Submission to the Senate Economics Legislation Committee Inquiry into Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024

Considerations to raise climate ambitions for rapid decarbonisation

The submission acknowledges the Bill is well-designed to encourage the establishment of new and important industries in Australia, including how it:

• designs subsidies to encourage emissions reduction;
• provides the most support to the first movers who lock in high costs from early technologies; and
• supports downstream industries, not extractive industries.

We do, however, provide two enhancements of the tax incentives the government could consider, including:

• Establishing emissions thresholds for critical mineral projects; and
• Extending the critical mineral production tax incentive to recycling projects, regardless of whether they entail a “substantial transformation”.

Designing the community benefits rules to achieve a just transition

The submission recommends that the tax incentives should be higher for projects that support a just transition, and outlines seven factors that CPD believes should make companies eligible for these higher tax incentives. This includes projects that:

• Give local communities and Indigenous groups a voice based on the principles of free, prior, and informed consent (FPIC)
• Invest in community adaptive capacity
• Set up in low-SES or transition-exposed communities
• Have some level of domestic – and preferably community – ownership
• Create local jobs and training pathways
• Ensure the least well-off households are not harmed
• Use feedstock from equitable and sustainable sources

It also recommends that the application of the community benefit rules should be scaled, such that firms that provide more community benefits receive greater tax offsets.