Introductory Info

Date of introduction: 2024-07-03

House introduced in: House of Representatives

Portfolio: the Portfolio responsibilities for the Bills are as set out below:

Future Made in Australia Bill 2024: Treasury

Future Made in Australia (Omnibus Amendments No.1) Bill 2024: Department of Foreign Affairs and Trade (Schedule 1), Department of Climate Change, Energy, the Environment and Water (Schedule 2).

Commencement: the Bills commence as set out below: 

Future Made in Australia Bill 2024: the day after the Act receives Royal Assent

Future Made in Australia (Omnibus Amendments No.1) Bill 2024: the day after the Act receives Royal Assent.

Purpose of the Bills

The overall purpose of the Future Made in Australia Bill 2024 (FMA Bill) and Future Made in Australia (Omnibus Amendments No. 1) Bill 2024 (Omnibus Bill) is to give effect to particular aspects of the Albanese Government’s Future Made in Australia industrial policy agenda.

Future Made in Australia is a plan for explicit public investment at scale with the aim of crowding in private finance within sectors that could either have a comparative advantage in a net zero global economy, or where domestic capability could deliver economic resilience and supply chain security. The plan is designed to take advantage of the economic and industrial benefits of the global move to net zero, put Australia back on the path to being an advanced industrial economy, and secure the country’s place in the changing geopolitical landscape where countries are moving towards the idea of preferential trading blocks.[1]

Future Made in Australia links challenges of climate change and national economic capability to reindustrialisation, predominantly using Australia's world-significant clean energy and critical minerals to increase onshore secondary processing of these metals and the manufacture of products and components required for decarbonisation and greater sovereignty.[2]

The specific purpose of the FMA Bill is to create a new principal Act under the Government’s Future Made in Australia agenda. The FMA Bill is framework legislation which establishes the National Interest Framework (NIF) as the means to identify sectors as potential candidates for public investment under Future Made in Australia. It also puts in place Community Benefit Principles that the government will apply to ensure that investments in priority industries have broader benefits to the Australian community.

The specific purpose of the Omnibus Bill is to amend:

• the Export Finance and Insurance Corporation Act 1991 (EFIC Act) to create two new primary duties for Export Finance Australia (EFA):
  • to perform national economy and net zero functions
  • to be able to fund domestic projects that align with these new functions.
• the Australian Renewable Energy Agency Act 2011 (ARENA Act) to expand the functions of the Australian Renewable Energy Agency (ARENA), thereby enabling it to administer support to industries under the Future Made in Australia Innovation Fund (Innovation Fund) and other programs.

Both Bills enact measures announced as part of the 2024–25 Budget package Future Made in Australia.[3] An overview of the Future Made in Australia Budget package and explanation of the historic economic context to the Government’s new industrial policy is provided in the Parliamentary Library’s Budget Brief, New industrial policy: a Future Made in Australia.

Structure of the Bills

Future Made in Australia Bill 2024

The FMA Bill establishes a new Act and has 4 Parts:

• Part 1 sets out preliminary matters including the objects of the Act and definitions.
• Part 2 establishes the NIF as being composed of the net zero transformation stream and the economic resilience and security stream. It also provides for sector assessments to analyse whether priority industries are aligned with the NIF. This part also sets out the way in which sector assessments should be conducted and reported.
• Part 3 sets out the requirement for community benefit principles to be taken into account when deciding whether any form of Future Made in Australia support should be provided by the Commonwealth (including a Commonwealth entity or Commonwealth company).
• Part 4 provides for:
  • a rule making power for the Minister in respect of matters related to the Act
  • the Department’s annual report to include a section relating to the operation of Future Made in Australia support
  • the delegation of the Secretary’s functions or powers in relation to sector assessments.

Future Made in Australia (Omnibus Amendments No. 1) Bill 2024

The Omnibus Bill has 2 Schedules:

• Schedule 1 amends the EFIC Act as follows:
  • Part 1 amends the functions of EFA (previously the Export Finance and Insurance Corporation, or EFIC) in section 7 of the EFIC Act to include two new functions: a ‘national economy function’ and a ‘net zero function’. This Part allows EFA to disregard two of its primary duties (namely ‘performing functions to best assist the development of Australian export trade’, and ‘having regard to the desirability of improving and extending the range of insurance and other financial services’) for the purposes of being able to perform the two new functions. Part 1 also amends relevant provisions to insert the Minister for Finance as joint responsible minister for EFA.
  • Part 2 confirms that Ministerial directions previously given under subsection 9(2), and debt neutrality charge arrangements made under section 61A, of the EFIC Act will continue in force as if given by both Ministers under the relevant amended clause of the Schedule.
• Schedule 2 amends the ARENA Act and Australian Renewable Energy Agency Regulation 2016 to support ARENA to administer the Innovation Fund and support priority sectors under the National Interest Framework (NIF). The schedule is structured as follows:
  • Part 1 provides for:
    • amendments to the objects of the ARENA Act to include contributing to the reduction of global greenhouse gas emissions in accordance with the Paris Agreement.
    • updates to the ARENA Act to include definitions of ‘electrification technologies’ and ‘energy efficiency technologies’, and to specify that ARENA’s functions extend to these technologies, as well as the ‘manufacture’ of renewable energy technologies.
    • reform of ARENA’s governance arrangements, including removing restrictions on the agency’s ability to employ staff and engage consultants, to allow for expansion of the Agency consistent with its new role in administering the Innovation Fund.
    • amendments to the ARENA Act to provide the Finance Minister with greater involvement in governance matters.
    • replacement of section 64 of the ARENA Act to provide for an updated table of statutory funding being made available to ARENA from 2025–26 through to 2038–39.
  • Part 2 sets out the application of amendments relating to existing financial assistance, work plans and terms of appointment of members of the ARENA Board.

Background

The global economy, ‘polycrisis’, and the return of industrial policy

Having been a largely pejorative term associated with the idea of governments ‘picking winners’ and propping up uncompetitive industries with tax‑payer funds, industrial policy has undergone a gradual revival over the last two and a half decades. Countries which had previously embraced the neoclassical economic orthodoxy that investment decisions regarding optimal allocation of capital across physical resources and R&D to promote improvements in technology were best left to the market are now moving towards more explicit forms of government intervention in promoting key domestic manufacturing sectors.[4]

Polycrisis, market failures and the case for government intervention

This shift back towards more explicit government intervention with respect to industrial policy has been prompted by a number of interlinked global risks, which have manifested in a series of economic, social and environmental crises that some have termed ‘polycrisis’.[5] The global financial crisis of 2008, the climate crisis, the COVID-19 pandemic, and heightened global political tensions from wars in Europe and the Middle East have all led to a re‑examination of why free-market policies have failed to prevent advanced liberalised economies from suffering shocks and low productivity.

This reflection has drawn an acknowledgment that there are several critical circumstances under which the neoclassical assumption that the market will allocate resources most efficiently are violated. These market failures have led to suboptimal allocation of resources:

• Firstly, missing markets for environmental goods (such as clean air, water, and biodiversity) have resulted in the failure to capture environmental externalities. Prices which do not incorporate the true economic cost of negative externalities associated with greenhouse gas emissions, have led to consumption and private sector investment decisions that fail to take into account these environmental costs. In sum, we have not been paying the true economic cost of the goods we consume, resulting in unsustainable use of the planet’s resources, global warming, and the current climate crisis.
• Secondly, in the case of goods such as knowledge (R&D) which have spill-over effects, and where economic rents cannot be fully captured by the private sector, the market will tend to underinvest. An economy that relies on the free market will therefore not produce and transmit knowledge efficiently.[6] This is considered an issue particularly in the case of nascent (or ‘infant’) industries in the process of development which rely on innovation.

The suboptimal allocation of resources by the market under these circumstances creates a role for government intervention: to crowd-in private investment in knowledge and assist nascent industries; correct the private sector’s tendency towards myopia in sectors that are vital to society’s wellbeing in the longer term; and adjust for the ‘green premium’ pricing barriers faced by clean energy technologies. It must do so while avoiding the introduction of new inefficiencies such as political capture (political interference or self-interest), economic crowding out (where government over-corrects the market failure leading to displacement of private investment and excess costs for the taxpayer), or negative spill-over effects.

the point of industrial policy is not to pick winners at all. Rather, successful industrial policies identify sources of positive externalities – sectors where learning might generate benefits elsewhere in the economy.[7]

The act of ‘picking winners’ can be a legitimate element of a successful industrial policy and does not in and of itself amount to government failure. In the case where those winners go on to deliver welfare-enhancing efficiencies and benefits that would not otherwise have existed the associated government intervention would be characterised as Pareto-improving. The negative sentiment associated with ‘picking winners’ is based on historic scepticism as to whether the government has access to better information than the private investor and is therefore better able to identify projects that are more likely to succeed. Again, however, this assumes that the market has perfect information and picks winners based on full pricing of all the costs and benefits to society, including benefits that will accrue far into the future:

the market fundamentalists who, using poor economics, oppose all forms of government intervention. Drawing on what they see as industry policy lessons of the past they say “let the market decide our future industry winners”, ignoring the need to use basic economics and allow for externalities. Without such allowance the market will pick losers.[8]

The US economist Dani Rodrik writes about an appropriate framework for industrial policy as being one that encompasses the following pillars:

• Embeddedness – where the state designs mechanisms to elicit information about the market gaps and builds strategic collaborations and coordination between relevant actors to address those market failures.
• Conditionality – where the state not only encourages investment in non-traditional areas, but also creates compliance costs for firms for failing to meet the social and cultural objectives of the project.
• Accountability – where the state is fully transparent about how decisions are made and ‘why certain activities or firms are favoured’.[9]

The move away from the Washington Consensus

The term ‘Washington Consensus’ came to stand for the free market, neoliberal policies adopted by governments around the world in response to the stagflation crisis of the 1970s. The Washington approach to industry policy was simple: as Gary Becker once famously described it, the best industrial policy was ‘none at all’.

The move away from the Washington Consensus has been a gradual one that has gathered pace as challenges of the polycrisis have mounted. Starting as far back as 2002, the Nobel Prize-winning economist Joseph Stiglitz published his book ‘Globalization and its Discontents’ which described growing opposition in the developing world to globalizing reforms. These reforms were based around neoclassical economic ideals of the free-market and typically included trade liberalisation, privatisation of assets, financial deregulation, as well as harsh fiscal and monetary conditions designed to reduce inflation and fiscal deficits.

