Fortescue Metals Group executives have fronted a Senate Committee hearing considering the proposed Minerals Resource Rent Tax saying the tax will have a devastating impact on the incentive to invest in the mining industry.
Fortescue Metals Group executives have fronted a Senate Committee hearing considering the proposed Minerals Resource Rent Tax saying the tax will have a devastating impact on the incentive to invest in the mining industry.
The Senate Select Committee on Fuel and Energy is holding a hearing in Perth today.
FMG chief executive Andrew Forrest told the Committee that the MRRT was unfair, discriminatory and ultimately unconstitutional.
"This is an ill-conceived, sledgehammer approach that kills off the incentive to invest for anyone outside of the Big 3 miners with whom the Gillard Labor Government has cut a side arrangement.
"The MRRT will not only act as a barrier to entry to iron ore markets for the vast majority of Australian miners, it will do so while red-carpeting the existing dominant players who've been given an inside run," said Mr Forrest.
"The notion that the Government is engaged in genuine consultation on the tax is fanciful.
"It's a sham, with no changes to the principles underpinning the tax nor the revenues the Government expects to squeeze out of junior miners.
"We call on legislators to stop this spiteful new tax in its tracks before further harm is done."
Mr Forrest said he was very surprised the Government was persisting with the tax proposal in its current form given the constitutional backdrop.
"At its core, the MRRT is unconstitutional" he said.
Representatives from the Chamber of Commerce and Industry also addressed the committee.
Chief economist John Nicolaou told the hearing that more time is needed to discuss and examine how the MRRT will work, and what impact it will have on businesses both inside and outside the mining sector.
"The tax in its current form is a significant risk to the Western Australian economy, and the large number of businesses that rely directly, and indirectly, on a strong resources sector.
"Considering the Western Australian economy will be paying the bulk of the tax, it is appropriate that the views and concerns of the local business community are fully considered," Mr Nicolaou said.
The Association of Mining and Exploration Companies, DomGas Alliance, the Chamber of Minerals and Energy, the Department of Treasury and Finance, Magnetite Network and Buru Energy all had opportunties to address the committee.
The committee's terms of reference include considering the minerals resource rent tax and expanded petroleum resource rent tax, a carbon tax, or any other mechanism to put a price on carbon, and any other new taxes proposed by government, including significant changes to existing tax arrangements.
The committee is required to report by November 30.
See statement from FMG below:
Fortescue Metals Group Ltd ("Fortescue") executives have told a Senate Committee that the proposed Mineral Resource Rent Tax (MRRT) will have a devastating impact on the incentive to invest in the Australian mining industry.
Chief Executive Officer Andrew Forrest and the senior executive team at Fortescue today appeared before the Senate Select Committee on Fuel and Energy during hearings in Perth.
Mr Forrest told the Committee that the MRRT was unfair, discriminatory and ultimately unconstitutional.
"This is an ill-conceived, sledgehammer approach that kills off the incentive to invest for anyone outside of the Big 3 miners with whom the Gillard Labor Government has cut a side arrangement.
"The MRRT will not only act as a barrier to entry to iron ore markets for the vast majority of Australian miners, it will do so while red-carpeting the existing dominant players who've been given an inside run," said Mr Forrest.
"The notion that the Government is engaged in genuine consultation on the tax is fanciful. It's a sham, with no changes to the principles underpinning the tax nor the revenues the Government expects to squeeze out of junior miners.
"People shouldn't think for a moment that this has gone un-noticed overseas, where investors are already voting with their feet and backing new projects in Africa, Asia and the Americas rather than Australian start-ups."
Mr Forrest said it was now fully evident that the MRRT, if introduced, would be unconstitutional.
"However, the problem Australians face is that by the time their Government's actions are proven to be unconstitutional in a court of law, commercially the horse will have bolted," said Mr Forrest.
"There's no point having a Pyrrhic victory some years down the track when the mining industry is on its knees and new projects have dried up.
"We call on legislators to stop this spiteful new tax in its tracks before further harm is done."
Mr Forrest said he was very surprised the Government was persisting with the tax proposal in its current form given the constitutional backdrop.
"At its core, the MRRT is unconstitutional" he said.
"Not only does it ignore the ownership of mineral resources by the States, it is constructed around a discrimination that targets iron ore and coal and leaves other commodities unscathed.
"The final dumb aspect of the tax is that it will penalise those States that, perish the thought, try to encourage the development of mineral resources by lowering production royalty rates.
"Investors around the world are seeing this tax grab for what it is and our great concern is that irreparable damage will be done before the Government faces up to reality."