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Australia’s fiscal outlook is expected to show a more than $7 billion improvement since the 2021‑22 Budget, with the nation’s resources and commodity sector playing a significant part in the revised figures.

The Federal Government released its 2021‑22 Mid‑Year Economic and Fiscal Outlook report this week showing the underlying cash balance in 2021‑22 is expected to be a deficit of $99.2 billion (4.5 per cent of GDP), a $7.4 billion improvement since the Budget.

However, it warned the global pandemic will continue to pose headwinds for domestic and global recovery for some time to come.

According to the report, mining investment is forecast to grow by 4 per cent in 2021-22 and by 8 per cent in 2022-23.

“Mining exports are expected to increase by 4 per cent in 2021-22 driven by growth in iron ore, coal and LNG exports as the temporary factors that subdued volumes in 2020-21 unwind, and new production comes online,” the report stated

“Mining exports are expected to continue to grow by 4½ per cent in 2022-23 as iron ore production from the ramp up of new mines, such as BHP’s South Flank and Rio Tinto’s Gudai Darri projects, exceed the falling production from older mines.

“Spot prices in Australia’s key commodity exports (iron ore, metallurgical coal, thermal coal and LNG) all reached record highs during the year.

“Commodity prices, however, remain volatile and susceptible to global shocks such as the recent slowing in the Chinese steel sector, with the spike in iron ore unwinding rapidly in recent months.”

Minerals Council of Australia chief executive officer Tania Constable said the strong recovery numbers released in the budget update confirm the significant contribution that mining makes to Australia.

“Forecast company tax receipts have been revised up $18.0 billion in 2021-22 and $36.8 billion over the four years to 2024-25 – driven by record mining exports,” she said.

“A strong mining industry is essential to Australia’s economic success. When mining is strong, all Australians win.

“Stable and internationally competitive tax settings are essential to attracting investment in innovative, lasting and large scale projects in mining and mineral processing.

“The industry pays the highest wages, contributes the most to GDP, pays the most company tax and delivers the most export revenue.”

The Australian Tax Office Corporate Tax Transparency Report released last week shows Australia’s minerals industry contributed more than 40 per cent of all the company tax reported by the 2,370 corporate entities in 2019-20.

The record tax payments are highlighted in a report by Deloitte Access Economics, commissioned by the MCA, which shows that in addition to the large company tax, the industry paid $15.2 billion in state and territory royalties in 2019-20.