Over the next two decades, opposition to globalisation and the Washington Consensus started to grow, not just in the developing world, but also in developed nations. During this period, economists such as Dani Rodrik, Nathan Lane, Joseph Stiglitz and Mariana Mazzucato were all influential in challenging the neoclassical orthodoxy and arguing that mainstream economists’ ‘knee-jerk hostility’ to industrial policy was ‘increasingly outmoded’.[10] Their research gradually started to produce a ‘more nuanced and contextual understanding’ of industrial policy that ‘yields a generally more positive assessment’.[11] Stiglitz and Greenwald, in their seminal 2014 book, ‘Creating a Learning Society’, demonstrated how well-designed industrial policies could actually enhance learning and innovation and drive economic growth through technological progress. Taking as their starting point the observation by economist Robert Solow that rising incomes come, not from capital accumulation, but from technological progress, Stiglitz and Greenwald made the case that knowledge is the most important determinant of economic growth. Since knowledge is a public good (non-excludable and non-rivalrous), the market will fail to invest efficiently, creating a role for government intervention:

the point of industrial policy is not to pick winners at all. Rather, successful industrial policies identify sources of positive externalities – sectors where learning might generate benefits elsewhere in the economy.[12] [emphasis added]

As industrial policy was being reshaped from the academic side by a greater understanding of its effects and the more sophisticated set of policy tools available to governments, a number of geopolitical, environmental and economic crises were simultaneously provoking a re‑examination of the neoclassical assumption that the market knows best, and a reconsideration of the fundamentals likely to underpin competitiveness and economic prosperity in the future.[13] Increases in income inequality, the failure of free trade to deliver on its promised benefits, the global financial crisis of 2008, and the development of the climate crisis have all contributed to the gradual rejection of the ‘laissez-faire’, free-market economic orthodoxy, and an associated rejection of globalisation. As President Biden’s National Security Adviser, Jake Sullivan, put it in a speech to the Brookings Institute in 2023,

The vision of public investment that had energized the American project in the postwar years—and indeed for much of our history—had faded. It had given way to a set of ideas that championed tax cutting and deregulation, privatization over public action, and trade liberalization as an end in itself.

There was one assumption at the heart of all of this policy: that markets always allocate capital productively and efficiently—no matter what our competitors did, no matter how big our shared challenges grew, and no matter how many guardrails we took down.

…

Another embedded assumption was that the type of growth did not matter. All growth was good growth. So, various reforms combined and came together to privilege some sectors of the economy, like finance, while other essential sectors, like semiconductors and infrastructure, atrophied. Our industrial capacity—which is crucial to any country’s ability to continue to innovate—took a real hit.

The shocks of a global financial crisis and a global pandemic laid bare the limits of these prevailing assumptions.

…

A modern American industrial strategy identifies specific sectors that are foundational to economic growth, strategic from a national security perspective, and where private industry on its own isn’t poised to make the investments needed to secure our national ambitions.

…

It helps enable American business to do what American business does best—innovate, scale, and compete.

This is about crowding in private investment—not replacing it.  It’s about making long-term investments in sectors vital to our national wellbeing—not picking winners and losers.[14]

The ‘New Washington Consensus’

The shift in US industrial policy marked by Sullivan’s ‘New Washington Consensus’ speech was a response both to the economic and climate crises of the 2000s (the polycrisis), as well as the current wave of deglobalisation prompted by heightened geopolitical tensions and new rules of global competition. ‘New industry policy’, as Treasurer Jim Chalmers’ address to the Lowy Institute in May 2024 confirmed, is just as much about countries staking their place within emerging preferential trading blocs as it is about stimulating growth and domestic industrial redevelopment. As strategic competition and geopolitical risks have increased, so has the desire of governments around the world to embrace industrial policies and to source resources from trusted or like-minded jurisdictions with similar political alignment.

US Treasury Secretary Janet Yellen has referred to this as a ‘friend-shoring strategy’, a term originally attributed to a USAID department official, but adopted by the US administration in the context of the Minerals Security Partnership announced in June 2022.[15] During Prime Minister Albanese’s visit to the US in May 2023, President Biden undertook to request that Congress add Australia as a ‘domestic source’ under the Defence Production Act to streamline technological and industrial cooperation, and ‘matching the preferential economic treatment provided to Canada and Mexico’.[16]

In parallel, the paradigm shift of the last couple of decades is starting to coalesce around a new economic orthodoxy, as described in this article. The so-called ‘Berlin Declaration’, which emerged from a recent summit of economists and policy practitioners, is being referred to as a replacement for the Washington Consensus.[17] It includes calls to:

…

• reduce market power in highly concentrated markets.[18]

The new economics of manufacturing

As the world moves towards tackling the climate crisis and countries begin decarbonising their industries, the economics of global manufacturing processes are gradually changing. Processes that, to date have been competitive because the environmental externalities of carbon emission have not been fully priced in, will become increasingly unviable under a future scenario of strategic global competition based on decarbonisation:

“The prohibitive cost of long-distance imports means that energy-intensive industries will inevitably migrate to regions with cheap clean energy. It is inconceivable for any country to import iron ore from Australia or Brazil, hydrogen from Australia, the Gulf, Canada or Africa, and make steel at a globally competitive cost”[19] [emphasis added].

The rules of global competition will change over the coming decade, even for countries such as China who have previously dominated global trade exports:

Last year, a team from the Oxford School of Engineering Science published in Nature Communications the results of an elaborate modelling exercise defining the cost of producing iron and steel in different locations in a zero-carbon world. Australia emerges as by far the world’s largest producer of iron metal and steel, more than twice as large as any other country.

…

[On China] Its renewable resources are poorer than Australia's and concentrated in the north (much on the latitude of Hobart where winter days are short), and in the west (far from where industry is concentrated along the coast and in the south). Even if China were willing to pay twice Australia's expected costs in 2050, it would only satisfy half of its forecast requirement for wind and solar power from its own resources. That leaves a gap of over 6000 TWh. The cheapest way to source that immense amount of energy is by importing goods that embody renewable energy.[20] [emphasis added]

Analysts have pointed out that Australia’s comparative natural advantages in terms of renewable energy generation potential, alongside a skilled workforce, and stable political institutions position the country well for future success in green industries:

The global transition to net zero is Australia’s opportunity. We can use it to raise productivity and living standards after the decade of stagnation. Other countries do not share our natural endowments of wind and solar energy resources, land to deploy them, as well as land to grow biomass sustainably as an alternative to petroleum and coal for chemical manufacture. In the zero-carbon economy, Australia is the economically natural location to produce a substantial proportion of the products currently made with large carbon emissions in Northeast Asia and Europe.

…

Our main message today is that export of zero-carbon goods can underpin a long period of high investment, rising productivity, full employment and rising incomes in Australia.[21]

Rod Sims of The Superpower Institute has also talked about:

opportunities opening up for Australia because the world’s net zero transition brings new areas of comparative advantage for Australia. We only want goods to be now made in Australia where the economics have “flipped”, which we see as the Superpower opportunity.[22]

Taking advantage of Australia’s inherent competitiveness in renewable energy and exports of zero emissions goods could not only deliver economic growth, but environmental benefits.[23] The Centre for Policy Development calculated that onshore green refining of 25% of Australia’s iron ore and alumina exports would avoid over 250 Mt CO2-e per year of global emissions (more than double Australia’s target to reduce domestic emissions by 43% by 2030).[24]

The change in our economic circumstances and the big change in economic opportunity in the zero-carbon economy mean that the best policy solutions change. In designing policies to secure our own decarbonisation, we now have to give a large place to Australia’s opportunity to be the renewable energy Superpower of the zero-carbon world economy.[25] [emphasis added]

Australia will face some key challenges in the implementation of ‘new industrial policies’ associated with re‑industrialising and re-skilling from a low base. Australia has been de-industrialising for the last 30 years and in 2020 it ranked last among OECD countries for manufacturing self-sufficiency. In the December quarter 2023, manufacturing’s share of national output was just 5.8%.

In addition, Australia’s manufacturing base currently has low ‘economic complexity’, a metric developed by Harvard University’s Growth Lab to characterise a country’s manufacturing products. Higher complexity indicates higher levels of processing and has been linked to higher economic growth prospects. Australia’s manufacturing structure, because it is dominated by unprocessed or only lightly processed raw materials, placed us 93rd out of the 133 countries studied in 2021, a decline of 12 places in complexity ranking compared to a decade prior.[26]

Further challenges come from the need to address Australia’s acknowledged weaknesses in commercialisation. Overall R&D intensity has been declining since the mining boom, making Australia an outlier among OECD and G7 nations. The R&D intensity of Australian businesses, i.e., the amount that business reinvests, was just 0.9% of GDP in 2021–22, its lowest level in two decades.

These challenges were covered by the Senate Economics References Committee’s Inquiry into the Australian manufacturing industry which reported in February 2022, and which noted:

As part of creating a resilient and sustainable manufacturing sector, Australia needs to address the single biggest issue that has arisen out of the covid crisis—the impact of a limited domestic manufacturing capability.

…

The committee has, through submissions and hearing testimony, received evidence that suggests that Australia’s current policy is failing to sustain and support the growth of manufacturing in Australia.

…

Dr Mark Dean argued that there is no overarching strategic policy direction: ‘In one phrase: the lack of industry policy. I think that's strategic. There needs to be a federally coordinating industry policy strategy in place to actually shape the direction of our industrial capabilities’.[27]

What is Future Made in Australia?

Announced by the Prime Minister on 11 April 2024, Future Made in Australia is the government’s plan for identifying and investing in areas of comparative advantage that will enable Australia to capitalise on the economic and industrial opportunities of the global move to net zero, as well as aligning its national security and economic interests, and securing its place in the new geopolitical landscape of preferential trading blocks.[28] Essentially, it is a response to the two major shifts in the global economy that have occurred in the last decade: the global move to reach net zero by 2050, and heightened geostrategic competition caused by increasing tensions and insecurity of global supply chains:

Nations are drawing an explicit link between economic security and national security. The so-called ‘Washington consensus’ has fractured - and Washington itself is pursuing a new direction.

…

All these countries are investing in their industrial base, their manufacturing capability and their economic sovereignty.

This is not old-fashioned protectionism or isolationism - it is the new competition.[29]

In May 2024, the Treasury released further details, setting out the role for government in addressing these global economic shifts, based on the presence of market failures: firstly in the case of achieving sufficient levels of investment in ‘green’ technologies where the market does not accurately price carbon emissions, and secondly in the case where the market fails to price in the costs of supply chain shocks associated with political instability.[30]  

… we must recognise there is a new and widespread willingness to make economic interventions on the basis of national interest and national sovereignty.

