oakeshott and swan collide on mining tax

LABOR'S alliance with the two rural independents has hit its first hurdle, with Rob Oakeshott demanding the mining tax be included in the government's proposed tax summit, despite Wayne Swan's refusal to allow the original super-profits tax to be discussed.

Mr Oakeshott said last night there had to be a public discussion about the Henry tax review that included state mining royalties and the mineral resources rent tax.

The revised mining tax is the key to Labor's plans to deliver a budget surplus in 2013-14 and fund $6 billion of its regional infrastructure promises, and the Treasurer does not want to go back to the original recommendations of the Henry tax review.

But Mr Oakeshott said there had to be a public discussion on the recommendations in the Henry review -- including the first form of the mining tax.

Kevin Rudd's creation of the resource super-profits tax sparked war with the mining industry and was a trigger for his removal. Julia Gillard negotiated the new mineral resources rent tax, and set up a committee to create legislation, after a deal with the big three mining companies.

Mr Oakeshott said: "This should be a public discussion about how we structure the tax system for the future and about all the recommendations of the Henry tax review which includes a shift from state-based royalties to a resources rent tax."

His comments followed a day of confusion after Tony Windsor, the other rural independent who backed a Gillard government, said there was a misunderstanding over promises the Treasurer made to the independents about the mining tax.

Mr Windsor and Mr Oakeshott won support for the tax summit in return for backing a Labor minority government.

Treasurer Wayne Swan said: "Tony has some views and wants to be consulted on the MRRT and would in normal course of events anyway, irrespective of anything we've agreed to."

After starting the day raising concerns about whether the summit would discuss the tax summit Mr Windsor changed his tune.

Mr Swan said he had discussed the issue yesterday and in the past with Mr Windsor, saying the MRRT was critical to funding investments in superannuation, regional infrastructure and lower corporate tax.

Mr Windsor yesterday confessed that he was talking at cross-purposes in terms of the review, and meant the "Argus review".

"But that doesn't mean that the concept of a rent resource tax won't be looked at by the Henry review (summit)," Mr Windsor said.

The opposition used the confusion to claim there was already a split in the Labor alliance with the independents.

Mr Swan said later yesterday that Labor made a commitment during the campaign that following the Argus review of MRRT they would put in place the final design, go through consultation and prepare legislation.

"Now that will take some time, probably take six months or more. Now, of course if during that period or around that period we have a tax forum which talks about Henry, I'm sure there will be many people who will want to discuss issues in Henry that we ruled out," he said.

"They may want to discuss the draft legislation. I'm relaxed about that but the government is very firm in its commitment that we must progress this piece of legislation and as we do that, because we've got to get it through the parliament, there will be very close consultation with the industry but also with all members of parliament in the House of Representatives and the Senate," he said.

Don Argus last night said in a speech at the Melbourne Park Hyatt Hotel the Henry review had been touted as the most comprehensive review of the tax system in 50 years but didn't even examine the GST.

"I find it interesting that one can attribute such status to a review without including GST and without wide industry and community consultation," he said.

"We have just had another federal election and, for me, the only feature of real note to observe was the inability of our politicians to outline how we sustain productivity growth which is the foundation for strong growth in Australia's living standards.

"Given the election result, I note the new government's commitment to the MRRT. I believe the consultation process set out in the terms of reference for the Policy Transition Group will address the concerns that I have been hearing from some industry participants.

"Whatever the outcome of the process, if we are going to realise our potential as a nation, we simply have to maintain Australia's competitive edge globally," Mr Argus said.

The opposition tried to exploit differences on the mining tax claiming Treasurer Wayne Swan and Mr Windsor were already at odds over whether the tax would be part of next year's tax summit.

"We're not going to have stability for the next three years if this is what happens on day one," opposition Treasury spokesman Joe Hockey said.

"The happy couple haven't even left the chapel and they're arguing about the mining tax already."

Business groups in resource-rich Western Australia attacked the government's decision to exclude its MRRT from being assessed at a proposed tax summit.

Uranium miners are also worried a Labor-Greens alliance will move to tax the sector more heavily or restrict uranium mining at a time when scores of new projects are being planned.

As uranium stocks slumped yesterday amid fears that the Greens' growing influence over policymaking would be negative for the sector, a leading mining analyst warned the government would need to expand the mining tax.

In a note to clients yesterday, UBS analyst Glyn Lawcock said estimates the MRRT faced a potential $8 billion revenue shortfall raised the risk the government would increase the tax.

The Australian reported this week that an analysis by resources intelligence firm Intierra found the MRRT would raise only about $2.5bn in its first two years compared with the $10.5bn forecast by the government.

"We believe this raises the risk that the government may seek to increase the proposed MRRT rates or the regime being applied to other commodities," Mr Lawcock said yesterday.

Australian Uranium Association chief executive Michael Angwin said he had yet to receive a response to a letter he had written to Julia Gillard seeking assurances that Labor's alliance with the Greens would not lead to a change of policy on uranium.

http://www.theaustralian.com.au/national-affairs/rob-oakeshott-and-wayne-swan-collide-on-mining-tax/story-fn59niix-1225916141507