A federal agency managing up to $4 billion worth of regional loans - dubbed the "Barnaby Bank" - is set to be established after legislation cleared the Senate.
The controversial Regional Investment Corporation, which Labor described as "shocking pork-barrelling", passed the Senate on Tuesday after the government struck a deal with key crossbenchers.
The government expected the corporation to be based in the NSW regional city of Orange, though a minister-appointed board would have the final say on location after a number of Labor amendments aimed at boosting transparency were agreed to.
The new agency would administer the government's $2 billion farm business concessional loans from July 2018, as well as the $2 billion National Water Infrastructure Loan Facility to give out loans to states and territories to build dams.
The bill passed 33 votes to 31 with the support of One Nation's three votes, two Nick Xenophon Team senators and independents Derryn Hinch, David Leyonhjelm and Fraser Anning.
Agriculture Minister David Littleproud hailed the bill as a fantastic win for regional Australians.
"Great to deliver for the regions and create 25 new jobs for Orange," he tweeted.
Labor's agriculture spokesman Joel Fitzgibbon said it was driven by raw politics in the Nationals, who lost the NSW state seat of Orange at a by-election in 2016.
"How else would you explain the decision to locate the corporation in Orange, the place where the National Party lost a local parliamentary seat for the first time in 69 years?" Mr Fitzgibbon said.
"Labor continues to reject what we believe to be a political stunt and a shocking pork barrel."
The amendments, which have the support of the government, Labor and the Greens, will now return to the lower house to be ticked off.
