The Minerals Council of Australia has rejected the need for a new iron ore tax following a decrease in the mining sector’s capital expenditure.
Figures from the Australian Bureau of Statistics (ABS) have shown a 16 per cent drop in capex this June quarter, with the $10.7 billion expenditure the lowest it has been since December 2010.
Brendan Pearson, chief executive of the Minerals Council of Australia, said the data reinforces “the folly of the WA Nationals’ proposal for a new $7.2 billion tax on Australia’s major iron ore produce.”
The proposal, Pearson said, introduced by the Nationals leader Brendan Grylls, would make WA the highest taxing iron ore state in the world.
He added that it would reduce jobs and hamper future investment, as well as create sovereign risk.
“A huge new tax burden will deter investment, not encourage it,” he said.
He went on to say that both BHP and Rio Tinto made contributions to the state’s economy, providing $3.2 billion in royalties to the government during 2014-15. They also contributed an additional $259 million in other state government taxes, as well as investing $2.7 billion in services and infrastructure for local communities.
Iron ore royalties to the government doubled over the last six years from $1.5 billion to around $3.6 billion in 2015-16.