The Federal Government has announced a budget dependant on the mining and resources industries and especially its involvement in the “Asian century.”
Last night’s budget announcement revealed a decrease in the expected tax for 2011 and 2012, and following this period, when the economy is expected to have returned to surplus and is continuing to grow, Treasury is remaining cautious about whether it will benefit from higher tax revenues.
On Monday, federal shadow resource spokesman, Ian McFarlane slammed the mining tax proposed by the Gillard government, saying it underpins the budget and is causing other policies to fall apart.
Treasurer Wayne Swan’s primary focus with the budget was “jobs, jobs, jobs,” including in the mining industry.
Total skilled migration will increase to 16,000 positions and increase the number of people available to work on WA and Queensland resource projects.
The global financial crisis (GFC), the strength of the Australian dollar and natural disasters have resulted in a fall of $9.8 billion on the expected tax take for 2010-11 and is expected to extend to 2011-12.
While the economy of the nation will remain largely dependant on the mining industry, Treasury has warned against assuming it will remain the same.
The mining boom over the last decade has been so beneficial due to the rising commodity prices mining companies used to their advantage.
Now miners are spending big money on new projects and infrastructure and in the upcoming financial year investment in the mining sector will reach $76 billion, making up 6 per cent of the total economy.
This figure shows eight times more being spent in the industry than the previous financial year.
But the government says the enormity of the investment will have a negative side, as miners make more money and are able to claim back costs, depreciating investments.
”Differences between the earlier mining boom and the mining boom in prospect suggest that there is unlikely to be an accompanying surge in company tax receipts for some years,” the papers say.
”Higher levels of depreciation expenses mean that the levels of taxable income, and thus company tax receipts, are lower than would have been the case otherwise.”
Greens slam budget
Greens Leader Bob Brown has criticised the announced budget for increasing the gap between mining companies and the less fortunate members of society.
He also slammed the governments involvement with mining companies over the mining tax.
"The Greens would have made this budget sing," he said.
"We would have ensured that the mining boom was brought into the nation’s services and wasn’t just lining the pockets of the big mining corporations, who export tens of billions of that money each year out of this country.
"We believe this resources boom … money from it should be put in a sovereign wealth fund for the future.
"The Treasurer is right, we are wealthy and have the budget potential like almost no other country on the planet.
"We are the wealthiest country in terms of resources per capita, but you wouldn’t know that in this budget."
"We are in the middle of a resources boom, this nation is extraordinarily wealthy, but instead of the Treasury-recommended super profits tax, we’re seeing a $22 billion squeeze in this budget – billions of which are unnecessarily targeted at people who deserve a better go," Senator Brown said.
"This is a budget lacking vision," Brown said.
"It has some clever components to it, but it’s a great missed opportunity. I’d give it a six out of 10."