New government to reboot mining investment boom

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Image courtesy of [Salvatore Vuono] \ FreeDigitalPhotos.net

Tony Abbott swept into office on Sunday with a promise to boot up Australian mining and revive an appetite for investment under the incoming conservative government.

Image courtesy of [Salvatore Vuono] \ FreeDigitalPhotos.net
Image courtesy of [Salvatore Vuono] \ FreeDigitalPhotos.net
At the core of Abbott’s campaign was a charge that carbon and mining taxes brought in by the Labor government have upset business confidence and boosted energy costs, sending corporate profits into its sharpest tumble in the past fifty years. The new government faces a debt challenge to live up to its promises of unwinding Labor’s policies within 100 days of gaining power as Australia’s economy adjusts to the waning mining investment boom.

“People expect the day after an election an incoming government will be getting down to business. That’s what I’ll be doing today,” Abbott said on Sunday in a Reuters report.

The prime minister-elect’s ability to deliver on these pledges will depend heavily on whether he can get majority support to scrap the carbon and mining taxes from the Parliament’s upper house. He is likely to face a disparate range of minor parties and independents with the balance of power votes from July 2014.

The Abbott government, however, is currently enjoying support from the country’s resources sector after his election night speech to declare Australia once again “open for business”.

Finance spokesman and incoming trade minister, Andrew Robb said there is $150 billion worth of mining projects up for grabs.

Mining giants such as Australian Mines and Metals Association, Rio Tinto and BHP Billiton welcome the new government saying they look forward to working with the prime minister and his cabinet on issues that will help restore the country’s productivity and competitiveness.

Allowing tax breaks on resource exploration by smaller prospecting companies along with the abolition of a tax on miners’ profits could revive spending.

“The MRRT was founded on the falsehood that the mining industry was not paying a fair share of tax and that a further new tax was necessary for Australians to share in the benefits of the millennium mining boom,” said Mitch Hooke, chief executive of Minerals Council of Australia in an Australian Mining article.

According to Hooke, scrapping the carbon tax and the Minerals Resource Rent Tax (MRRT) would be a positive first step by the Abbott government for the mining sector.