State, Commonwealth budgets under pressure amid commodity price slump
PERTH (miningweekly.com) – Advisory firm Deloitte Access Economics said on Thursday that both state and Commonwealth budgets would remain under pressure as commodity prices continued to remain low.
In its latest edition of the Investment Monitor publication, the firm noted that the fall in mining investment in Queensland was already well advanced, while Western Australia and the Northern Territory still had “some way to go”.
In contrast, New South Wales and Victoria’s state budgets were likely in better shape.
The report noted that commodity prices were now sufficiently low enough to make investing in new minerals and energy capacity unlikely, with expected capital expenditure in 2016/17 likely to remain weak, which would intensify short-term pressures on the Australian economy.
Overall, the total recorded value of projects in the Investment Monitor database reached A$780.5-billion, which was a 0.5% increase from the previous quarter but a 3.9% decline from the level recorded in March last year.
The value of definite projects in the database, classified as those under construction or committed, increased by just over A$3-billion over the quarter, which was equivalent to a 0.8% rise.
However, this is still 11.7% lower than the year before.
The value of planned projects in the database, classified as those under consideration, rose by 0.1% during the March quarter to A$18.7-billion, which was also 4.9% higher than last year.
In its sector analysis Deloitte Access Economics pointed out that only eight iron-ore projects, with an estimated value of more than A$500-million, were currently under consideration, while only one iron-ore project, Rio Tinto’s Marandoo mine expansion, was due for completion this year.
While prices for coking coal and thermal coal fell sharply over the last year, investment in the coal sector continued, with more than 50-million tonnes scheduled to be added to Australia’s production by 2017, and a further possible 62-million tonnes by the time all the projects classified as planned, got under way.
The outlook was more grim for liquefied natural gas (LNG), as the construction of megaprojects wrapped up.
With the completion of the $21-billion Curtis Island LNG project and the $19-billion Gladstone LNG project, only four projects were still due for completion by the end of the year, including the Gorgon, Wheatstone, Australia Pacific LNG and the Greater Western Flank projects.
The $37.4-billion Ichthys project and the $12-billion Prelude floating LNG developments were the only ones to extend into 2017.
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