The Coalition has shown again today that they have no plan to capture and spread the benefits of Mining Boom Mark II, and instead are trying to wreck a vital economic reform that will address the challenges of a patchwork economy.
Instead of profits-based tax reform which is supported by the mining industry, Shadow Resources Minister Ian Macfarlane has today recommitted to the inefficient royalties system which hits all companies – small and big, in bad times and good - regardless of how profitable they are.
The Coalition failed to harness the benefits of Mining Boom Mark I and they now refuse to support the Gillard Government's plan to lock in the benefits of the current boom and deliver a fairer return from the nation's mineral wealth through the Minerals Resource Rent Tax (MRRT) and the expansion of the Petroleum Resource Rent Tax (PRRT).
The evidence is now overwhelming and incontrovertible: the MRRT and PRRT have not and will not deter investment in Australia. The Government, through extensive consultation with industry, has designed a tax that will ensure Australia remains internationally competitive.
The claims today by Mr Macfarlane that the MRRT poses a sovereign risk to Australia are wrong and not supported by any evidence.
The fact is that Australia last year achieved record levels of capital investment in resources and energy projects – a record we are on track to break this year. Companies are investing more in minerals and energy projects in Australia than they ever have before, in full knowledge of the MRRT.
New capital expenditure on minerals and energy projects in 2010-11 was the highest on record and nearly four times the average annual expenditure of the past 30 years. The April 2011 ABARES Major Development Projects Listing showed a 31 per cent increase on the record set in October 2010 with 94 advanced projects totalling $173.5 billion with less advanced projects bringing the total planned capital investment to $430 billion.
Since the Government announced the MRRT and PRRT on 2 July last year, we have seen investment not only continue but accelerate, particularly in the three commodities – coal, iron ore and petroleum – covered by our resource taxation reforms.
Over $85 billion has been committed to new LNG projects, multi-billion coal investments – including the opening up of an entirely new coal province in the Galilee Basin in Queensland – and major expansions of iron ore production in the Pilbara, with investments from Rio Tinto, BHP Billiton and Fortescue Metals Group.
This investment is happening across the board, from mining companies both big and small. Claims that the MRRT somehow disadvantages small miners are also wrong and have been expressly rejected by the Minerals Council of Australia among other key industry voices. The simple fact is, despite what Fortescue Chairman Andrew Forrest may claim, the vast majority of the tax will be paid by three companies, BHP Billiton, Rio Tinto and Xstrata.
If the Coalition was really concerned about small miners, they would not be advocating that states jack up inefficient royalties, which apply to all companies, big and small, which apply equally in bad times as well as good and which apply retrospectively.
State royalties will not pay for:
The MRRT will deliver these important reforms.
The Coalition's wrecking-ball approach to economic reform reflects an economic team which has become a laughing stock, with major back flips and divisions on superannuation and other key policies recently, and a growing $70 billion budget crater.
The Coalition needs to stop saying no and support this important economic reform rather than denying the nation the benefits of our biggest ever mining boom.
20 November 2011