THE next federal government is poised to reap the spoils of a major economic boost and multi-billion-dollar revenue windfall by 2016 as a result of the recent construction boom in Australia's liquefied natural gas and iron ore sectors.
The Australian has analysed a range of economic data, official forecasts, state and federal budgets and resource company profit estimates that all cast doubt on Kevin Rudd's assertions during the election campaign that the resources boom has ended.
Export earnings from Australia's resources industry are forecast to rise almost 20 per cent -- from $186 billion to more than $220bn -- by 2017, according to forecasts by the Bureau of Resources and Energy Economics.
The associated revenue boost to Canberra's coffers is expected to kick in towards the end of the next parliamentary term, aiding efforts by the next government -- opinion polls point to a comfortable Coalition victory -- to produce a budget surplus after several years of deficits.
Senior government sources have told The Australian that the scale of the economic impact from the next wave of the boom -- as projects under construction are commissioned and begin earning revenue -- has been little understood.
The expected windfall comes after The Australian reported yesterday that senior business leaders had questioned Mr Rudd's claims that the mining boom was over and expressed confidence that the income phase of the boom would provide a big boost to the economy.
"It's not over; most of the capital still has to be spent in order to deliver these big projects," said Origin Energy chief executive Grant King.
"In respect to the LNG industry, there's still at least half to be spent across the industry . . . and when it's spent it's turned into revenue and that's still to come, so the revenue hasn't even started."
The spectacular growth of the LNG industry will contribute $520bn to the economy in the decade from 2015, adding 2.6 per cent to national GDP and increasing the annual tax take by $11bn, according to McKinsey.
Seven LNG mega-projects under construction in Western Australia and Queensland are forecast to boost the sector's total export revenue from $12bn last year to $61bn by 2018, according to BREE.
Australia's 10 biggest resources companies are also forecast to grow their profits by 16 per cent over the next four years -- from $31.47bn this year to $36.44bn in 2017.
And the WA government is forecasting that its iron ore royalty income will rise by a stunning 55 per cent -- from $4.4bn to $6.9bn -- between 2012-13 and 2016-2017.
The WA forecast is a sign that increased production volumes led by companies including BHP Billiton, Rio Tinto and Fortescue Metals Group will help offset weaker iron ore prices that are expected in the years ahead. However, the iron ore price has held up stronger than expected in recent months, and has risen by 31 per cent in Australian-dollar terms since the start of June.
The iron ore price yesterday was $US138 a tonne.
Looks like the Liberals will win the election just in time to see revenue spike, return to massive surpluses and pay down labours debt. Then in 10 years Labour will be back in to spend it all again. Hopefully this time the Liberals lock away much of the revenue in a Sovereign wealth fund that cannot be raided easily.
According to Perthite the sky is falling and we are in recession. He should sell some of what he is smoking, would help save for a house deposit much quicker.
According to Perthite the sky is falling and we are in recession. He should sell some of what he is smoking, would help save for a house deposit much quicker.
Asking a bear to give up the bong?
Ignore posts by The Whole Truth · View Post · End Ignoring The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
Looks like the Liberals will win the election just in time to see revenue spike, return to massive surpluses and pay down labours debt. Then in 10 years Labour will be back in to spend it all again. Hopefully this time the Liberals lock away much of the revenue in a Sovereign wealth fund that cannot be raided easily.
According to Perthite the sky is falling and we are in recession. He should sell some of what he is smoking, would help save for a house deposit much quicker.
Yeah, right. What are the required FTE numbers for the tail end of the boom?
Nobody doubts--or has ever doubted--that production, and state royalties, and perhaps even the federal MRRT, will get jacked up as major recent investments in iron ore production and various forms of gas output, come online, i.e. move from construction to production.
The question for the Australian economy is who will benefit as the transition occurs. There will be a substantial rolloff of well-paid jobs, as projects transition from contruction to production. And, there will simultaneously be a balance-of-payments rolloff of similar scale for the Australian economy.
The majority of shareholdings in companies like BHP, Rio, Chevron, Shell, and BG are not Australian-domiciled, so shareholder returns from the production phase will predominately flow offshore.
None of this is a Bad Thing, viewed over the lifecycle of investment. For those that had the right contruction skills at the right time, it has been a near decade-long gravy train. For the much smaller number needed to keep operations turning over once built, it is a longterm sinecure. And for the minority of Australian shareholders on the registers of the actual owners of these projects, it should provide a decent longterm return, despite the construction expense.
But make no mistake--"rolloff" has substantially negative meaning for the Australian economy as a whole...
I think the money coming into federal government coffers from the revenue phase of the boom will likely be little more than a pale shadow of the tax revenue that was created by the great surge in economic activity from the construction phase which has now peaked. Private spending is barely growing now - start reducing the amount spent on mining investment and I seriously doubt that earning from flogging dirt will cover it. It is building new infrastructure for digging dirt that makes Australians wealthy from our vast mineral resources - actually selling the dirt appears to do more to make foreigners wealthy.
