WA Chamber says government budget blowout highlights need for resource sector support
The big hole in the Treasury’s mid-year economic and fiscal outlook has confirmed the critical importance of the resources sector to the nation, according to industry proponents.
Federal treasurer Jim Chalmers earlier this week revealed a $21.8 billion blowout in budget deficits and commonwealth debt climbing through $1 trillion in the coming year.
The treasurer also confirmed that Australia’s significant mid-term budget downgrade is due to a sharp decline in mining sector earnings.
$100b drop in earnings
The government’s mid-year budget featured a decrease of $100b in mining earnings, driven by China’s faltering construction sector and reduced export returns from iron ore, lithium and nickel.
Chamber of Minerals and Energy (CME) WA chief executive officer Rebecca Tomkinson said the result confirms the critical importance of the resources sector to the nation, adding that when the resources sector struggles, Australia struggles.
“These downgrades must act as a wake-up call for the commonwealth government to the substantial challenges confronting Western Australia’s resources sector,” Ms Tomkinson said
“Harmful policy is no longer just a handbrake on the growth of industry—for some commodities, it is now an existential threat.”
Controversial reforms
Ms Tomkinson said industry continues to advocate for the repeal of several key aspects of recent federal industrial relations reforms.
“Disconnecting wage rises from productivity gains and opening the door to widespread industrial action has substantially increased investment risk,” she said.
“CME continues to support reforms that are better for the environment and better for business, but the proposed Nature Positive laws, as currently drafted, achieve neither objective.”
Ms Tomkinson said legislating production tax incentives for renewable hydrogen production and critical minerals processing – the key plank in the government’s Future Made in Australia plan – must be prioritised.
“The road to net zero should run through WA–but it won’t without recognition that we are competing against jurisdictions that are rolling out the red carpet for downstream processing.”
Chinese impact
Treasurer Chalmers said changing demand from China has had a “substantial impact” on the Australian bottom line.
“This is a particularly slow and soft period in the Chinese economy and, even with the very welcome announcements made by the administration about efforts to boost growth, we still expect growth in the Chinese economy to be quite weak,” he said.
“That’s played out in our expectations of mining exports, company taxes and the like.”
“I’m an optimist about the future of Australian resources and the workers and investors and businesses that make up that key industry—I’m very optimistic,” he said.