Tax receipts tell the story of the massive benefits of mining to Australia – 21 August, 2014

Home / Views / Tax receipts tell the story of the massive benefits of mining to Australia – 21 August, 2014
Anyone who still doubts that the now-abandoned MRRT (better known as the Mining Super Tax) was flagrantly unjust need only look at tax office receipts for 2013-14.

Directly making up more than 10per cent of GDP, the mining industry contributed a whopping 25 per cent of the nation’s company tax in the last tax year. It also paid royalties to the States which took its total contribution to government coffers to almost $22 billion.

Those numbers are from the Minerals Council of Australia which commissioned Deloitte Access Economics to review the industry contribution. They make nonsense of the idea that Australians needed a special tax to get their share of benefits from the industry.

Whenever the big miners report multi-billion dollar profits there’s a tendency for some commentators to see these as evidence of good times and capacity to pay up more, but they need to consider two important factors.

The first is that these returns are built on massive capital investments running to many tens of billions of dollars and built up over many years. In terms of returns on capital invested our big miners don’t do better than many other industries; they just have more shareholder funds invested.

The second is that companies like Rio Tinto and BHPB are global, so a fair chunk of those profits are generated elsewhere…where they also pay tax.

The way commodity prices have been in the past year or two there aren’t too many windfall profits being generated. In fact miners have been implementing and looking at cost reduction and overall improved efficiency programs and certainly not basking in the sunshine of excess earnings.

Nobody is suggesting we need to pass the hat around for our miners — Australian technology and professional know-how helps to offset some of the other high operating costs — but neither should governments go on looking at them as cash cows to be milked whenever there is a shortfall.

The miners well and truly pay their fair share. And let’s not forget that some of the biggest shareholders in our major miners are Australian super funds – investing the savings of all of us.

The MRRT was a bad idea. Nobody should mourn its passing.

(For the full Deloitte Access Economics report, go to www.minerals.org.au)