The government had again undermined long-standing bipartisan taxation arrangements for the industry by changing thin capitalization rules and exploration tax arrangements. These detract from Australia’s reputation and attractiveness for investment, ACA acting chief executive Greg Sullivan said.
“Australia is one of the world’s highest cost locations and with low coal prices and a high Australian dollar, the industry is facing the most difficult operating conditions for more than a decade. The government has missed the opportunity to deliver stability and certainty to encourage growth for the long term.
“With around 9000 jobs lost in the last 12 to 15 months and the recent postponement of multi-billion dollar projects, a priority for the government should have been to build Australian industry’s competitiveness and productivity.
“Instead, this government has delivered more tax, more regulation and more uncertainty. This simply adds up to fewer jobs, less growth and less investment for the future.”
Coal is one of Australia's most important commodity exports. In 2011-12 alone, coal exports contributed $48 billion dollars to the Australian economy, Sullivan said.
Australia needs a stable and competitive taxation regime, certainty and efficiency in regulation, and long term investment in innovation and technology, he said.
The decision to cut $500 million from the Carbon Capture and Storage (CCS) Flagships program was short-sighted given the International Energy Agency’s recent call for governments around the world to increase their investment in CCS, Sullivan said.
“As a global community we are massively reliant on fossil fuels and CCS is the only proven technology that can substantially reduce emissions from carbon intensive industry.
“Not only is cutting CCS counterproductive from a climate perspective it also undermines the future strength of our coal export industry which delivers vital jobs and revenue for Australia,” he said.
The industry was looking for the government to encourage exploration expenditure through the introduction of a tax credit system that allows companies to voluntarily pass to shareholders a credit for losses created on exploration, according to Grant Thornton Australia tax partner Peter Hills.
“Encouraging exploration is critical for the industry at a time when greenfield exploration is at an all-time low due to commodity prices and a lack of new capital injection, combined with a number of larger resource companies abandoning proposed expansion,” he said.
“Unfortunately, no such measures were provided for in this year’s budget.”
