Brendan Pearson, acting Chief Executive Officer of the Minerals Council of Australia (MCA) says that Australia’s national Budget “takes an important step towards reversing the imbalance between expenditure on short-term measures to boost consumption over long term capacity-building investment.” The Budget itself outlines investment of A$2 billion in carbon capture and storage over nine years; as part of the A$4.5 billion Clean Energy Initiative, A$339 million for a common-user port at Oakajee; part of the A$3.5 billion development; A$5.7 billion for higher education and innovation funding, A$1.3 billion for its Closing the Gap initiatives for Indigenous people, and A$3.3 million to develop and implement the National Mine Safety Framework. The Budget also excludes the implementation of a flow through shares scheme (FTSS) designed to help investment in exploration companies.
Pearson: “The MCA is encouraged by the directions on infrastructure, education, addressing Indigenous disadvantage and the development of low emissions technologies. Over recent years, the MCA has expressed growing concern at the trend of successive budgets to devote spending to short term consumption in preference to addressing capacity constraints limiting Australia’s export effort. While this trend continues in the 2009/10 Budget, exceptional financial circumstances have clearly necessitated expenditure on initiatives to stimulate the economy over the short term.
“The Budget papers make clear that Australia’s economic recovery, and its ability to pay off the Commonwealth A$188 billion of debt, will be heavily dependent on the minerals industry and resources exports. Insufficient investment in Australia’s export infrastructure and both human and capital productivity would only serve to hinder the economic recovery as would new costs or taxes. In particular there are significant remaining gaps in export chains, Australian vocational and higher education systems, and social and physical in regional and remote communities.”
The MCA views the A$2 billion investment on carbon capture and storage as welcome recognition that there will not be a global solution to climate change without low emission coal technologies. Pearson: “The minerals industry has already committed A$1 billion over ten years through the Coal 21 fund, and the Government’s commitment will help drive the commercial deployment of this critical technology.”
On building to help exports in Australia, the MCA said that on top of the A$584 million pledged in December 2008 for the A$1.68 billion upgrade of the Hunter Valley rail corridor, the Government is helping to create an environment for the industry to expand and avoid the capacity constraints that have plagued the nation in the past. “As downpayments on the process of tackling the constraints on the nation’s export potential, there remains scope for additional initiatives in the future, leveraging private investment through more aggressive reforms to regulation and planning,” Pearson commented.
On education and R&D, the council welcomed the Government’s broad acceptance of the Bradley Review’s recommendations for the higher education sector. “The Government’s higher education and innovation funding will help set education directions through to 2020 – a period where an additional 86,000 employees will be required to meet demand in the minerals industry. [We] welcome increased scope for collaboration between the university and vocational education and training sectors, including $3 billion for education infrastructure.”
In regards to the Government’s investment in indigenous initiatives Pearson said that “the industry and the communities in which it operates are committed to robust agreements that can deliver benefits for all. The minerals industry also commends the additional $1.9 billion for housing in remote areas and $202 million to assist Indigenous job seekers prepare and take up jobs.”
The MCA did have concerns with the Government’s investment in exploration however. It is disappointed that the Government has not used the 2009 Budget to implement a FTSS, which was promised by the Australian Labor Party prior to the 2007 Federal Election. Pearson: “A new study shows that an FTSS could generate socio-economic benefits of up to 4,196 new jobs, A$114.4 million in additional gross domestic product, A$191.2 million in additional real private consumption and $965.1 million in additional real investment between 2009-10 and 2012-13. These benefits would come at a cost of about A$130 million/y to the Federal Budget. The MCA nonetheless welcomes the Government’s ongoing commitment to see a scheme implemented during its first term.”