2014-15 FEDERAL BUDGET: MINERALS COUNCIL OF AUSTRALIA
Today’s federal Budget confirms that Australia’s mining sector will play its part in building a stronger Budget and a stronger economy.
Through higher mining company tax receipts and new fiscal measures, the industry will make a significant contribution to the Budget and new Government programs. On Paid Parental Leave, the industry is expected to account for a major share of the $3.8 billion in revenue tax raised by the new levy.
This is on top of three measures confirmed in the Budget that generate a further $3.7 billion over the forward estimates. These are changes to exploration deductibility, new research and development requirements and a revision of the thin capitalisation ratio.
Importantly, the Budget confirms that fiscal repair is not an end in itself. Australia’s longer term goal should be lower taxes, greater tax stability and competitive industries if we are to drive growth across the economy, in mining and non-mining sectors alike. This is the smart way to build a stronger Budget based on higher revenues to government.
Higher mining production and exports over coming years will contribute to growth and higher revenues, including to state and territory government royalties. But as the Budget documents point out, further growth in the resources sector is not pre-ordained. There needs to be a platform for long-term prosperity.
The abolition of the carbon and mining taxes will reduce the burden on households and industry, especially export and import-competing sectors. This focus on rebuilding Australia’s competitiveness will be an essential element of a pro-growth strategy over the near to medium term.
The Minerals Resource Rent Tax was predicated on the falsehood that mining was not already paying its way. With minerals industry company tax and royalty payments of about $20 billion per year, this was never the case.
Both the carbon and mining taxes should be repealed by the Senate as soon as possible.
The Budget also includes a $460 million reduction in Commonwealth investment in low emissions coal technologies, including Carbon Capture and Storage. This is disappointing, but Australia’s coal sector remains committed to investing in the development and deployment of technologies that substantially reduce coal’s carbon footprint.