Federal Budget 2024: Coalition blasts production tax credits as ‘billions for billionaires’

The federal Coalition is outright opposed to Labor’s planned tax credits for critical minerals refiners and hydrogen producers, arguing taxpayers shouldn’t be forking out “billions to billionaires” while Australians are struggling with the cost of living.

Liberal leader Peter Dutton and Shadow Treasurer Angus Taylor have come out swinging against the centrepiece of the Federal Government’s Future Made in Australia Plan.

The stance sets up a major political fight with potentially significant ramifications for WA, which is set to be the biggest beneficiary of the scheme.

The Government will offer $7 billion worth of tax credits to miners for processing and refining critical minerals, and $6.7 billion worth of tax subsidies for green hydrogen production, starting from 2027-28.

The tax incentives will run through to 2040-2041, with the total cost to the Budget estimated at $31.9 billion.

WA’s peak mining groups welcomed the announcement, having lobbied hard production credit scheme to rival the subsidies offered under the US’ Inflation Reduction Act.

I think we should be helping, frankly, Australians who are struggling at the moment

But Mr Taylor said handing out “billions to billionaires” was “not a good use of taxpayer money”.

“This is not how you get manufacturing and resources sectors really firing,” Mr Taylor told RN Breakfast.

“We know that from history. It is a bizarre way to try to get those sectors going.”

Mr Dutton suggested billionaire miners including Andrew Forrest – who is attempting to kickstart Australia’s green hydrogen industry – had managed to “milk” the Federal Government.

He said the Coalition supported critical minerals projects – but insisted they should be able to stand on their own two feet.

“Well, we don’t support it because I think we should be helping, frankly, Australians who are struggling at the moment to find a house,” Mr Dutton told ABC News Breakfast.

“We’ve got people living in cars and in tents.”

Both the hydrogen and critical minerals subsidies schemes are uncapped, meaning the cost to the Federal Budget could be even greater if there is a strong take-up.

Association of Mining and Exploration Companies chief executive Warren Pearce said the tax credits were a “proven mechanism” that would reward companies willing to take a risk.

“To be clear, this incentive is a zero-risk approach for Australia to take. If companies don’t produce a value-added product, they don’t receive a tax credit. It’s as simple as that,” Mr Pearce said.