Below trend growth to continue
This year’s budget contains a number of negatives for the resources sector. NAB’s Group Chief Economist, Alan Oster, looks at where the government has targeted it’s efforts including impacts to exploration and many mining and energy programs.
This year’s budget contains a number of negatives for the resources sector. In particular, the mining industry is one targeted by the government’s drive to bolster the corporate tax base and reduce loopholes. Deductions for exploration are to be tightened with immediate deduction of mining rights and information now to be depreciated over 15 years, or their effective lives (whichever is shorter). The Budget estimates a $1.1 billion gain in revenue over the next four years. The introduction of a cash bidding system for certain offshore petroleum exploration is expected to raise government revenue by $160 million after four years.
Many mining and energy programs have also been scaled back in an attempt to cut costs, with the clean coal sector one of the clear losers – almost $900 million in related program cuts (carbon capture and storage, emission initiatives, job assistance programs etc).
However, fears that fuel rebates – of which miners are a major beneficiary – would be wound back didn’t come to fruition. Also, the government pledged to amend the Petroleum Resource Rent Tax (PRRT) legislation that will grant petroleum producers additional certainty regarding deductions for legitimate expenditure. The change is expected to reduce government revenue by $120 million over the estimate period.
Our team of leading economists, tax and superannuation experts will continue to unpack the Federal Budget 2013 to help you understand what it means. Visit all the latest articles, fact sheets and video commentary – 2013 Federal Budget – Business Research and Insights.
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.