Australia cannot realise the full value of its clean energy potential without investing in the inclusion and leadership of First Nations. That’s the key message of our submission to the Federal government’s Economic Reform Roundtable Consultation.
The transition of Australia’s energy and economic system - built around clean energy - provides an opportunity (including through processes like the Economic Reform Roundtable) to design and deliver mutually beneficial outcomes by:
- addressing inefficiencies in the prevailing system which entrench unnecessary costs, like First Nations economic exclusion and inequality,
- improving productivity, equity and economic efficiency by investing in First Nations communities and First Nations outcomes, and
- supporting First Nations clean energy leadership and projects.
A forthcoming Network report highlights the commercial benefits for investors that comes with First Nations ownership and participation - bringing trust, long-term stability, improving project delivery, mitigating conflict and reputational risk, and providing numerous benefits to investors.
Inequality and exclusion creates risk, which increases costs and reduces productivity.
A policy and fiscal system which results in First Nations inclusion will deliver national productivity gains. The clean energy transition and associated economic transformation that necessarily accompanies the energy transition provides an historical opportunity to establish an inclusive economy which recognises the economic value of First Nations leadership, participation and benefit.
Drawing from global precedents, especially the United States’Inflation Reduction Act (IRA), Canadian fiscal innovations and Canadian government investment in First Nations communities, our proposals below directly support Treasury’s reform objectives.
Efficient resource use and increased local economic activity
Australia cannot realise the full value of its clean energy potential without investing in the inclusion and leadership of First Nations. This is an economic point.
Local projects create durable jobs and unlock system benefits if properly supported. Unlocking local First Nations workforces and opportunities through targeted investment and inclusion will increase productivity - improvement in participation and skills will lead to large gains in household incomes and local economic activity.
First Nations hold significant rights and interests over land and waters required for the industries of the future - areas that are rich in renewable energy resources, critical minerals, and regions that will support green metals extraction and production. Legal uncertainty, administrative, regulatory and agreement-making systems that are chronically underfunded entrenches high transaction costs. Properly embedding First Nations rights in law and process, and Free, Prior and Informed Consent (FPIC) will reduce project delays, lower risk, and unlock underutilised economic resources.
Economic exclusion is a cost to the Australian economy
Inequality and exclusion are sources of national economic loss; inclusion is a driver of national productivity gains - inclusion of First Nations will accelerate capital flows and reduce risk.
As Canadian First Nations economic leaders have argued, First Nations should be reframed not as a ‘cost centre’in the economy, but as key drivers of national productivity. Equity-enhancing policies, such as the merit criteria in the Capacity Investment Scheme and the community benefit principles in the Future Made in Australia Act are examples of emerging productivity enhancing policies which need to be strengthened and scaled throughout Australia’s policy and fiscal frameworks.
Driving productivity and economic resilience - tax reform
The Network proposes:
- First Nations Clean Energy Tax Credit. Modelled on IRA Section 48 (Investment Tax Credit), this would provide a refundable or transferable tax credit for eligible clean energy projects with verified First Nations ownership or participation.
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Clean Energy Bonus Tax Credits. Stackable with other tax credits and modelled on the IRA’s Low-Income Communities Bonus Credit and Energy Community Bonus, these should be available for projects that:
- ○ serve remote / energy-insecure First Nations communities
- deliver measurable household energy savings
- embed First Nations outcomes in their design.
Unlock investment
The Network’s 2024-25 Pre-Budget Submission highlighted the need for a First Nations Clean Energy Investment Fund. Delivered by the Clean Energy Finance Corporation, and backed by government guarantees for First Nations equity investment in large-scale energy infrastructure (as successfully achieved in Canada), this package of initiatives would directly improve economic efficiency by treating First Nations as partners, co-investors and co-developers (rather than passive stakeholders or a barrier to overcome).
Support inclusive and sustainable growth
Modelled on the IRA’s Section 6417 (Direct Pay) and Canada’s Clean Energy Investment Tax Credit, permit tax-exempt First Nations organisations to receive cash equivalents of clean energy tax credits. And similarly, modelled on the IRA’s environmental justice goals, link tax access to energy justice outcomes, e.g. projects reducing diesel reliance and which improve energy affordability in First Nations communities.
Read our submission