Business welcomes $2.1 billion surplus budget

WA’s business community has welcomed the Federal Government’s $2.1 billion budget surplus and its positive impact on interest rates and inflation rates.

In a budget dominated by increased national security measures, including spending $1.3 billion over five years for increased coastal surveillance and airport security, Treasurer Peter Costello was quick to brush over the $1.2 billion deficit expected in the current year despite a strong domestic and export sector.

DJ Carmichael analyst Peter Strachan said this boost in security spending opened the door for local engineering and manufacturing companies such as Leighton, Clough, United Group and Austal as well as security firms.

The budget has been labelled as good for the investment climate due to significant saving initiatives in superannuation.

The current tax deduction limit for superannuation contributions is to increase from $3,000 for self-employed persons to $5,000.

Other superannuation incentives are aimed at increasing super for the low paid, allowing couples to split super and allow super payments for children.

Chamber of Commerce and Industry chief executive Lyndon Rowe said businesses could be happy with the budget.

“This is not a business budget as such but it’s a budget that is good for business,” Mr Rowe said.

“It does show the appropriate degree of fiscal discipline, the surplus is welcome and it does take the pressure off interest rates.

“What we saw last year was a bit of a lack of financial discipline. That has been reined in this year and growth in government outlays this year are in real terms zero and that is welcome.”

WA’s valuable resource sector is also likely to benefit.

Chamber of Minerals and Energy chief executive Tim Shanahan said it was a positive sign that the Government recognised that increasing business investment was the key to growth in the coming year as demand for housing fell away with the drop in the First Homebuyers’ Scheme.

“I’m happy with the surplus that has been announced and we are pleased that there are new tax initiatives,” Mr Shanahan said.

“I think that there has been a recognition that the economy is growing on the back of business investment.

“Its absolutely essential that we in WA have a competitive framework which is important in maintaining and growing this business investment.”

WAFarmers president Colin Nicholl said the constrained spending would help provide a healthy business environment.

However he warned the Government not to heed the Fuel Tax report, released to coincide with the budget, that recommended the Government reintroduce the indexation of the fuel excise from August 2003.

Mr Shanahan, expressed disappointment that the flow through tax scheme the resource sector had been pushing for, was not included in the budget.

A NEW Small Business Assistance Program costing $60 million over four years will be established as part of a number of initiatives outlined in the Federal Budget.

Of this, $36 million is provided under the program for skill development projects that promote an enterprise culture and to establish small business incubators.

Opportunities for Australian small businesses to participate in major projects and global supply chains have also been enhanced with a further $3.1 million allocated through the Government’s small business package that will include boosting the ISONET service and Supplier Access to Major Projects program.

Federal Industry Minister, Ian MacFarlane said $2 million had been spent on the program since its inception in 1997.

Since it began the program has helped Australian industry to secure contracts worth around $640 million.

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THE oil and gas exploration and production industries will be encouraged through the continued provision of geoscience information for exploration companies.

The Government has allocated $8.5 million to Geoscience Australia to provide data to help pinpoint areas for drilling.

“Oil exploration is an expensive, high-risk activity,” Resources Minister Ian MacFarlane said.

“Only by encouraging exploration in unexplored areas can Australia hope to find new reserves.”

A further $6.1 million will be spent over three years to establish a National Offshore Safety Authority to regulate safety.

The Government has also allocated $1 million to study the potential of harnessing tidal energy to generate electricity at Derby.

Minerals Council of Australia chief executive officer Mitchell Hooke said the cap on certain long-lived assets for deprecation purposes was a positive step forward.

“This will provide the basis for developing a consistent policy approach regarding the effective life of all long-term assets across all sectors,” Mr Hooke said.

He said the council was happy to work together with the Government to meet its commitment to maintain existing entitlements under the Diesel Fuel Rebate Scheme and the Diesel and Alternative Fuels Grants Scheme.

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THE tourism industry will have $45 million in new funding directed at it over the next five years. Over that time the Australian Tourism Commission will produce and implement a business and leisure tourism redevelopment package with $24 million being allocated to the program.

The Government will also fund a further $8 million over four years toward its See Australia campaign to encourage Australians to travel domestically.

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THE budget provides about $160 million for rural research and development that must be matched by the private sector.

About $21 million is allocated through the new Industries Development Program to assist business to launch new agribusiness products, technologies and services.

An industry council will be established to oversee the establishment of a Food Innovation Grant Program to provide matching funds to firms to undertake projects.

Communi-ties in WA’s South West that have been affected by the Regional Forestry Agreement will be given assistance as part of the Government’s $47.8 million spend to help them through the adjustment.

The Government is also working on developing an Australian Forest Standard this year that will demonstrate sustainable forest production for companies that adopt it and assist their access to world markets.

It has also allocated up to $24 million over three years to continue to fund the Exceptional Circumstances assistance for an area in WA’s northern wheatbelt.

The assistance was given after an independent review by the National Rural Advisory Council.

Farmers will also be assisted through a $25 million program over five years to provide cash rebates under the Government’s new Environmental Management Systems Incentive Program.

The Program hopes to provide farmers with an incentive to use alternative fuels such as ethanol and biodiesel.

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