2012-13 Pre-Budget Submission - Overview

Executive summary
  • Realising the opportunity of the mining boom and lifting the speed limits of Australia’s economy should be the focus of the 2012-13 Budget. The Government needs to shift gears from “spreading the benefits” of the boom (through higher taxes, ad hoc spending and increased regulation) to tackling the real challenges of fiscal sustainability, productivity growth, expanding supply-side capacity and enhancing the economy’s structural flexibility.
  • This is not a zero-sum policy game as the “patchwork economy” narrative might suggest. In reality, the policies needed for Australia to make the most of the boom are the same as those needed to support the long-term growth and competitiveness of other sectors.
  • Against this backdrop, the priorities of the Minerals Council of Australia (MCA) in its 2012-13 Pre-Budget submission are:
  1. Long-term fiscal sustainability – Further steps should be taken to address the structural deficit in the Commonwealth Budget and to ensure appropriate medium-term fiscal policy settings. Though global economic conditions will necessarily bear on any return to budget surplus in 2012-13, this should not impede a long overdue review of Commonwealth spending priorities.
  2. Best practice regulatory reform – Renewed Commonwealth leadership is urgently needed to reform poorly developed and administered regulation at all levels of government. Inefficient and overlapping regulation is creating higher costs and uncertainty for the minerals industry in the key areas of project approvals, energy and climate change policy, water market access and occupational health and safety.
  3. Efficient capacity building – Efficient public sector investments and targeted reforms are needed to overcome current and future capacity constraints given the structural changes taking place in the Australian economy. Growth in the minerals industry is highlighting pressure points on skilled labour and inadequate social infrastructure in mining regions.
  4. Benchmarking Australian competitiveness – Policies that drive Australian projects up the global cost curve and increase sovereign risk impede industry growth and result in the opportunity cost of lost national income. The Australian Government needs to begin regular benchmarking of Australia’s competitiveness and ensure critical economy-wide policy settings (including energy and climate change policy, taxation and workplace regulation) promote flexibility and growth.

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