Australian opposition parties call for mining tax reform
Published: Wednesday, 26 March 2014
Significance: With the repeal of the Mineral Resources Rent Tax (MRRT), the government is looking to replace it with one that offers breaks to junior exploration companies, which it believes will encourage foreign investment in the country. However, opposition leaders fear the tax will take jobs and profits out of Australia.
Australias ruling government, the Liberal party, has lost
its battle to repeal the countrys mining tax, installed
by the previous administration.
Graphite deposit in South Australia. Image: Lincoln
Given that the law now looks set to remain in force, opposition
figures have called for the bill to be amended.
Senator Mark Furner from the opposing Labor party suggested the
Mineral Resources Rent Tax (MRRT) needs to include a 40% rate,
as applied under the petroleum resource rent tax and should be
extended to all minerals.
The Senate calls on the government to withdraw the bill
and redraft it to ensure that the benefits of the mining boom
can be spread throughout Australian society, he
We [the Labor party] believe that the profits of our
country's resources, which can only be dug up once, should be
shared amongst all Australians, not just enjoyed by a handful
of mining magnates, said the Senator.
He added that the advantages of the MRRT was that it offered
tax breaks to small businesses through the instant asset
write-off and the tax loss carry-back pensions, helped young
families through the school kids bonus and assisted
low earners with the low-income superannuation contribution.
Christine Anne Milne, leader of the Green party, was in
agreement with Furner and said that the mining industry was
capital-intensive and only contributed 10% towards
GDP, employed 2.4% of Australians and therefore did not need
any tax breaks in order to prosper.
The profits have been taken by the companies concerned
and have been funnelled overwhelmingly to overseas
shareholders. The money has not circulated in the Australian
economy to create jobs, said Milne.
New tax breaks
Had the MRRT been repealed, Prime Minister Tony Abbots
government intended to introduce the
Exploration Development Incentive (EDI) to give tax breaks
to junior exploration companies.
Minister for Industry Ian Macfarlane said the opposing Labor
partys refusal to eliminate the mining tax was a direct
assault on the Australian economy, in particular the strong
mining state of Western Australia.
The country is a major producer of industrial minerals like
bentonite, chromite, kaolin, ilmentite and rutile.
This is a tax that has hit mining companies with layers
of red tape and tens of millions of dollars of compliance
costs. But at the same time the mining tax is generating
virtually no income, said Macfarlane.
It was revealed in February that the MRRT had only raised
Australian dollar (A)$126m ($116m*) in the first six months of
operation, when the previous Labor government had promised
Macfarlane said: The investment phase of our mining boom
is coming to an end and now we see the benefits as we shift
increasing volumes of product into hungry global resources
He quotes a report from the Australian Bureau of Resources and
Energy Economics, which states that the countrys
resources and energy commodity export earnings will increase by
8% per year from 2013-14 to total A$284bn in 2018-19.
Between 2012-13 and 2018-19, natural gas exports are projected
to increase at an average annual rate of 22% to reach 79m
tonnes, up from 24m tonnes in 2012-13.
This government is firmly behind our miners and our
mining industry. We will continue to work to deliver on our
policies to get rid of the tax burden on the sector and to
scrap excessive red tape, said Macfarlane.
*Conversion made March 2014