And – critically – none of this is being left solely to market forces or trusted to the invisible hand.

The heavy lifting of economic transition and industrial transformation is not being done by individuals, companies or communities on their own. It is being facilitated, enabled and empowered by national Governments from every point on the political spectrum.

Because this is not about ideology, it’s about opportunity – and it’s about urgency.[31] [emphasis added]

The Future Made in Australia plan covers a broad agenda based on building ‘a stronger, more diversified and more resilient economy powered by clean energy, in a way that creates secure, well-paid jobs and delivers benefits to communities across the country’.[32] It has 5 key aspects:

• attracting and enabling investment
• making Australia a Renewable Energy Superpower
• value adding to our resources and boosting economic security
• backing Australian ideas, through innovation and science
• investing in people and places.[33]

In a speech to the Lowy Institute on 1 May 2024, Treasurer Jim Chalmers described the National Interest Framework that would guide the selection of public investments to be made through a Future Made in Australia:

We will set 5 tests on where we act, and how.

First, is the industry one where we can be competitive, and more productive.

Second, does it contribute to an orderly path to net zero.

Third, can it build the capabilities of our people and especially our regions.

Fourth, will it improve Australia’s national security and economic resilience.

And fifth, does it recognise the key role of the private sector and deliver genuine value for money for government.

The Act will also outline criteria for 2 streams:

A national interest stream, where domestic sovereign capability is necessary to protect our national security interests or ensure our economy is sufficiently resilient to shocks.

This will have a focus on only the most critical risks – to avoid a costly mindset of trying to eliminate all risks.

And a net zero transformation stream, where industries support decarbonisation, and there is a reasonable prospect of a self‑sustaining comparative advantage.[34]

Budget 2024–25 measures

As part of the 2024–25 Budget, the Government announced a series of measures under the package Future Made in Australia, totalling $22.7 billion in funding commitments (Table 1). Some of the individual components build on programs introduced in previous budgets, including the Hydrogen Headstart program (Budget paper no. 2: 2023–24, 71), and the Strengthening Australia’s Science, Technology, Engineering and Mathematics Capabilities program (Budget paper no. 2: 2023–24, 168).

The Government’s $15 billion National Reconstruction Fund which was announced as part of the 2022–23 Budget (Budget Paper no. 2: October 2022–23, 153) and is administered by the National Reconstruction Fund Corporation under the National Reconstruction Fund Corporation Act 2023. As such, it does not form part of the Future Made in Australia package and lies outside of the proposed National Interest Framework to be established by the current FMA Bill.[35]

Table 1 Future Made in Australia - 2024–25 Budget measures

Measure	Key components
Attracting Investment in Key Industries ($68.0 million over 4 years and $3.1 million per year ongoing)	Development of legislation that establishes a National Interest Framework Establishment of a domestic National Interest Account to be managed by Export Finance Australia (EFA) Consultation on the development of a ‘single front door’ for investors.
Investing in Innovation, Science and Digital Capabilities ($1.7 billion over 10 years)	Mapping of Australia’s natural resources by Geoscience Australia under the ‘Resourcing Australia’s Prosperity’ program Financing package of equity and loans on the National Interest Account to PsiQuantum Pty Ltd. Financing of partnership with the United States on next generation of Landsat earth observation program.
Making Australia a Renewable Energy Superpower ($19.7 billion over 10 years)	Introduction of a Critical Minerals Production Tax Incentive from 2027–28 Introduction of a Hydrogen Production Tax Incentive from 2027–28 Funding for a second round of the Hydrogen Headstart program, to be administered by the Australian Renewable Energy Agency (ARENA) Seed capital injection for ARENA’s investments in renewable energy technologies Establishment of the Future Made in Australia Innovation Fund, to be administered by ARENA Funding for the Solar Sunshot program and the Battery Breakthrough Initiative, both to be administered by ARENA Funding for strategic investments in critical minerals projects under the Critical Minerals Facility and the Northern Australia Infrastructure Facility (includes financing to support the Alpha HPA alumina project in Queensland and Arafura Rare Earth’s Nolans Rare Earth project in the Northern Territory) Funding for Australian Made Battery Manufacturing Precinct, the Powering Australia Industry Growth Centre and the Future Battery Industries Cooperative Research Centre Consultation on development of incentives to support the production of low carbon liquid fuels, and on incentives to support the production of green iron, steel, and aluminium Funding to explore opportunities for developing a green polysilicon industry in Australia Fast-tracking of the Guarantee of Origin scheme.
Promoting Sustainable Finance Markets ($17.3 million over 4 years and $3.1 million per year ongoing)	Delivery of sustainable finance framework, including issuance of green bonds Consultation on design of a labelling regime to regulate sustainability labels on investment products Additional resourcing for Australian Securities and Investments Commission to act on companies engaging in greenwashing and other sustainability-related financial misconduct
Strengthening Approvals Processes ($182.7 million over 8 years and $4.5 million ongoing from 2031–32)	Funding to develop a national priority list of renewable energy-related projects and strengthen approval processes for renewable energy projects of national significance Improvement of community engagement through permanent establishment of the Australian Energy Infrastructure Commissioner Strengthening and streamlining Australia’s foreign investment framework.
Workforce and Trade Partnerships for Renewable Energy Superpower Industries ($218.4 million over 8 years and $1.3 million per year ongoing)	Funding to address -Vocational education and training (VET) trainer workforce shortages and for new and existing training facilities. Establishing the Building Women’s Careers program Establishing the National Hydrogen Technology Skills Training Centre in partnership with the Victorian Government Funding for Science, Technology, Engineering and Mathematics (STEM) programs.

Source: Total figures for each of the funding segments and key components are taken from Australian Government, ‘Budget 2024–2025’, Budget Measures: Budget paper No. 2: 65–73.

Sectors already identified as consistent with the NIF

Released at the time of the 2024–25 Budget, the National Interest Framework: Supporting paper presented the results of work carried out by the Treasury in identifying priority sectors for Future Made in Australia support. Based on analyses of Australia’s comparative advantage (pp. 15–29), five sectors were announced as being consistent with the tests set out in the NIF (Table 2).

Table 2 Priority sectors identified as being aligned with NIF streams

Net zero transformation stream	Economic resilience and security stream
Renewable hydrogen	Processing and refining of critical minerals
Green metals	Manufacturing of clean energy technologies
Low carbon liquid fuels (LCLFs)

Source: Australian Government, ‘Budget Strategy and Outlook’, Budget paper No. 1: 2024–25, 21.

Elements of Future Made in Australia relevant to the Bills currently before Parliament

Of the measures announced in the 2024–25 Budget under Future Made in Australia, the two current Bills would allow for delivery of the following components:

• the commitment under Budget measure ‘Future Made in Australia – Attracting Investment in Key Industries’ to:
  • develop legislation that establishes a National Interest Framework (FMA Bill).
  • establish a domestic National Interest Account to be managed by EFA, supporting domestic projects in the national interest (Omnibus Bill (Schedule 1)).
• the commitments under Budget measure ‘Future Made in Australia - Making Australia a Renewable Energy Superpower’ to (Omnibus Bill (Schedule 2)):
  • supercharge ARENA’s core investments in renewable energy
  • create the Future Made in Australia Innovation Fund to be administered by ARENA
  • establish the Solar Sunshot program to be administered by ARENA
  • establish the Battery Breakthrough Initiative to be administered by ARENA.

Consultation on Future Made in Australia

The Government has undertaken consultation on elements of its Future Made in Australia policy, which has informed development of the current legislation as well as subsequent legislation expected to be introduced in the future to enact individual components of the FMA package:

• National Interest Framework – consultation within the Treasury and between ‘other government departments’.[36]
• Hydrogen production tax incentive – closed 12 July 2024. Treasury is consulting on the proposed design, eligibility conditions, and administrative arrangements for the Government’s proposed Hydrogen production tax incentive.
•  Critical minerals production tax incentive – closed 12 July 2024. Treasury is consulting on the eligibility criteria (eligible processing expenditure and outputs), and administrative arrangements for the Government’s proposed Critical minerals production tax incentive.
• Unlocking Australia’s low carbon liquid fuel opportunity – closed 18 July 2024. Consultation aimed at identifying the ‘best form of production incentives and other measures to support the establishment of a made in Australia LCLF industry’.[37] The outcomes of this consultation are expected to be considered by Government by the end of 2024.[38]
• Guarantee of Origin scheme – The Department of Climate Change, Energy, the Environment and Water and the Clean Energy Regulator have previously consulted on plans to introduce a Guarantee of Origin scheme based on two separate components: a product-based emissions accounting framework (Product GOs) and a renewable electricity certificate mechanism (REGOs). A further round of consultation on scheme design, emissions accounting and renewable electricity certification was conducted in late 2023. The Government has said that a final response to the consultation is due to be released shortly, with a view to finalising the enabling legislation so that the scheme can commence in the second half of 2025.[39]
• New ‘front door’ for investors – The Treasury will be consulting on the design of the investment front door ‘over the coming months’.[40]

Export Finance Australia

EFA, formerly known as the Export Finance and Insurance Corporation (EFIC), is the Australian Government’s export credit agency. It forms part of the Commonwealth’s Specialist Investment Vehicles (SIV) Portfolio, and provides finance to support Australian exporting businesses and overseas infrastructure projects that are likely to result in an Australian benefit.[41]

EFA is a corporate Commonwealth entity governed by the provisions of the EFIC Act and the Public Governance, Performance and Accountability Act 2013 (PGPA Act). It is part of the Government’s Foreign Affairs and Trade Portfolio, and its responsible Minister is the Minister for Trade and Tourism. As a corporate Commonwealth entity, EFA can enter into contracts separate from the Commonwealth, giving it a degree of independence from government, except where it receives a direction from the responsible Minister:

The PGPA Act does not give ministers a general power to direct the activities of a corporate Commonwealth entity. It does give broad powers to require the entity to provide information about its activities.

Corporate Commonwealth entities are generally not required to comply with policies of the Australian Government except where there is

• a direction from the responsible Minister under the enabling legislation
• a government policy order.[42]

Under the EFIC Act, EFA’s legislated functions are to:

EFA supports domestic exporters, Australian companies that are part of an export-related global supply chain, and Australian companies conducting business and investing in emerging and frontier markets.[44] While the primary focus of EFA is to support Australian businesses in their export trade, it also provides finance for domestic purposes within Australia. For example, financing critical minerals projects located in Australia where those projects feed into export-related supply chains.[45]

EFA does not compete with private sector financing (e.g. investments from commercial banks).[46] Instead, EFA assists Australian companies only in circumstances where they have been unable to source adequate finance from the private sector i.e. it acts as a ‘market-gap’ financier.

