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The 2021-22 federal Budget will be constrained by the persistence of COVID-19, geopolitical tensions, heightened demands on federal and state governments and record government debt.

Fiscal and regulatory settings that support a business-led recovery through private sector driven investment growth and improved productivity will be crucial to supporting economic recovery, preserving and creating jobs and sustaining communities.

This expansion can accelerate budget repair without new or increased taxes.

A strong commitment to internationally competitive tax rates, open trade and investment, modernising training and skills, a more productive workplace, simpler project approvals, support for regional communities, a focus on the emerging critical minerals and their potential to add value through a renewed Australian manufacturing base, will contribute to Australia’s resilience and should remain priorities in this Budget.

The Australian minerals industry continues to drive prosperity in Australia, making substantial contributions to exports, wages, jobs and government revenue. The resources sector contributed $283 billion in 2019-20, 60 per cent of Australia’s total exports. In the same year, mining became Australia’s largest industry, accounting for 10.4 per cent of real gross domestic product. Treasury expects resources exports to grow by 5 per cent in 2021-22 powered by iron ore, coal and gold.

When Australia needed it most, the minerals industry and its workforce worked with governments to keep an essential industry going. The continuation of operations through the worst of the COVID-19 pandemic while keeping workers, families and communities safe demonstrated the value of mining’s strong health and safety culture and the industry’s leadership in developing globally-recognised health and safety protocols.

Australia is a reliable partner with a proven performance in the face of extraordinary conditions, such as the disruption caused by the pandemic, and with the right economic reforms can do more.

Mining provides a strong skills base in Australia’s regions. The industry employs approximately 8,600 apprentices and trainees and in coming years will provide 5,000 new mining apprenticeships, mostly in regional Australia.

First Nations landholders and communities are fundamental partners in mining and the economic and social contribution the industry makes to Australia. The minerals industry’s approach to Indigenous engagement is based on respecting and valuing Aboriginal and Torres Strait Islander cultures, histories and aspirations and ongoing learning and improvement. Increased support to better administer the Commonwealth’s heritage protection safeguard should continue.

The Australian minerals industry paid $25.2 billion in company tax (more than one-quarter of all company tax) and $14.1 billion in royalties in 2018-19, benefiting all Australians through better services and infrastructure. The recent Mid-Year Fiscal and Economic Outlook has already identified mining’s contribution to the anticipated improvement in this financial year’s Budget position. New taxes and levies or increases in tax rates would undermine the recovery task.

Reforms that encourage investment in large and long-life mining projects bring benefits to workers, communities and governments. The government’s planned reforms to environmental regulation, workplace relations rules and education and training will help Australia realise mining investment opportunities.

The MCA has identified 31 minerals projects at or above the $500 million threshold that have completed a feasibility study. The combined $31 billion in investment flowing from these projects could create more than 17,000 construction jobs and 11,000 ongoing operating jobs across Australia.

In addition, emerging demand for new materials – refined rare-earth and high performance metals – presents a unique opportunity to create new manufacturing opportunities in Australia at a larger scale. Government policy that directly encourages these opportunities can deliver jobs and tax revenue into the future.

Government policy should also seek to create conditions supporting industry investments in new technologies aimed at reducing emissions in the ongoing pursuit of the Paris Agreement goals.

Doubts over Australia as a welcome investment destination are increasing. The government should immediately announce a review of its recent changes to the foreign investment framework, given the urgent need to reduce risk and uncertainty for those sectors that do not directly affect national security.

Open and integrated trade and the prosperity it delivers are underwritten by a rules-based international order that provides global certainty and stability. The government should continue to invite constructive dialogue and a supportive environment for continued industry and business partnership, cooperation and trade, forging relationships that have in many cases developed over more than fifty years and supported economic growth, jobs and prosperity in Australia, China and the Asia-Pacific region.

Trade has been disrupted by the COVID-19 pandemic and geopolitical tensions through 2020. Some commodity markets, such as iron ore, gold and copper, have recovered and suppliers are benefiting from strong demand and high prices. Australia’s coal exports are adapting to China’s import restrictions with exports to India and Vietnam rising in late 2020 albeit at lower prices relative to those paid by the Chinese market. There is considerable downside risk for Australian coal producers should geopolitical tensions persist while competitor nations increase supply.

The threat to Australian jobs and prosperity will increase with global COVID-19 recovery as other nations seek to increase their share of commodity trade as part of their COVID-19 recovery stimulus measures.

The MCA provides the following specific recommendations to support Australia’s competitive position, economic recovery, employment growth and national prosperity.

MCA Pre-Budget Submission 2021-22.PDF

MCA Pre-Budget Submission 2021-22.PDF