News Wrap

IN THIS morning’s wrap: miners angry at no company tax cut; investment to reach record levels; resource deals slump amid global uncertainty; and trade deficit hits $1.6 billion as imports climb.
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Image courtesy of PWCS.

Lou Caruana

Miners angry at no company tax cut

The booming mining sector was saved from any further significant tax pain in Wayne Swan's fifth budget but the revenue grab the Treasurer was hoping to earn has again been watered down, The Australian reports.

Swan last night outlined that he would spread the riches from the mining boom – earned through the minerals resource rent tax – to ordinary Australians rather than the business community through a 1% cut to the tax rate.

Atlas Iron chairman David Flanagan said the 1% cut to the company tax rate was material and yet another broken promise by the government.

BC Iron managing director Mike Young said it was disappointing there was no cut to the company tax rate and said the funds should instead be directed towards infrastructure funds to contribute to "nation building" projects.

Investment to reach record levels

The business investment boom is expected to reach an all-time high this year, The Australian reports.

The budget delivered in Canberra last night revealed investment will surge again, as companies cash in on the second phase of the mining supercycle.

Treasury estimates there will be an extra $120 billion pumped into projects this year to build on the $450 billion under way, more than half spent on projects already approved or under construction.

The new injection of investment will equate to 12.5% of gross domestic product, a record, and 8% the following year.

Major miners are expected to account for most of the new spending, which Treasury warned could further exacerbate the "patchwork" economy.

Resource deals slump amid global uncertainty

Floats, mergers and acquisitions have dried up in the mining and metals sector because of the faltering world economy, the Sydney Morning Herald reports.

The number of transactions begun globally in the March quarter fell 34% below that for the first quarter of 2011. Deal value was down 20%.

Figures compiled by Ernst & Young showed almost 300 transactions took place in the March quarters of 2010 and 2011, but this slumped to 195 this year. Total value fell from $US31 billion in the first quarter of 2011 to $US25 billion this year.

Trade deficit hits $1.6 billion as imports climb

Australia posted a wider than expected trade deficit yesterday, raising questions about the outlook for the export sector in a time of weaker domestic growth, the Sydney Morning Herald reports.

The March trade deficit widened to $1.59 billion, from a revised $754 million fall in February, according to the Australian Bureau of Statistics. The result was wider than the $1.3 billion deficit analysts expected.