Production tax credits timeframe revealed in new bill
Critical minerals and hydrogen projects hoping to benefit from the government’s new tax credits will have to be in production by 2040 under a tweak to the arrangements.
Treasurer Jim Chalmers will put legislation for the tax incentives to Parliament on Monday.
Under the scheme, first unveiled in May’s budget, a 10 per cent tax credit on the costs of critical minerals processing and refining will be on offer for up to a decade to projects that start production between 2027-28 and 2039-40.
Similarly, a hydrogen production tax incentive of $2 per kilogram produced in the same time frame.
The deadline to start production is a year earlier than the 2040-41 end date outlined in the Budget papers.
The two incentives combined are worth $13.7 billion over the next decade and form the centrepiece of the Government’s Future Made in Australia policy.
“The legislation will give investors clarity and certainty to invest in Australia’s potential to add more value to its natural resources, and help deliver cheaper and cleaner energy,” Dr Chalmers said.
WA and Queensland are expected to be the biggest beneficiaries.
Warren Pearce, chief executive of the Association of Mining and Exploration Companies which proposed the tax credit scheme, said those benefits would come in the form of a whole new industry with highly paid jobs for workers, increased tax and royalty revenue for governments and a big step forward in decarbonisation goals.
“Importantly, this is a smart and zero risk approach for Australia. If companies don’t produce a value-added product, they don’t receive a tax credit and it costs taxpayers nothing,” he said.
“Talking a good game isn’t good enough. We need real action, and the production tax incentive is exactly what industry has been seeking.”
The Chamber of Minerals and Energy WA’s Rebecca Tomkinson said passing the legislation would set an important investment signal about value-adding industries.
The peak body for the State’s resources sector wants to work further with the government to make sure its support does not end at production tax credits.
The Coalition has indicated it will oppose the scheme – despite backing from WA Liberals – which leader Peter Dutton dubbed “billions for billionaires”.
Resources Minister Madeleine King said this amounted to “behaving like clowns” and would damage the resources sector and national security.
She pointed out the Opposition supported loans to the critical minerals projects but wouldn’t back an industry-led policy response to the global challenges the sector faced.
“It’s hypocritical, shameful and the Coalition should stop wasting people’s time with stupid stunts that act against the interests of their own constituents and the resources industry,” she told The West.
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