Support to develop Australia’s critical minerals industry, tax deductions for small business investment and a promise to train more tradies are among the bright spots for Western Australian businesses in the 2024-25 Federal Budget.
The budget forecasts a $28.3b deficit for the coming financial year, after confirming the second surplus in a row for 2023-24.
“The budget is like a leaky bucket, with WA’s mining sector pouring significant amounts of tax revenue into the coffers, but massive spending pressures in areas like the NDIS and interest repayments ensuring that the money disappears faster than it arrives,” CCIWA’s Chief Economist, Aaron Morey, said.
Mr Morey said cost-of-living measures will be welcomed by households but were likely to add to inflation concerns in the medium-to-longer term.
“While the cost-of-living measures will deliver much-needed relief to households, it’s likely to add to the underlying drivers of inflation, which will keep upward pressure on interest rates,” he said.
“The Reserve Bank will be watching this closely and we expect rates will hold steady in the medium term rather than move downwards.”
Mr Morey said the introduction of a production tax credit for critical minerals and renewable hydrogen processing will be welcomed by the resources industry in Western Australia.
“WA has the potential to be at the forefront of the global critical minerals boom, but we are not the only jurisdiction racing to develop our industries,” he said.
“Funding to better map Australia’s critical minerals and develop the infrastructure needed to mine and process those minerals will give Australia a competitive edge in the race for global capital.
“Unfortunately, when it comes to industry competitiveness, the Government is giving with one hand and taking with the other. Sweeping industrial relations changes and plans to add more green tape to major project approvals will damage Australia’s global reputation in the eyes of investors.”
WA’s housing squeeze will be assisted by an increase in fee-free TAFE places in the building and construction trades and the reversal of a decision to reduce payments for apprentices and employers in priority occupations, maintaining the current $5,000 incentive.
“We welcome the focus on training new apprentices, but Western Australia is suffering from a significant cut to the skilled migration cap,” Mr Morey said.
“We urge the Federal Government to urgently review the cap to help WA build the houses needed to accommodate a rapidly growing population.”
Small business will benefit from the extension of the instant asset write-off scheme, which allows businesses with turnover up to $10 million able to deduct $20,000 from eligible assets.
“Many small businesses right around Australia have been doing it tough as costs continue to rise, so the extension of this scheme will bring some relief to those who are eligible,” Mr Morey said.
Around one million small businesses in Australia will also be eligible for a $325 rebate on their electricity bills, on top of the $400 rebate announced in the State Budget last week.
“CCIWA also welcomes continued investment in financial and mental health support for small business owners, in recognition of the fact that many are doing it tough and being battered by rising costs,” Mr Morey said.
“The budget also includes $20 million to help small businesses understand the recent overhaul of our industrial relations system, which has introduced significant complexity into Australia’s workplaces.”
The budget also confirms 40% of company tax collected by the Government comes from the mining sector, highlighting the oversized role WA plays in boosting the nation’s bottom line.
“WA continues to do a lot of the economic heavy lifting, which should give pause to those calling for the current GST deal to be revised,” Mr Morey said.