EFA governance

The EFA is managed by a Board,[47] consisting of a Chair, Deputy Chair, the Managing Director, up to 5 further Non-Executive Directors, and a government member representing the Minister (typically the Secretary of the Department or their alternate).[48] All Board members are appointed by the Minister, with the exception of the Managing Director.[49] The Board provides the responsible Minister with a Statement of Intent in response to the Minister’s Statement of Expectations. These statements express and formalise the Minister’s expectations of EFA and the EFA Board’s intention to meet these expectations.

As a corporate Commonwealth entity under the PGPA Act, EFA is required to notify the responsible Minister of certain significant events, such as the acquisition or disposal of interests in companies or other ventures. Further, the EFA Board must keep the responsible Minister informed about its operations and provide any information required by the responsible Minister. The responsible Minister may give EFA written directions relating to how it performs its functions or exercises its powers, if satisfied that it is in the public interest.[50] The responsible Minister may also approve or direct entry into transactions on the National Interest Account (see next section).[51]

Who makes decisions on financing support?

EFA uses two accounts to provide finance to businesses. Under the Commercial Account the agency is able to provide finance to businesses without having to obtain permission from the Minister.[52] As a corporate Commonwealth entity, EFA carries all risks on the Commercial Account, it therefore retains all margins and fees, and bears all losses.[53]

Under the National Interest Account, EFA may be directed by the Minister to provide financing to businesses if the Minister is satisfied that it is in Australia’s national interest,[54] or EFA may refer specific applications to the Minister for determination of whether it is in Australia’s national interest.[55] The Commonwealth receives all income on National Interest Account transactions. It also bears all risks and losses.[56]

EFA publicly discloses transactions in a given financial year on the transaction register for that year.

A 2019 Australian National Audit Office evaluation of the effectiveness of EFA concluded:

Efic is effectively undertaking its functions, except for its annual performance statement reporting.

Efic is operating within its prescribed mandate. It has developed a framework to interpret, operationalise and comply with each mandate requirement.

Efic effectively manages its financial and service delivery functions, and the evidence can support a view that Efic is operating on an appropriately commercial basis.

Efic is meeting its statutory and prudential management responsibilities, however Efic's annual performance statement reporting should be enhanced to enable a more comprehensive assessment of overall progress against its purpose.[57]

Australian Renewable Energy Agency

The Australian Renewable Energy Agency (ARENA) is a corporate Commonwealth entity that was created by the ARENA Act, as a part of the then Gillard Government’s Clean Energy Futures Package.[58] The original aim was to put funding for renewable energy projects on a longer-term, more secure footing to encourage research, development, commercialisation, and deployment of renewable energy technologies. Its establishment in 2012 meant that the responsibility for funding such projects moved from the Minister to a separate statutory body with an independent board and legislated governance.[59]

The agency’s overall purpose is to ‘support the global transition to net zero emissions by accelerating the pace of pre-commercial innovation’. It does this by providing financial support to accelerate the development of innovations that improve ‘the competitiveness and supply of renewable energy and the uptake of energy efficiency and electrification’.[60] The majority of the financial assistance provided by ARENA is in the form of grants.[61]

ARENA’s functions

Under section 8 of the ARENA Act, ARENA’s functions include providing financial assistance for research, development and subsequent commercialisation of renewable energy technologies, as well as facilitating the dissemination of technical knowledge relating to such technologies.[62]

Funding

The ARENA Act set up a series of payments to be made to ARENA. These are summarised below as they are listed under the ARENA Act, section 64 (Table 3). The contributions currently total $1.94 billion.[63]

These payments act as seed payments, or equity injections from the Australian Government to establish ARENA. ARENA projects are then funded from these contributions as well as ARENA earnings from returns on prior investments. Over time, therefore, any surpluses are used to reinvest. Like the Clean Energy Finance Corporation (CEFC), ARENA essentially provides gap financing for ‘developmental goods’ that might be considered critical for society but which the private sector is not willing or able to finance due to market failures such as those described above.[64]

Table 3 Amounts available for payment to ARENA

Item	Financial year	Amount for financial year
1	2013‑2014	$581,276,000.00
2	2014‑2015	$194,340,000.00
3	2015‑2016	$89,991,000.00
4	2016‑2017	$56,950,000.00
5	2017‑2018	$257,925,000.00
6	2018‑2019	$235,296,000.00
7	2019‑2020	$254,704,000.00
8	2020‑2021	$134,035,000.00
9	2021‑2022	$132,474,000.00

Source: Reproduced by the Parliamentary Library from Australian Renewable Energy Agency Act 2011, section 64.

Under the ARENA Act, ARENA cannot provide funding unless it complies with the Australian Renewable Energy Agency (General Funding Strategy) Approval 2023 (the General Funding Strategy), a legislative instrument developed by the ARENA Board and approved by the relevant Minister.[65] The General Funding Strategy (GFS) outlines ARENA’s funding principal objectives and priorities, but cannot specify specific projects or people to receive funding.[66] It remains in force until a subsequent version is approved by the Minister.[67]

ARENA’s General Funding Strategy was last updated in August 2023, with its strategic priorities listed as:

• Optimise the transition to renewable electricity.
• Commercialise renewable hydrogen.
• Support the transition to low emissions metals.
• Decarbonise transport.[68]

The GFS informs ARENA’s Investment Plan (which details funding programs and initiatives against the strategic priorities and how to apply for funding), and its Work Plan (ARENA’s main activities for the year and how it will implement the GFS).[69]

As in the case of EFA, ARENA acts as a market-gap financier, providing funding where a commercial return is not available.[70] It can retain rights to upside returns through equity or royalties, thereby delivering a return on Government funds.[71] To date ARENA has invested $2.25 billion in 663 projects, resulting in total investment of $9.75 billion in the renewable energy industry, and meaning that each $1 of ARENA funding has leveraged an average $3.32 of cofounding from the public and private sectors.[72]

ARENA Governance

ARENA is managed by a Board, which is responsible for overseeing the agency’s operations.[73] ARENA has only 2 direct employees: the Chief Executive Officer who is appointed by the Minister on the recommendation of the Board for a maximum period of 3 years and is responsible for the day-to-day administration of ARENA;[74] and the Chief Financial Officer.[75] All other staff necessary for ARENA to carry out its functions must be persons employed in the Department (currently the Department of Climate Change, Energy, the Environment and Water) and made available to the Agency by the Secretary.[76] ARENA must not engage or employ its own staff.[77] It may only employ consultants to provide technical and specialist advisory services that are unable to be performed by Department staff.[78]

A 2020 Australian National Audit Office evaluation of ARENA’s grant program management found that:

While ARENA’s grant program management is largely effective, its evaluation and performance reporting frameworks do not clearly demonstrate that its grant funding is increasing the supply and competitiveness of renewable energy in Australia beyond what would otherwise have occurred.

Strategic planning and grant project selection largely aligns with ARENA’s objectives. ARENA’s performance measurement framework does not provide a reliable basis to demonstrate to the Parliament and the public that ARENA is achieving its objectives.

ARENA’s management of grant funding agreements is largely effective. Improvements are required to ARENA’s management of variations and its integration of electronic systems with its business processes.

ARENA’s external evaluations since 2017 do not clearly demonstrate the extent to which ARENA’s programs are impacting on its legislative objectives of improving the supply and competitiveness of renewable energy in Australia.[79]

Since legislative amendments in 2022, both ARENA and EFA are required to consider Australia’s emissions reduction targets when exercising their statutory responsibilities.[80]

Committee consideration

Senate Economics Legislation Committee

The Bill has been referred to the Senate Economics Legislation Committee for inquiry and report by 5 September 2024. Details of the inquiry are at Future Made in Australia Bill 2024 [Provisions] and the Future Made in Australia (Omnibus Amendments No. 1) Bill 2024 [Provisions]. The closing date for submissions was 26 July 2024, with 50 received in total.

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Senate Standing Committee for the Scrutiny of Bills was yet to consider the Bills.

Policy position of non-government parties/independents

Australian Greens

The Australian Greens have welcomed some aspects of Future Made in Australia strategy, such as the Battery Breakthrough Initiative. However, they have accused the Government of simultaneously seeking to expand coal and gas projects past 2050:[81]

“What Labor is trying to hide is that A Future Made In Australia is actually A Future For Coal and Gas Past 2050.

“Even just one new gas mine could wipe out any gains from people putting more batteries and solar in their homes.

“Batteries and gas are competing for the same role in the energy transition. The government has to choose what it wants: batteries built here or dirty coal and gas beyond 2050, because they can’t choose both.”[82]

The Prime Minister has stated publicly that there will be no government investment in gas under Future Made in Australia.[83]

The Australian Greens have previously supported the idea of the role of Government agencies being more aligned with net zero policy objectives. Speaking at the National Press Club in 2022 in the context of negotiations with the Government over the Climate Bill 2022, Australian Greens leader Adam Bandt said:

Government agencies, such as Export Finance Australia, that in the past have funded coal and gas projects, will for the first time be forced to take climate targets into account, which should see them curbed from supporting fossil fuels. They join a range of other agencies with new limits, including Infrastructure Australia and the Northern Australia Infrastructure Fund.[84]

Independent Members and Senators

Many of the so-called ‘Teal independent’ Members and independent Senators who campaigned on a platform of climate action at the last election have broadly expressed their support for the government’s Future Made in Australia agenda insofar as it will provide investment in solar and battery manufacturing and commercialisation of ‘green’ technologies that can contribute to decarbonisation.[85]

At the time of the Budget announcement, Allegra Spender noted that it was important to ensure that the measures would deliver value for money:

"The clean energy transition is a golden opportunity for Australia's future economic prosperity and the government needed a response to the US Inflation Reduction Act" she said. "But with such big sums of money at play, we have to make sure the government is investing it wisely".

"We need experts investing at arm's length from government, a clear off-ramp for support, and a tax system that delivers a return for Australians when these industries generate super- profits" she said. "I support the government's direction of travel, but the devil will be in the detail.”[86]

Senator David Pocock has previously called for the government’s Future Made in Australia to include more investment in household electrification:

“This means ensuring that a Future Made in Australia - the Government’s response to the US Inflation Reduction Act - includes things like a substantial investment in household electrification.

