How’s that mining tax going?

Not well.

The Treasurer this morning revealed net revenue from the Mineral Resource Rent Tax was only $600,000 in the June quarter, compared with the already-downgraded $150 million forecast last year.

Is that net of the promise to refund state government royalties? Either way another terrible Rudd-Gillard policy bites the dust.

Hockey, however, also said this:

The PUP was elected on the basis they were going to repeal the mining tax package. We were elected on the basis we were going to repeal the mining tax package. We ask the parliament to respect the mandate we have.

Hmmmmmm – turns out that the Parliament did respect the “mandate”. Both the House and the Senate passed legislation repealing the mining tax. The government, however, got greedy – it wanted to repeal the tax and the associated “expenditure” in one fell swoop. The Senate passed the tax repeal but not the associated expenditure – the only reason the mining tax is still on the books is because the Abbott government did not accept the Senate amendments.

Okay – so what is the associated “expenditure” that is causing so much trouble?

  • Loss carry back
  • Small business asset write-off and motor vehicle deduction
  • Foregone tax revenue from the increased superannuation
  • school kid bonus
  • low income superannuation contribution

The financial consequences are set out here:

MRRT - repeal

In that table we see about $7.28 billion of “expenditure” – when you separate out actual expenditure from tax cuts we see that the Abbott government was looking to repeal about $4 billion of tax cuts.

The Abbott government has no mandate to increase taxes – in fact, quite the contrary.

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39 Responses to How’s that mining tax going?

  1. steve

    In politics there are the good guys and there are the bad guys……..until you find out that the good guys are bad guys too.

  2. H B Bear

    Seriously, what are the chances of seeing another incompetent government that will even come close to KRudd, Gillard, The Goose, Nanny Roxon … ?

  3. steve

    Well, HB, there is this one, and the next one and the one after that………

  4. Andrew

    Come off it – they absolutely had a mandate to repeal the idiotic MRRT, as well as the giftathon that the Goose sprayed around from its non-existent policy. They could not have been more clear about their pre-election policy: Abolish the MRRT, and the associated spending package.

    And you can’t seriously be grouping the rephasing (deferral) of SGC increases as something they didn’t have the mandate for? This was not only their stated policy – it’s effectively a tax on businesses! You reckon they don’t have a mandate for THAT?? (Noting that anyone up to and including the SGC threshhold is entirely free to nominate concessional / packaged super anyhow! Literally nobody is worse off from this policy.)

    I think a reasonable compromise is that, to the extent there are non-zero revenues in the forwards, keep the income support, SGC change and 1/2 of the Schoolkids bonus. Keep it revenue neutral, all of which were in their policies. Can’t see how the Skywhale can object to the fairness of that.

    Sure, the deficit is $2bn p.a. higher over the forwards, but that was true of EVERY SINGLE MONTH that the hapless R-G-R maladministration was enabled by the corrupt “independents.”

  5. Mark from Melbourne

    The government, however, got greedy – it wanted to repeal the tax and the associated “expenditure” in one fell swoop.

    … which is exactly what it promised to do before the election… scrap the tax and scrap all the goodies falsely predicated on it actually earning billions of d0llars.

    So it has exactly that mandate. This is nothing to do with “getting greedy”.

    Geez, they’ve broken enough promises, at least give them the credit for one they are trying to keep!

  6. Mark from Melbourne

    Snap, Andrew.

  7. Marion of the Glades

    Regardless of its policy merits, the mining tax was a scandal because Rudd+Swan+Gillard allowed the mining companies to design their own tax. No one else gets to do this. And it’s hardly a surprise that it collected no money. Just as their carbon tax similarly had no effect for exactly the same reason.
    The malaise we now endure is characterised by politicians who seek only to give an impression. Not to actually do anything. Abbott seems to be no different at all.

  8. Mr Skeletor

    Can someone explain to me what Sinc actually supports? He doesn’t want higher taxes, doesn’t want spending reduced, doesn’t want the government to make money by ‘investing’ in businesses (picking winners) and doesn’t want them to borrow money.
    Is there an option I’m missing, or is Sinc a Goth who just likes to complain about every option?

  9. Infidel Tiger

    Last quarter’s mining tax revenue doesn’t even cover Mark Scott’s salary.

