Read the full submission here: MCA Pre-Budget Submission 2025-26
Australia's enviable economic reputation is under significant threat.
Economic growth remains weak. Productivity continues to languish. Inflation has depressed consumer confidence and distorted household spending, causing a substantial fall in real disposable income.
Business conditions are sluggish, constraining investment and job creation. Businesses invest in innovation, but the potential is not realised in the face of negative and derogatory politics aimed at those committed to creating prosperity and opportunity.
And the outlook, both here and abroad, remains challenging, with no genuine signs on the horizon of a material and sustained turnaround in economic growth, productivity and investment.
This alarming picture is driving dangerous pressures on the government's budget position; creating a tendency toward wasteful spending and a lack of fiscal discipline.
Without a proper economic vision for prosperity, the government does not have the tools to distinguish between worthy and wasteful spending, creating a risk for the future.
December's Mid-Year Economic and Fiscal Outlook (MYEFO) brought into stark relief the challenges facing the economy and the government's fiscal position over the coming years. The budget is projected to remain in deficit for at least the next decade. There is a growing risk of the budget deficit deteriorating if there are increasing demands for government spending and a lack of fiscal discipline, along with smaller tax revenue upgrades than successive governments are accustomed to. The fiscal quandary this presents for the government is occurring when gross debt is around one trillion dollars and there are headwinds to economic growth from domestic and international inflationary pressures, high interest rates, low productivity growth along with a volatile geopolitical environment.
While the government incorrectly blamed mining for revenue downgrades in MYEFO, the prevailing market conditions in mining are more likely to result in a $4 billion to $6 billion upward revision of company tax receipts 2024-25.
The past two budget surpluses could not have occurred without the economic contribution of the mining industry. It was unforeseen revenue upgrades, partly thanks to mining revenues, that turned two forecasted budget deficits into surpluses. With this considerable influx of tax revenue from mining, the government has basked in an unprecedented boost to its spending power.
Unfortunately, rather than using this additional revenue to undertake long-term budget repair, the government has allowed spending to rise to unsustainable levels, missing a golden opportunity to show fiscal restraint and ensure that Australia's finances remain healthy for future generations. Tough decisions on spending have not only been delayed, but dismissed outright, showing a lack of economic judgement and discipline.
Reviving Australia's long-term economic growth must be the top policy priority of the government. Any serious attempt to alleviate the structural budget deficit and reduce public debt requires a growth agenda that prioritises policies and actions targeted at lifting the nation's productivity without adding additional pressures to the budget bottom line. Lifting productivity requires both the government and business being better at what they do - improving their efficiency. The government and business must also be better at working together.
The MCA has ten recommendations for the 2025-26 federal budget that will help the government lift the living standards of all Australians by ensuring mining remains a vital pillar of our nation's prosperity.
These recommendations address the key barriers to investment, productivity and growth, both within the minerals sector and across the broader economy. They focus on removing regulatory blockages, improving workplace flexibility and strength, and ensuring Australia reverses the alarming decline of its global competitiveness through enabling tax and energy policies.
They also build on previous policy recommendations from the MCA that have delivered significant outcomes and opportunities for the sector, specifically junior exploration companies.
These recommendations are straightforward and designed for immediate impact, strengthening the sector and the broader economy, while building on the mining industry's immense contribution to Australian communities and fiscal stability.
If the government was serious about unlocking Australia's vast resource potential, and providing prosperity to Australians for generations to come, it must get the policy fundamentals right first.
The hour is too critical and the opportunity too immense, for piecemeal policy reform. It must be bold. It must be focussed on making the Australian economy stronger and more competitive, one that attracts investment, drives innovation, and creates jobs. Too often the reverse has been true, where targeted policy has dragged our economy backwards.
Band-aid solutions, tax incentives and all the positive rhetoric in the world will not be enough to revitalise Australian industry, boost lagging productivity, and attract the necessary investment the nation's struggling economy requires.
It requires a holistic approach to policy reform - building the blocks that will enable growth, but also dismantling unproductive and costly policies that are holding Australia back from realising its potential.
