Mitch Hooke, Chief Executive Officer of the MCA said the latest Australian budget “continues the Federal Government’s pre-occupation with spreading the proceeds rather than locking in the mining boom for future generations by building national capacity. The Government’s recognition that the boom will “directly and indirectly support growth in other parts of the economy” including construction, manufacturing and services is a welcome departure from the “boom-with-gloom” rhetoric of the past 12 months.  So too is the acknowledgement that the economy’s trend growth forecast is “driven by strong growth in resources”.However, we were looking for similar recognition of the need for a longer term path of capacity building and productivity enhancing reforms, but this was not addressed in the Budget.

Fiscal stability is also key to Australia’s investment pipeline and continual changes to Australia’s tax system acts as significant deterrent to investors.

From July, the minerals industry will face two new taxes adding about $7 billion to the industry’s $23.4 billion company tax and royalty bill. From 2004 to 2015, the mining boom will add about $250 billion to Commonwealth revenue.

New taxes compromise the industry’s ability to deliver the investment pipeline so often cited by the Government as a done deal.

It will be critical that any measures under consideration by the Business Tax Working Group flagged in the Budget today are the subject of detailed and intensive consultations with industry to ensure that they are not just another tax grab.

The intention to use the Minerals Resources Rent Tax to cover the impact of the world’s biggest carbon tax on households simply uses the revenue from one new tax to offset adverse impacts of another. And it is clear acknowledgment that the carbon tax will have a greater impact than initially forecast.

It is time the Government stopped tinkering at the edges of the carbon tax package and re-visited the fundamentals on carbon pricing.