Seriously Mike - you're still trying to sell the notion of a boom that cannot end. We've had booms in the past - not as big as this one admittedly - that did not continue once we transitioned to the production phase. The boom ends when it ends, otherwise Australia would be in a permanent boom. I think you might be the one holding the bong on this issue.
I think the money coming into federal government coffers from the revenue phase of the boom will likely be little more than a pale shadow of the tax revenue that was created by the great surge in economic activity from the construction phase which has now peaked. Private spending is barely growing now - start reducing the amount spent on mining investment and I seriously doubt that earning from flogging dirt will cover it. It is building new infrastructure for digging dirt that makes Australians wealthy from our vast mineral resources - actually selling the dirt appears to do more to make foreigners wealthy.
Seriously Mike - you're still trying to sell the notion of a boom that cannot end. We've had booms in the past - not as big as this one admittedly - that did not continue once we transitioned to the production phase. The boom ends when it ends, otherwise Australia would be in a permanent boom. I think you might be the one holding the bong on this issue.
Correct me if I'm wrong, but ore produced here and exported, must be paid for here and taxed here before any money flows offshore to shareholders. The combination of mining royalties and taxation going forward will not be insubstantial.
Any expressed market opinion is my own and is not to be taken as financial advice
Well I guess that explains why the big miners have laid off 100,000 workers over the past year, they are getting them out of the way of all the profits that are "About" to flow.
Export earnings from Australia's resources industry are forecast? The associated revenue boost to Canberra's coffers is expected?
Senior government sources have told ???? The expected windfall ??
These are all just election promises, they have no basis in the real world where people need a cash deposit to buy a home and need a job for that deposit. I wish people would go back to reporting the facts and not wishful thinking. This story is worthless as far as investment decisions are concerned.
once we transitioned to the production phase. The boom ends when it ends, otherwise Australia would be in a permanent boom. I think you might be the one holding the bong on this issue.
We had a boom because a single client, China, was prepared to pay above market prices and had an unlimited bank account. The China boom ended and so did ours, why can't people just accept that and move on.
Correct me if I'm wrong, but ore produced here and exported, must be paid for here and taxed here before any money flows offshore to shareholders. The combination of mining royalties and taxation going forward will not be insubstantial.
Some,but not all.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
I think the money coming into federal government coffers from the revenue phase of the boom will likely be little more than a pale shadow of the tax revenue that was created by the great surge in economic activity from the construction phase which has now peaked. Private spending is barely growing now - start reducing the amount spent on mining investment and I seriously doubt that earning from flogging dirt will cover it. It is building new infrastructure for digging dirt that makes Australians wealthy from our vast mineral resources - actually selling the dirt appears to do more to make foreigners wealthy.
Seriously Mike - you're still trying to sell the notion of a boom that cannot end. We've had booms in the past - not as big as this one admittedly - that did not continue once we transitioned to the production phase. The boom ends when it ends, otherwise Australia would be in a permanent boom. I think you might be the one holding the bong on this issue.
If the boom is over why then did mining investment increase in the June quarter by 6.5% to equal our all time high of investment set in 2012. We reversed the previous losses over the last 9 months in just 3 months as economic conditions have changed. Resource prices have remained at high levels, demand is increasing strongly. For the boom to be over you would think we would sell less of those items, not increase iron ore exports by 33% over the last 12 months, that is a boom. With demand increasing and prices rising more projects can be expected in the future.
The problem the bears have is you always hitch your boat to the negativity of the moment. Last few years it was Europe, The the US debt issue, US sequestration and China. All proved to be wrong. Chinese growth is accelerating as I said it would, US growth is continuing to increase as I said it would. US growth is now 2.6% with previous quarters being revised up. Everything the bears have clung to in recent years has failed.
Perhaps it would be easier to look at events the bears got right...........I can't think of any. To make predictions you need credibility or past results in your favour which the bears have none or little of.
You are wrong and you will see it over the next few years just like all previous events.
The biggest event for the world economy at present is Syria, that situation could easily get out of hand.
Correct me if I'm wrong, but ore produced here and exported, must be paid for here and taxed here before any money flows offshore to shareholders. The combination of mining royalties and taxation going forward will not be insubstantial.
Problem is, that money has already been spent.
At the federal level, the uncertain proceeds from the MRRT have been wildly overcommitted, which is part of the reason we'll be kicking the bums out tomorrow.
State royalties are more certain, but in QLD they barely cover the interest payments on existing state debt. WA is in somewhat better shape, but even there, projected future revenues are already committed.
And in no part of the country is the future tax/royalty revenue stream going to fully replace the wind-down of the construction-era gravy train.
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