NSW Budget – positive but decline in business investment a concern

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The NSW Government should be commended for delivering a responsible Budget based on strong fiscal discipline that increases investment on essential services and infrastructure while also tackling the state’s debt levels.

“The Budget also contains some welcome additional funding for mining region infrastructure. However the Budget also confirms a weakness in NSW business investment, and includes royalty forecasts that will be tough to meet without policy support from the Government,” NSW Minerals Council CEO, Stephen Galilee said today.

“Today’s allocation of an additional $100 million the Hunter Infrastructure Investment Fund (HIIF) is welcome. However, unlike the pattern of previous HIIF funding allocations, it is important that the Upper Hunter receive its fair share of funding,” he said.

“Investing an additional $87 million in the important Resources for Regions Program will also provide a boost to infrastructure in mining communities in the New England North West, Central West, Hunter and Illawarra.”

“This is a good start, but more is needed.  Mining communities will be looking for increased and ongoing funding for the Resources for Regions program before the next state election. The eligibility for Resources for Regions funding should also be increased to enable more mining communities to participate,” he said.  

“Two years ago in the 2012/13 Budget, mining was ambushed with nearly $80 million in new fees and levies. Mining workers across the state will be relieved that this year the NSW Government has resisted the temptation to impose further new taxes and levies on the sector. Mining is currently doing tough, we have seen thousands of jobs lost, and any new costs would have been likely to mean even further job losses.”

“As with previous years, the Budget notes the important contribution mining makes to the NSW economy, confirming that over 2013/14 mining delivered $1.36 billion in royalties, helping to fund services we all use like schools, hospitals, emergency services and public transport,” Mr Galilee said.

“However, the NSW Government continues to underestimate the impact that a combination of uncertainty surrounding the NSW planning system, a high Australian dollar and a fall in commodity prices is having on future royalty revenue.”

“Last year’s Budget forecast an increase in mining royalties of around 14%. This year’s Budget papers reveal that In reality, royalties over the last year were 10% lower than forecast.  This year the Budget forecasts an increase in mining royalties of around 17% in 2014/15. This increase will not be realised without the right policy settings from the NSW Government, starting with changes to the planning system that provide the certainty needed to attract further investment.”

“The Budget papers also indicate the relative strength of the NSW economy is being propped up by household and government spending, noting that NSW has experienced a decline in business investment in the mining and non-mining sectors over 2013-14.”

“This is a worrying warning sign for the NSW economy. If NSW is to truly become the first state in Australia to do business, more must be done to attract greater business investment, including in mining,” Mr Galilee said.

“As the Budget specifically notes, mining investment in NSW has fallen by 45% in the last four years. We are already seeing the impacts of this with over 2,000 jobs lost in mining in the last 18 months,” he said.

“Mining is going through tough times and its real jobs of real workers and their families on the ground that are being affected.”  

“It’s vital that in the lead up to the next election there is a renewed focus on attracting mining investment, to protect mining jobs, and to ensure that our state’s largest export industry can continue to deliver economic strength for our state,” Mr Galilee said.

Contact:

Chris Rath