Tough Love Budget 2014 and What it Means for Mining

Joe Hockey’s ‘tough love’ budget was delivered last night heralding a new era of government, not for the faint of heart, but surprisingly gentle on the mining sector.

As expected, the controversial carbon tax and mining tax have been cut in favour of a debt levy squarely aimed at the big end of town. Look out if you earn over $180,000.

But what else does the budget mean for the mining and resources sector? It’s a mixed bag really…

The good bits:

• The government has backed the Exploration Development Incentive that provides a tax break for junior miners and exploration companies. These smaller companies and their investors are the future of mining in this country and without them there’ll be a shortage of mines in the future. Michael Roche, head of the Queensland Resources Council, believes there are less than 20 years of proved and probable mineral reserves left in the key mining area of north west Queensland. Now that’s a worry.

• Infrastructure was one of the few areas not to feel the keen edge of Hockey’s hatchet. Many projects essential to mining activities will go ahead including the Scone Level Crossing in the Hunter Valley, the Toowoomba Second Range Crossing and upgrades to the Great Northern Highway in WA as well as a number of key roads in the Northern Territory.

• While the youth coped a general savaging in this budget, one small ray of light is the concessional loans scheme designed to encourage the take-up of trades training. This will be welcomed by the mining sector currently struggling under a skills shortage.

The bad bits:

• Half a billion dollars has been cut from Commonwealth funding of carbon capture and storage technology development. This is a concern, not only to the environment, but also to future energy security in this country.
• Funding of education and health has been cut. Because who needs those things right? The States will now have to scramble to make up the difference, which could lead to increases in mining tax and royalties. Watch this space.