TAX NEWS - June 2010

Australia Tax: Miners consulted on super-profits tax since '08: PM

Kevin Rudd fought back today against charges that the mining industry had not been properly consulted over the proposed super profits tax, arguing the tax had been on the table since August 2008.

Responding to Opposition questions about the level of consultation and the role of the so-called "gang of four" in the development of the tax, Mr Rudd said it was not the "bolt out of the blue" hinted at by the Opposition.

"This entire debate has been out there through the public documents released by the treasury on where the overall direction of tax reform was going," he said.

"Back on the 2nd of May 2008 the government announced it would be having this review into the tax system. On the 6th of August 2008 a discussion paper was released on the tax review entitled the Architecture of Australia's Tax and Transfer System.

"That discussion paper raised the inefficiencies of royalties and pointed to a profits-based tax. It says these royalties can discourage high risk investments ... it said a resource rent tax does not apply until the firm has earned above normal profits."

Mr Rudd said the government then called for further public submissions, before releasing in December 2008 a more detailed consultation paper defining super-normal profits.

Mr Rudd's defence of the level of consultation in question time came after Resources Minister Martin Ferguson conceded in caucus that one of the difficulties with the proposed tax may lie in its uniform approach to different industries.

Mr Ferguson told the caucus meeting that "one size didn't necessarily fit all", pointing to the differences between the oil and gas, sand and quarry and iron ore industries.

During the meeting, Mr Rudd also sought to reassure MPs that discussions with the mining industry over the proposed tax had progressed from the consultation phase to the negotiation phase.

He said discussions with the mining industry were "progressing well" and overall were "constructive and reasonable".

In parliament this afternoon, Mr Rudd also said that more than 1300 submissions on the plan were received from the mining sector in May 2009, including on the introduction of a profits-based tax.

"This process has been under way for two years," Mr Rudd said.

The opposition, however, responded by grilling ministers on the level of government consultation over the proposed tax, after The Australian reported this morning that Mr Rudd and Wayne Swan were the principal figures who piloted the proposal.

Trade Minister Simon Crean and Mr Ferguson were both asked questions on whether they were consulted about the tax by the "gang of four", consisting of Mr Rudd, Deputy Prime Minister Julia Gillard, Wayne Swan and Finance Minister Lindsay Tanner.

Mr Crean said he had been consulted over the RSPT, while Mr Ferguson argued that the consultation process had been extensive and he had been involved in the cabinet process.

"I was involved in cabinet processes, as I should be," Mr Ferguson told the parliament.

"And in doing so, I was not in a position prior to the release of the Henry tax report to actually have serious consultations/discussions about the content until it was publicly released and until after the government brought forward its response to the reform. I'm now involved in detailed consultations about the implementation."

Tony Abbott continued the assault on RSPT itself, asking Mr Rudd when he would "end this amateur hour experimentation with Australia's economic future and dump this bad tax?"

Earlier Mr Rudd had sought to promote the government's economic credentials along with its overall tax reform agenda, referring to the plan to return the budget to surplus in three years, the income tax cuts to take effect from July 1 and the strong jobs figures from last week showing unemployment at 5.2 per cent.