The Minerals Council of Australia welcomes the repeal of the Minerals Resource Rent Tax (MRRT), a major step on the road to Australia reclaiming its status as a globally competitive producer and an attractive destination for mining investment.
The MCA also welcomes the wider signal sent by the Commonwealth Parliament that workable and pragmatic solutions can be found to support legislative action in line with election commitments. The Abbott Government, key cross-bench Senators and the Palmer United Party are to be congratulated for finding the common ground necessary to pass the MRRT repeal legislation.
The MRRT was based on the false premise that the mining industry was not paying its fair share of tax through the Millennium Mining Boom. It added a third, complex and unnecessary layer of tax on coal and iron ore companies, on top of Federal company tax (itself a profits-based tax) and State royalties.
These two instruments alone are estimated to have raised $40.3 billion in the two years to June 2014 according to new estimates by Deloitte Access Economics. This is on top of a record figure of $24.5 billion in 2011-12. And it is despite the fact that commodity prices have fallen by 50 per cent or more in the case of iron ore and coal in the last three years.
Over the last decade, revenues from company tax and royalties have totalled more than $156 billion. Over that period, the mining industry’s share of company tax has trebled from 8 per cent to around 25 per cent.
That the MRRT was not necessary for all Australians to share in the benefits of the boom has been further demonstrated by a Reserve Bank of Australia research paper released last month. The authors found that by 2013 the mining boom had raised real per capita household income by 13 per cent, increased real wages by 6 per cent and lowered the unemployment rate by about 1.25 per cent.
In just 4 sitting weeks, the new Senate has repealed the carbon and mining taxes thus demonstrating that with policy intent and goodwill the Australian Parliament can remove the blockages to stronger and more durable economic growth.