THE Federal Budget, released last night by Treasurer Joe Hockey, saw a win for parents, small business owners and farmers.
But what exactly does the budget have in store for those in the mining industry?
“It is pleasing that the Government has recognised the importance of Employee Share Schemes for start-up companies to attract talent,” Mr Bennison said.
Mr Bennison was also pleased the budget recognised the importance of the mineral and economic potential in northern Australia and the need for infrastructure to unlock stranded assets and encourage investment in the region.”
QMEB broke down all the mining industry budget bits and pieces and have kept it right here in one spot.
Zone tax offset to exclude FIFO and DIDO workers
The zone tax offset will exclude fly-in fly-out and drive-in drive-out workers where their normal residence is not within a zone.
The zone tax offset is a concessional tax offset available to individuals in recognition of the isolation, uncongenial climate and high cost of living associated with living in identified locations.
Eligibility is based on defined geographic zones and comprised of two zones, Zone A (factors of isolation, uncongenial climate and high cost of living) and Zone B (less badly affected areas).
The tax offset for ordinary Zone A residents is accordingly higher than the tax offset for ordinary Zone B residents. A special category of zone allowances is available to taxpayers residing in particularly isolated areas within either zone.
Currently, to be eligible for the zone tax offset, a taxpayer must reside or work in a specified remote area for more than 183 days in an income year.
It is estimated that about 20 per cent of all claimants do not actually live full-time in the zones – many of these are FIFO workers.
This measure will better target the zone tax offset to taxpayers who have taken up genuine residence within the zones.
For those FIFO workers whose normal residence is in one zone, but who work in a different zone, they will retain the zone tax offset entitlement associated with their normal place of residence.
This measure will take effect from July 1, 2015.
Budget recognises significance of oil and gas industry
Treasurer Joe Hockey acknowledged the LNG industry in his budget announcement last night.
Mr Hockey said in the next five years, “we will become the world’s largest exporter of Liquefied Natural Gas”.
The positive LNG prospects were further reinforced in the Budget paper.
“Significant investments in LNG are still under development and will make a strong contribution to export growth in coming years,” the budget paper stated.
“Exports of LNG are set to nearly double over the forecast period as major projects in Western Australia, Queensland and the Northern Territory enter into their production phases.”
Big budget win for northern Queensland infrastructure
Queensland Resources Council Chief Executive Michael Roche welcomed the Federal Government’s announcement of a $5 billion infrastructure initiative for northern Australia.
“The Northern Australia Infrastructure Facility will help to build essential new road, water, electricity, airport and rail infrastructure in regions in the north that have long been hamstrung by inadequate infrastructure,” Mr Roche said.
“In particular this is great news for boosting the resource sector potential of Cape York and the North West minerals province.
We also welcome the confirmation from the Federal government of its commitment to invest $100 million in the Reef Trust, providing new money to improve Great Barrier reef water quality and combat infestations of Crown of Thorns Starfish.
Taken together with an additional $100 million from the Queensland government, this budget is further confirmation that both governments are serious about the health of the Great Barrier Reef.
The QRC also gives the federal government a tick for its overall fiscal strategy, which is driving the budget bottom line in the right direction without resort to damaging tax increases.
A change in economic growth
Australia’s future economic growth will come from different sources, according to the budget overview.
With the mining industry contributing to 45 per cent of growth at the moment, it is expected to decrease to 16 per cent.
“The Australian economy is entering its 25th year of economic growth. This is the second longest continuous period of growth of any advanced economy in the world. And it is expected to continue to grow even as we adjust to the end of the unprecedented boom in resources investment,” the budget overview states.
“The outlook globally is brighter with major advanced economies including the United States, the euro area and Japan all expected to strengthen.
“India is expected to become the fastest growing major economy this year and while growth in China is moderating from double digit rates seen in the last 10 years, it is still a major contributor to global growth.”
The overview states Australian services exporters will gain improved access to major markets, such as China, “but the economic outlook presents challenges for this Budget”.
“With growth in global commodity supply rising at the same time as demand from China cools, prices for our commodity exports have fallen. The fall in commodity prices has affected business and household incomes and is having a significant impact on government revenues.”
Iron ore impacts tax revenue
With the iron ore price almost halving in the last year, the budget overview has stated the industry “has been a key driver of economic growth and national income in recent times”.
“Iron ore investment and exports directly contributed 15 percentage points to economic growth over the past decade, while export values are now 14 times higher at $75 billion,” the overview states.
Iron ore investment is falling while exports are rising
The Federal Government has predicted the price of iron ore, the country’s largest export, will average $US48 a tonne in 2015-16.
This figure is significantly lower than the $US60 per tonne estimate given late last year.
The downward revision in the budget underpins a small deterioration in the government’s forecast deficit for 2015-16. The shortfall is expected to be $35.1 billion in 2015-16, up from the December forecast of $31.2 billion, and of $17.1 billion in last year’s budget.
The government expects the budget to return to surplus by 2019-20.
Treasurer Joe Hockey was positive about the prospects for iron ore demand when announcing the budget.
“Each year we send enough iron ore to China to build the Sydney Harbour Bridge, from Sydney to Perth, and then back again,” Mr Hockey said.
“The opportunities from Asia for our resources are enormous.”