“We can’t have a country where renewables are just for the rich.

“The US has just allocated $7 billion to putting solar PV on the roofs of low-income households. We can’t match that scale but we should match the ambition.”[87]

Independent MPs Allegra Spender and Monique Ryan have also both called for more investment in household electrification as part of Future Made in Australia, including more emphasis on financial incentives to get batteries into homes alongside investment in battery production under the National Battery Strategy.[88]

Senator David Pocock and Monique Ryan are currently advocating for reform of Parliamentary lobbying, including an independent review of the Lobbying Code of Conduct.[89] Senator Pocock’s dissenting report to the Senate Finance and Public Administration Committee’s inquiry into access to Australian Parliament House by lobbyists included recommendations for extensions of the Lobbying Code of Conduct, expansion of the definition of lobbyist, and monthly publication of Ministerial diaries.[90] Such reforms, it is argued, could assist in improving transparency and addressing concerns that lobbyists may seek to exploit government discretion in the allocation of funds under A Future Made in Australia.[91]

Liberal-National Coalition

The Liberal-National Coalition has previously committed to repealing key planks of Future Made in Australia,[92] and questioned the transparency of the process by which funds were allocated to PsiQuantum, a firm based in America.[93] However, at the time of writing, the Coalition has not announced an official position on the provisions contained in the FMA Bill or Omnibus Bill.

Following the introduction of the Bills on 3 July 2024, Deputy Leader of the Opposition and Shadow Minister for Industry, Sussan Ley, said:

I'm interested, though, in a couple of things around this legislation, mainly, how will it help our struggling manufacturing sector? What I've seen so far doesn't indicate that, obviously, we will go through what the Bill is about, and reserve our position when it comes to the conversations we'll have in the Shadow Cabinet and in our party room.[94]

To date, the Coalition’s response to the package of measures announced in the 2024–25 Budget for Future Made in Australia has centred on opposition to the proposed production tax incentives for critical minerals and for hydrogen, which Opposition Leader Peter Dutton and Shadow Treasurer Angus Taylor have both characterised as ‘splashing billions for billionaires’.[95] The production tax incentives, details of which are currently subject to a consultation process closing on 12 July 2024, are part of the Budget measure, ‘Future Made in Australia – Making Australia a Renewable Energy Superpower’ and do not form part of the provisions contained in the FMA Bill or Omnibus Bill. 

Position of major interest groups

This section summarises views expressed by major interest groups following the Prime Minister’s announcement in April 2024 that the Government would create a Future Made in Australia Act, as well as views expressed following the announcement of measures under the heading of Future Made in Australia in the 2024‍‍–25 Budget, and following the introduction of the Bills.

Industry groups and trade unions

The Australian Chamber of Commerce and Industry (ACCI) expressed support for the objective of achieving sovereign manufacturing capability and maximising Australia’s comparative advantages in decarbonisation as part of a Future Made in Australia, while noting the need for appropriate scrutiny of government investments.[96]

The Business Council of Australia (BCA) noted that it had previously called for an Australian response to the US Inflation Reduction Act and that this had been secured in the form of the Future Made in Australia package.[97] The BCA welcomed the fact that Future Made in Australia represented steps towards making Australia more globally competitive, and increasing investment, but urged the Government to undertake ‘greater consultation with business to get this huge investment push right, so all Australians can have confidence in a transparent, independent and expert-led process for selecting projects’.[98]

The Australian Industry Group (AI Group), the peak body representing Australian businesses across traditional and emerging sectors, welcomed the overall commitment to better coordination of government action, but was cautious of the potential for introducing government failure (‘fundamentally, governments should be enablers, not deliverers’). It has called on the government to focus on delivering on its existing responsibilities and commitments with respect to skills and training systems.[99] 

The Australian Council of Trade Unions (ACTU) has welcomed the introduction of the FMA Bill as ‘an important step change that will lock in decades of jobs and domestic manufacturing while supercharging Australia’s transition to clean energy’.[100] In particular the ACTU welcomed the inclusion of Community Benefit Principles supports as helping to ensure that the investment in industries such as green metals, advanced renewable manufacturing and critical minerals will also ‘promote safe and secure jobs that are well paid and have good conditions’.[101]

The Minerals Council of Australia does not appear to have commented publicly on the government’s Future Made in Australia policy either in the wake of the Budget announcement or the introduction of the Bills.

The Australian Manufacturing Workers’ Union (AMWU) has said that it ‘rejects the ‘head in the sand’ approach advocated by the Minerals Council over the Federal Government’s proposed Future Made in Australia Act’. It noted that communities such as Collie, Mackay, Rockhampton, and the Hunter Valley ‘have the potential to become manufacturing hubs supporting thousands of highly skilled, well paid, clean jobs for current workers, and for generations to come’.[102] The AMWU further stated:

“Australia ranks 93rd in the OECD for economic complexity. Our dig and ship economy has us comparable to Uganda and Pakistan.”

“Lifting the Australian economy up the value chain so that we sit alongside economies like Japan Germany and the UK, will create good unionised jobs in manufacturing, particularly in our regions.”

“Government has a role to play. Transformational industry development carries with it inherent risk, upfront investment and market uncertainty.

We need the government to offer finance and incentives to boost industry opportunities in the clean energy sector. We need strong local content provisions to give preference to creating local jobs over importing our future energy needs. We need the government to invest in the manufacturing workforce by giving them the skills they need to apply for the jobs of the future.”[103]

Institutional investors

Following the announcement of the Future Made in Australia package on Budget night, the Association of Superannuation Funds of Australia (ASFA) acknowledged:

… the opportunity presented by the government’s Future Made in Australia plan, and its goal of attracting investment capital to key industries including renewable energy and welcomes conversations with investors on the development of the national interest framework.[104]

ASFA further noted that ‘[p]atient superannuation capital investment in vital infrastructure of the future is a win-win opportunity for super fund members and for Australia as a whole’.[105]

The Investor Group on Climate Change (IGCC), a network of institutional investors, has previously expressed support for the Future Made in Australia framework and described the Act as ‘a much-needed response by the government to keep Australia competitive, resilient and productive in a global race for capital to fund the clean energy transition’.[106]

“These policy settings will leverage Australia’s potential in clean industries and materials, helping to mobilise capital to reduce emissions, and will lay the foundations for Australia’s ongoing economic success.

“Australia can’t outspend the USA and others but we can outsmart them and use our unique resources to realise our competitive advantage.”[107]

In its submission to the Senate Economics Legislation Committee on the FMA Bill, the IGCC called for community benefit principles to be required considerations for FMA support , as well as for greater clarity on how community benefit principles will be measured when deciding whether to allocate funding.[108]

Australia’s eight major Super Funds (Australian Super, Australian Retirement Trust (ART), CareSuper, Cbus, HESTA, Hostplus, Rest Super, UniSuper) and IFM Investors had previously released a policy blueprint document calling on the Government to introduce a policy package along the lines of those being adopted by other countries in order to attract investment in clean energy at scale:

Capital is flowing to places with more attractive investment opportunities, strong climate and energy policies and growing demand for clean energy and low carbon goods and services. Australia can’t afford to be left behind.

This does not mean Australia need to replicate the approach of other countries. Rather we should make the most of our comparative advantages with an ambitious and proportionate response, including policies, such as those outlined in this blueprint, to make Australia a renewable energy superpower.[109]

Economists and academics

Several economists, as well as former Reserve Bank governor Bernie Fraser, and Australia’s Productivity Commissioner Danielle Wood, have expressed concern over the potential for a Future Made in Australia to mark a return to policy failures of the past, such as attempting to pick winners, or providing ongoing subsidies for industries that never become competitive.[110] The Productivity Commission, in its submission to the Senate Economics Legislation Committee inquiry into the FMA Bill and Omnibus Bill, has however welcomed the inclusion of a clear National Interest Framework to assess sectoral interventions under Future Made in Australia, as well as the additional detail provided in the Treasury Supporting Paper on the operationalisation of tests for support under the NIF.[111]  

In May 2024, 77 economists signed an open letter supporting the Future Made in Australia policy. Accusing the Productivity Commission and other critics of ‘predictable, knee-jerk responses’ based on ‘outdated laissez-faire thinking’, the letter noted that:

… other industrial countries are implementing the new vision of economic statecraft for a world that is changing rapidly. The focus of public debate should now be on how Australian workers and communities can best benefit from this global transformation in energy, manufacturing, and infrastructure – and how powerful pro-active strategies can drive the process.[112]

The group went on to explain that:

Australia’s over-dependence on raw resource extraction and export undermines prospects for more sustainable, value-adding activities. It does so by diverting capital and labour resources, contributing to exchange rate overvaluation and instability; and distorting fiscal policy settings, regional imbalances and democratic processes.

If we continue on this path, Australia will miss an historic opportunity to rebuild a sophisticated, technology-intensive, and sustainable manufacturing capability – and participate fully in new global markets for clean energy and manufacturing. We would continue exporting raw minerals (including critical minerals like lithium) but we would squander opportunities to add value to those minerals and develop a more diversified and sustainable industrial mix. We would remain on the losing side of lopsided trade relations: selling unprocessed resources to buy back more expensive value-added products (like transmission equipment, batteries, and electric vehicles). And our future prosperity would be jeopardised by a failure to seize the economic and industrial opportunities of the global energy transition.

…

Using the full suite of policy levers available to government, a Future Made in Australia strategy could rebuild a strong, sustainable manufacturing sector, with spill-over benefits spread throughout the economy and society. We strongly support this important shift in emphasis and vision because we firmly believe that sustainable manufacturing must play a vital and strategic role in Australia’s economy.[113]

Professor Ross Garnaut and Rod Sims of The Superpower Institute have urged the government not to take a strict view of ‘made in Australia’ and be too ‘internally focused’, but to be ‘export focused’ and to have a strong framework that prevents rent-seeking by domestic businesses that could lead to higher costs and lower productivity. They have urged the government to only focus on ‘made in Australia’ where the country’s comparative advantage is strong and ‘where the economics have flipped’, the so-called ‘Superpower industries’ such as energy intensive green products like green iron.[114]

Environmental and Climate groups

A coalition of stakeholders, collaborating as the Climate Capital Forum, launched a campaign at the Smart Energy Council’s Australian Renewables Industry Summit in September 2023 calling on the Australian Government to respond to the United States Inflation Reduction Act with its own $100 billion Australian Renewables Industry Package. Supporters of the campaign included the Australian Conservation Foundation, Climate Action Network Australia and The Clean Energy Council and Climate Energy Finance.[115] The Australian Conservation Foundation has, in addition, urged the government to ensure that coal and gas projects, as well as carbon capture and storage do not receive support:

“With strategic implementation, backed by sufficient public investment, this package should unlock the billions of dollars of private investment needed to replace Australia’s fossil fuel exports with responsibly produced clean technologies and products.

