Mining tax repeal fails in Senate

The mining tax has met with reprieve in the Senate, with the unpopular tax repeal voted down 35 to 32.

The Liberal party election promise to repeal both the MRRT and the Carbon tax is proving difficult to keep, with the risk of a double dissolution election looming if the senate doesn’t pass the repeal legislation a second time.

The second reading of the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 on Monday showed strong opposition to the repeal from the Labor Party and the Greens.

Only four senators out of 15 spoke against the tax repeal, indicating the level of opposition to the abolition of the resources tax.

Senator Sean Edwards pointed out dissent within Labor ranks on the carbon tax issue in earlier weeks.

“Just last week, Labor voted to keep the carbon tax… Obviously the Labor Party's number one ticket holder in Western Australia for the election on 5 April is not in concert with his federal parliamentary colleagues, because Mr Joe Bullock proudly declared that Labor was scrapping the carbon tax,” he said.

Edwards also suggested that the tax was harming investment in mining.

“Of particular significance to us in this debate is the issue of foreign investment. It must be made clear that the MRRT overlooked the fact that the very strength of the industry is dependent on attracting huge amounts of investment from abroad… Under Labor, Australia was not seen as an attractive business destination.”

Senator Larissa Waters suggested that although the tax has problems, these could be fixed.

“The mining tax clearly has its problems, but these problems should be solved by strengthening it, not by ripping it up,” she said.

“When something is broken, you fix it; you do not throw it out.

“The fact that we must speak today against the repeal of the mining tax is testament to the fact that this government is totally in the pocket of the big mining companies.

“In fact, it is a wonder that this government does not just abolish the parliament entirely and put Xstrata, BHP and Rio overtly in control of the country, rather than just covertly in control.”

Senator Doug Cameron, in response to Senator Bernardi, raised the issue of the amount of money raised by the mining tax, suggesting that the money is well spent of community issues.

“He talked about there only being $400 million raised [by the MRRT]. I would rather have $400 million being spent in the community on issues of importance to the community than have the mining companies make even more profit,” Cameron said.

Greens senator Christine Milne told the Senate that although the tax had not made as much money as was projected, this money was still valuable to the state, and that the mining industry was showing profits large enough to sustain the tax.

“The miners made a combined half-year profit of US$14.58 billion,” she said

“If that is not a superprofits tax candidate, I do not know what is. They are making megaprofits, and the way they have framed this debate is, 'Oh, the iron ore price is down; therefore we should not have to pay the superprofits tax.' With the iron ore price down, they have almost doubled their profits, and that is in a half-year, not a full year, so goodness only knows what they are going to end up with in terms of that assessment.

Milne also said that the great tragedy of the mining tax was that it did not tax heavily enough.

“Originally the tax was meant to be a 40 per cent tax on superprofits above $50 million and applied to all minerals.

“The tragedy is that it was watered down to an effective rate of 22.5 per cent on profits above $75 million and restricted to only a few minerals. That is where it went horribly wrong, and that is where the mining industry absolutely pulled the wool over the eyes of former Prime Minister Gillard and Treasurer Wayne Swan.”

Milne motioned for a second reading amendment harking back to the original super profits tax touted by Kevin Rudd in his first term, suggesting that a 40 per cent tax rate should be applied to all minerals, and said that the benefits of the mining boom should be enjoyed by all Australian Society.

The bill will return to the lower house, where it is anticipated it shall be quickly passed and returned to the upper house.


To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.