MRRT is a failed policy approach that would stifle investment

The revival of a Minerals Resource Rent Tax (MRRT) proposed by economist Ross Garnaut tonight in his speech at the Jobs and Skills Summit would stifle investment in mining and force companies to go offshore.

Imposing a new tax on Australian mining companies would seriously undermine our international competitiveness resulting in jobs losses across the country and devastating many communities which rely on mining.

The Government’s Jobs and Skills summit is meant to be discussing how to create more jobs and improve skills, Garnaut proposed a tax that will do the opposite. Make no mistake, jobs would go!

The failed MRRT created instability and uncertainty, and resulted in project delays.

Australia must attract more capital investment to generate productive growth and that will not occur if Australia’s corporate tax system is made even less internationally competitive.

With over AUD $4 trillion of investment in new mining and minerals processing up for grabs globally Australia should be doing everything in its power to attract some of it.

The Australian mining industry always pays its fair share of tax while providing royalties to state governments to pay for improved roads, hospitals and other infrastructure and services.

Garnaut refers to a low tax take in Australia compared to developed countries. Australia’s company tax rate is the third highest in the OECD and well above the OECD average. The OECD countries have higher GST rates, basically double Australia’s so they rely less on taxing income.

The minerals industry has been paying tax consistently for years and record amounts over the last decade.

The return to the community from Australia’s mining industry has again hit record levels with a combined $43.2 billion in company tax and royalties paid in financial year 2020-21, a 16 per cent increase from the $37.3 billion contributed in the previous period.

Company taxes paid reached a new record high of $26.5 billion and royalties also reached a high of $16.7 billion in 2020-21 contributing significantly to federal, state and territory governments at a time when they needed it most during the COVID-19 pandemic.

The record company and royalties payments are highlighted in an Ernst & Young report commissioned by the MCA which also shows that in the last decade (between 2011-12 and 2020-21), the mining industry contributed $254 billion in company taxes and royalties ($142 billion and $112 billion respectively).

Company tax and royalties payments are expected to continue increasing in 2021-22 in line with increases in export earnings. This is driven by a positive outlook in the price and quantity produced of metallurgical and thermal coal coupled with a robust year for iron ore, gold and base metals.

The industry in Australia continues to pay the highest average wages, the most company taxes, delivers the most export revenue and is critical to supporting regions and communities – supporting 1.1 million jobs in the mining industry and its supply chains.

Mining companies also support thousands of regional businesses around Australia and their workers who provide essential services that keep the industry operating.

In addition to new jobs across the nation and paying its fair share of taxes and royalties, the mining industry has been supporting local communities through the COVID-19 pandemic, providing substantial donations to hospitals, charities, child care centres.