Media Releases


The MCA welcomes the State Government’s response to the Economic Development and Infrastructure Committee’s Parliamentary Inquiry into Greenfields Mineral Exploration and Project Development in Victoria. The recommendations and the Government’s response provide Victoria with a platform to get the policy and regulatory settings right to ensure a vibrant and sustainable minerals industry that delivers benefits to the state and regional and remote communities through economic development and employment opportunities. An implementation plan that clearly outlines delivery of the recommendations is now required. Industry has experienced considerable frustration at the lack of implementation over the past decade of recommendations from a suite of reviews and inquiries that the Government of the day agreed to. A number of the Government’s responses identify the need for further consultation and the MCA looks forward to these discussions.


In this year’s Budget, the Federal Government has again put the squeeze on business to fund future spending. Gone is any recognition that Australia’s business tax regime is increasingly uncompetitive. The proposals designed to protect the corporate revenue base include measures that were uncontroversial until the Government discovered its Budget problem. They smack of blame-shifting aimed at papering over a failed fiscal strategy. Higher taxes compromise industry’s ability to deliver future investment and jobs. Having spruiked the mining investment pipeline for all its worth, the Government is now driving up taxes on investments at the precise time when global markets have made them higher risk. Changes to thin capitalisation rules, which date back more than a decade, undermine Australia’s reputation as a stable and attractive place for businesses to locate and invest. Analysis conducted for the Business Tax Working Group (BTWG) last year showed that Australia’s rules are not overly generous and the BTWG expressly rejected changes to these rules. Changes to exploration tax arrangements strike at the high-risk nursery of the mining industry. A right to explore should be deductible along with other exploration expenditure. Australia’s share of global mining exploration expenditure has declined in recent years and this measure only increases effective tax rates on explorers. While the minerals industry will examine closely other changes under the heading of protecting the corporate tax base, this agenda must not become a Trojan Horse for bad policy. If these issues were of such moment, they should have been put openly onto the agenda of the BTWG last year so that consultation could take place. Fiscal stability is critical given the time horizons for mining investment are so long. Continual chopping and changing of Australia’s tax system only damages investor confidence. And spending programs (however meritorious) can only be funded with a strong, growing economy. As independent modelling by Macroeconomics has shown, the mining boom has tipped around $160 billion into Commonwealth revenue from 2004 to 2011. The minerals industry is contributing an estimated $20 billion in company tax and royalties this financial year. The industry’s effective tax rate (company tax and royalties as a share of taxable income) has averaged 41.6% since 2001-02. Tax Office data for 2010-11 released last month confirmed that mining pays a net corporate tax rate more than 18% above the all industries average. This is before royalties, the world’s biggest carbon tax and the Minerals Resource Rent Tax. The Government’s decision to slash funding for carbon capture and storage is a worrying sign. With coal-fired power remaining the mainstay of Australia’s electricity generation, carbon capture and storage will be a critical emissions reduction technology. Now is not the time to be reducing expenditure on this technology if you are serious about addressing the climate change challenge. The Budget also confirms just how far ahead of the world we are on the carbon tax. The Budget papers predict the carbon price will be around $12 per tonne when Australia moves to a floating market and yet business will be forced to pay more than double that over the next two years. This is just a deadweight on our economy. The carbon tax should be scrapped. While the mining sector is a small user of temporary skilled workers, the surprise increase in the application charge for 457 visas in the Budget is most unwelcome. It will add to business costs at precisely the wrong time.


The Northern Territory Government Budget today introduces two new taxes on the NT mining sector – a move that runs contrary to the claims that the top end is open for business. Along with the plan to impose a new tax on top of a revised environmental bond system announced last week, the Budget includes a surprise announcement of a cap on transfer pricing and a limit on head-office deductions for mining companies.


The Northern Territory minerals industry will vigorously oppose plans to increase the tax burden on the resources sector in this month’s Budget. The Government’s plan to introduce a new abandoned mines tax on top of a revised environmental bond system is unnecessary and unwarranted. It is based on a flawed understanding of the environmental bond system and is being imposed at time when the NT minerals sector is under significant stress due to low commodity prices, the high dollar, rising costs and declining productivity. This is a retrospective tax that holds private companies to account for past failures of Government regulation. This sets a disturbing precedent for other industries that have an impact on the environment such as agriculture, fisheries and industrial development. Regrettably, the proposed tax has been presented to industry as a fait accompli despite requests to work with the Government to achieve a better and fairer outcome.
Far too often in the recent past, the Australian minerals resources sector has been presented with flawed tax proposals that are already set in stone. Here we go again. The NT government has campaigned that mining is one of the Territory’s three economic hubs. How will burdening the sector with a new tax help develop one of the main pillars of the economy? The Minerals Council of Australia – Northern Territory Division is calling on the Government to abandon this tax proposal and consult with industry on potential changes to the environmental bond system.

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