Last night, the mining tax legislation was passed by the Senate 38 votes to 32 with the support of the Greens but with no help from the opposition which, on two occasions, unsuccessfully sought to suspend standing orders to delay the vote.
Despite the tax getting through the Senate, there is now the high possibility of a legal stoush in the High Court, with the opposition, along with miners including Fortescue Metals Group, threatening to challenge the legislation on the grounds that it is unconstitutional.
However, the federal government believes the tax legislation will survive any High Court challenge, with Finance Minister Penny Wong reportedly saying she has sought legal advice on the matter and is confident the tax will hold up against a court challenge.
Federal Treasurer Wayne Swan defended the $A10.6 billion forecast to be generated from the tax over the next three years and rejected suggestions the government had foregone up to $60 billion in revenue over 10 years by changing the design of the tax from the failed Resources Super Profits Tax.
“Over the forward estimates it is broadly the same, a bit less because as you would be aware it depends on exchange rates, it depends on volumes and it does depend on prices,” he told ABC Radio this morning.
“This is a vastly different design from the previous tax.
“Yes there is a lower rate but the fact is when you look at exchange rates, when you look at prices and when you look at volumes, what we are raising over the forward estimates is not vastly different to what we originally forecast with the original tax.
“But it is true, it is a better tax with the changes that we have made when we got to sit down with the industry and consult through all the details.”
Swan also took aim at the states which sought to boost royalties, threatening to cut infrastructure funding to those states.
“Those who are putting up their royalties will certainly not be in a position to receive the sort of funding that we’ve got in the infrastructure fund,” he said.
The mining industry previously cried foul that it was not consulted over the tax in the first place, with Gillard initially only consulting with the three big miners, BHP Billiton, Rio Tinto and Xstrata over the tax last year.
The revenues from the tax will be used to boost compulsory superannuation contributions, provide a 1% tax cut and a $6500 instant asset write-off for small businesses.
The Chamber of Minerals and Energy of Western Australia said the tax, coupled with the carbon tax, would place a heavy burden on the resources sector come July 1.
“CME has always preferred the retention of a state-based royalty regime as an important income stream to the government so that communities that generate this wealth will continue to receive the most benefit,” it said.
“The MRRT threatens our prosperity and international competitiveness by making Australia a less desirable place to invest.”
These views were echoed by Association of Mining & Exploration Companies chief executive Simon Bennison, who labelled the tax as “ill-conceived” and “poorly designed”
He said the tax was “discriminatory” and took aim at Australian Greens leader Bob Brown for trying to expand the tax to cover other commodities.
“Further calls by Australian Greens leader Bob Brown to expand the mining tax to include gold and uranium will only put other commodities at risk,” Bennison said.
