Industry groups have cautiously welcomed a report on implementation of the federal government's proposed mining tax, but Premier Colin Barnett remains dissatisfied.
Industry groups have cautiously welcomed a report on implementation of the federal government's proposed mining tax, but Premier Colin Barnett remains dissatisfied.
The Chamber of Minerals and Energy of WA, the Australian Petroleum Production and Exploration Association and Minerals Council of Australia have all enthusiastically welcomed the report's key finding that all current and future state royalties be fully credited against the tax.
Premier Colin Barnett has also welcomed the report but strongly condemned the federal government for refusing to respond to the report's findings until next year.
The Premier indicated that the lack of meaningful consultation to date was a major concern and had created a high level of uncertainty for resource companies and the State.
The Premier also said the report did not adequately address the issues associated with the crediting of State royalties.
"While the report recommends the crediting of all current and future State royalties, it also recommends that the Australian, State and Territory governments put in place unspecified arrangements to ensure that State and Territory governments do not have an incentive to increase royalties on coal and iron ore," he said.
"This will effectively prevent the crediting of future royalty increases," he said.
The Premier is also concerned that magnetite iron ore remains included within the MRRT.
"I personally wrote to the Prime Minister seeking the exclusion of magnetite iron ore from the MRRT to ensure equitable treatment with other highly processed minerals, such as gold and nickel, and that the development of the emerging magnetite industry is not jeopardised by the new tax" the Premier said.
"The Prime Minister referred this matter to the committee and it is disappointing to see that the report recommends that all mining activities involving the depletion of iron ore and coal should be subject to the MRRT, including magnetite iron ore."
The recommendation for current and future state royalties to be fully credited under the proposed resource rent tax was welcomed by CME chief executive Reg Howard-Smith.
He said adoption of this key recommendation would prove crucial, if the federal government and industry were to reach agreement on the proposed MRRT.
"It's now time for our political leaders to secure the future growth of this industry and the jobs of almost 90,000 Western Australians," Mr Howard-Smith said.
"Failure to do so would expose WA producers to the real risk of double-dip taxation."
The CME welcomed the group's acknowledgement of the intensive processing requirements for the state's emerging magnetite sector, by recommending that a taxing point for the MRRT be set at the mine gate or Run of Mine stockpile.
In terms of threshold arrangements, it's vital that the rate and mechanisms underpinning its operation are as transparent as possible.
CME said it will will examine other design elements of today's report, including transfer of losses and treatment of deductible amounts; compliance and administration; transition arrangements for the Petroleum Resource Rent Tax; and exploration incentives.
"We will now examine the report in detail and the impact on our membership," Mr Howard-Smith said.
MCA chief executive Mitchell Hooke said the report represented a significant milestone and vindicated the industry's call for detailed consultation on resource taxation reforms.
"It is now crystal clear that all current and future royalties must be credited against MRRT liabilities, as the industry has maintained throughout the debate," Mr Hooke said.
"There are, however, some technical areas where the industry considers that the reports depart from industry expectations and normal tax practice, and where further clarification and consultation will be needed," he said,
These areas included the grouping of losses, the inclusion of inventory and the perceived need for an exploration tax credit scheme.
The oil and gas industry's peak body has welcomed the findings, which have implications for the Petroleum Resources Rent Tax, with chief executive Belina Robinson saying the proposal to extend the PRRT had left many in the industry feeling nervous.
"While the industry continues to hold a number of concerns with the long term impact of the decision, the willingness of the government to engage in a transparent and comprehensive consultation process... has provided APPEA members with the opportunity to raise genuine issues of concern," Ms Robinson said.
The Association of Mining & Exploration Companies adopted a more critical stance.
"The majority of iron ore and coal miners are still extremely concerned about the implications of the proposed additional tax on their investment and decision making processes, despite the many recommendations contained in the Policy Transition Group report on the implementation of new taxation reforms," said Simon Bennison, AMEC CEO.
"In fact the PTG report on the MRRT highlights the haste in which the original tax reform measures were determined with three multi-national and multi-commodity companies as there are 67 recommendations relating to the original design and implementation features of this additional tax on the mining industry.
"The report also highlights the overall complexity and administrative burden that the proposed tax will have on the industry, and government.
"Any suggestion that the industry has signed off on the report and the recommendations are incorrect. The three large companies that previously met with the government in June / July this year also had no mandate to represent the industry. Their decisions and agreement would have been based on their own business case imperatives, and in the best interest of their shareholders, and not in the interest of their competitors."
