April 9

Federal mining tax: a long way to go

Notwithstanding the government agreeing to the broad ranging changes recommended by a committee headed by Don Argus, formally from the BHP Billiton company, it is unlikely that the miners not involved in the negotiations – that was most of them – will agree, reported Scott Murdoch in Hong Kong for The Australian (24/3)

Nor is Western Australia and possibly Queensland likely to accept that they cannot increase royalties, or that the commonwealht may punish them if they do.

The mining  tax raises important constitutional and legal issues touching upon the federal nature of our Commonwealth which we have discussed in these columns. Noe of these seem to have been resolved, apart froma grudging acceptance by the Commonwealth that they have agreed with the three miners that state royalties are deductible.



My view of this is it was brought into existence to solve the RSPT brackets resources super profits tax,”  said leading miner Andrew Forrest.

He was commenting on the government's agreement to the recommendation of the policy transition group including those relating to new resources taxation arrangements and a number relating to promoting exploration.

Mr Forrest said: “It was a tax designed by BHP. It’s amusing the ex-BHP chairman (Don Argus) chaired the independent committee made up of large companies.

 “It’s a precedent that should not be supported. Policy should be broad ranging, it should be fair and it should be based on the constitution of being equal among states and equal among companies.

"That hasn’t happened here. BHP has literally written a tax for everyone else to pay.

“If you attend briefings by BHP, Rio and Xstrata they are not talking about paying a great deal of this MRRT (minerals resources rent tax). They have massive double protection from it which is not available to new companies.

“Who else is going to pay it? It will be the new companies, the new developers who are the future of the economy that you want to encourage. It is unhealthy and unprecedented and should not be supported.”


…federal government threatens States…

The Federal Treasure Mr Swan warned that he had not given a green light to the states to increase their royalties. He said that the Commonwealth had a range of mechanisms to stop them, including cutting GST payments.

…WA Premier protests…

 In the meantime the Premier of Western Australia Mr Colin Barnett said he was not going to give into Canberra's bullying.

According to Jennifer Hewett in The Australian (26/3), he said

"Western Australia will always reserve the right to change royalty rates because the royalty is the rate at which we, the people, actually sell the mineral to the company," he said.

"The issue, I guess, in terms of the federal tax is, are they going to refund that to the companies as they promised them? I don't know. That's their problem, not my problem."

And the government’s partner, the Greens say the tax is not high enough.

…the future…

Once Parliament agrees 0n the tax – if it does – it is likely there will be a High Court challenge.


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