Miners fear tax expansion
Friday, 25th November, 2011
By Paula Doran
Mining companies throughout Australia have a justifiable concern that the Federal Government’s mining tax will spread to them, according to a prominent resource analyst.
While the new Minerals Resource Rent Tax (MRRT), passed in the Lower House on Wednesday morning, focuses on coal and iron ore producers, senior resource analyst Gavin Wendt warned all sectors to not be complacent about future taxation.
Locally, Perilya and CBH, as well as Uranium One are exempt from the tax, but Carpentaria Exploration, which has iron ore interests south of the city, could feel the weight of it.
“You would have to be naive to think that a tax like this will not broaden to include other mineral and energy producers. There is justifiable concern that life will not just carry on once this tax is introduced,” said Mr Wendt.
He said the tax would have a big impact on Australia’s competitiveness.
“It’s going to erase our risk profile on the world stage. It will certainly make it more difficult for smaller companies to get funding.
“The Australian Government is essentially doing a great disservice to the mineral sector. Instead of sitting down with the industry and going over the results of the Henry Review, they have instead grabbed key findings and made their move without fair or reasonable engagement with the industry.
“I just don’t think that this tax helps Australia. Does nobody recognise the significant taxes the minerals industry already pays? They pay tax on every dollar they earn, everything they produce, and yet there is a misconception that they’re not paying anything.
“And this, the one industry that’s kept us out of recession, is the one industry that is being punished.”
Mr Wendt said the full impact would not be felt in the near future, but in decades to come.
“Explorer dollars will be spent elsewhere in other countries more supportive to minerals and energy.
“And it’s when the weight of investment dollars start to shift offshore, that’s when we’re going to have long-term impacts.”
Leader of the Nationals, Warrant Truss, backed those concerns, saying the MRRT would hurt country Australia.
“If the tax becomes law, regional communities will lose the jobs and economic prosperity created by mining development and mineral processing,” he said.
“Most of this industry that is about to be subjected to a new super tax is located in regional communities. The processing sector is also generally in regional communities. In many places, this is the major part of a regional economy. So this is a tax that is going to be particularly focused on regional Australia.
“The government has said that any new investment in services in regional areas is dependent on introducing this great big new tax. So if it does not pass, vital regional development projects will simply not be funded.
“This really is a shabby sleight of hand from a government promising goodies that it cannot afford, based on a tax that has not passed the parliament and that, if it does, will hurt regional Australia hard.
“It is lose-lose: either we lose jobs or we lose the promised regional funding activities.”