…

“Industries like green metals and renewable-powered manufacturing present a once-in-a-generation opportunity to revitalise Australia’s economy.

“As this bill works its way through parliament, ACF encourages parliamentarians from both houses to make sure it protects nature and leaves no room for fossil fuel expansion”.[116]

Financial implications

Future Made in Australia Bill 2024

The FMA Bill implements the Budget measure ‘Future Made in Australia – Attracting Investment in Key Industries’, which included funding of $54.7 million over two years from 2024–25 to:

•  ‘administer, coordinate and promote the Government’s Future Made in Australia agenda, including the development of legislation that establishes a National Interest Framework, and
• consult with industry, investors and major stakeholders on the development of a ‘single front door’ that improves the attraction and facilitation of major investment proposals’.[117]

According to the Budget documents,

The cost of this measure will be partially met from savings identified in the Department of Infrastructure, Transport, Regional Development, Communications and the Arts.[118] [emphasis added]

The financial impact statement in the Explanatory Memorandum states that the FMA Bill has ‘been assessed to have no financial impact’.[119]

Future Made in Australia (Omnibus Amendments No. 1) Bill 2024

As previously announced in the 2024–25 Budget measure, ‘Future Made in Australia – Attracting Investment in Key Industries’, the financial impact of Schedule 1 of the Omnibus Bill is estimated to be $11.4million over 4 years from 2024–25 (and $3.1 million per year ongoing from 2028–29).[120] The Budget documentation states that the funding will ‘establish and manage a domestic National Interest Account with Export Finance Australia, supporting domestic projects in the national interest, consistent with the Future Made in Australia National Interest Framework’.[121]

The Budget papers do not disclose the payments to be made available to EFA on the National Interest Account to support Future Made in Australia under the 2024–25 Budget measures ‘Investing in Innovation, Science and Digital Capabilities’ and ‘Making Australia a Renewable Energy Superpower’ as they are listed as ‘not for publication’ (nfp).[122] ‘Not for publication’ refers to estimates which have been calculated when preparing the budget but are not published in the documents, usually for either commercial-in-confidence or national security reasons.[123]

Schedule 2 of the Omnibus Bill reintroduces statutory funding for ARENA totalling $6.19 billion from 2025–26 to 2038–39, which has already been allocated to ARENA through the Federal Budget process.[124]

The 2024–25 Budget measure ‘Future Made in Australia – Making Australia a Renewable Energy Superpower’ included $7.1 billion for budgeted programs to be administered by ARENA, made up of the following:

• $1.9 billion to ARENA’s baseline funding out to 2036–37 ($1.5 billion over seven years from 2027–28 and an average of $125.0 million per year from 2034–35 to 2036–37)
• $2 billion for round two of the Hydrogen Headstart program ($1.3 billion over ten years from 2024–25 and an average of $151.6 million per year from 2034–35 to 2038–39)
• $1.7 billion over ten years from 2024–25 for the Future Made in Australia Innovation Fund
• $1 billion for the Solar Sunshot program ($835.6 million over ten years from 2024–25 and $66.8 million per year from 2034–35 to 2036–37)
• $523.2 million for the Battery Breakthrough Initiative.[125]

Fiscal impacts of Omnibus Bill

Amounts payable by the Commonwealth to EFA under section 54 of the EFIC Act and to ARENA under section 65 of the ARENA Act are paid out of the Consolidated Revenue Fund.[126]

Assessing the full fiscal impacts of equity-based financing entities such as EFA and ARENA can be complex. The Parliamentary Budget Office publication, ‘Alternative Financing of Government Policies: understanding the fiscal costs and risks of loans, equity injections and guarantees’ provides a comprehensive treatment of the issues around balance sheet transparency involved in having government policy delivered via alternative financing arrangements. As noted in the report:

With an equity injection, the government uses cash to invest in a project, and it generally then has the entity undertaking the project as a financial asset on its balance sheet. The initial value of the equity is taken to be the amount that the government paid, so the initial transaction does not have any impact on the government’s net financial worth (or the fiscal or underlying cash balances).[127]

The equity injections to EFA and ARENA will therefore have a neutral budget impact in terms of the underlying cash balance but does carry risk and therefore may not be budget-neutral in the long run. These issues, along with the associated implications for Budget (balance sheet) transparency and Parliamentary scrutiny are covered in further detail in the Parliamentary Library’s Bills Digest for the National Reconstruction Fund Corporation Bill 2022 (pp. 20–25). As the authors note:

The NRFC [National Reconstruction Fund Corporation] is modelled on the CEFC [Clean Energy Finance Corporation]. While the latter has delivered a positive return in most financial years since its inception, it has never met its statutory rate of return target as stipulated in its investment mandate; and its economic impact, though considered positive, has proven difficult to quantify.

…

it is doubtful whether most Budget observers could easily assess the risk exposure to uncertain returns across the $15 billion NRFC, $10 billion Housing Australia Future Fund, $20 billion Rewiring the Nation fund, $240 billion Future Fund (including subsidiary funds) and other Australian Government equity investments – in aggregate and individually. It is currently very difficult – if not technically impossible – to scrutinise and form evidence-based opinions on such investments.[128]

Note, however, that both EFA and ARENA are required to publish Annual Reports, which contain full financial statements prepared in accordance with the Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015.[129]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that both Bills are compatible.[130]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights had no comment on either Bill.[131]

Key issues and provisions

Future Made in Australia Bill 2024

Establishment of the National Interest Framework

The Bill establishes a National Interest Framework (NIF) as the means by which sectors will be identified as potential candidates for public investment under A Future Made in Australia.[132] The NIF aims to ensure that economic incentives for government intervention are aligned with Australia’s national interests[133] and ‘to impose rigour on Government’s decision making on significant public investments’.[134] The NIF will consist of two streams:

• the net zero transformation stream
• the economic resilience and security stream.[135]

The terms under which a sector may be considered to align with a particular stream are set out in clause 7 of the Bill. The Explanatory Memorandum states the considerations that may be taken in account when determining whether a particular sector aligns with a given stream.[136] There is no requirement in clause 7 for considerations under a particular stream to take into account those listed under the alternative stream. This could, in theory, give rise to a situation in which a particular sector was considered eligible for support under the economic resilience and security stream but would conflict with requirements under the net zero transformation stream, although the likelihood of this scenario occurring is probably not high.

The role and conduct of Sector Assessments

Sector assessments will be conducted to analyse the extent to which a sector aligns with the NIF, and the opportunities in that sector for government to address current barriers to private sector investment.[137] Clause 6 provides for the Minister to direct the Secretary of the Department, via notifiable instrument, to conduct a sector assessment. The Minister must consult with other Ministers, as considered appropriate, prior to making a direction. As noted in the Explanatory Memorandum, the term ‘sector’ is not a defined term in the Bill, meaning that the Minister has flexibility to define a sector in a broad or narrow sense through the direction to the Secretary.[138]

Clause 8 provides the process for conducting sector assessments. This includes the ability for the Minister, via legislative instrument, to give general directions to the Secretary in relation to conducting the assessment and further considerations that should be taken into account, such as a requirement for public consultation. The clause stipulates that the Minister must not give directions to the Secretary regarding the findings of any sector assessment, nor must the Minister seek to influence the Secretary in respect of any assessment findings.[139] The Secretary may, however, consult across government and the private sector during the assessment process, with a view to drawing on all relevant experience to deliver a robust analysis.[140]

Subclause 8(1) sets out the factors that the Secretary may consider when conducting a sector assessment:

(a)  whether Australia could be competitive in the sector;

(b)  whether the sector could contribute to an orderly path to net zero transformation, including through the use of renewable energy;

(c)  whether the sector could build the capabilities of the Australian people and the regions of Australia, and generate employment opportunities;

(d)  whether support for the sector could improve Australia’s economic resilience and security;

(e)  whether support for the sector could:

                              (i)  recognise the key role of the private sector; and

                             (ii)  deliver genuine value for money.[141]

The Secretary is not required to consider all factors for every sector assessment, but rather has discretion to take into account those factors the Secretary considers relevant in each particular case.[142]

The Explanatory Memorandum notes that the Minister’s directions can be amended or repealed, but will not be subject to disallowance (consistent with table item 2 in regulation 9 of the Legislation (Exemption and Other Matters) Regulation 2015).[143] It also notes that sector assessments are considered to be a point-in-time analysis and the Minster can direct the Secretary to review a particular sector again, as economic and market conditions alter.[144] Sector assessments will not be applied more broadly to policy frameworks already in place for existing government investment programs, such as the National Reconstruction Fund.[145]

Clause 13 of the Bill would allow the Secretary to delegate, in writing, all or any of their functions and powers in respect of sector assessments to an SES employee (or acting SES) in the Department. The use of delegation mechanisms is not uncommon in Commonwealth legislation and would not be considered unusual in these circumstances.     

Reporting on sector assessments

Sector assessments must be tabled in each House of the Parliament within 30 sitting days of the Minister receiving the report.[146] Clause 9 of the Bill allows for the Minister to redact such information from the report if the Minister is satisfied that the information is personal, commercial-in-confidence, or could cause damage to the security or international relations of the Commonwealth, or damage to Commonwealth-State relations.

