While overall spending on mining, manufacturing and construction is forecast to decrease $3.139 billion last year, to $2.74 billion in the next financial year, Mining Australia suggests the news is primarily positive. The decline in spending has principally been attributed to the government’s decision to reduce the research and development tax incentive and refundable tax offset by 1.5 per cent to 43.5 per cent on July 1 this year.
Despite this, companies operating in the mining and resources industry should experience significant gains through the federal budget decisions. One major announcement expected to boost cashflow in the sector is the government’s pledge to remove the mineral resources rent tax, along with the carbon tax.
The decision to abolish the mining tax came after this initiative raised only $200 million last year, well below the $3 billion originally forecast.
Once these particular levies has been removed on July 1 this year, organisations can expect access to larger profits which, when coupled with the 1.5 per cent reduction to the company tax, should help boost the ability to grow and expand in Queensland.
Opening company cashflow opportunities will enable organisations to reinvest in important business ventures, such as taking on new staff and employing apprentices or trainees in Queensland.
Further improvements for the mining and resources industry includes the promise to repeal and reduce the levels of red and green tape currently creating administrative burden across the sector.
In his speech on May 13, Treasurer Joe Hockey explained that “to improve business opportunities, we are cutting company tax by 1.5 percentage points for around 800,000 businesses. We are abolishing the carbon tax and we are abolishing the mining tax”.
“We are removing $1 billion a year in red tape because regulation means more staff doing paperwork and fewer staff helping customers.”
In addition to the support specifically given to the industry through the 2014 federal budget, the government has also announced investment plans to help boost road, rail and port infrastructure across the country.
Many mining and resource companies rely on safe and efficient transport and freight routes to support export and sales. Any improvements to Queensland road infrastructure should help boost mining productivity and efficiency.
By Leanne de Toerkenczy, Public Relations Coordinator