Ann: QUEENSLAND COAL ROYALTY REGIME, page-49

The main reason this won’t happen is it would be unconstitutional and would be knocked down by the high court without state government buy in and approval . This is not a controversial point legally . The states clearly own the mineral resources of Australia , the exception is offshore oil and gas resources which are owned by the commonwealth as these resources often fall within the greater Australian exclusive economic zone and hence are beyond state jurisdiction but within the commonwealth of Australia .

When the feds attempted the super profits tax the first time around under Rudd and then it’s watered down replacement of the mineral resources rent tax under Gillard , both came out of an extensive review done by the bureaucrat Henry people might recall . The first version , the super profits tax caused so much division and anger both within the labor party ( from the union base who realised this presented a real danger to many union jobs in wa, nsw and Qld ) and the wider community it ended up playing a large role in Rudd being knifed . Gillard went with a watered down version but she too lost in the ensuing election and the libs repealed the mrrt. Personally the labor was so wrecked by this whole affair I do not see them wanting to try anything similar so soon after just getting back into power . That whole episode largely cost them 10 years in the abyss electorally.

Politics aside but which is a big reason why they won’t do this in a hurray if at all, is the legal practicalities . When Henry did his review he made it very clear and everybody who knows the law in this area is cognisant the states actually own the vast bulk of mineral wealth in Australia . For any sort of resource rent tax be both legal and practical the states need to bought into the whole process . To prevent double taxation on the business community such a scheme like the previous versions need some ability to deduct royalties paid in the resource rent tax calculation .

This gets very complex very fast and hence it’s impossible to do this just on a whim without a lot of consultation between the mining industry and both levels of government . In fact these sort of resource rent taxes for this very reason of complexity often become shelved as impractical and a huge turnoff for future investment . This is not just rich mining companies making this argument , it’s a pretty fair argument from an economic perspective and Australia ultimately loses if we lose foreign capital investing in our resource industries and many projects will never get off the ground and many jobs never bought into existence . Even union hierarchy get this point at some very basic level. Mining exploration , development and extraction is high risk and to attract capital you need the potential for higher returns . If you make it all too hard for this capital there are plenty of other countries for this capital to find a home in . That’s just the economic reality of the world we live in.

Finally there is a principle in taxation policy called horizontal equity . Basically it means 2 entities in the same position doing pretty much the same sort of thing should be taxed in the same way . Your tax policy shouldn’t discriminate against organisations or individuals simply based on their activity unless everybody doing that activity is treated the same. Most academic economists , even left wing ones agree with this idea. Therefore you wouldn’t find support within the bureaucracy in Canberra to just target the coal industry if your trying some sort of resource rent or super profits tax . It would be all mining included or nothing. You shouldn’t pick and chose . This however makes getting something like this up even harder as all of a sudden you have many more parties you have to convince who could be potentially effected .

If you were arguing that coal is some sort of nasty pollutant ( I don’t agree with that but that is the insane narrative that exists today ) then that might allow you to tax it in another way but your not talking a super profits or resource rent tax then and arguably you still have the problem you don’t have a head of power in the constitution to tax in this way . So it’s not straight forward trying to pull this off whatever way you go as there is a big legal constraint being the property in the resources it’s vested in the states not the commonwealth .