Future Made in Australia Bill 2024: Key takeaways and implications for critical minerals projects

Summary

• The Future Made in Australia Bill 2024 (Bill) forms part of the Federal Government’s Future Made in Australia policy announced as part of the 2024-25 Budget.
• The proposed legislation seeks to establish criteria and processes for decision-making and provide certainty for the private sector to attract private capital in areas of national interest. The Bill seeks to do this through establishing a National Interest Framework to guide Government investment and decision-making, an assessment process to identify opportunities in sectors that align with the Government’s investment direction, and community benefit principles to inform support given under the proposed legislation. 
• The Bill establishes broad parameters around Future Made in Australia support, which includes funding, grants, loans, guarantees, equity investments, among other things. Under the Bill, the Minister has powers to make rules in relation to the provision of Future Made in Australia support. The Bill itself does not set out the process for how Future Made in Australia support will be provided.
• Critical minerals are likely to fall within both streams of the National Interest Framework as products and an industry that is key to the net zero transformation and Australia’s economic resilience and security. The preamble to the Bill also makes it clear that the Government is contemplating greater public investment being required in sectors such as critical minerals.

Future Made in Australia policy

The Future Made in Australia policy was announced in the 2024-25 budget¹ with a committed funding of $22.7 billion over 10 years. The policy is one of the planks of the Labour Government’s economic policy.

The stated aim of the policy is to encourage and facilitate private sector investment in Australia to benefit from the net zero transition and the heightened geostrategic competition.² 

Future Made in Australia Bill 2024

The Bill, along with the Future Made in Australia (Omnibus Amendments No. 1)³, was introduced into Parliament on 3 July 2024. The Bill is expected to clear the House of Representatives, although it may face amendments in the Senate where the Labour Government does not have a majority.

National Interest Framework

The Bill proposes to legislate the National Interest Framework, which was announced as part of the 2024-25 Budget. The National Interest Framework has two streams: net zero transformation; and economic resilience and security. 

The Bill sets out more detail about whether a sector of the Australian economy is aligned with the streams:  

1. Net zero transformation:

• the sector could have a sustained comparative advantage in a net zero global economy; and
• public investment is likely to be needed for the sector to make a significant contribution to emissions reduction at an efficient cost.

2. Economic resilience and security:

• some level of domestic capability in the sector is a necessary or efficient way to deliver economic resilience and security; and
• the private sector will not deliver the necessary investment in the sector in the absence of government support.

The National Interest Framework is used as the basis for the sector assessments (see below) as well as guiding the investment direction of the Government. 

Sector assessment processes

The Bill establishes sector assessments, which provides a mechanism for the Secretary of the Department of Treasury at the direction of the Minister to undertake assessments of the extent to which a sector aligns with the National Interest Framework and the opportunities to address barriers to private investment. 

In the second reading speech, the Treasurer highlighted the intention for the National Interest Framework and sector assessments together to give guidance to private sector investors on the Government’s position on certain sectors.  

The explanatory memorandum states that sector assessments are not intended to inform all government decisions or replace other policy frameworks. Under the Bill, sector assessment reports must be tabled to Parliament.

Future Made in Australia support

The Bill provides for Future Made in Australia support. Future Made in Australia is defined broadly to be any support provided by the Commonwealth, a Commonwealth entity or a Commonwealth company (including a grant, loan, indemnity, guarantee, warranty,  investment of money or equity investment) that is prescribed, or provided under Future Made in Australia Fund, certain support through the Export Finance and Insurance Corporation or other laws. 

Under the Bill, decision-makers must have regard to the Community Benefit Principles in decisions in relation to providing Future Made in Australia support. 

The community benefit principles are as follows: 

• promote safe and secure jobs that are well paid and have good conditions;
• develop more skilled and inclusive workforces, including by investing in training and skills development and broadening opportunities for workforce participation;
• engage collaboratively with and achieve positive outcomes for local communities, such as First Nations communities and communities directly affected by the transition to net zero; 
• strengthen domestic industrial capabilities including through stronger local supply chains; and
• demonstrate transparency and compliance in relation to the management of tax affairs, including benefits received under Future Made in Australia supports.

The Minister may specify additional community benefit principles through rules (see below).

The Bill also contemplates that certain recipients of Future Made in Australia support will be required to have Future Made in Australia Plans, the requirements for these which may be set out in more detail in the rules.

The Bill itself does not set out the process for how Future Made in Australia support will be provided, and allows the Minister to make rules relating to the provision of the support, decisions about whether it should be provided, methods and criteria among other things.

Minister rule-making powers

The Bill provides powers for the Minister to make rules by legislative instrument. The Minister may use this underlying rule-making power whenever the Bill confers power on the Minister to do something by rules, notably in relation to the provision of the Future Made in Australia support (including methods and criteria), and whether the community benefit principles apply to certain decision-makers or decisions. 

Implications for critical minerals projects

Critical minerals projects and the products they produce are key to the net zero transformation and Australia’s economic resilience and security. These types of projects can also provide benefits to communities through employment, for First Nations communities and for domestic supply chains. 

The preamble to the Bill expressly refers to value-adding to resources, which aligns with the current Government’s support of downstream processing in Australia. The preamble to the Bill makes it clear that the Government is contemplating greater public investment being required in sectors such as critical minerals.

The broad range of support that is contemplated by the legislation is encouraging, however we will await further details in the rules regarding how the support is provided (including eligibility, methods and criteria).

Other initiatives announced as part of the Future Made in Australia policy under the 2024-25 Budget⁴ targeted at the critical minerals sector include: 

• the announced Critical Minerals Production Tax Incentive to support downstream refining and processing of Australian critical minerals, estimated to cost $7 billion over the next decade, providing a production incentive valued at 10% of relevant processing and refining costs;
• commitment of $1.2 billion to the Critical Minerals Facility and the Northern Australia Infrastructure Facility, including financing to support the Alpha HPA alumina project in Queensland, and Arafura Rare Earth’s Rare Earth Project in the Northern Territory; and
• $10.2 million to establish the Critical Minerals National Productivity Initiative, which will work with States and Territories to undertake pre-feasibility studies for critical mineral common-user processing facilities.

References

1. Available at: https://budget.gov.au/content/03-future-made.htm.

2. Future Made in Australia Bill 2024 Explanatory Memorandum available here.

3. Future Made in Australia Bill 2024 is available here and Future Made in Australia (Omnibus Amendments No. 1) Bill 2024 is available here. The Omnibus Bill proposes certain amendments in relation to the Export Finance and Insurance Corporation and Australian Renewable Energy Agency (ARENA).

4. See Minister for Resources and Minister for Northern Australia, Securing Australia's critical minerals, exploration and processing industries 14 May 2024.