  10. Tim Neilson

    i accept the comments above that the Coalition were doing what they’d said they would.
    But Sinc is right to argue against the intellectual pollution of confiscating people’s money through tax increases (slower depreciation etc.) being described as “cutting expenditure”.

  11. Sinclair Davidson

    is Sinc a Goth

    Hmmmmmm – No.

  12. Andrew

    The Abbott government has no mandate to increase taxes – in fact, quite the contrary.

    It said it would not commit to any of the associated commitments attached to the Mining Tax. It certainly does have a mandate to abolish/reverse all of the listed changes. It is also introducing a PPL which effectively increase company tax from 28.5% to 30% for big business.

  13. Sinclair Davidson

    What you’ll get under us are tax cuts without new taxes.

    Tony Abbott.

  14. candy

    Tony Abbott clearly stated in the debates and during the election campaign that the mining tax with associated expenditure items would be scrapped.

    The government is trying really hard to reach a balanced budget by around 2017/2018. I don’t know why you guys here are against that.

  15. Robert Crew

    Repealing the spending associated with the mining tax was a central plank of the Party’s election commitment, and cost them dearly in the election campaign. I’d like to know what word fits better than “mandate”.

  16. Andrew

    Mandate for some commentators on here means ‘keep the parts I like that you committed to and scrap the parts I don’t’. Sadly, you can’t have your cake and eat it too.

  17. Empire

    Seriously, what are the chances of seeing another incompetent government that will even come close to KRudd, Gillard, The Goose, Nanny Roxon … ?

    Earth to Humphrey: that’s what good folks were saying in 1976 after Cyclone Gough.

  18. Tim Neilson

    Stop calling it “spending” when most of it’s just letting people keep their own money e.g. by depreciation deductions.

  19. chrisl

    Mr Skeletor Good post! With all due respect to Sinclair (oh oh here comes the bad bit) It is pretty easy to snipe from the sidelines(That bit should be in capitals but it makes you look a bit freaky) The point is the electorate does not consist of ever so slightly right of centre university professors! THERE ARE A LOT OF THICKHEADS OUT THERE (Whoops)
    And you have to get re-elected!

  20. Steve Shailer park

    That’ s got to be the silliest article Sinc has written. A mining tax that raises bugger all and was supposed to pay for Labor give away’s . No mining tax =no give away’s simple really.

  21. Sinclair Davidson

    Many of you are missing the point. The government isn’t trying to cut expenditure, it is trying to repeal tax cuts.

  22. Mark from Melbourne

    It is doing what it said it would do.

  23. Andrew

    It is doing what it said it would do.

    Yes, it is called a mandate. The expenditure and tax cuts were apart of the budget savings that the Government took to the election.

  24. Leo

    @ HB Bear “what are the chances?” Above and beyond we are now stuck with that numb nut Abbott and his henchman.

  25. 2dogs

    Perhaps Abbott can remind Palmer that what the government giveth, the government can also taketh away.

  26. Wallace

    I suppose the half million is gross profit, not after collection and regulation costs (think room loads of public servants with their heads down all year working this out) .
    Probably a nett loss of around ten million or so. Great economics, great business model…

  27. Andrew

    Can anyone explain to me how delaying the future increasing SGC mandatory concessional contributions his tax increase? And why the libertarian position is to support this mandatory contribution increase?

  28. Twodogs

    Three things are evident in Davidsons post… He has an agenda, doesn’t understand plain English and is trying to con people into believing what he says is true when it absolutely isn’t…

  29. Robert Crew

    I don’t see any tax cuts here, unless you mean the Loss Carry Back provisions.

    “Rephasing the SGC”, means that because we won’t be forced into contributing more to super, and will get to keep more of our money, then the government will collect more tax. They’ll get more tax because I get more in my pocket. At least that money I can spend, I can be sure a future Labor government will find ways to spend my super before I reach retirement age, and I’ll never see that money.

    I thought that Accelerated Vehicle Depreciation was sold as a trade-off for losing the Entrepreneur’s Tax Offset, not the Mining Tax?

    The schoolkids bonus was only a tax cut if you believe all welfare is a tax cut if delivered by the ATO, rather than Centrelink.

