State’s index slip blamed on MRRT

A senior public servant in South Australia has blamed the federal government’s mining tax for the state’s fall in ranking in a reputed international investment index.

Mineral and Energy Resources Department deputy chief executive Paul Heithersay said the minerals resource rent tax was responsible for South Australia slipping in the annual ranking in the Fraser Institute’s Mining index from positive five to 20.

“South Australia’s decline in the Fraser Institute’s ranking was in line with all Australia’s states in the wake of the federal government’s mineral resources rent tax initiative,” Heithersay said.

The Fraser Institute, a Canadian-based organisation, runs an annual international survey of metal mining and exploration companies to gauge how mineral endowments and public policy decisions such as taxation and regulation influences exploration investment.

The South Australian Labor government was using high rankings by the Institute to promote the state’s mining capabilities, The Australian reported.

In 2010, the institute ranked SA as the leading Australian jurisdiction for mining potential.

South Australian finance minister Michael O’Brien commented last month Labor had oversold some projects and the state may have lost an opportunity to benefit from the mining boom.

In February, the head of South Australia’s Resources Department Geoff Knight blasted the MRRT as a flawed tax structure that increased Australia’s sovereign risk, dented business and investor confidence, and divided the mining community.

He was later reprimanded for his comments by mining minister Tom Koutsantonis at the behest of Premier Jay Weatherill.

Koutsantonis told parliament public servants were not to speak on issues that could embarrass federal Labor.

Yesterday Weatherill said he was satisfied with the state’s position this year as it continued to rank ‘very highly’ in international rankings.

“The truth is that there’s been a change in the economics of doing business in Australia, because of a high Australian dollar.

“That affects the relative attractiveness of jurisdictions like South Australia. And indeed the other jurisdictions within Australia,” he said.

Opposition frontbencher Iain Evans yesterday said the state government cannot keep supporting the mining tax.

“The Weatherill Labor government now has its two most senior mining officials criticising the federal Labor government’s tax,” he said.

“Why does the Weatherill government continue to support the tax when its own department heads keep criticising it?”

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