Industry News

Exploit the best of the Budget

In May, Treasurer Wayne Swan brought down the Federal Budget for the 2012-13 financial year. Contrary to rumours, there were fewer shocks for the extractive industries than expected.

It was no surprise that the Federal Government dishonoured its promise of a one per cent cut in the corporate tax rate. Given that small businesses at large ? including small quarry operations ? do not meet the definition of being a ?small? business, then it seems the corporate tax ?cut? is spilt milk not worth crying over.

It will impact on the majors and some medium size companies in the industry but most small mines and quarries could not have claimed the deduction anyway. Nevertheless, small businesses may be eligible to claim losses of up to $1 million back against tax they have paid in the last two years.

Far more important was the retention of the $5 billion rebate on diesel fuel tax. In the lead up to the Budget, the Greens lobbied the Federal Government to scrap the diesel tax credit, arguing that it was a ?subsidy? to the resources industry.

The mining, quarrying and extractive industries can reclaim 38 cents per litre on their diesel usage because their heavy vehicles operate on private roads and haul roads within quarries and mines.

Had the rebate been scrapped, it would have been a blow to many extractive businesses. The extractive industry will lose 6.2 cents per litre on its diesel usage when the carbon tax is introduced on 1 July. Some quarrying and extractive businesses that run their own on-road truck fleets have been hit by a further 2.4 cent per litre drop in the excise rate anyway, as agreed by all tranport ministers at the Standing Council on Transport and Infrastructure meeting in February. No doubt quarry operators are relieved that the rebate was retained.

There was a modest expansion of the Government?s Nation Building Program in the Budget, including an additional $3.5 billion for the duplication of the Pacific Highway. This program will assist with keeping the demand for aggregate from capital works projects high.

The Government?s approach is still considered short-sighted by some industry groups but given the construction industry is suffering from the effects of the two-speed economy (see page 9), the quarry industry will be keen to supply aggregate to as many infrastructure projects as possible.

There were some sweeteners for industry in the Budget. The Government reaffirmed its commitment to funding the vocational education training of 33,000 new and existing workers in the National Workforce Development Fund and enhancing the services of Enterprise Connect to help improve the competitiveness of Australian SMEs.

Although SkillsDMC and Enterprise Connect have for some time encouraged businesses to engage in these programs, the take up by the quarry industry has been slow.

As the new fiscal year approaches, I encourage all SME quarry operators to make skills training and business innovation a priority. As is common at Budget time, governments are criticised for taking money from the kitty but are rarely acknowledged for offering SMEs opportunities and funding to improve their businesses. Why not utilise the opportunity if you are capable of doing so?

The case for education and innovation funding will become more critical when the carbon tax is introduced in July. Rather than whinge about lost tax breaks, businesses should focus on what they can do to make their operations more efficient.

If that means collaborating with government departments on worthwhile projects, then why not? Getting into bed with the devil is pragmatic – albeit uncomfortable! You may in the long term earn back some of the expenses that you incur through cuts to the fuel diesel rebate.

When it boils down to it, governments rarely please stakeholders, whether that be the IQA, CCAA, Minerals Council, unions, charities and green groups; they can never please everyone all of the time. With the carbon pricing scheme dawning on us, the extractive industries should exploit the opportunities that are available, not hanker for the ?could?ve beens? that a Budget will not deliver.

DAMIAN CHRISTIE
Editor

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