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Federal budget: $100m to kickstart Newcastle hydrogen hub

VISIT: Scott Morrison with Port of Newcastle special project director and Nationals senate candidate Ross Cadell and port chief executive officer Craig Carmody in March last year.

The federal government says it will invest $100 million to help establish a hydrogen and ammonia manufacturing hub at Newcastle port.

Deputy Prime Minister Barnaby Joyce said in a budget day media statement on Tuesday that the money would support detailed early works to enable final investment decisions on pipelines, compression facilities, storage and other infrastructure.

Port of Newcastle has published a $3.1 billion plan for a hydrogen hub on the Hunter River at Kooragang Island opposite Mayfield West.

The port consortium's plan includes a $184 million pilot plant, but a port spokesperson said the federal funding was separate to the pilot project and would instead ready the hub for final investment decisions to progress to commercial production.

The port's project timeline includes starting the pilot in 2025 and scaling up hydrogen and ammonia production to 2040 to supply domestic and international markets.

Treasurer Josh Frydenberg made reference to "transformational" energy investments in the Hunter in his budget speech to Parliament, part of the government's efforts to "boost our sovereign manufacturing capability".

The budget papers say the government will spend $7.1 billion over 11 years under a new Energy Security and Regional Development Plan targeting four "key regional hubs": the Hunter; Pilbara in Western Australia; the Northern Territory; and north and central Queensland.

Forward estimates outline a total of $1.3 billion spending over the next four years under the plan.

The 11-year plan includes $750 million for Hunter transport and port infrastructure projects "that will improve supply chain efficiency and boost exports".

The plan includes the hydrogen hub money and $268 million for the Muswellbrook bypass, a project with a long history of funding pledges.

The budget does not identify projects covered by the Hunter's remaining $382 million nor specify when the money will start flowing.

The government says the Hunter spending will fund "transport infrastructure projects that will improve supply chain efficiencies and help diversify the economy building on the region's existing strengths and facilitating the development of new industries".

Mr Joyce's media release said funding for projects under the plan was "conditional pending completed business cases demonstrating value for money and sufficient public benefit".

The budget papers reiterated the government's pledge to spend $1 billion upgrading 10 kilometres of rail line between Wyong and Tuggerah which it says will remove a train bottleneck and cut travel times between Newcastle and Sydney.

The government will spend another $102 million in 2022-23 on continuing the Newcastle Airport runway upgrade to accommodate long-range aircraft.

The project is due for completion in late 2023.

The budget also flags Defence Housing Australia residential developments in Newcastle totalling $101.8 million, pending planning approvals.

The budget does not include funds for several large projects long championed by Hunter business and political leaders, including the Newcastle Airport terminal upgrade, Hunter Park redevelopment at Broadmeadow and freight rail bypass.

Treasury estimates thermal coal spot prices, which have spiked during the Ukraine war, will fall from $US320 a tonne to $US60 a tonne by the end of September.

Opposition leader Anthony Albanese will make his budget reply speech on Thursday as Labor holds a clear lead over the Coalition in pre-election polling.

Prime Minister Scott Morrison is expected to announce in the next week that the election will be on May 7 or May 14.

Business Hunter chief executive officer Bob Hawes said the government pledge to support hydrogen export readiness would allow the port and the wider Hunter region to prepare for future diversified energy markets.

"We know that there is around $40 billion in commercial interest in our hydrogen hubs and that our region's export capability in hydrogen has been recognised and reviewed closely by global partners," he said.

"This announcement supports the port to play a big part in the region's hydrogen development and export advancements and takes advantage of our region's valuable export infrastructure assets.

"It also sends a vital signal that commercial interest in energy diversification in our region is a safe bet.

"The hydrogen hub will make a strong contribution to the growth of our region and will lead to jobs and economic growth."

The Nationals' Hunter candidate, James Thomson, welcomed news that the Hunter has been identified as one of four catalyst regions.

"This investment by the Nationals in government will create more good-paying local jobs and opportunities for individuals and families across the Hunter, helping them get the job they want and to pursue their dreams," he said.

"Tonight's announcement will attract new sources of investment to the Hunter, further unlocking the potential of our region and supporting the industries that earn the export dollars that make us wealthier and stronger."

Greens Newcastle candidate Charlotte McCabe said the budget had failed to deliver for the Hunter.

"We need federal funding to kickstart the jobs and industries of the future and to ensure coal workers have financial security over the coming years," she said.

Ms McCabe said addressing cost-of-living issues with one-off payments, which formed part of Mr Frydenberg's budget program, would "do nothing to help those who are struggling to make ends meet".

"The Greens are committed to structural change and will lift all social security payments above the poverty line to $88 a day.

"This is morally the right thing to do in a country as wealthy as Australia, and it's also economically much smarter than bearing the social and health costs of entrenched poverty."

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