Resource taxes remain on agenda
In 21st century Australia, the battle over the share of resource wealth between the extractor and the government that provides licences to deplete the natural endowment of the country, often takes place in a very public arena, the media.
The tussle in Western Australia between the state government and gold miners about a rise in gold royalty rate to the royalty holiday Adani is seeking for its uneconomic and environmentally damaging mine in northern Queensland has kept resource taxes in the news.
Resource taxes is the subject of the Masters submitted for examination late last month by ISF student Kevin Morrison who chose the mining tax unveiled by former Prime Minister Kevin Rudd in 2010 as a case study to examine resource tax policy in Australia. This research draws parallels between the mining tax known as the Resource Super Profits Tax (RSPT) of seven years ago and the current conflict surrounding the rise in Adani’s royalty rate, through articulating the importance of transparent tax reporting, and the impact of the reporting on these taxes throughout the media.
The findings from Kevin’s research titled The Tale of Two Taxes – A Study of Mineral and Petroleum Resource Taxation in Australia – were presented at the 18th Global Conference on Environmental Taxation (GCET) in Tucson, Arizona; a fitting venue, considering the battles over mining wealth that took place in Arizona.
The main question the research answers is why was the Minerals Resource Rent Tax (MRRT), which taxes Australia’s two largest commodity exports by value – iron ore and coal, was repealed in 2014 after a two-year legislative life, while the onshore extension of the Petroleum Resource Rent Tax (PRRT) in 2012 has remained in place given that both taxes are based on the same theory of the taxation on economic rent, which are profits above the normal rate of profitability, and both taxes cover the same forms of operations.
Utilising a case study approach, which entailed conducting interviews with senior resource tax policymakers, as well as conducting statistical and documentary analysis, Kevin’s research found two major factors contributing to the difference in lifespan for these taxation schemes – the contributions of direct contact between the interest groups affected by these taxes and policymakers within government, and the contributions of media in reporting on the discourse surrounding the implementation of these taxes.
The first reason for the different outcomes was that the oil and gas sector welcomed the onshore extension of the PRRT, as they had worked with it since it was first legislated in 1987. Additionally, the oil and gas sector advocated for many amendments on the tax during the early 2000s, resulting in a fall in PRRT payments over this period, even though oil prices and total oil and gas output had risen. None of these amendments raise much attention in the public eye at the time.
The miners were given something similar opportunities to influence the MRRT, but this opportunity only benefited large mining organisations such as BHP and RIO. As a result, smaller mining companies such as Fortescue and Hancock opposed the implementation of this tax, due to its focus on iron ore and coal narrowing their opportunity to benefit from royalty payments.
As a result, smaller mining organisations lead an anti-MRRT advocacy campaign, utilising the lack of regulations associated with paid advertising to publicise claims about the economic and social impacts of the MRRT, without including evidence to support these claims with their advertisements. Through setting the agenda on the MRRT with their advocacy advertising, Mining Companies Australia was able to use the Labor government’s inability to communicate a clear message regarding the intent and impact of the MRRT to influence public opinion and reduce public support, especially in Queensland and Western Australia, resulting in the repeal of the MRRT by the Coalition government in 2013.
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