03-June-2010
Portfolio Media Releases, The Economy
Topis: Labor’s great big new tax on mining
E&OE
ANDREW ROBB:
I’d just like to make some comments if I could on the work by KMPG that was released this morning. I think this analysis of the impact of Mr Rudd’s great big new tax makes a total mockery of one, the budget, it shows it to be a house of cards, and two, the rhetoric and the attacks and the vilification, that’s been undertaken by the Government.
In my view, there is no confidence now in the revenue numbers in the budget. What will it do to the $12 billion that’s projected revenue in the last two years of the forward estimates? It suggests there’s no straight forward surplus. And I do think, it also shows, that the Government’s claims that the industry’s paying 17 per cent tax are just absurd.
The Government, off the back of a graduate studies work from North Carolina, ran around saying that the industry was paying 17 per cent tax. When in fact, it’s been confirmed this morning, it’s of the order of 40 per cent on average, and it will go to 55 per cent.
So what it means is that the industry is now paying 33 per cent more than every other company in Australia, as it should, it’s a fair share, I think. But it will go to over 90 per cent more tax than every other industry in Australia. And that’s just going to make us uncompetitive, put thousands of people out of work, and we’ll lose many, many projects, billions and billions of dollars of projects in the years ahead.
JOURNALIST:
Why should we believe this modelling by KMPG opposed to actual Treasury figures? Wouldn’t they be a bit more reliable?
ANDREW ROBB:
The fact of matter is KPMG is the company that did the modelling for Treasury. This is the same modelling, right. So it just shows and demonstrates the sneaky nature of this Government. For reasons of a pure tax grab, not tax reform, they have sought to mislead people, grossly mislead people, and withhold information. Why won’t they put out their results, the assumptions that asked KMPG to use?
In this instance it’s the same company, with the same models, making an assessment, and it shows quite clearly that the industry is paying substantially more, 33 per cent more, than every other company in Australia. And the Government is looking to take that to a totally unacceptable level of 95 per cent more.
JOURNALIST:
Shouldn’t the mining companies though pay more tax in comparing them to other companies who aren’t using resources that are in the ground in Australia? Shouldn’t there by some kind of premium for the fact that they’re getting access to that once only resource?
ANDREW ROBB:
There should be a premium. There should be a premium. And there is a premium. The thing is this KPMG work this morning, confirmed that there is a premium of about 33 per cent, over and above every other company in Australia. They’re paying around 40 per cent effective rate of tax on average, BHP is up at 43. And every other company pays 30, 29, 28. So that’s about a 33 per cent difference. It is a premium and it’s a fair share.
What the Government wants to do is take that close to 60 per cent, which is 95 to 100 per cent more than every other company in Australia. Well, we just won’t get people investing. They won’t take the risk. Those minerals have no value, until someone puts serious amount of money and takes a lot of risk to extract them from the ground and export them.
So you have to have sufficient incentive in there for companies to make that huge investment to take that risk. I do think that what we’re seeing is, those companies, that sector, with which we’ve got a comparative advantage, it’s a great strength of Australia, and what we’re seeing is the Government attacking the great strength of Australia.
JOURNALIST:
Those companies are making a lot more profit though as well, than standards companies, should they then be paying a greater share of tax?
ANDREW ROBB:
Well they are. They are. It’s a percentage, corporate tax is a percentage. They pay $2.6 billion of corporate tax ten years ago because the industry was in a slump. They weren’t making profits. Now they’re paying close to $20 billion in corporate tax. They are paying. And they should pay. They should pay. That’s what it’s designed for.
But this piece of work this morning demonstrates that this is a tax grab, but also demonstrates the impact. Gold will be less competitive, in fact uncompetitive, the conclusion of this report is. Nickel will be uncompetitive. So not only will mines be under threat, but the prospect of new investment will be remote, and it means that literally tens of thousands of jobs in the development phase of all sorts of new projects, won’t happen over the next two, three, four years. And the revenue which would accrue there, which would amount to billions of dollars, will not hit the bottom line, and this budget that was brought down, is a house of cards.
JOURNALIST:
So you don’t think there’s any room for any negotiations, especially today, as the Minerals Council holds its Minerals Week Conference?
ANDREW ROBB:
I don’t think there’s any scope for the Government to maintain the fundamentals that they’ve got in place for the new tax. You can’t have a $9 billion tax on the industry that is our greatest strength, and expect the industry who are making the investments, taking the risk, to cop it. It won’t work. It won’t work for Australia.
JOURNALIST:
So do you think the room for negotiation simply hinges on that 40 per cent tax or the rate or when it kicks in?
ANDREW ROBB:
Well I don’t want to get into the negotiations. I think the best thing they can do is scrap it frankly. It is just a tax grab. It’s designed to do two things, one to fill a huge budget hole created by reckless spending which continues, and secondly, to pick a fight, to pick a fight with the miners, so the that Prime Minister, who has back-flipped on so many things and is seen as a real jelly back, that this Prime Minister can try and pretend that he’s got some toughness about him.
I mean it’s just so cynical in the extreme. The cynicism is palpable. Mr Rudd stands condemned for what he’s doing to our country. He’s no longer fit to govern this country.
Media Contact: Cameron Hill on 0408 239 521