Production tax credits to 'level the playing field'

Debate on Australia’s industries of the future is ramping up as parliament considers tax incentives for green hydrogen and critical minerals.

The centrepiece of the Labor government’s broader Future Made in Australia package, the tax credits are designed to help secure the nation’s place in the global net zero supply chain.

Treasurer Jim Chalmers is expected to introduce the legislation for production tax credits totalling $13.7 billion to parliament on Monday.

“Our production tax incentives are about more investment and more jobs in Australia’s resources sector and ensuring local communities benefit from the global transformation to net zero,” he said.

The production incentive for critical minerals and rare earths would refund 10 per cent of the processing and refining costs between 2027/28 and 2039/40 for up to 10 years per project.

Tax credits of $2 per kilogram would be made available for production of renewable hydrogen from 2027/28.

The coalition has previously criticised the proposal, with Opposition Leader Peter Dutton calling it “corporate welfare for billionaires” in his budget reply speech.

Dr Chalmers called on Mr Dutton to clarify his position.

“Peter Dutton’s reckless arrogance is the worst enemy of the resources sector and communities across Australia that will be supported through these investments,” he said.

The Chamber of Minerals and Energy of Western Australia chief executive Rebecca Tomkinson said the government incentives would “level the playing field in what is an intensely competitive global market”.

“Australia’s resources, including our critical minerals, have a key role to play in the energy transition,” she said.

Clean Energy Council decarbonisation policy director Anna Freeman said it was an important part of the policy’s design that incentives would only go to businesses investing in and delivering hydrogen and critical minerals.

“Other major markets, including the United States and Canada, are providing generous support to hydrogen production and Australia too needs to create attractive investment conditions if we are to attract the tens of billions of dollars of new private investment waiting in the wings,” she said.

The Greens have previously expressed their broad support for critical minerals and green hydrogen industries and said they would assess the production incentives legislation on its merits.