Economy

Feb 12, 2013

Labor spins its wheels on the mining tax

Both sides are stuck with an expensive superannuation policy that will cost billions in future years, regardless of what happens with the mining tax.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

When Julia Gillard and Wayne Swan walked into the main committee room in Parliament House on July, 2010 to announce the new mining tax deal hammered out with the world’s biggest mining companies, they may have thought they were finally free of the issue that had helped destroyed Kevin Rudd’s prime ministership.

57 comments

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57 thoughts on “Labor spins its wheels on the mining tax

  1. Jimmy

    “The Coalition simultaneously decries the tax for not raising enough money, and for being damaging to the mining industry” The question I have is that given the Liberal states have all raised royalties knowing the Federal govt will refund the mining companies what happens when Abbott removes the MRRT and the miners are faced with a less efficient scheme with higher rates than before the MRRT?

    Also given the Iron Ore Price was down to $87 in September and was lower than it it is currently for a significant portion of the December quarter wouldn’t it stand to reason that if prices hold the revenue from the MRRT for the next 6 motnhs would be considerably higher than what it has been, possibly even close to the orginal forecast?

    Also why are we rushing to judgment on this reform, some criticisms have been that the miners have been deprecitaing their investments which has resulted in them not paying the MRRT, well assuming they are using the diminishing value method the benefits of this are fornt ended and will run out long before the minerals do, meaning that in the future lower commodity prices will still see higher MRRT payments.

    On the costing issue this is the pay off for Gillard on setting the date early, journalists are already growing restless of the Libs avoiding releasing their costings, they might of been able to get away with it for 8 weeks but not 8 months, especially when everybody nows the figures can’t add up.

  2. PkD

    Is this an issue of the forecasts supplied by Treasury? Or the interpretation of the supplied forecasts?

    Does Treasury supply one forecast, or do the supply a range of forecasts based on market sensitivity? Don’t most mature gold and oil stocks have a fairly predictable sensitivity to the price of gold, oil and exchange rates?

  3. zut alors

    ‘When Julia Gillard and Wayne Swan walked into the main committee room in Parliament House on July, 2010 to announce the new mining tax deal hammered out with the world’s biggest mining companies…’

    My version: When Julia Gillard and Wayne Swan walked into the main committee room it was patently obvious a couple of guileless sitting ducks had been well and truly done over by the mining industry bullies. I can’t recall two politicians appearing so pleased with themselves having just been outwitted and tightly stitched up by a few businessmen.

  4. Apollo

    Grow some balls and redesign the tax now so they can collect the money next quarter and show the benefit of it to the Australian public.

    They’re having a reputation of beholden to the unions, now they want to have a reputation of beholden to the miners as well. Not representing the interest of the public.

    The piss weak attitude is going to usher Abbott into power with ease. But have no fear, Abbott will bring back the more than the golden years of Howard’s socialism. Pop out a baby and you’ll have enough to deposit for another investment homeloan.

    Our secret scientists have installed great socialist value into Abbott’s brain. He is now considering about following the Republic of China’s economic model to set up special economic zone.

    Ne vous inquiétez pas! La vie est belle, il faut me croire Kameraden.

  5. Jimmy

    Apollo – “Grow some balls and redesign the tax now so they can collect the money next quarter and show the benefit of it to the Australian public.” I have a feeling the Govt are playing a smarter game than that, they delayed the release of the December quarter figures by about a month, which meant that by the time they released them they had 6 weeks of actual commodity prices and only 7 weeks to “project” to estimate what the March quarter will look like.

    I think the reason for the sudden change of heart of about the confidentiality of the tax records was that they have already estimated that the March quarter will see significantly higher revenues from the MRRT. Based on that I think they are trying to “rope a dope” Abbott, let him come throwing haymakers about the lack of revenue this quarter and then step forward next quarter with a couple of smart jabs a drop him with all this extra revenue he plans to give back to the miners.

  6. Apollo

    Jimmy, I’m sure the revenue will be higher, but it won’t be high enough.

    For all the political hit they got from proposing the mining tax, the amount of revenue collect is not worth the effort. K.Henry even wonders why they bother with it. Go bigger and bolder. Gold should have been included in it, not because global instability has push its price up, but the growing demand from Chinese and Indian middle class is tremendous.

  7. Dogs breakfast

    Kevin Rudd can hardly look back and say that histroy will judge. My recollection is that Rudd was on the ropes because he had just abandoned his promises on the carbon tax, he was wandering around in a political funk, unable to do anything apart from announce another enquiry, and in an attempt to look like a man of action, picked a fight with a well organised and funded mining community without having settled on the legislation.

    The effect was that this as much as anything caused him more wobbles, which led to him sending out his chief of staff to ‘sound out’ support, which directly led to the challenge from Gillard.

    If Rudd had managed it correctly from the start he might still be PM. He didn’t, he wobbled, he lost, and Gillard was half obliged to clean up the mess to clear the decks for an election.

    I’m with Zut, when the ‘agreement’ was announced my heart sank. You don’t want multi-billion dollar companies agreeing to your new tax measures, you want them squealing like stuck pigs.

    And they were cheshire cats.

  8. Jimmy

    Apollo – “Jimmy, I’m sure the revenue will be higher, but it won’t be high enough.” What is high enough?

    This is a long term reform and you can argue that they should of included this or that but I wouldn’t be surprised if they get up around the $1b for the year if prices hold which is pretty significant coin, especially considering the massive drop in the September Qtr, As the depreciation unwinds the price required to achieve good revenue comes down.

    The MRRT in it’s current form will generate enough money to raise serious question about how Abbott will replace the revenue.

  9. Apollo

    Jimmy, $1 billion is below $2 billion at mid year forecast, and $3 billion in May budget. It should at least come close to the $2 billion midyear forecast. I’d prefered the tax to raise at least $5 billions to spread the benefit for all Australians.

  10. Dogs breakfast

    Considering that the design of the tax allowed them to offset any changes to the states royalties, you would fairly include that value in the overall tax take as well. I suspect that it will get closer to $1b for the year if iron ore prices hold, and more if you count the extra royalty money to the states.

    The royalty side of the tax was, if I recall correctly, part of the original design from the Henry review, but it never made sense to me. It was always an invitation for the states to increase their royalties, which should be tied in any case to the final price rather than just being given away, as they have been since the first fleet.

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