Treasurer Josh Frydenberg handed down the budget last night.
However, the Morrison government's decision to implement a temporary tax incentive was singled out by the Australian Petroleum Production and Exploration Association.
The tax incentive applies to around $200 billion worth of investment and will include 80% of depreciable assets from October 6 until June 2022.
Any business with turnover of up to $5 billion can deduct "the full cost of eligible depreciable assets of any value in the year they are installed," budget papers revealed.
The cost of improvements to existing assets can also be deducted, reducing after-tax costs and providing cash flow benefit.
"This measure is estimated to deliver $26.7 billion in tax relief over the forward estimates, and $3.2 billion over the medium term," the papers said.
"The announcement to introduce an investment allowance for businesses is a positive step. It will help to improve capital availability and investment, growth in wages and GDP in the same way as a company tax cut, while also raising national income," APPEA CEO Andrew McConville said.
The government has promised to cut red tape further, though details of exactly what this will mean remain hazy.
It is also offering a streamlined and digitised process for trading Australian carbon credits but gave no more details and also promised to fast track environmental assessments.
The budget promised $52.9 million for its ‘gas-fired' recovery, which includes developing resources, pipeline build and trying to turn Wallumbilla into a US Henry Hub-style pricing centre in a move that left some in industry skeptical at the time.
It has also promised to possibly underwrite a new power station to replace AGL Energy's ageing Liddell when it comes offline soon.
Much of the plan is based on the recommendations of the National COVID Coordination Commission, headed by former mining executive and Strike Energy non-executive director Nev Power.
Credit Suisse analyst Saul Kavonic called it a "self fulfilling prophecy" noting that now the government has told industry it will invest, industry will likely prefer to sit back and wait for it to do so.
"The business case for more pipelines remains poor in our view with the highlighted gas basins still too immature to justify spending," he wrote in September.
Infrastructure and development
The government has promised a A$1.5 billion manufacturing fund to be spend over four years, focussing on six sectors including resources technology and clean energy, first announced by Scott Morrison at the beginning of the month in an address to the National Press Club
The government wants to use the strategy to kickstart the economy, alongside its gas plans.
The centrepiece of the strategy will be the A$1.3 billion Modern Manufacturing Initiative, which will see the government invest in projects that will scale up manufacturing jobs across six sectors: resources technology and minerals processing, clean energy and recycling, defence, space, medical products and food and beverage.
It has promised $250 million for major energy infrastructure projects like the Marinus Link, Project EnergyConnect and VNI West to get them to the next stage and suggests this will lower energy prices and create 1000 jobs.
There will be $53.6 million for a regional microgrid program to develop pilot projects in remote areas and it has promised to connect the North West Minerals Province near Mount Isa in Queensland to the National Electricity Market via more support for the CopperString high voltage transmission line.
It did not put a price on this but has said the transmission line could cut electricity prices by 40% and create some 3500 full-time, ongoing jobs.
The budget has also promised $28.5 million via the South West Interconnected Systems Big Battery Project in Western Australia and microgrid program for remote and Indigenous communities, which it announced five days ago.
There is $52.2 million to improve energy efficiency and lower bills, which includes $24 million to building upgrades and to reduce energy use in community groups and for small hotels.
Another $4.9 million over two years will be spent on improving cybersecurity in the energy sector, an ongoing issue globally as grids become the target of hackers.
The government will spend $250.7 million on fuel security via investing in large diesel fuel storage facilities and progress reforms to "boost the resilience of fuel supply and support local refineries" which it expects will create 1000 new jobs and increase its dielsef stocks by 40%.
This will help Australia meet the International Energy Agency mandate of 90 days' worth of fuel for all member countries. Australia often has less than half that.
The Northern Australia Infrastructure Facility has been extended five years to June 2026 and has expanded its lending criteria.
Under new plans announced a week ago, the NAIF will be expanded to encourage new investment in oil and gas, among other industries.
The NAIF has already provided $2.4 billion in financing for major projects across the Top End. Projects include Kalium Lakes' gas plant and lateral gas pipeline, and $37 million for Merricks Capital's Hudson Creek P12 MW gas power Station in Darwin.
It has also helped finance Genex Energy's pumped hydro project in northern Queensland and some solar and wind renewables projects. Its largest single finance in the energy sector is worth $500 million.
Clean energy
The Australian Renewable Energy Agency will receive $1.4 billion over the next decade towards the government's Technology Investment Roadmap, unveiled first in May which includes support for gas and carbon capture and storage technologies, and has been the focus of some ire from environmental and clean energy groups for such inclusions.
Hydrogen development receives $70.2 million over five years to develop a hydrogen export hub and for study international supply chains.
A Technology Co-Investment Fund to implement the recommendations of the King Review receives $95.4 million towards low emissions technology.
The expert panel, headed by former Origin Energy boss Grant King, was quietly appointed by energy and emissions reduction minister Angus Taylor last year to find low-cost solutions to the government's emissions policies which have so far failed to deliver a meaningful reduction in CO2.
It reiterated its Low Emissions Technology Statement, which is supported with $1.9 billion and will expand the remits of the Australian Renewable Energy Agency and the Clean Energy Finance Corporation "to back new technologies in sectors like agriculture, manufacturing and transport".
The plan was announced late September and outlines five priority technologies: hydrogen, CCS, low carbon manufacturing, energy storage, and soil carbon.
It also features economic stretch goals to make the new technologies as cost-effective as possible including hydrogen production under $2 per kilogram, energy storage dispatched at less than $100 per megawatt hour and CCS for under $20 per tonne of CO2 stored.
Carbon capture and storage gets $50 million to create pilot projects to cut emissions from large industrial facilities, which is likely good news for Santos which is planning its own CCS development in the Cooper Basin to sequester 1.7 million tonnes of CO2 per annum and wil take final investment decision before the end of the year.
The government will use $74.5 million over four years for adoption of electric, hydrogen and bio-fuelled vehicles but has not yet released its policy on electric vehicles.
More to come.
