Australia’s mining industry is set to suffer a significant decline in exports due to China’s economic slowdown, resulting in substantial revenue loss for the federal government.
Australia‘s Mining Industry Hit Hard by China‘s Weaker Economy
China’s economic slowdown is having a significant impact on Australia’s mining industry, with forecasts indicating that mining exports could plunge more than $100 billion over the next four years.
This decline in mining exports will result in an $8.5 billion hit to company tax receipts, representing a $36 billion reversal in forecast federal revenue compared to last year. The figures are set to be revealed in this week’s mid-year budget update, known as Myefo.
The Impact of China‘s Economic Slowdown
China’s weaker economy is causing a ripple effect on Australia‘s mining industry, with commodity prices and export forecasts being revised downwards. This is due in part to the Treasury‘s decision to downgrade its four-year forecast for mineral exports by more than $100 billion.
“The challenges in the Chinese economy will have flow-on effects for our own budget, and that will be clear in Treasury’s forecasts on Wednesday,” said Federal Treasurer Jim Chalmers.
Worsening Deficits Expected
Chalmers also foreshadowed worsening deficits, indicating that Myefo would reveal “some slippage in some years.” This suggests that the Australian government is bracing itself for a potential economic downturn, with the global economy being described as uncertain and unsettling.
The figures to be released this week represent a significant reversal of fortune compared to last year’s mid-year update. The decline in mining exports will have far-reaching consequences for the Australian economy, with company tax receipts set to fall by $8.5 billion over the next four years.
Government Response
In response to the economic challenges facing Australia, the government has announced a new deal with states and territories to unlock up to $3 billion in funding from its Housing Australia Future Fund. This funding will be used to build up to 5,000 homes for low-income Australians, with applications closing in late January.
The Albanese government is also launching a fast-tracked funding round for social housing projects, contingent on state governments releasing land and engaging community housing providers. This initiative aims to address the growing housing crisis in Australia by building more affordable housing options.
