Contact: Neil Ward
Deloitte
Tax Partner
0411 269 703

Contact: Anna Brown
Deloitte
Media and Communications
0419 214 913

Contact: Bhavesh Morar
Deloitte
Partner Assurance & Advisory
(02) 9322 7176

Commenting on yesterday’s Federal Budget release, Deloitte head of Mining Bhavesh Morar said the Budget failed to address the capacity constraints currently facing the sector and capping its ability to underpin continued Budget surpluses.

“The current shortages of professional, skilled as well as unskilled and ancillary services labour across the resources sector nationally have not been comprehensively dealt with by the measures announced in the Budget. Nor have the soft or hard infrastructure issues impacting productive capacity been addressed in any significant way.

“The $1000 incentive for first and second year apprentices is a welcome start to addressing the anticipated future increases in shortages of skilled/semi-skilled labour, but makes no impact on existing levels of shortage.

“Of equal importance is the current lack of engineers however there is nothing in the Budget to attract university entrants into engineering related degrees nor, in the immediate term, to further attract skilled workers to Australia.

Mr Morar said the Budget also failed to address the ‘soft’ infrastructure issues facing much of the sector - namely the educational, medical and other social infrastructure required to alleviate the frontier-like amenities currently acting as disincentives to workers relocating to remote locations.

“In the absence of Federal Government initiative there is not even encouragement for business to
invest in this infrastructure, despite the fact that its provision is of a long term nature and of greater benefit than to the resource sector alone.

On the issue of transport related infrastructure, Mr Morar said “The sector looks forward to the detail of how the $22 billion over 5 years will be allocated.

“On the positive side corporates in the resource sector with annual turnover in excess of $100 million will welcome the proposed changes announced in the Budget that will once again allow them to recoup same business test (SBT) losses,” according to Deloitte Tax Partner, Neil Ward.

“The changes mean companies will be able to seek amendments to their tax returns retrospective from 1 July 2005.

“This could also improve their balance sheets as such losses would have been previously unrecognised.

“Corporates in the resource sector who will benefit most will be those with start-up losses on their operations.”