Labor's signature reconstruction fund has passed the lower house and is expected to clear the Senate after the government struck a deal with the Greens to ensure it does not support coal and gas.
The $15 billion National Reconstruction Fund will provide finance for projects in key areas such as technology, transport and renewables to boost manufacturing in Australia.
Industry Minister Ed Husic said having the bill clear the lower house was a "good day" and the legislation would champion Australian manufacturing.
"I'm proud of the support," he told parliament.
"This is something that is absolutely worth fighting for ... in the end, you had the bulk of this chamber say Australian manufacturing is worth backing."
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Greens leader Adam Bandt said on Thursday an amendment to the bill had been agreed preventing future governments using the fund to invest in coal and gas projects or log native forests.
It would create a class of "prohibited investments" within the legislation including financing the extraction of coal and gas, the construction of gas pipelines and the logging of native forests.
The Greens will back the bill in the Senate subject to consideration of government and other amendments.
"Coal and gas are the biggest cause of the climate crisis, so this is a big win for the climate and a big win for jobs and the economy," Mr Bandt said.
"The government will support this amendment and make sure that this does not turn into a slush fund for new coal and gas."
Deputy Liberal leader Sussan Ley described the legislation as "bad" and said gas was critical for the transition to clean energy.
"We will fight Labor's recklessness all the way to the Senate, then to the election, and beyond," she said.
The government had argued in the past the fund was not being set up to back coal and gas projects, but now it will be explicitly set out in the legislation.
While the coalition said it would not back the bill, Mr Husic said he was still willing to get bipartisanship on the fund.
"It is important that we work on this and it's important we work with the crossbench and the Greens on this, that we build something that ultimately will be enduring," he said.
The government will still need the support of at least two crossbench senators for the bill to pass the upper house.
Mr Bandt said it was important to ensure the funds were used appropriately.
"Public money should be going to public schools and hospitals, not to coal and gas corporations," he said.
"But we know every time there is money put aside to increase investment in manufacturing ... big corporations will line up with the handout and try and take public money."
Australian Associated Press
