PERTH (miningweekly.com) – The resources sector has welcomed the federal government’s Budget, but has warned that policy changes could have a negative impact on future investments.
The Budget papers point out that higher commodity prices are expected to drive near-term tax received forecasts on the back of stronger corporate profits for mining companies in the near term, with tax receipts from resource companies approaching record levels.
The Treasury noted that tax receipts are forecast to be A$54.4-billion, or 10.7%, higher in 2022/23, and A$142-billion, or 6.4%, higher over the four years to 2025/26. However, around two-thirds of the increase is concentrated in the first two years, the vast majority in company tax.
Elevated commodity prices are expected to underpin profitability in the mining sector in the near term, supporting significant increases in company tax receipts. However, these profits are expected to taper as commodity prices return to long-term levels, the Treasury said.
“The contribution to the federal Budget from mining is extraordinary and highlights once more the importance of mining investment to the Australian economy,” Minerals Council of Australia (MCA) CEO Tania Constable said.
“In the last 20 years, employment in mining has tripled and wages doubled, benefiting hundreds of thousands of Australians, especially in regional areas.”
The Chamber of Minerals and Energy (CME) of Western Australia said the budget highlighted the significant contribution that the resources sector was making to the economy.
“Our sector’s contributions help fund vital federal government investment in healthcare, childcare, education and infrastructure, including important projects in Western Australia,” said CME CEO Rebecca Tomkinson.
Queensland Resources Council (QRC) CEO Ian Macfarlane noted that continued international demand for Queensland’s coal, gas and metals was the major contributor to Australia’s record terms of trade.
“For every three months commodity prices remain high, the resources sector is forecast to contribute an additional A$43.8-billion in GDP, and A$10-billion of tax revenue over the next two years, which is a staggering result that shows just how important mining is to our economic future,” Macfarlane said.
“Resources and energy exports were the biggest contributor to a record 12% increase in Australia’s terms of trade, underpinning our economic strength.
“It is good to see the federal government acknowledge the importance, and the contribution, of the resources sector to the nation’s economic security.”
As part of the Budget measures, the federal government announced a A$50.5-million investment, over the next four years, to establish the Australian Critical Minerals Research and Development Hub.
The hub will combine expertise from Geoscience Australia, Commonwealth Scientific and Industrial Research Organisation and the Australian Nuclear Science and Technology Organisation to work with Australia’s research sector and industry to address technical challenges and support international research and development collaborations. Bringing together these agencies in the Critical Minerals Hub will help unlock Australia’s critical minerals potential.
The government will also allocate an additional A$50.1-million over three years to the Critical Minerals Development Program for competitive grants to support early- and mid-stage critical minerals projects. This builds on the A$49.7-million recently committed to six key projects across Australia last month.
“These measures will help bring online new sources of supply, support robust supply chains, and create high-paying regional jobs for Australians, while improving Australia’s critical minerals capability and export resilience,” federal Resources Minister Madelein King said.
“The programs will help to establish Australia as a renewable and critical minerals superpower. Without Australia’s resources, the world will not reach net zero.”
To continue to drive the development of the sector, the government will also develop a new National Critical Minerals Strategy. This will be developed in consultation with industry and community stakeholders, including Traditional Owners, and will set out a vision for the sector.
Other measures include A$2-million to support the Isaac Regional Council to establish a site for a Resources Centre of Excellence near Mackay in Queensland, which will provide mineworkers and communities with training and access to new technologies to help meet demand for new skills.
The CME’s Tomkinson said that the measures announced by the government were very much aligned with the work the sector was already undertaking to grow its ability to extract and refine forward-facing commodities, and to reduce emissions as the country works towards net zero targets.
“The commitment to the A$15-billion National Reconstruction Fund to transform and strengthen industries is most welcome,” Tomkinson said.
“Up to A$1-billion of that being allocated to a Value-Adding In Resources Fund very much aligns with the progress the Western Australian mining and resources sector is already making in expanding its mid and downstream processing capabilities.
“Our industry, along with many others, has spoken openly about ongoing challenges with skills shortages. It’s encouraging to see this Budget tackle the situation through training measures such as an additional 465 000 fee-free TAFE places, and also by expanding permanent migration and committing more than A$42-million to accelerate visa processing and reduce backlogs.
“We also applaud the A$42.5-million allocated over four years to implement the federal government’s response to recommendations of the Respect@Work Report, and the A$1.7-billion committed over six years to support women’s safety.”
While the resources sector has welcomed the investment plans, proposed policy changes have caused some concern.
The MCA’s Constable said that the government’s plan to fundamentally realign Australia’s workplace relations system from enterprise bargaining to multi-employer bargaining would undermine efforts by both the government and the Reserve Bank to stabilise the economy.
“Multi-employer bargaining will expose mining to levels of industrial disruption and wage inflation not seen since the 1980s. It is clear from the economic outlook presented by the Treasurer in handing down the budget that the government must embark on the productivity reforms needed to secure the nation’s economic future, including attracting a large slice of the A$4-trillion of mining investment required to transform the world to net-zero emissions by 2050.
“It is increased productivity that will drive business growth and with the right policies Australian mining can undergo another major expansion in investment. However, to fully capture the economic potential of this opportunity, government policies must support investment in exploration, mining, minerals processing and mining-related manufacturing,” Constable said.
“Measures such as the new programs for funding students at universities and in technical and further education, particularly those in regional Australia, are a good start. As are government initiatives on critical materials such as funding the new research and development hub and other development programs.
“Australia needs policy settings that deliver internationally competitive company taxes, practical and beneficial workplace relations rules, an efficient transformation to net-zero emissions that provides reliable and competitively priced energy, and efficient and effective regulation and approvals processes.
“The budget shows the value of the large expansion in mining investment that began in the early 2000s which has provided more than A$143-billion in company taxes over the last decade.
“Internationally competitive and stable investment settings are essential to attracting large-scale investment in mining that will ultimately benefit all businesses, workers, households, and other economies around the world,” Constable said.