The 2017 federal Budget is a balanced document that will support stronger economic growth and improved living standards by investing in infrastructure, regions, skills, housing and essential services.

The Budget outlook for a pick-up in growth to 3 per cent over the next two years, which would see the economy expanding by close to its full potential, is good news for Australian households and businesses.

The Budget’s forecasts highlight the critical role played by Australia’s mining and resources sectors in delivering economic growth and jobs.

With the production phase of the mining boom well underway, Treasury expects resources exports to grow by 8 per cent in 2017-18 and 5 per cent in 2018-19. This strong expansion will underpin growth in Australia’s overall outbound trade.

Three commodities – iron ore, coal and LNG – are expected to account for around 70 per cent of all resources exports as mines and gas projects built in recent years expand to their full production capacity.

The Budget’s modest fiscal consolidation is also welcome, but more needs to be done to ensure the Commonwealth rebuilds the fiscal capacity needed to respond to any major economic shocks in future years.

The challenge for Australia’s political leaders is to embrace the need for fiscal repair and to embark on structural reforms to boost competitiveness and productivity and attract international investment.

Australia’s living standards will suffer long-term decline if political gridlock continues to block reforms in areas such as corporate tax rates, workplace relations, the GST distribution system, access to reliable and affordable energy and workforce skills and training arrangements.

The MCA welcomes the Budget’s infrastructure focus and the new Regional Growth Fund which will support communities in regional Australia facing economic challenges.

It will be important for these infrastructure investments to be guided by sound economic analysis to ensure taxpayer resources are invested in projects which will benefit future generations.

The MCA also welcomes the Government’s $28.7 million East Coast gas development program, the $15.3 million Digital Earth Australia initiative to unlock vast amounts of satellite imagery and data, and Geoscience Australia’s 2017-18 focus on resource exploration in northern Australia which will improve understanding of potential mineral, energy and groundwater resources.

The MCA is disappointed the Government will not extend the Exploration Development Incentive program.

With Australian minerals exploration expenditure declining by $2.15 billion, or 60 per cent, over the last five years, the Government should consider new policy measures to overcome the tax asymmetry whereby junior explorers with no taxable income are unable to access the immediate deduction for exploration.


Download complete article