This means addressing Australia's uncompetitive tax regime and resisting the urge to impose further imposts to suit ideological positions, or cover for overspending. It means scraping the government's reckless industrial relations changes that are strangling productivity and have made doing business in Australia more expensive. It means embracing energy solutions that drive down costs, strengthen increasingly fragile energy grids, and turbo-charge our industrial capacity.
Fix these fundamentals, and investment will flow - without the need for unnecessary government spending.
It is futile for the government to expect business to do the heavy lifting in strengthening the economy when policies are making it harder for them to become more efficient. Inefficient regulation is making it increasingly difficult for project proponents to seek approvals and invest. Onerous aspects of the new workplace relations regulations will weaken the job market and make Australian businesses less competitive. By limiting the scope of technologies considered for clean energy generation, such as nuclear, the federal government risks overlooking least-cost, efficient solutions and imposing internationally uncompetitive energy costs on the economy.
The Australian economy needs the government to implement a strong productivity growth agenda combined with greater fiscal discipline to ensure public spending is efficient. Repairing the budget by strengthening the economy requires the government avoiding both wasteful spending and exposing taxpayers to high-risk endeavours that may undermine the net worth of the government's balance sheet.
How policy is developed and implemented is as important as what policies the government chooses to focus on. We urge the government to become more efficient in its functions by improving the way policy impacts are assessed, that is each policy should not be considered in isolation, and improving stakeholder consultation and effective collaboration, and moving to a fiscal strategy based on disciplined spending and accountability, such as public fiscal net worth.
The MCA would like to see policies that drive greater efficiencies in the economy.
Businesses need certainty in policy settings to make investments and flexibility in how they operate. A commitment from the government to no new taxes and ensuring business tax settings like the fringe benefits tax (FBT) and accelerated depreciation rules are fit-for-purpose to encourage investment.
Productive workplace relations are crucial for business efficiency. As a priority, the productivity- destroying workplace relations changes introduced by the government should be reversed along with a commitment to not impose further changes, which will remove a substantial risk to Australia's international competitiveness.
The government can play a more active role through industry policy in driving the investment needed to reshape the economy. The announcement of the $3.4 billion precompetitive geoscience funding last year is an excellent example, but this should be made permanent. To build on this, public investment in junior explorers is required. Continuing the Junior Mining Exploration Incentive (JMEI) also as a permanent scheme and removing the cap on credit allocations will ensure junior explorers have the certainty and flexibility to continue to find the mineral deposits of the future while delivering a high return on public investment. Allocating $20 million over the next four years to fund mobile assay laboratories for junior explorers will alleviate some of the cost pressures of exploration activities.
Public provision of infrastructure can catalyse investment in critical minerals. Coordinated development of common user infrastructure between federal, state and territory governments will accelerate the establishment of new minerals mining and processing provinces. The MCA proposes the first area for consideration is the corridor between the West Arunta and the Port of Wyndham.
The costs imposed by government regulation is an impediment to mining investment. Streamlining the current environmental regulatory framework, along with eliminating duplication in environmental and climate change polices between jurisdictions, will reduce costs for project proponents.
An efficient energy transition uses a total system cost approach that considers all technologies to balance short term costs against affordable, secure, clean energy in the long run. Removing the prohibitions on nuclear activities, including uranium mining, in the EPBC Act and considering all clean energy technologies, will provide the best chance of achieving long run competitiveness for businesses.
Host communities are critical to the success of Australian mining and the industry fosters relationships at a local level to ensure that heritage is preserved and benefits flow to them. Removing the duplication of existing legislative frameworks of industrial relations and taxation from the Community Benefits Principles in the Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024 (FMIA (PTCOM) Bill) will improve economic empowerment in Traditional Custodian communities. The MCA proposes redirecting government funding from the Environmental Defenders Office to the Aboriginal and Torres Strait Islander legal services to ensure culturally appropriate legal representation and for the government to establish a sustainable funding model for Prescribed Bodies Corporates.
The minerals industry has an important role to play in lifting Australia's productivity growth by remaining a vital pillar of the economy. Acknowledging the industry's strength - the combination of things that it does better than any other sector in the economy - and looking to how policy can leverage mining to capture opportunities further along value chains provides Australia the best chance of achieving higher and secure living standards.
