Exploration is at the centre of the strategy to grow the resources sector, while affordability is the word for energy, as the Morrison Government keeps jobs and economic recovery at the centre of its 2021 Federal Budget.

For convenience of its members, AREEA has compiled a summary below of the key Budget measures in relation to the resources industry, Northern Australia, energy policy and trade.

Full Budget papers and government fact sheets are available if more specific detail is required. For assistance, contact [email protected].

(Note: visit related AREEA Budget articles for a summary of announcements on workforce and women’s participation).

Developing the resources sector and unlocking northern Australia

Expanding the nation’s resources sector and prioritising development of northern Australia will maximise long-term economic opportunities and job creation, says Minister for Resources, Water and Northern Australia Keith Pitt.

Specific Budget measures announced last night include:

• $100 million in fiscal balance terms to extend the Junior Minerals Exploration Incentive for four years from 1 July 2021, to encourage exploration and development of new deposits and to ensure a strong investment pipeline for development across regional Australia.
• $20.1m over two years to deliver a Global Resources Strategy, which will diversify and strengthen Australia’s access to key export markets, and reduce the risk of trade disruptions.
• $15.7m to support Gas Field Trials in the North Bowen and Galilee Basins, as part of the Government’s Strategic Basin Plans.
• $189.6m investment over five years for the Next Five Year Plan for Northern Australia, with a focus on job creation, stronger digital connectivity, and support for businesses to scale-up and diversify.
• $40.2m over the forward estimates and $6.3m ongoing to enhance Australia’s location-based data infrastructure as part of the Government’s Digital Economy Strategy.

The Budget also includes a temporary levy on offshore petroleum production to fund decommissioning and remediation works in the Laminaria-Corallina oilfields and associated infrastructure.

Minister Pitt said the levy was an important measure to ensure taxpayers aren’t footing the bill for the decommissioning and remediation of the oilfields, northwest of Darwin in the Timor Sea.

The Government will consult with industry over details of the levy’s administration, with further information to be announced following this consultation period.

Energy Policy Measures

The Government has allocated investment of more than $1.8 billion in the 2021-22 Budget to “boost jobs, reduce emissions, and support affordable and reliable energy”.

““Australia is focused on investing in commercialising technologies, not harmful taxes, in the global effort to reduce emissions,” Minister for Energy and Emissions Reduction Angus Taylor said.

“These initiatives will secure Australia’s recovery while also bolstering our position as a leader in the development of low emissions technologies, which are vital to achieving net zero emissions globally.”

Budget announcements include:

Electricity:

• $24.9m to assist new gas generators become hydrogen ready.
• Up to $30m for early works on Australian Industrial Power’s (AIP) Port Kembla gas generator project.
• $30.0m to support a big battery and the roll-out of microgrids in remote Indigenous communities, as part of a future Northern Territory Commonwealth bilateral agreement on energy and emissions reduction.
• Up to $76.9m to secure the Portland aluminium smelter’s participation in the Reliability and Emergency Reserve Trader scheme.
• Up to $19.3m to support the deployment of a renewable energy microgrid incorporating hydrogen in the Daintree in Northern Queensland.
• $34.3m to implement the Government’s consumer-focused reform agenda including post-2025 electricity market reforms and expand the role of the Australian Energy Infrastructure Commissioner.

Gas:

• Up to $38.7m to support critical gas infrastructure projects to alleviate the forecast gas supply shortfalls.
• $5.6m to further strengthen the Government’s gas system planning framework through delivery of the National Gas Infrastructure Plan.
• $6.2m to design, consult and implement reforms to accelerate the development of the Wallumbilla Gas Supply Hub.
• $4.6m to develop initiatives that empower gas reliant businesses to negotiate competitive outcomes in their gas supply agreements.
• $3.5m to design and implement a framework to facilitate Commonwealth support for medium to long-term gas infrastructure to secure Australia’s future gas supply.

Fuel security:

The Budget also sets out measures to further strengthen Australia’s long-term fuel security:

• A refinery production payment to help maintain Australia’s refining capability.
• Support to assist the refiners to conduct infrastructure upgrades, subject to consultation with industry.
• $50.7m to establish a new fuel security framework, including for the implementation and monitoring of the minimum stockholding obligation and the production payment, ensuring industry complies.

Emissions Reduction

New initiatives in the Budget will support investment in new and emerging low-emissions technologies prioritised under the Government’s Technology Investment Roadmap, collaborate internationally on achieving technology breakthroughs, lower energy costs and create more than 6,000 jobs.

Measures include:

• $1.2 billion across a number of low emissions technology innovation and commercialisation projects, including international technology partnerships, four additional clean hydrogen hubs, carbon capture technologies, soil innovation and agricultural feed technologies (note: visit the Budget website for a full breakdown of the $1.2b investment).
• $279.9m to establish the below baseline crediting mechanism recommended by the King Review, which will support large industrial facilities to reduce energy consumption and emissions while improving productivity and international competitiveness.
• $26.4m to help Australian businesses and supply chains to reduce energy costs through more energy efficient industrial equipment and business practices.
• Establishing a $50m venture capital financing function within the Australian Renewable Energy Agency to support Australian clean tech innovation.
• $10.4m to expand the range of certifications offered by the Government’s Climate Active program and ensure it remains a best practice standard and certification scheme for business looking to voluntarily reduce emissions.
• $14.3m to reduce costs and streamline the reporting requirements for businesses covered by the National Greenhouse and Energy Reporting Scheme.

Advanced Manufacturing Support

In last year’s Budget the Government invested $1.5 billion in a four-year Modern Manufacturing Strategy to boost Australia’s international competitiveness and stimulate jobs.

This was followed by additional $2b in research and development tax incentives for Australian manufacturers.

The 2021-2022 Budget further supports this manufacturing plan by creating a new ‘patent box’ starting on 1 July 2022. Under the patent box, income earned from new patents that have been developed in Australia will be taxed at a concessional rate of 17 per cent.

The patent box will initially apply only to the medical and biotech sectors, with the Government set to consult on expanding it to the clean energy sector.

Investing in Trade Interests

The 2021-22 Budget includes some measures to support and enhance Australia’s international trading relationships. Key measures include:

• Investing $198.2m over four years from 2021-22 to support Australian exporters and businesses, deliver the nation’s Indo-Pacific priorities, and expand advocacy and cooperation with partners internationally.
• A $112.8m extension of the International Freight Assistance Mechanism. This temporary and targeted response to COVID-19 has already repaired some of the damage to global supply chains, reconnecting Australia to almost 70 international destinations to secure critical inputs for the nation’s pandemic response and to supply customers with premium perishable goods.
• Further funding of $37.4m over three years to drive implementation of Simplified Trade System reforms. The system is intended to create a simpler, more efficient and digitised trade framework so more Australian businesses can take full advantage of the opportunities offered by international markets.

More information on all the above measure is available on the Budget website. Alternatively, contact [email protected] for queries and assistance.