Miners may shift from building to buying
Economic uncertainty and market volatility have kept merger and acquisition volumes in the mining sector in check so far this year, although there remains scope for less speculative activity across the rest of the year, according to The Australian.
According to an Ernst & Young report, while resource nationalism and macro-economic issues have created a tough environment for investment decisions recently, rising capital costs and softening commodity prices may force major miners to shift their focus from building operations to buying them.
Abbott backs Chinese holdings in Australia
Tony Abbott will indicate his support for Chinese investment in northern Australia and his embarrassment at the White Australia Policy, during his first visit to Beijing as Opposition Leader, according to the Australian Financial Review.
Abbott will make the remarks in a speech on Tuesday morning, when he attempts to balance Australia’s alliance with the US and the economic relationship with China.
In an apparent concession to the more free-trade minded elements of the Coalition, Abbott indicated he would not abandon Labor’s plans to encourage the development of Australia’s north.
“We won’t neglect the development of northern Australia, which could be a food bowl for Asia,” he will tell the China-Australia Chamber of Commerce. To achieve this, the Coalition will shortly release a policy based on over 12 months of consultation.”
Doubts grow over surplus promise
Prime Minister Julia Gillard has insisted the federal government will meet its budget target, despite growing concerns that falling commodity prices will make it impossible to deliver the politically essential $1.5 billion surplus this year, according to the Australian Financial Review.
“The budget will return to surplus,” Gillard said amid fresh warnings that a failure to properly fund potential big-ticket items such as the National Disability Insurance Scheme could leave the nation’s economy with a structural deficit and vulnerable to economic shocks.
Former Reserve Bank of Australia board member Warwick McKibbin said the federal government realised its chances of winning the next election were so low that it could promise whatever it liked for future years.
McKibbin said budget revenue shortfalls were “fairly likely” given the global backdrop of falling commodity prices and turmoil caused by Europe’s debt crisis.
“You’re better off admitting the current state of the world economy and then outlining the appropriate response of fiscal policy,” he said.
