Josh Zimmerman: Future Made in Australia gamble positions WA at the centre of budget repair efforts

Resources Minister Madeleine King is fond of saying the road to net zero runs through WA. Jim Chalmers’ third budget has ensured that the road to a long-term structural surplus — if indeed one exists — follows the exact same path. Two years into the job, the Treasurer has done little to address the financial black holes that are set to plunge the nation into a deficit of $122 billion over the next four years. Spending on defence, NDIS, aged care, GST top-ups and debt repayments remain on rapid growth trajectories. Windfall commodity prices — primarily iron ore exported from WA and coal from Queensland — have underpinned Chalmers’ pair of surpluses to date. It’s a formula the Treasurer appears to like. The Future Made in Australia plan — developed in close consultation with King — represents a high-stakes gamble on a new wave of renewables-focused resource ventures. Tens of billions in tax breaks and incentives for hydrogen and critical mineral producers will act as a siren call for major investment into critical minerals and hydrogen. There remains a healthy dose of scepticism about the commercial potential of green hydrogen. It is expensive to produce and even more expensive to transport. The same cost imperative applies across the resources sector. Just ask WA nickel miners, who have been undercut by the environmentally disastrous operations that have sprung up in Indonesia. But if the gamble pays off — which will require a global acceptance of green premiums — the potential revenue pay-off in the form of royalties and company taxes is undeniably immense. A fraught electoral landscape, with households under immense financial pressure and conditioned by the pandemic years to expect ever-increasing government intervention, presents a significant barrier to spending cuts. In that environment, rapidly boosting the receipts sides of the ledger is Chalmers’ best chance of keeping both his surplus and his job.