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Mining tax passes Senate but faces dissent -

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The Federal Government's Minerals Resource Rent Tax has passed through the Senate with a mixed
response from miners and the markets, so what is the lie of the land?

Transcript

CHRIS UHLMANN, PRESENTER: It's been two years and two prime ministers in the making, but the mining
tax is finally set to become law. The Bill passed the Senate last night and the Prime Minister has
declared victory. Julia Gillard's thrown down the gauntlet to the Opposition about the benefits the
tax will buy, like a lower company tax rate and paying the tax concessions on a rise in compulsory
superannuation. But the fight isn't quite over: it might end in the High Court, and shortly I'll
raise that with the West Australian Premier Colin Barnett. But first, to the tax built to ride the
mining boom.

It's a once in 140-year cash explosion.

CHRIS RICHARDSON, DELOITTE ACCESS ECONOMICS: This is a remarkable period. Half the world is having
an industrial revolution. That makes them incredibly hungry for commodities such as coal and iron
ore.

CHRIS UHLMANN: The wealth washed through the entire economy. But the existing state-based royalty
system only captured some of the rise in the value of Australian mineral exports, not the
accompanying huge spike in profits.

CHRIS RICHARDSON: The Government thought, well, let's have a profit-related tax rather than
something as simple as royalties.

CHRIS UHLMANN: So, in 2010 the Rudd Government announced a mining tax to capture the soaring
profits. The basic idea was sound.

WAYNE SWAN, TREASURER: Our resources belong to all Australians, and Australians do deserve a fair
share.

CHRIS UHLMANN: But the execution was execrable; it alienated the mining states.

COLIN BARNETT, WESTERN AUSTRALA PREMIER: The West Australian Government does not support this tax.
It is a bad tax in almost every respect.

CHRIS UHLMANN: ...and started a war with miners that helped unseat a prime minister. So, the
Gillard Government rewrote the tax with the world's biggest miners in the room. Last night, mining
tax mark two passed the Senate, and an exultant Prime Minister is tell selling the benefits it will
buy.

JULIA GILLARD, PRIME MINISTER: New tax benefits to small businesses and businesses around the
nation. New superannuation benefits.

CHRIS UHLMANN: But therein lies the risk. The benefits are expensive and permanent, and the tax
will be volatile.

WAYNE SWAN: It depends upon the exchange rate, when it depends upon volumes and when it depends
upon commodity prices...

CHRIS RICHARDSON: Regardless of the merits of the individual components, you're going to have a
volatile tax paying for less volatile cost. Always a tricky thing.

CHRIS UHLMANN: And in a concession to the big miners, the Federal Government is locked into
rebating any rise in state royalties.

WAYNE SWAN: Those that are putting up their loyalties will certainly not be in a position to
receive the sort of funding that we've got in the infrastructure fund which flows from the resource
rent tax, because if they're taking away revenue there's less revenue to the Commonwealth.

CHRIS UHLMANN: And there is a constitutional threat.

MATHIAS CORMAN, SHADOW ASST TREASURER: This mining tax will ultimately thrown out by the High
Court.

CHRIS UHLMANN: But one keen observer believes the benefits of the mining tax outweigh the risks.

CHRIS RICHARDSON: It's better than the old system of just royalties, and it's better than the
original proposal of the RSPT. It ain't perfect but it ain't bad.