THE Minerals Resource Rent Tax is not perfect. No tax is.
It is complex and brings regulatory burden for the companies. All taxes do.
The arrangement with the states with respect to royalties is untidy, inefficient and, I think, unsustainable.
Review and reform will be necessary with respect to the regime. But the MRRT is, unquestionably, a good thing.
It is a good thing for the nation and it is certainly a good thing for the Hunter Region.
As has been the case with the petroleum industry for decades, the MRRT taxes profits above normal – so-called ‘‘super profits’’.
It does so for three very important reasons.
First, the resource being extracted by the mining companies is a community-owned resource.
It is owned by the Australian people and, when the price goes up to exceptionally high levels, they should benefit from that outcome.
Second, once the right to mine is granted, that right is an exclusive one.
That company then has a monopoly, if you like, on the right to mine that resource. Often they secure that right when commodity prices are low and exercise that right when they are high.
Third, it is important to return high dividends to the regions from which the resource comes.
People in my electorate do not understand what this debate is about.
They certainly do not understand the opposition’s position on the MRRT.
One moment they hear the opposition thinks it is a terrible tax and they want it scrapped.
The next minute, they hear the opposition complaining that the tax does not raise enough money.
No wonder my constituents are confused.
First, the opposition say the tax is going to destroy the mining industry.
According to them, all the Hunter’s coalmines were going to be closed down when the government announced this tax.
But now they say it has no effect at all.
Again, no wonder my constituents are so confused.
Let us go back to the first principle. We introduced a tax that, as I stated, is a tax on super profits.
I was talking with many of my constituents about this issue over the weekend.
I said to them: ‘‘It’s a funny thing isn’t it. We said we were going to tax super-profits. And guess what, coal prices have fallen and there are no super-profits, so we are not getting much additional tax from the coal mining companies. Surprise, surprise! Wasn’t that our intention? We were never going to destroy the coal mining industry. We were never going to tax normal profits. So what is the fuss?’’
By now, my constituents know that we received only $126million over the first six months of the tax. That’s $126million more than the Opposition Leader would raise because he is going to scrap the tax. Indeed he would never have had the tax in the first place.
Now, let me move to the royalties question the opposition has laboured. I have acknowledged the royalties question is a difficult one, because the states have chosen to abuse the arrangement.
The states now think they can just keep raising royalties and have the Commonwealth rebate it back to the companies.
The problem for my constituents is this: the mining tax is going to be in part returned to my local community to fund infrastructure in my communities, which is necessary because of the impact of the mining industry – the traffic jams, for example.
But, if NSW Premier Barry O’Farrell keeps raising his royalties and forces us to give more of the mining tax back to the companies, then instead of the money being spent in the Hunter Valley it will be spent in Sydney.
I want the money coming from the mining industry to be spent in our mining region, the region I represent.
The mining industry has brought great wealth to the Hunter.
We welcome the mining industry.
It is a great job creator and a great driver of higher wages.
But it also brings problems: pollution, reduction of air and water quality, traffic jams, higher prices in the supermarkets as prices chase wages, as well as childcare and housing shortages.
Striking the right balance is a difficult challenge. If you allow the mining companies to take super-profits unchecked, the industry will just run away.
Governments become hooked on the revenues and we end up with too much coal mining in a region like the Hunter Valley.
I want to protect our environment and our sustainable industries and MRRT helps to strike the balance.
Joel Fitzgibbon is the federal Labor member for Hunter and Chief Government Whip.