Resources boom falls to earth
The federal government’s chief commodities forecaster has warned that the shelving of $150 billion mining and energy projects over the past year and $29 billion in cost blowouts means the resources construction boom has peaked and is likely to fall sharply through the next half decade, according to the Australian Financial Review.
The Bureau of Resources and Energy Economics reported that $350 billion in committed and potential projects may slump to $25 billion in 2018, half of what it was when the boom began in 2003.
Economists said the difficult economic transition would take years because other parts of the economy wouldn’t cover the fall in resources investment. Interest rates will stay low because of weak economic activity.
“Australia [is] facing a massive multi-year adjustment as mining investment returns to normal,” said Barclays economist Kieran Davies.
Mining research tax curbs damaging: industry
Miners and tax experts say the federal government’s plan to cut tax breaks for research and development discriminates against local business and could hurt Australia’s reputation, according to the Australian Financial Review.
The comments are contained in submissions to Treasury over the legislation to implement a change announced in February to strip $1 billion in tax concessions from Australia’s 15 to 20 biggest companies to fund a manufacturing jobs scheme.
“The R&D tax incentive has often been used by large companies in deciding what projects are in the best interests – it has and it does influence outcomes,” said KPMG partner David Gelb.
Stripping the incentive might mean only some aspects of a project are pursued, or a trimmed down version, or a deferral entirely, he said.
O’Farrell refused $13m request in Obeid deal
A former tax adviser to Kerry Packer who sold a rural property to the family of former NSW Labor minister Eddie Obeid asked the state Coalition government to pay the $13 million shortfall between the sale price and the amount the Obeids stood to make from the land as part of an allegedly corrupt coal deal, according to the Australian Financial Review.
John Cherry, a former Ernst & Young partner and a tax adviser to the late Packer, wanted to donate the money to charity but the request was knocked back by NSW Premier Barry O’Farrell.
The Obeids bought Cherrydale Park, Cherry’s farm in the NSW Bylong Valley near Mudgee, for $3.65 million in late 2007.
In June 2009, after Obeid’s political ally and then Labor mining minister Ian Macdonald granted a coal exploration licence over the property, the Obeid family entered into a contract to sell the land to private miner Cascade Coal for $17 million.
