Australia’s newly appointed Federal Resources and Energy Minister Gary Gray has ruled out any possibility of making changes to Labor’s controversial Minerals Resource Rent Tax.
The tax programme generated A$126m ($130m) in the first six months of its implementation, against a full year estimate of A$2bn ($2.06bn), due to considerable flaws in the agreement, including a promise to reimburse miners for their state royalty payments.
Gray, while admitting that the mineral tax has its faults and that its introduction could have been handled better, stated that the policy generates extra revenue for the government.
Speaking to ABC TV’s Lateline programme, Gray noted, "With the MRRT and with the increases in royalties that various state governments have introduced, we now have a minerals sector that’s contributing to the coffers of state and Federal governments in a way that has never happened before, and that’s a good thing."
Defending the tax structure, he clarified that the ministry was not going to make any changes as even discussing them would create uncertainty in the mining sector.
Gray added that it is important for the mining sector to grow in the wake of price uncertainty and weakening markets.
"I think it’s right to say that as we look to the future for our extractive industries, we see price uncertainty, some softening in markets and that’s been well and truly flagged both by analysts but also by the Australian Government over the course of the last four or five years," he told the television channel.
Raising volumes would mean that the cost pressures are kept to a minimum so that sector remains profitable, he pointed out.
The Greens have been pressuring the federal government to remove the loopholes in MRRT, especially as miners can offset royalties introduced by states against their tax liabilities.
The policy has also faced stiff opposition from the Liberal Party. In February, shadow assistant treasure Mathias Cormann said; "Wayne Swan overestimated the gross revenue from the MRRT and underestimated the cost of the various concessions he and Julia Gillard made in their MRRT Heads of Agreement."
"Any managing director or chief financial officer of a publicly listed company who came in more than 90% below target on a key revenue measure like this would have been forced to resign," Cormann said.
Image: Federal Resources and Energy Minister Gary Gray admits that the mineral tax has its faults, but says it generates extra revenues for the government. Photo: Kate Lundy.