PERTH (miningweekly.com) – The Minerals Council of Australia (MCA) has called for economic reforms to boost investment in the resources sector, after the federal Budget revealed that the industry is accounting for a significant portion of revenue.

The MCA’s interim CEO, David Byers, said on Wednesday that the record resources exports of A$207-billion in 2017 underscored the importance of the minerals industry to economic prosperity.

Treasury is forecasting growth in mining exports of 4% in 2017/18 and 6.5% in 2018/19, while mining industry capital expenditure is expected to grow by 3.5% in 2019/20 as mining companies maintain the capital stock built up during the mining investment boom.

By 2019/20, Australia’s mining exports will have roughly doubled since the start of the mining investment boom. This is boosting wages, jobs and tax revenues for all Australians, Byers said.

“The mining sector is also making a major contribution to the A$5.2-billion increase in company tax receipts since the Mid-Year Economic and Fiscal Outlook estimates last December,” he said.

Further, the Budget papers show that Australian business will contribute more than A$100-billion a year in company tax payments by 2021/22.

“This highlights the fundamentally important role played by mining and the wider business sector in helping to fund the education, healthcare and social services that Australians rely upon.

“Rising company tax collections, together with growth in individual income tax payments, underpin the improvement in the Budget balance over the forward estimates.”

Byers added that while the cyclical upswing provided a welcome short-term boost, and enabled income tax relief, the government should pursue structural reforms to deliver long-term improvements to the Budget position and the economy’s growth potential.

“The Budget’s investments in infrastructure, including in national science and research infrastructure, are important new measures that will contribute to economic growth.

“The government should also use the Budget as the impetus for fresh economic reforms to drive the investment and growth needed to deliver jobs and prosperity into the future.

“Only a genuine reform programme, which boosts investment and workplace productivity, can deliver the strong and lasting growth required for serious budget repair,” Byers said.

He noted that these reforms should include a comprehensive deregulation and competition policy agenda, a more flexible and productive workplace relations system and streamlined major project assessment processes.

“Parliament must also pass the Enterprise Tax Plan to improve the international competitiveness of Australia’s corporate tax rate and encourage business investment,” he added.

The Association of Mining & Exploration Companies (Amec), meanwhile, welcomed the continued funding for the Junior Minerals Exploration Incentive (JMEI) and the Research and Development Tax Incentive.

The JMEI will consist of A$100-million of direct tax offsets which will be available over the next four years, allowing mineral explorers with no income to renounce and pass future tax deductions to their Australian resident investors.

“The JMEI will encourage much needed investment in Australian greenfield mineral exploration,” said Amec CEO Warren Pearce.

He added that the continued funding of the Research and Development Tax Incentive would also encourage companies to invest in innovation, saying that there was substantial investment in this sector from the mining industry.

“The Budget’s focus on cutting waste, and educing unnecessary spending and red tape are essential. The government should remain focused on ‘growing the economic pie’, maximising Australia’s natural resource potential, including developing battery mineral processing and manufacturing,” Pearce said.

He noted that the corporate tax rate was a key part of the cost of doing business in Australia, and the government’s commitment to Australia’s competitiveness should be supported by the Parliament.

“The funding for the JMEI, the Research and Development Tax Incentive and the potential for future company tax cuts are all positives for the mining and mineral exploration industry,” said Pearce.

Federal Treasurer Scott Morrison revealed legislated tax cuts for about 3.3-million small and medium-sized Australian businesses during his Budget announcement, while also giving small businesses access to the A$20 000 instant asset write-off for a further 12 months, creating more opportunities for investment and replacing or upgrading assets.

“This is part of our commitment to the full Ten Year Enterprise Tax Plan, which will see the company tax rate reduced to 25% over ten years for all businesses, ensuring Australian businesses can remain competitive in the global economy,” Morrison said.