Prime Minister Julia Gillard has confirmed the Government has reached a deal with the miners over its new tax, but it comes at the cost of a reduced cut to company tax.
VIDEO REPORT: Gillard announces revamped mining tax
The Government has made several key concessions demanded by the mining sector, including on the rate, threshold at which the tax applies and the resources it covers.
The Resource Super Profits Tax has even been renamed the Minerals Resource Rent Tax.
The deal has already prompted mining giant Xstrata to announce it will resume a project that it had suspended because of the resources super profits tax.
The $400 million Ernest Henry mine expansion in Queensland will go ahead, and it is reviewing its plans to suspend the Wandoan coal project.
Xstrata Copper chief executive Charlie Sartain said the decision to retain existing taxation and royalty structures for copper had given the company "sufficient confidence to recommence with immediate effect these significant projects that form an important part of our business strategy in north west Queensland.
It also helped the stockmarket open higher this morning.
The benchmark S&P/ASX200 index was up 27.2 to 4264.7 points and the broader All Ordinaries index rose 27 points to 4289.7, as of 10.15am.
The deal will mean the Government gets $1.5 billion less revenue over the forward estimates, although this reduction could have been larger if the exploration rebate and refundability of losses had not also been removed from the scheme.
Ms Gillard, Deputy Prime Minister Wayne Swan and Resources Minister Martin Ferguson said this meant the Government was unable to provide the full promises linked to the tax, although the budget is still expected to return to surplus in 2013.
The company tax rate will be cut from 30 per cent to 29 per cent from 2013-14 but will no longer fall further to 28 per cent. Many smaller businesses will get the cut a year earlier still.
Mr Swan indicated the extra 1 point cut could still be delivered later.
''We are just staying at 29 [per cent] until we have a further look at fiscal conditions,'' he said.
The Government said the deal was ''more generous to industry in some respects, while industry has given ground in other areas''.
The new Minerals Resource Rent Tax regime will apply to iron ore and coal in Australia. This tax will be levied at 30 per cent, compared with the earlier proposal for a 40 per cent super profits tax, and will only apply to profits above $50 million a year.
The Government has also lifted the threshold at which it applies from the government bond rate, of about 5 per cent, to that rate plus 7 per cent, or about 12 per cent.
The current Petroleum Resource Rent Tax regime will be extended to apply to all Australian onshore and offshore oil and gas projects, including the North West Shelf.
The removal of all other commodities from the new arrangements means the tax will now affect about 320 companies, rather than 2500.
The Government has also agreed to mining industry demands for more generous arrangements for the treatment of past investment, through a credit that recognises the market value of that investment written down over a period of up to 25 years.
BHP Billiton chief executive officer Marius Kloppers said he was encouraged that the new tax was ''a material improvement from the original tax proposal''.
''We are encouraged that the MRRT design is closer to our frequently stated principles of sound tax reform, in that the proposed tax will be prospective in its treatment of profits from our iron ore and coal businesses, and not apply to the other commodities in our portfolio,'' he said.
Minerals Council of Australia Chief Executive Officer Mitch Hooke also described it as a positive outcome.
''Although there is still considerable work to be done, this proposal should draw a line under the uncertainty created by the highly contentious super mining tax in the minerals industry, its communities, related businesses and capital markets,'' he said.
''It is a fundamental improvement on the original super mining tax proposal, which would have seriously undermined the industry's international competitiveness, increased sovereign risk and cost jobs and investment to the detriment of the economy.''
However, Association of Mining and Exploration Companies chief Simon Bennison told the ABC his group had been left out of the negotiations and small miners would be disadvantaged by the deal.
''The Government feels the only way it can negotiate through these sorts of situations is with three companies. That's an absolute nonsense,'' he said.
The Government had been in negotiations with BHP, Rio Tinto and Xstrata until a deal was struck last night.
The mining union welcomed the agreement as a ''good deal for mining communities and a good deal for Australians''.
Despite the deal, the Coalition is still opposing the tax.
Opposition treasury spokesman Joe Hockey said the deal was a coup for the miners, not for Ms Gillard, but said there could be unintended consequences around the tax.
Deputy opposition leader Julie Bishop said it was a dog's breakfast and a recipe for uncertainty.
Resources spokesman Ian Macfarlane said Labor would use the tax as a ''milking cow''.
''While ever this tax is in place, every time the Labor Party runs out of money, they will simply change the parameters of the scheme,'' he said.
''Once this tax is in place, the parameters can be changed and the message that that sends internationally is Australia is now a very risky place to do business.''
The deal removes one of the major obstacles to Ms Gillard calling an election, however, she said this morning that ''we have more governing to do, and my focus is on delivering those things that matter to the Australian people and keep us moving forward, that's what we are doing today''.
Mr Swan indicated the legislation would be introduced to Parliament after the election, saying he did not think it would get to the Senate until next year.
When asked whether the changes meant any lobby group that yelled loudly enough and had a well-funded campaign could change government policy, Ms Gillard said she believed she had achieved a fairer share of mineral wealth for all Australians ''through a hard, frank and respectful negotiation with mining companies''.
Mr Swan said Ms Gillard's intervention ''changed the tone of this debate and has led to this breakthrough''.
''She gets things done and I think that's obvious by the nature of this agreement,'' he said.
Source: The Canberra Times
0 comments:
Post a Comment