Add to that an increase to the surcharge for 457 visas and it means more competition problems for Australia's resources sector. It is raising the 457 visa application charge to $900 - which it believes will bring in another $198 million in revenue over four years.

The government predicts that it is going to receive less from the Petroleum Resources Rent Tax due to a "softening in petroleum prices and lower assumed production levels across a number of relevant fields".

Indeed, it has written down its take from its resource rent taxes - the PRRT and the Minerals Resource Rent Tax - considerably.

Those taxes are expected to be $3.6 billion lower in 2012-13 and $3.2 billion down in 2013-14.

The government says those taxes are "highly sensitive to assumptions regarding production volumes, capital deductions, commodity prices and exchange rate".

That makes it seem counter-intuitive to mess with the capital deductions side of that equation.

On the PRRT, there are some changes that are in response to the decision in the Esso Australian Resources v Commissioner of Taxation case.

The amendments will:

• restore the ability of taxpayers to apportion expenditure across a number of projects
• allow taxpayers to claim deductions for services provided by third parties while preserving the requirement to break down payments made to related parties for services.

Back to the capital deductions side of things.

Resources companies lose the immediate deductions for rights and information first used for exploration. Instead, the deduction for such costs will be available over 15 years or the life of the project - whichever is shorter.

This will increase the costs associated with developing oil and gas resources in Australia because it make the costs associated with trading or buying into exploration permits higher.

Australian Petroleum Production and Exploration Association chief executive David Byers said the changes particularly hit small or medium-sized exploration companies wishing to sell an interest to larger, better-resources or more experienced companies on a full or partial cash basis.

"Changes to deductibility rules means that a purchasing company will be unable to obtain a timely deduction for the acquisition cost," he said.

"There will therefore be less incentive for the purchase to take place and the proposed [safe-harbour] write-off period of 15 years does not reflect commercial reality.

"While the decision to maintain the existing treatment for non-cash farm-in/farm-out arrangements is welcome, overall, the announcement continues the trend of policies which make it harder for explorers to invest in Australia.

"This includes the failure to proceed with a flow-through share scheme, the introduction of cash bidding and the imposition of significant compliance and administrative costs associated with extending PRRT onshore."

However, changes to these deduction rules are perhaps not that cut and dried.

KPMG energy & natural resources tax lead Rod Henderson said there were still some twists ahead for this provision.

"The measures take effect from May 14 but the details are subject to consultation with submissions due by July 12, which raises a question as to when will these measures be passed into law, noting that parliament will be prorogued prior to the September 14 election," he said.

"As companies approach key financial reporting dates they need to carefully consider the financial reporting impacts.

"Under the current law they can claim an immediate deduction for the purchase price of exploration rights and information first used for exploration but this could be clawed back and spread over 15 years if these measures subsequently pass into law."

The changes to the thin capitalisation rules will directly impact the after tax return for very large oil and gas projects relying on debt funding. It also will create further complexity in the tax system.

The government says it is reducing the safe harbour debt-to-equity gearing ratio for oil and gas companies from 3:1 to 1.5:1.

While this aligns Australia with thin capitalisation limits in the US and Canada there are problems here.

According to KPMG, Australia's regime will be more restrictive because there is no indication of any change to the extent of debt that is subjected to thin capitalisation.

In Australia thin capitalisation relates to all debt whereas many foreign regimes only limit related-party debt deductions.

Byers said cash-bidding is another area of concern for the industry.

"In the budget papers the government also has identified the potential revenues associated with the proposed introduction of cash bidding for nominated offshore exploration acreage, which APPEA believes to be both premature and likely to be overly optimistic," he said.

"APPEA remains opposed to cash bidding as it reduces the funds available for future exploration.

"The industry faces challenges in competing both in domestic and global markets and the decision to put further lead in the industry's saddlebags will further erode investor confidence.

"The contribution made by the oil and gas industry in terms of both tax payments and the investment of hundreds of billions of dollars in risk capital must not be taken for granted by either side of politics.

"The challenge for the federal government is to rein in spending, search for expenditure savings and impose the discipline that any new expenditure must be offset by savings in existing programs.

"According to analysis by Macroeconomics, resource sector revenue contributed about $160 billion to the federal budget from 2003-04 to 2011-12.

"Over the same period, growth in public spending has expanded on the basis of unrealistic forecasts of continued revenue growth.

"Increasing revenue by targeting productive sectors entrenches rather than address an ever expanding government sector."