02-July-2010
Portfolio Media Releases, The Economy
Julia Gillard and Wayne Swan’s claim that their revised great big new tax on mining will cost the budget just $1.5 billion over the forward estimates are simply laughable and raise massive new doubts about Labor’s capacity to return the budget to surplus within three years.
The budget factored in $12 billion in revenue from the great big new tax in its original form, yet the government asserts that it will still deliver $10.5 billion.
Shadow Minister for Finance Andrew Robb said this is simply unbelievable:
- The tax was to apply to 2500 mines, it will now apply to just over 300 mines.
- The tax was to cut in at the bond rate, it now cuts in at the bond rate (6 per cent) plus 7 per cent.
- The headline rate has been reduced from 40 per cent to effectively 22.5 per cent, once you apply the 25 per cent extraction discount.
- The May Budget papers said the government’s tax plan would promote growth across the entire economy, based on the government assuming 40 per cent of the risk in each mining project. The government claimed a subsequent growth dividend of $600 million in 2012-13 and 2013-14. There is now no basis for claiming a growth dividend.
“This confirms that Labor’s budget is a house of cards and lacks all credibility. Either the government has played with the assumptions, or it is simply lying to the public,” Mr Robb said.
“The case for an emergency mini-budget is compelling. It appears that the revised estimates have just been made up.
“The government is being run by a bunch of amateurs. This whole process has created enormous long-term damage to our reputation as a safe and stable investment destination, and has undermined local and overseas business confidence in national governance in Australia.
“This smoke and mirrors announcement today is no more than a political fix. It is a deal struck with three big miners. The Coalition is worried about the smaller miners. The prospect of mid-tier miners attracting vital overseas finance has been gutted.
“This tax will be seen as the thin end of the wedge. Once the framework is in place the Labor government will change the rate every time they run out of money.
“The tax remains simply a tax grab, not tax reform. It is designed to fund Labor’s $100 billion debt and $57 billion deficit. This erratic and spendthrift Labor government can’t be trusted not to make future changes.
“It was a very bad tax yesterday, and remains a very bad tax today.
“The Coalition will oppose this tax in opposition, and rescind it in government,” Mr Robb said.
Media Contact: Cameron Hill on 0408 239 521