Pub­li­ca­tions

Com­pet­ing inter­ests con­tin­ue to fight over the future of the Min­er­als Resource Rent Tax (MRRT)

Last week’s arti­cle The Min­er­als Resource Rent Tax (MRRT) — Will it be debat­ed at next year’s tax sum­mit? high­light­ed the con­fu­sion around the antic­i­pat­ed imple­men­ta­tion of the fed­er­al government’s pro­posed Min­er­als Resource Rent Tax.

The pro­posed tax con­tin­ues to draw vocal crit­i­cism from a num­ber of quar­ters. Small­er min­ing com­pa­nies have crit­i­cised the gov­ern­ment for not con­sult­ing them on the design of the revised tax and instead nego­ti­at­ing only with the country’s three biggest min­ers, BHP-Bil­li­ton, Rio Tin­to and Xstrata.

At a recent sum­mit held by the Aus­tralian Agri­cul­tur­al and Resource Eco­nom­ics Soci­ety, promi­nent econ­o­mists point­ed out the flaws in the MRRT, describ­ing it as a patch-up” and mere­ly an exer­cise in buy­ing time” and stat­ing that it would under­mine coal and iron ore explo­ration, dis­tort invest­ment and pro­mote inefficiency.

The Busi­ness Coun­cil of Aus­tralia has also spo­ken out against the MRRT, argu­ing that no firm deci­sion should be made until after the tax sum­mit in June next year. Sig­nif­i­cant­ly, min­ing indus­try ana­lysts have also cast doubt on the abil­i­ty of the tax to gen­er­ate the government’s pro­ject­ed $10.5 bil­lion over its first two years, stat­ing that the sum to be raised in tax rev­enue is more like­ly to be in the vicin­i­ty of $2 – 3 billion.

While Trea­sur­er Wayne Swan con­tin­ues to insist that he expects the MRRT to be in draft leg­is­la­tion form by the time of the tax sum­mit, some with­in the min­ing indus­try point to inde­pen­dent Tony Wind­sor as the pos­si­ble weak link in the fed­er­al government’s plans to imple­ment the tax.

Any deci­sion to delay the intro­duc­tion of the MRRT until after next year’s tax sum­mit would give the min­ing indus­try a sig­nif­i­cant reprieve, as the Trea­sur­er is well aware. It is also unde­ni­able that it would give the gov­ern­ment some respite from the attacks it has endured from min­ing indus­try lob­by groups in recent months.

On one hand, the gov­ern­ment faces the prospect of a Sen­ate con­trolled by the Greens, who are like­ly to push for the MRRT to be broad­ened to include oth­er min­er­als, par­tic­u­lar­ly ura­ni­um. On the oth­er, any expan­sion of the tax could once again crank up the well-resourced anti-Labor pub­lic­i­ty machine of the min­ing industry.

On any analy­sis, both the minor­i­ty fed­er­al gov­ern­ment and its pro­posed min­er­als resource rent tax seem to be fac­ing an uncer­tain future.