Nita Teoh, Big4.com
July 20, 2010
Australian Prime Minister Julia Gillard and Treasurer Wayne Swan treaded carefully to reach an amicable deal with the mining industry giants over the revised Minerals Resource Rent Tax (MRRT).
Since the new tax was released on the 2nd July, the Opposition party has been hard at work to uncover the downsides of Labor’s new policy.
See our blog post on how the Big Four firms had perhaps a very small part to play in the resignation of the previous Australian Prime Minister Kevin Rudd on the highly unpopular Resource Super Profits Tax (RSPT) – http://www.big4.com/?page=blog_item&url=did-the-big-four-firms-help-topple-the-australian-prime-minister-577
Warren Truss, Nationals Leader expressed his concerns that more than $10 billion would be lost to regional Australia in the first two years of implementation of the tax.
Ian Macfarlane, Shadow Minister for Energy and Resources also voiced his opinion that the tax had seriously tarnished Australia’s reputation as an investment location.
Now that the PM has announced an election for the 21st August, perhaps the dust will settle on the revised MRRT after the new Government comes into office.
The Australian Government released the details of its new Minerals Resource Rent Tax as follows:
• It will focus on the most profitable commodities: iron ore, coal, oil and gas, rather than all mining projects.
• It will be based on a 30% tax rate that will commence on 1 July 2012 and apply to all new and existing iron ore and coal projects.
• The current Petroleum Resource Rent Tax (PRRT) will be extended to all Australian onshore and offshore oil and gas projects, including the North West Shelf.
• A Policy Transition Group led by Resources Minister Martin Ferguson AM and Mr Don Argus AC has been established to transition the new arrangements.
KPMG and the Minerals Council of Australia indicated that clarification on the detailed mechanics of the new regime is required before it can properly assess the financial impacts for its mining and energy clients. Recall that KPMG had conducted the widely-referenced RSPT study for the Council earlier.
It will need to undertake future modeling work to assess the implications of the change in tax base for both the MRRT and PRRT, since it differs from the previous Resource Super Profits Tax (RSPT).
Stay tuned for the exciting results of the upcoming Australian election. Labor is leading the popularity polls since the election was announced.
It won’t be long before the Big 4 firms receive news on whether the MRRT, in whatever shape or form, might finally get legislated. And then we can see their opinions and what impact it has on future Australian governments.