The requirement for reporting of sector assessments provides for some element of transparency with regard to why certain activities have been deemed eligible for FMA support.[147] The Productivity Commission, in its submission to the Senate Economics Legislation Committee inquiry into the FMA Bill and Omnibus Bill, has called for the government to also make public the data and reasoning underlying the sector assessment.[148] It has also called for the government to make clear the extent to which programs already announced as part of the 2024–25 Budget such as Solar Sunshot and Battery Breakthrough Initiative were subject to NIF sector assessment.[149]

Community Benefit principles

Clause 10 of the Bill states that decisions as to whether or not to provide Future Made in Australia support must have regard to the following community benefit principles:

(i)  promoting safe and secure jobs that are well paid and have good conditions; and

(ii)  developing more skilled and inclusive workforces, including by investing in training and skills development and broadening opportunities for workforce participation; and

(iii)  engaging collaboratively with and achieving positive outcomes for local communities, such as First Nations communities and communities directly affected by the transition to net zero; and

(iv)  strengthening domestic industrial capabilities, including through stronger local supply chains; and

(v)  demonstrating transparency and compliance in relation to the management of tax affairs, including benefits received under Future Made in Australia supports; [150]

This applies to any support identified as Future Made in Australia support including that provided under the Innovation Fund administered by ARENA, as well as support provided by Export Finance Australia on the National Interest Account under its new national economy and net zero functions.[151]

The application and enforcement of community benefit principles to any support provided will be the responsibility of the relevant decision-maker (person or body) providing the support.[152]

The Climate Council of Australia, in their submission to the Senate inquiry, has called for the list of community benefits to be expanded to include prioritisation of low and zero emissions projects, by adding an item ‘requiring the deployment of the best available energy efficient and low- or zero emission technologies, materials and fuels’.[153] The Clean Energy Council have called for greater consultation on the list of community benefit principles, proposing that they be defined in subordinate legislation to allow for greater public consultation to be undertaken.[154]

Future Made in Australia plans

Clause 11 of the Bill provides for Future Made in Australia plans. It enables the Minister to make rules setting out the circumstances where those applying for, or in receipt of, Future Made in Australia support will be required to have in place a Future Made in Australia plan. The Explanatory Memorandum makes clear the optional nature of Future Made in Australia plans, by stating that ‘it is not intended that a Future Made in Australia Plan will be required to be provided by all persons who apply for or receive Future Made in Australia support’.[155]

Where such a plan is required by the Ministerial rules (see next section), it should be in writing and explain how the Future Made in Australia support would provide community benefits consistent with the community benefit principles specified.[156]

Rulemaking power

Clause 15 of the Bill allows the Minister to make rules, via legislative instrument, on matters relating to the operation of the Act. Such rules could relate to:

• Designating a particular support provided by the Commonwealth (or a Commonwealth entity or Commonwealth company) as Future Made in Australia support (paragraph 10(2)(d)).
• The circumstances of provision of Future Made in Australia support, including, but not limited to: prescribing requirements that must be complied with when applying for Future Made in Australia support (paragraph 12(1)(a)), matters that may, must or must not be taken into account when deciding whether support should be granted (paragraph 12(1)(b)), methods or criteria that must be applied when deciding whether support should be granted (paragraph 12(1)(b)), or conditions that should be applied to provision of support (paragraph 12(1)(c)).
• The specification of additional community benefit principles for particular cases of support (paragraph 10(3)(b)).
• The circumstances in which a Future Made in Australia Plan is required or not required (subclause 11(1)).

The Explanatory Memorandum notes that the policy intent here is to allow for the Minister to provide ‘additional guidance’ for decision makers.[157] It states that:

These rules do not have effect in relation to the provision of Future Made in Australia support under a particular law to the extent that the rules are inconsistent with that law. For example, it is not intended that rules made under this section override the governance frameworks for financial assistance that have been established under relevant legislation, such as the ARENA Act.

The Explanatory Memorandum states that any rules made under the provisions in clause 15 ‘are subject to disallowance and sunset after 10 years and will therefore be subject to appropriate Parliamentary scrutiny’.[158] It also notes that the Minister cannot prescribe rules that impose taxes or provide for amounts to be appropriated from the Consolidated Revenue Fund.[159]

However, once a particular sector has been assessed by the Secretary as being consistent with the NIF, it appears that the rule making power provides the Minister with considerable latitude to influence the circumstances of eligibility for support, as well as the support received, and the conditions attached to the support. Note that, in addition, the Bill provides the Minister (clause 8) with considerable latitude in defining the scope of individual sectors to be assessed against the NIF.

Some Members and Senators have already raised concerns over transparency with respect to the government’s decision to allocate $466.4 million for a financing package of equity and loans provided by Export Finance Australia on the National Interest Account to PsiQuantum Pty Ltd.[160] However, both the Minister’s rule-making power in respect of conditions that should be applied to provision of support, as well as the application and enforcement of community benefit principles associated with support have the potential to add the feature of conditionality to FMA support (Rodrik’s second pillar of effective industrial policy framework, and in contrast to previous reliance on ‘no strings attached’ industry funding).[161]

A key issue will be whether the conditionality suggested by the government’s framework is workable in practice and can generate sufficiently strict accountability for those industries in receipt of FMA support, as commentators have urged:

… the design of an Australian industrial policy response can create conditionalities for access to the country's natural resource base, from the vast wealth of mineral reserves to the bountiful solar, wind and wave power, in ways that returns benefits to all Australian stakeholders, not just private shareholders. The government can send clear signals to private enterprise that failure to meet social, environmental and governance obligations will be met with severe penalties associated with failing to deliver on the primary mission-oriented objective; namely, a green industrial strategy which grows clean energy systems, diversifies the industrial base and ensures secure, decent work for all who want it.[162] [emphasis added]

The government’s approach to Future Made in Australia has been to establish framework legislation, with much of the detail to be provided in delegated legislation. Equivalent industry policy legislation introduced by the US government (the Inflation Reduction Act and the Chips and Science Act) ran to several hundred pages and contained specific details of the amounts to be appropriated to each agency and what it was to be used for.[163]

Although the Department is required to report to the Minister on the operation of the Act over a given period (see ‘Other provisions’ below), the FMA Bill does not contain specific provision for independent statutory review of the policy. This runs counter to one of the principles listed in the government’s own Guide to Policy Impact Analysis, which states:

The most significant policy proposals must undergo a post-implementation review reflecting on the extent to which the stated objectives have been achieved to ensure settings remain focused on delivering the best possible outcomes for Australia.[164]

Future Made in Australia (Omnibus Amendments No. 1) Bill 2024

Expansion of EFA’s functions and alignment with the NIF

Schedule 1 of the Omnibus Bill amends the EFIC Act to expand the functions of EFA, enabling it to provide investment for domestic projects that are consistent with the NIF (net zero transformation and economic resilience and security streams). Two new functions are inserted into section 7 of the EFIC Act, being ‘EFIC’s national economy function’ and ‘EFIC’s net zero function’.[165]

Item 4 inserts proposed subsection 8(6) to allow EFA to disregard two of its primary duties (namely ‘performing functions to best assist the development of Australian export trade’, and ‘having regard to the desirability of improving and extending the range of insurance and other financial services’) for the purposes of being able to perform the two new functions.

Item 12 inserts proposed section 23B which would enable EFA to use its existing finance tools in respect of its two new functions, but limited to the National Interest Account. Speaking at Senate Estimates in June 2024, Mr Hopkins, Managing Director and Chief Executive Officer of Export Finance Australia, noted:

The differential with the domestic National Interest Account that's been proposed by the government is that we will be able to finance transactions that don't have an export link.[166]

EFA’s new functions will therefore allow it to use its National Interest Account to support domestic investments that promote economic resilience and net zero transformation. On the face of it, this should provide better alignment between Australia’s export financing investments and the goal of Future Made in Australia to crowd in private finance within sectors that could either have a comparative advantage in a net zero global economy, or where domestic capability could deliver economic resilience and supply chain security.

Mr Hopkins also confirmed that the EFA would still perform as a ‘market gap financer’ under its new functions:

Senator FAWCETT: One of those criteria in the past has been that EFA shouldn't provide financial services or products on its commercial account unless it has satisfactory evidence that private-sector providers are unable to support those activities—in other words, you fill the market gap. Under this new construct, will it still be the expectation that you would only support a market gap?

Mr Hopkins: The very definition of the transactions that go into the national interest account requires there to be a market gap. There is still the definition, for us, that there needs to be a market gap before we can provide finance. In fact, counterintuitively, if we are involved in a transaction for a long time and we're ready to finance that transaction, and a private financier comes in and says that they want to do it, we have to hand that transaction over to them. That is considered to be a success, and rightly so, because it means there's an opportunity for us to take that money and invest it elsewhere where it may be needed, and the private sector is more capable of providing finance that is needed.

Senator FAWCETT: So, in your view, some of the areas that have been touted as potential candidates for this new EFA function—for example, hydrogen or green metals—have attracted large amounts of investment in many domains overseas and here. From your knowledge of the market, do you expect that they would fall into the criteria that you would be able to fund?

Mr Hopkins: Quite possibly, if there is a gap. It's not exclusively ours, so, often, we'll play a catalytic role or a crowding-in role. Our involvement in a transaction, particularly a large one, while initially it might only be small, can give assurance to others to come in and invest. Sometimes that investment may be enough for us to step away. Sometimes we may still have to be involved. It's not mutually exclusive. It's not black and white. We can be involved and bring others in, or crowd others in, and we can still be in a transaction, or we may provide the last piece of finance that's needed. And that piece might be slightly outside the risk curve for some of the commercial financiers, so we're, really, plugging a risk hole for a transaction. We play multiple roles in relation to providing finance.

But you're right: some of these projects are going to require enormous amounts of capital. We as a small agency aren't going to be able to provide all that capital, but we can play a role in catalysing our international colleagues, private financiers and others to come in and invest alongside us as well.[167]

Addressing the conflict between export feasibility and downstream manufacturing

The expansion of the EFA’s functions recognises the interdependence of (and potential conflict between) export feasibility based purely on global market considerations, versus domestic downstream manufacturing opportunities. By expanding the EFA’s functions to cover both, the Omnibus Bill brings domestic and export considerations under the responsibility of the same organisation, opening up opportunities for better alignment of investment objectives, but also potential risks of conflict. Item 4 allows the EFA to prioritise domestic opportunities in the two streams under the NIF by disregarding its export imperative. This addresses concerns that have been raised in the context of moves towards a global economy based on preferential trading blocs, which poses the risk of Australia remaining a contributor of raw materials to trading partners who advance their own industrial agenda of high-value products and high-skilled jobs. The expansion of functions, including the ability to disregard development of trade as a priority in sectors relating to the NIF, will provide the opportunity to ensure that Australia’s domestic interests are not relegated below those of our trading partners by ad hoc prioritisation of the development of export trade.

