Australia’s resources sector is pessimistic about next month’s federal budget as it fears an increased tax hike could hamper the sector’s recovery.
Queensland Resources Council chief executive Michael Roche told a tax conference in Brisbane on Monday that miners impacted by royalty rises in Queensland and Western Australia in recent years were apprehensive about the May budget, saying there seemed to be a ‘desperate rush for cash’.
“Somewhere between thin capitalisation rules, accelerated depreciation, exploration deductibility and fuel tax credits – a pocket is waiting to be picked,” Roche told the Minerals Council tax conference.
He also said the effective taxation rate on a new coalmine in Queensland was 50 per cent, which is much higher than Australia’s international competitors. He said about half of Queensland’s coalmines will face competitive threat if they cannot manage costs.
Significant cost cutting measure in the past year will continue over the next few years, the AFR reported.
Peabody Energy chairman Eric Ford also spoke at the conference. He said Australia needs to stop being complacent about regulatory and taxation reform for the mining sector so it can regain its competitive edge.
Ford said the minerals resource rent tax and carbon tax had considerably dented Australia’s standing among international investors.
He added the resources sector knew it would have to pay its portion of taxes, particularly during the boom years, but the flurry of new taxes introduced by both state and federal governments in recent years had brought policy uncertainty.
“The common thread that runs through these tax changes is a worrying complacency about Australia’s place in the world,” he said
“Underpinning this mindset is the apparent view that Australia’s competitiveness in mine production can never be lost; that more and more tax and regulatory burden can be added without risking the competitiveness of the sector.”
Australia set a standard for other coal-producing countries in technology, regulation and taxation but its competitive edge had fallen over the past decade, he said.