However, the industry body has little faith this year’s election will deliver any positive change.
Speaking at the Minerals Council of Australia biennial tax conference in Brisbane yesterday, QRC chief executive officer Michael Roche spelled out his frustration at the state and federal governments’ minerals taxation and royalty schemes.
“It’s becoming increasingly clear to me and my members that politicians just don’t get it,” Roche said.
“Regardless of the election result, it’s my expectation that we will continue to see squabbling continue over entitlements to the economic rents from resource extraction.
“After more than a century of federation, we’re still to see a nationally binding agreement on preferential tax/royalty approaches to sharing arrangements.
Roche referred to the GST Distribution Review report handed down last October which concluded “the current impasse between state royalties and the Commonwealth’s resource rent taxes are harmful and unsustainable”
“We could not agree more,” Roche said.
Pointing out a flaw in fiscal federalism, Roche said it was estimated that mining contributed about 9% of aggregate state revenues, yet represented 85% of the GST redistributed as a result of revenue assessments.
Roche found it hardly surprising his members were keen to explore development of agreed policy principles, whereby a substantial percentage of royalties are removed from the GST redistribution assessment.
“The time is ripe to end the feud and agree on a progressive national model to equitably distribute the proceeds of the nation’s minerals and energy wealth,” he said.
“At the state level, the QRC and its members agree that there is a need for strong corrective fiscal action to – if I can pinch a phrase – get Queensland back on track.”
Roche reminded delegates that Queensland Premier Campbell Newman had not committed to index the royalty rate thresholds.
“To restore the coal industry’s global competitiveness and Queensland’s attractiveness as an investment destination, indexation of royalty thresholds is critical,” he said.
Roche expressed hope that Australia might one day embrace a flow-through shares arrangement which had proved to be successful in Canada.
Roche’s comments echoed those of keynote speaker, Peabody Energy Australia chairman Eric Ford.
Ford said the spate of taxes and royalties introduced by both state and federal governments had created policy uncertainty and meant that the Australian industry was losing its competitive advantage.
“The common thread that runs through these tax changes is a worrying complacency about Australia’s place in the world,” he said.
“Underpinning this mindset is the apparent view that Australia’s competitiveness in mine production can never be lost – that more and more tax and regulatory burden can be added without risking the competitiveness of the sector and its contribution to the Australian economy.”
Meanwhile, revenues from company tax and royalties from the mining sector have totalled more than $A130 billion over the past decade.
“Despite this, some believe this industry is still under-regulated and under-taxed,” he said.
“Anyone who thinks there are super profits being earned in my industry is simply ignoring commercial reality.”