The example that Dean and Jackson (2023) point to in this respect is the case of the US‑Australian critical minerals compact which aims to build ‘end-to-end sustainable, reliable and transparent critical minerals supply chain globally, with a key focus on the US’, and which will be delivered by EFA through the Critical Minerals Facility.[168] As Dean and Jackson (2023) point out:

… it remains unclear how the current Critical Minerals Facility is the appropriate mechanism to deliver these stated supply chain objectives. The Facility is designed to assess projects based only on export feasibility and global market considerations, with no remit for domestic downstream manufacturing opportunities. Taken together with the IRA, the detail of the US-Australia compact allows for Australian resources to be considered as part of Australia's free trade agreement with the US where they are critical inputs to defence, critical minerals and clean energy (Morgan 2023). Hence, the kind of 'crowding in' that Australia can expect to see will only go as far as incentivising a further expansion of foreign mining interests in Australia's resources industries. There is little, if any, evidence that the current agreements will deliver on downstream processing or value-adding transformation of Australia's industrial capabilities for products like lithium-ion batteries, wind turbine and solar panel components.[169] [emphasis added]

The provisions of the Omnibus Bill in relation to the EFA’s functions aim to rebalance the weight of Australia’s domestic interests in emerging global supply chains, making sure that it is not tipped in favour of our trading partners achieving their own industrial policy objectives, with Australia just contributing commodities as raw inputs.[170]

Expansion of ARENA’s functions and powers under the ARENA Act

Schedule 2 amends the ARENA Act to ‘enable ARENA to support the commercialisation of renewable energy technologies that are critical to the net zero transformation and help position Australia as a renewable energy superpower, through the administration of the Innovation Fund and other programs’.[171]

Item 1 adds a new object to the ARENA Act to ‘contribute to the reduction of global greenhouse gas emissions in accordance with the Paris Agreement’. This reflects the importance of Australia’s commitment to that Agreement, and the potential role for industries aligning with the NIF such as renewable hydrogen and green iron to contribute to decarbonisation goals of Australia’s trading partners.[172]

Various items in Schedule 2 amend the ARENA Act to include definitions of ‘electrification technologies’ and ‘energy efficiency technologies’ and provide for the authority’s functions to extend to these technologies under section 8 of the Act.[173] These definitions and functions are already included in the Australian Renewable Energy Agency Regulation 2016, but the proposed amendments will add them into the ARENA Act itself.[174] The Explanatory Memorandum notes that this is in response to previous criticism by the Senate Standing Committee on the Scrutiny of Delegated Legislation that ARENA functions should be introduced in primary, rather than delegated, legislation.[175] In its 2022 Annual Report, the Committee expressed concern that two instruments registered in respect of ARENA that year ‘introduced measures that expanded the remit of ARENA beyond what was envisaged by Parliament when the Australian Renewable Energy Act 2011 (ARENA Act) was passed.’[176]  

Note that section 8 of the ARENA Act, which sets out ARENA’s functions. includes paragraph (f) which enables regulations to prescribe further functions.

Items 5 and 13 of Schedule 2 add to the list of activities that ARENA can provide assistance to the manufacture of renewable energy technologies. This amendment is to allow ARENA to perform its duties in respect of administration of the Innovation Fund, the Solar Sunshot program and Battery Breakthrough Initiative, all of which will have manufacturing of relevant technologies as a key element.[177]

Changes to ARENA governance

Schedule 2 includes amendments to the ARENA Act that would give ARENA the ability to expand as a statutory agency, including being able to employ its own staff and engage consultants for purposes other than technical and specialist advisory services.[178] As noted earlier in this Digest, currently ARENA can only engage staff that are employed by the Department and made available to it by the Secretary, and may only engage consultants for technical and specialist advisory services.[179] The Explanatory Memorandum states that ‘these amendments are necessary to allow ARENA to independently acquire and retain staff with the expertise required to carry out its functions, especially with an expanded program of work under the FMA agenda’. This includes the agency’s new responsibilities for administering the Innovation Fund, as well as other Future Made in Australia programs such as the Solar Sunshot program, and Battery Breakthrough Initiative.[180] The changes would bring ARENA into line with staffing arrangements for other Commonwealth Specialist Investment Vehicles, including the Clean Energy Finance Corporation (CEFC).[181]

Schedule 2 introduces a new position of Deputy Chair of the ARENA Board, while repealing the definition for Chief Financial Officer.[182] The Deputy Chair is appointed by the Minister, with the agreement of the Finance Minister and may be an existing Board member, or a person from outside the ARENA Board.[183] Schedule 2 also expands the number of ARENA Board members from 6 to 7 and increases the period of appointment from 2 to 3 years for a maximum continuous period of 9 years.[184] The aim of these changes is to ‘allow ARENA to retain executive leadership, be competitive with other similar Boards, and carry out functions in a more efficient and cost-effective manner’.[185] Board members of the CEFC are appointed for a maximum of 5 years and are eligible for reappointment.[186] 

Provision of statutory funding

Item 46 repeals existing section 64 containing the yearly amounts available for payment to ARENA (which ceased at the end of the financial year 2022–23) and replaces it with a new table of funding amounts for future years from 2025–26 to 2038–39 (Table 4).[187]

Table 4 Proposed yearly maximum payments to ARENA under the Omnibus Bill

Item	Financial year	Amount for financial year
2	2025‑2026	$666,186,000.00
3	2026‑2027	$600,443,000.00
4	2027‑2028	$715,763,000.00
5	2028‑2029	$733,457,000.00
6	2029‑2030	$695,532,000.00
7	2030‑2031	$683,978,000.00
8	2031‑2032	$572,043,000.00
9	2032‑2033	$490,000,000.00
10	2033-2034	$465,000,000.00
11	2024-2035	$265,000,000.00
12	2035-2036	$190,000,000.00
13	2036-2037	$115,000,000.00
14	2037-2038	An amount prescribed by the regulations for the purposes of this item (subject to subsection (3))
15	2038-2039	An amount prescribed by the regulations for the purposes of this item (subject to subsection (3))

Source: Reproduced by the Parliamentary Library from Future Made in Australia (Omnibus Amendments No.1) Bill 2024, Schedule 2, item 46.

The proposed amendment provides ARENA with a statutory entitlement to the amounts listed. In his second reading speech, the Minister said:

This 15-year funding will help ARENA invest in lasting, forward-looking opportunities, and we're legislating it, so that the funding is above the cut and thrust of the annual budget cycle.[188]

These amounts do not limit the total amount of money that ARENA can access in a given year, with additional amounts able to be appropriated via subsequent Federal Budgets, and amounts able to be carried over from one year to the next.[189] However, the total amount prescribed for a given year cannot be greater than $3.98 billion.[190] Any additional amounts prescribed by regulation would be subject to the Federal Budget process and would therefore be subject to parliamentary scrutiny as well as being subject to disallowance in accordance with the Legislation Act 2003.

The proposed legislative funding commitments to ARENA in item 46 totals $6.19 billion; putting the agency more on a par with the CEFC, which had an original $10 billion allocation committed through the Clean Energy Finance Corporation Act 2012 (CEFC Act).[191]

Application of the joint ministerial model to EFA and ARENA

Schedule 1 of the Omnibus Bill amends the EFIC Act to include the Finance Minister as joint responsible minister for EFA (together with the Minister administering the EFIC Act, traditionally the Trade Minister).[192] The joint ministerial model covers provisions relating to ministerial directions, Board appointments, and reporting obligations, meaning that the Board would consider the statement of expectations issued by the Trade Minister and Finance Minister jointly and both Ministers would be empowered to give directions to the Board regarding the exercise of its powers.[193]

The Explanatory Memorandum states that this is ‘consistent with the Government’s approach to enhancing the governance and oversight of its SIV portfolio’.[194] Indeed the joint Minister model is common for Commonwealth entities within the Specialist Investment Vehicle Portfolio (see below).

Schedule 2 amends the ARENA Act to allow the Finance Minister to have visibility and oversight of key aspects of ARENA’s governance and overall strategy, including amendments which:

• require the ARENA Board, in developing its general funding strategy, to have regard to the most recent statement of expectations for ARENA, which will be issued jointly by the Minister and the Finance Minister;

• require the Minister to consult the Finance Minister before approving or varying a general funding strategy, determining terms and conditions of ARENA Board appointments, and appointing or terminating the appointment of the CEO;

• require ARENA Board, Chair and Deputy Chair appointments and terminations to be made by the Minister, with the agreement of the Finance Minister;

• require the Minister to notify the Finance Minister of acting appointments and Chair and Deputy Chair absences;

• require interests of ARENA Board members and the CEO to be disclosed to the Minister and the Finance Minister; and

• require ARENA Board member resignations to be given to both the Minister and the Finance Minister.[195] [emphasis added]

Item 50 provides for the Minister to delegate powers for specific projects or grant programs to another Minister, if the subject matter would be more appropriately handled under that other Minister’s portfolio.[196] The delegated powers must be exercised in accordance with the ARENA Act.[197]

Other examples of the joint Minister model in relation to Commonwealth entities within the Specialist Investment Vehicle Portfolio are:

• Australian Infrastructure Financing Facility for the Pacific (AIFFP) – The Minister for Foreign Affairs and the Minister for International Development and the Pacific are the responsible Ministers for the AIFFP.[198] 
• Clean Energy Finance Corporation (CEFC) – The Minister for Finance and the Minister for Climate Change and Energy are defined as responsible ministers under the Clean Energy Finance Corporation Act 2012.[199] The responsible ministers appoint members to the CEFC Board and issue directions about the performance of the CEFC’s investment function. The Minister for Climate Change and Energy, as the nominated Minister under the CEFC Act, approves payments.
• National Reconstruction Fund Corporation (NRFC) – The Minister for Industry and Science and the Minister for Finance are the responsible ministers under the National Reconstruction Fund Corporation Act 2023.[200] The responsible ministers appoint members to the NRFC Board and issue directions about the performance of the NRFC’s investment functions and/or the exercise of the NRFC’s investment powers.
• Northern Australia Infrastructure Facility (NAIF) – The Minister for Northern Australia and the Minister for Finance are defined as responsible ministers under the Northern Australia Infrastructure Facility Act 2016.[201] The responsible ministers issue directions about the performance of the NAIF’s functions. The Minister for Northern Australia appoints members to the NAIF Board.
• Regional Investment Corporation (RIC) – The Minister for Agriculture and the Minister for Finance are defined as responsible ministers under the Regional Investment Corporation Act 2018.[202] The responsible ministers appoint members to the RIC Board and issue directions about the performance of the RIC’s functions or may provide directions on other specific matters such as farm business loans and water infrastructure projects.

Other provisions

Reporting requirements

Clause 14 of the FMA Bill states that the Department’s Annual Report given to the Minister under section 46 of the Public Governance, Performance and Accountability Act 2013 for any period must include a report on the operation of the Act during that period.[203]

Schedule 2 of the Omnibus Bill repeals the requirement for ARENA to develop a work plan on the basis that this is administrative duplication of the requirement to produce a general funding strategy.[204]