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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2010-05-11 Daily Xml
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Ministerial Statement

MINING SUPER TAX

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Federal/State Relations, Minister for Defence Industries) (14:38): I seek leave to make a ministerial statement.

Leave granted.

The Hon. K.O. FOLEY: I rise to update the house on the government's position on the commonwealth government's proposed Resource Super Profits Tax, commonly referred to as the RSPT. As members would be aware, the commonwealth government announced its intention to introduce the tax in its response to the Australia's Future Tax System report, more commonly known as the Henry review. The Resource Super Profits Tax seeks to impose an additional tax on the profits of mining companies in a similar, but not exactly the same, way as the Petroleum Resource Rent Tax on the offshore petroleum producers, which was introduced in 1987.

I do not believe that anyone could rightfully argue against mining companies paying an increased dividend back to the Australian people from high profits made from the extraction of minerals owned by the Australian people. As we know, high commodity prices have seen incredible wealth generated from the mining sector in recent years, especially prior to the global financial crisis. These profits were being generated under a taxation regime which has gone largely unchanged for many years.

With the mining sector seemingly on the cusp of another boom in activities and profits, the Rudd commonwealth government has made clear its intention to capture more of the benefits from these activities for the Australian community as a whole.

The Rudd government's response to the Henry review also outlined cuts to the company tax rate which have also been fast tracked for small business along with other tax concessions for small business. The response also included a new rebate for mining exploration activities and a new infrastructure fund to support mining activities.

These proposals are to be funded from the revenue generated by the resource super profits tax. The commonwealth anticipates that this package will generate significant benefits for the economy with real GDP growth expected to be boosted by 0.7 per cent over the long term from these changes.

The Rann government's support for the package was made clear on the release of the commonwealth response to the Henry review on 2 May. However, our support is not unconditional. The South Australian economy has benefited greatly from the increase in mining activity over the past eight years. One of the key drivers in the mining industry's growth over the past six years has been the Rann government's successful investment in our Plan for Accelerating Exploration, commonly known as the PACE program.

Mineral exploration has increased from $22.6 million in 1999-2000 by over eight times to $220.8 million in 2008-09 under this Labor government. When this government came to office there were four operating mines in South Australia. That number has now grown to 11 and by the end of the year is expected to be 16. Clearly we have worked hard as a state and as a government to support the mining sector, and we recognise the economic benefits that increased mining activity production provides to the South Australian economy and its citizens. It is the government's view that, while a new resource super profits tax should be supported, its final design and implementation must ensure that South Australia's mining sector can continue to flourish.

Without going into detail, the Premier, minister Holloway and I have received representations from mining companies that are concerned that the commonwealth has not yet achieved the most appropriate design and implementation parameters with the new tax. We have made it clear to these companies that we will make representations to the commonwealth on these concerns and seek clarity on some of the matters that are being canvassed publicly.

These include the definition of a super profit, the proposed treatment of investment and losses, the scope of the application of the tax and other features. Indeed, our engagement with the commonwealth has already begun and will continue throughout the consultation period outlined in the commonwealth's response to the Henry review.

In the same way, we have urged the mining companies to also directly engage with the commonwealth. I see from today's report that Santos CEO David Knox is already doing this and, I understand, so is BHP Billiton and other mining houses.

Ultimately this is about balance, about making sure that the Australian community is benefiting from the profits being made in the mining sector while ensuring that the new tax does not hamper future growth and operations.

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