Mining Sector Relieved to See No New Taxes in Australian Budget

Australia’s mining industry has expressed relief to see no new taxes in federal Treasurer Jim Chalmer’s recent budget.

“We were very pleased to see that the Albanese government supported the mining industry by ensuring there were no changes at all to tax settings,” said Tanya Constable, CEO of the Minerals Council of Australia, during an online forum on May 21.

“We did not get the much-talked-about cash flow tax; we didn’t get a new mining tax; and there were no changes to fuel tax credits,” she said.

“The budget showed that the government understands mining’s immense contribution to Australia’s economy, [and] to the jobs and regional communities that are needed to provide those services and products for Australia.”

She also praised the introduction of a two year “carryback” for losses, applicable to all businesses with up to $1 billion in annual turnover, and the commitment of $105 million to introduce artificial intelligence into the approvals process under the Environment Protection Biodiversity Conservation Act.

“That’s going to benefit the mining industry, and it will benefit the energy industry and the housing industry, because if we cut down time frames, it means that we get more projects onto the ground right across Australia,” she said.

Miners also welcomed changes to the skilled migration regime that means faster skills assessments for migrant trade workers and an acceleration of licensing.

Treasurer ‘Optimistic’ About Controlling Inflation: Economist

However, the council’s chief economist, Ross Lambie, warned that the economy has limited capacity to grow before inflation becomes a problem.

Chalmers, he said, had taken an “optimistic” view both of inflation and of the government’s ability to control spending on its largest items in the budget.

“Some of the assumptions with respect to spending growth are highly ambitious,” he said, although the budget deficit has improved on what was forecast a year ago.

“A lot is going to have to happen for the government to be able to rein in that spending growth, and those other areas outside of the NDIS [National Disability Insurance Scheme] are at risk of putting further pressure on the budget unless there is discipline on the spending associated with them.”

These were costs such as debt servicing, defence and health.

“With respect to real GDP growth, the budget has revised down GDP growth for every year except 2025/26, so we’ve still got a very weak economy [and] despite it being very weak, it has little capacity to grow without inducing inflation,” he said.

He pointed out that the Reserve Bank of Australia (RBA) is forecasting much weaker economic growth than the treasurer.

“So we’ve got an economy that’s basically running up against its speed limit, and to make matters worse, we are facing a few global headwinds, and the major one of those is what’s happening over in the Middle East,” Lambie said.

He cautioned that the country will be in deficit for “a considerable time” and that, without greater spending discipline by the government or strong economic growth, “the budget is going to be trapped in a deficit, and a consequence of that is the government is going to have to continue borrowing more and more to balance the books.”

Meanwhile, he noted the structure of the Australian economy had shifted towards greater provision of non-market services, he said, alluding to those provided free of charge or at a rate much lower than cost.

“These will create growing pressure on the government in terms of trying to rein in spending or change the way they are delivered to make them far more efficient.”

Tax System Positive for Miners: Lambie

For the mining industry, the budget was generally positive, Lambie said, with a stable tax system necessary to maintain international competitiveness. Measures to bolster fuel security were also welcome.

“But there are also issues that we really need to closely monitor: in particular, changes to the R&D [research and development] tax incentive in terms of just what the impact is likely to have on mining businesses,” he said.

The budget announced a major overhaul of the Research and Development Tax Incentive (RDTI) to tighten eligibility and increase rewards for experimental core activities.

Key changes included boosting core R&D offset rates by 4.5 percent, removing the eligibility of supporting activities, and restricting refundable offsets to companies under 10 years old.