Wins for green mining dreams, but business bemoans Federal Budget for missing big picture on productivity

Jim Chalmers’s pre-election budget has failed to deliver big economic reform at a time when the country’s prosperity is under threat, business lobbyists have warned. Productivity has been falling and a US-led trade war is worsening, sparking an industry-backed push to sharpen Australian competitiveness. The Treasurer pledged $17 billion of income tax cuts but projected four consecutive deficits tallying more than $150 billion. The Minerals Council of Australia, Committee for Economic Development in Australia, and the peak lobby group for businesses all said the government needed to think long-term. Minerals Council boss Tania Constable said businesses had been weakened by rising energy prices, red tape and uncompetitive industrial relations policies. “You can’t champion Team Australia while sabotaging Australian industry,” she said. “Australia’s ability to respond effectively to global trade pressures and tariffs has been severely compromised by domestic policies that have eroded our industrial base and competitiveness.” Ms Constable lashed the budget as “another missed opportunity to safeguard Australia’s economy”. Australian Chamber of Commerce and Industry chief Andrew McKellar said the budget — expected to be a $42bn underlying cash deficit — was treading water. “This is a budget which seems preoccupied with the short term, lacking a longer-term strategy to drive stronger economic growth by strengthening productivity and competitiveness,” he said. “As expected, the underlying cash balance projection shows a return to ongoing structural deficits for the foreseeable future. “This is going to place significant constraints on our ability to weather future economic challenges, or to undertake essential reforms”. Also raising the alarm about the need for better finances was CEDA chief economist Cassandra Winzar. That would prepare the country for international shocks, she said. “Like too many budgets from both sides before it, this Budget does not address the issues that threaten to derail Australia’s strong economy over the longer-term,”Ms Winzar said. “We must stop baking in ongoing spending decisions without addressing how we will pay for them.” She said structural problems had been masked by boosts from strong commodity prices and tax revenue. But Ms Winzar welcomed changes to non-compete clauses for workers and national licencing rules for electricians as measures that would boost productivity. Economists from Moody’s Analytics and Betashares thought the budget would not add significantly to inflation pressure. “The budget shows noteworthy restraint not stoking inflation,” top Moody’s economist Katrina Ell said. WA’s bedrock resources industry welcomed promised funding to try and cultivate a renewable-powered iron and aluminium manufacturing industry. But the sector was generally scathing about a lack of stronger action on approvals and industrial relations. Slashing red tape and walking back workplace reforms introduced by the Federal Government last year had been a big ask from WA businesses, particularly in the State’s iron ore sector as it faces a growing union movement. Minerals Council chief Ms Constable specifically called out the purported omission of a Junior Minerals Exploration Incentive as a “clear message” that “Australia’s mining industry was being “ignored at precisely the moment we should be securing our resource future.” Explorers had been angling to have the scheme doubled and renewed to keep investor dollars flowing into mineral pursuits. “The decision is a severe setback for exploration investment, undermining investor confidence and weakening Australia’s long-term mineral resource pipeline,” she said. “Rather than implementing urgently needed reforms to strengthen productivity, attract business investment, and control spending, the government has missed yet another opportunity, continuing to rely on mining revenues to cover uncontrolled expenditure.” Association of Mining and Exploration companies chief executive Warren Pearce was hopeful “both major parties will address measures in the upcoming election to support the exploration sector in Australia”. “Without exploration you can’t find the mines of the future,” he said. Chamber of Minerals and Energy WA chief executive Rebecca Tomkinson welcomed confirmation that measures the group had lobbied on — including funds for a nascent green iron industry — were locked in. The group also spruiked the WA resources industry’s role bringing in revenue and that the minerals and energy the State was producing were the “critical ingredients” needed to deliver low-emissions technology. Among the funds earmarked were a $2 billion aluminium production tax credit kicking off in the 2028 financial year, a $1 billion green iron investment fund, and a $750 million green metals innovation fund. But ultimately Ms Tomkinson said the budget had failed to include more solid measures to “improve Australia’s attractiveness” as an investment destination and lure more funds to deliver them. “The missing piece is fundamentals that give business the confidence to deploy their capital in Australia – including affordable and low-emission energy, efficient project assessments and stable and predictable workplace laws and environmental reforms,” she said. As part of the Budget the Federal Government has pledged to establish a new so-called ‘Front Door’ for investors with “major transformational proposals”. According to budget papers this initiative will act as a “single entry point” and make it simpler to invest in Australia by helping the Government identify “priority projects and those projects with coordinated facilitation services.” A pilot of this programme is due to start in September. Chamber of Commerce and Industry WA said the budget brought “modest support” for business, but the group raised concerns about a lack of solutions to fix productivity. “Australia needs an industrial relations system that is flexible and modern, we need an approvals system that doesn’t leave major projects in limbo for years, and we need to send a message to the world that we are open for business,” he said. A $20 million spend on a ‘Buy Australian’ campaign to boost local businesses in the face of an increasingly unstable trade environment, was also given kudos.