Truce Called In Australian Mining Tax Dispute

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

25 June 2010

The mining industry has called off its campaign against the Australian government’s proposed 40% resources super profits tax (RSPT), following the positive noises being made by the country’s new Prime Minister, Julia Gillard.

In her first speech as Prime Minister, she said that she will seek consensus on the RSPT. While reasserting that “Australians are entitled to a fairer share of our inheritance, the mineral wealth that lies in our grounds”, she confirmed that the government needed to do more than consult. It needed to negotiate.

She added that she was “throwing open the government’s door to the mining industry," but she asked in return that the mining industry "throws open its mind.” As a start, she disclosed that she would stop the pro-RSPT advertisements paid for by the government, and asked that, in return, the mining industry cease their advertising campaign.

The Association of Mining & Exploration Companies (AMEC) immediately issued a statement in which its Chief Executive Officer, Simon Bennison, agreed to withdraw its anti-mining tax media campaign, “subject to immediate resolution of future tax reform as it applies to our industry.”

However, another statement from AMEC had stated that “the first thing that the Prime Minister should do is to announce an immediate and complete withdrawal of the proposed toxic mining tax in order to restore Australia`s reputation as a safe, reliable and financially attractive place in which to invest.”

“AMEC now looks forward,” added Simon Bennison, “to Prime Minister Gillard`s announced withdrawal of the mining tax, and in entering open, frank and constructive dialogue on tax reform issues.”

BHP Billiton Chief Executive Officer, Marius Kloppers, said that the company was encouraged by the Prime Minister’s comments that her government will open the door for negotiations with the objective of achieving consensus.

"The industry has consistently been calling for the government to properly engage on all aspects of the tax and we welcome the opportunity to do so,” Kloppers commented. “BHP Billiton has consistently stated that any new resources tax must be prospective, competitive, differentiated and resource based."

"It is very important that this issue is resolved quickly and consistently with these four principles for the benefit of all Australians,” he continued. “They underpin investment decisions, are central to Australia's reputation and affect our employees and shareholders. We look forward to working with the government in this new way so as to quickly find a solution that is in the national interest."

Rio Tinto also said that it “is cautiously encouraged" by the new Australian Prime Minister's invitation to the Australian minerals industry to reconsider aspects of its tax reform proposals. "While it is a positive first step, the government needs to end the uncertainty affecting the Australian economy as soon as possible,” the firm said.

Rio Tinto added that it had “no doubt the RSPT was flawed policy" which has "already caused damage to Australia's reputation and the national economy."

"Rio Tinto believes it is fundamental that the negotiation process ensures any tax reform proposal is not applied retrospectively; and delivers an effective tax rate that retains Australia's international competitiveness as an investment destination,” the company stated.

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