Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

My question is to the Assistant Treasurer, Senator Sinodinos. Can the minister outline the impact that the mining tax has had on the Australian resources sector?

Arthur Sinodinos (NSW, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I thank Senator Eggleston for his question.

Jacinta Collins (Victoria, Australian Labor Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

If not his pronunciation!

Arthur Sinodinos (NSW, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I sometimes still struggle with 'Sinodinos' as well! Mr President, the mining tax was a poorly designed tax which burdened the industry with excessive compliance costs, making an investment in Australia's minerals sector less attractive globally. It was a poorly designed tax on Australian mining companies that discouraged investment by imposing higher taxation on ventures that involved risk taking. It was meant to be a resource rent tax, which means it was meant to extract profits without affecting production, but in fact the way it was originally designed meant it was imposing higher tax on ventures that involve risk taking. The MRRT damaged international investor confidence in Australia, and in particular the energy and resources sector, by making the sector less competitive internationally. The AMEC, the Association of Mining and Exploration Companies, stated:

Since the announcement of the RSPT—

the original resource super profits tax—

and MRRT in 2010, Australia’s reputation has been tarnished and industry confidence has floundered.

The repeal will go a long way to restoring confidence and much needed investment back into the mining industry.

The tax added a new administrative layer of complexity. It imposed a significant compliance burden on miners, even for the hundreds of companies that would never have a tax liability. As AMEC recently told the Senate Economics Legislation Committee:

… minimum total set-up costs in the first year of smaller iron ore and coal miners and junior exploration companies, excluding large miners, was estimated to be over $20 million and ongoing administration and compliance costs in excess of $2 million.

The managing director of Atlas Iron said in October last year:

We have spent the best part of $2m in compliance to find that we are not paying the tax …

The mining tax has already cost over $50 million in administration and yet only raised $400 million. The repeal of this tax will provide a boost for the mining industry. (Time expired)

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

Mr President, I have a supplementary question for the minister. Can the minister tell the Senate whether the mining tax has been effective in raising revenue?

Arthur Sinodinos (NSW, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I can report to the Senate that your suspicion is indeed right, Senator Eggleston. The mining tax has not been very effective in raising revenue. It was originally claimed that it would raise $49.5 billion when it was the resources super profits tax, which became $26.5 billion just two months later on the eve of the 2010 election as the Minerals Resource Rent Tax. The forecast of revenue has been volatile. In PEFO 2010, the forecast was $26.5 billion over five years. The PEFO released prior to the last election painted a very different picture, with just $4.6 billion over the same five-year period. To date, in net terms it has raised $400 million. The repeal of the tax will actually improve the budget bottom line by $13.4 billion over the forward estimates on an underlying cash basis or $15.1 billion over the forward estimates on a fiscal basis.

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Can the minister confirm to the Senate that the government remains of the view that it is bad policy to spend the expected proceeds of taxes before they are actually received?

Arthur Sinodinos (NSW, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I agree with the implication of Senator Eggleston's question, that you should not spend money you are not going to get or bank money and start to spend it before you have received it. Getting rid of the Minerals Resource Rent Tax will actually improve the budget bottom line by $13.4 billion over the forward estimates on an underlying cash basis. It will be the first tax in Australian history which actually saves money by its abolition. Labor has tried to claim that some of its programs were not linked to the mining tax. In relation to the schoolkids bonus, that is far from true. The now Leader of the Opposition in the Senate linked the schoolkids bonus to the mining tax and said:

I think it's about making sure we use the benefits of the boom wisely. And I think the Government's approach with the mining tax and making sure the benefits of that flow through to families, particularly low and middle income families through the School Kids Bonus, where people get assistance for kids' education costs does that.

Labor also misled— (Time expired)