Australia Fights Back Against Mining Industry

by Mary Swire, Tax-News.com, Hong Kong

02 June 2010

Following a vociferous response by the mining industry against the proposed new resource super profits tax (RSPT), the Australian government has decided to produce nationwide advertisements in support of its policy.

Australia’s Cabinet Secretary and Special Minister of State, Joe Ludwig, tabled a statement in parliament, approving an exemption from the Campaign Advertising Guidelines for the government’s campaign on tax reform. Those guidelines allow the Cabinet Secretary to exempt campaigns for different reasons, including extreme urgency or other compelling reasons.

Ludwig said: “I have accepted the Treasurer’s advice that there is an active campaign of misinformation about the proposed changes to our tax system, and that Australians are concerned about how these changes will affect them. The community has expressed a very clear desire to know more about the reforms to our tax system and it’s important to provide that information.”

“In granting the exemption, the Treasury was directed to adhere to the intent of the guidelines, that the campaign materials should be objective and not directed at promoting party political interests,” he added. “The cost of this communications campaign was clearly and publicly announced in the budget papers. This decision does not in any way affect the size or nature of the campaign being conducted by the Treasury in relation to tax reform.”

In an interview, the Prime Minister, Kevin Rudd, defended the government’s decision to advertise in favour of the RSPT, given that, in the recent budget, the government had been “very explicit on what would be expended on individual campaigns, and these also go to national interest or public interest matters.”

He explained that, “when you've got multinational companies, many big ones, lining up to fund a very big scare campaign against big tax reforms - which could damage the economy, damage economic confidence, and therefore hurt working families, the government has a responsibility to put the facts on the table. That's what we're doing.”

Mitch Hooke, Chief Executive Officer of the Minerals Council of Australia, has already replied that the government’s RSPT advertising is misleading. In a statement, he pointed out that the government’s new radio advertisement focuses on the mining industry’s royalty payments, but fails to acknowledge the sector’s company tax contribution in the total tax paid.

“The government has acknowledged that failing to include the mining industry’s company tax contribution is not the full picture of the sector’s taxation contribution,” he said. “Last year, the minerals resources sector paid AUD7.6bn (USD6.4bn) in royalties and AUD14.3bn in company tax – and over the decade to 2008/09, AUD80bn.”

“It is ironic,” he added, “that the government has resorted to misleading advertising given its stated justification for the new taxpayer funded campaign. The Minerals Council of Australia’s advertising has been fact-based and accurate throughout the debate over the proposed super mining tax.”

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