  30. Mr Skeletor

    Many of you are missing the point. The government isn’t trying to cut expenditure, it is trying to repeal tax cuts.

    Not here. Not according to what you have written.

    The money that Labor’s mining tax was meant to raise Labor ‘spent’ on a series of programs and initiatives.
    The government want to remove the mining tax and all associated programs and initiatives it was meant to pay for. Essentially make it like it never existed.

    Am I wrong in what I just wrote?

    However you seem to want the mining tax gone, but some of the initiatives it was meant to cover to stay (if not all of them since you want the spending separated out of the repeal – assuring Clive will back the removal of the MT but will reject all of the reduced spending.)
    So where is the money meant to come from to pay for the stuff the mining tax was meant to? You want a balanced budget so I just don’t understand your position here.

  31. peter of Melbourne

    Then the alternative for the Govermnent is to adjust the design of the MRRT to raise the necessary revenue to cover the wastral spending initiatives of R/G/R. Lets see how Clive likes that!

  32. Dr Faustus

    Just at the moment, Palmer’s interests are best suited by retaining the MRRT. He doesn’t have any actual mining projects that are impacted – but his rivals in Galilee Basin coal projects, Adani and Handcock Coal, certainly do.

    His objective is to keep the pressure of the MRRT in Adani/Handcock’s project economics while he tries to catch up with his own, limping and ironically named ‘China First’ coal project, kill off Campbell Newman’s Premiership, and mount a new argument with a suitably terrorized Queensland Government for Fat Bastard Coal to be the preferred rail operator and owner of the profitable rights to third party usage of the rail and port infrastructure.

    Big rentier dollars and the chance to secure project finance for his wobbly empire. That’s why he got into politics.

    Oh. And to look after the interests of ‘everyday Australians’.

  33. motherhubbard'sdog

    I confess to being heartily sick of all this claim and counterclaim about what “mandate” the government of the day has had conferred on it by the electorate. As far as I am concerned, the only mandate the government has from the electorate is the right to sit on the government side of the house for three years. Those who elected it did not necessarily agree with all its policies. They were elected solely on the basis that they were a less worse alternative to the other mob.

    The only mandate a government has is conferred by the legislature. The government has a mandate for whatever policy changes they can get through both houses. Regardless of whether we like the outcome or not, the fact is that current senators were elected by voters as well, albeit under a flawed system. Until we fix the system and have another election, we are stuck with them.

  34. Robert Crew

    motherhubbard’sdog, I’m interested to hear more argument on this. I lean to the view that the UK Parliament’s Salisbury Convention is the way to go e.g. the non-direct-election house will not block any elements contained in the directly-elected house winning party’s election manifesto, everything else is up for debate. That way if you want to raise a policy above the objections of the upper house, you have to take that policy to an election and let the people decide.

  35. Sinclair Davidson

    The tax loss carry-back and the depreciation write-off for small business and motor vehicles are all tax cuts.

    Andrew – the argument about super does like this:
    Imagine you have a $100 income. $9 is taken for super and you receive $91 before tax. You then pay tax; 15% of the $9 and, say, 30% of the $91. You have paid $28.65 is tax in total. If the super amount increases to $12, then you pay 15% of $12 and 30% of $88 = $28.20. The government has “lost” money. Revenue from the mining tax was meant to replace that “lost” revenue, although the way people talked about it, we got the impression that the government was going to be topping up super accounts.

  36. motherhubbard'sdog

    Robert Crew, I would not object to that proposal. It would end the current ridiculous and unedifying spectacle. That would mean that an election truly did confirm a mandate on whichever party gained a majority in the lower house. Although, given the current low ebb of Australian politics, I can imagine endless sophistry about whether the legislation introduced actually did reflect the government’s mandate, or was some new variant on what was originally promised.

    As it is, the upper house can claim it has a mandate to reflect the views of the voters who elected it, even if those views apparently conflict with the views of the same voters when they elected the lower house. It is a recipe for constant conflict, unedifying haggling and lowest common denominator policy results.

    One other possibility would be to remove the link between the number of senators and the number of lower house electorates. When each state had ten senators (and there were no territory senators) this sort of impasse rarely happened, because the party in government was much more likely to gain a majority of senators (as a result of five being up for election at each half senate election). This meant that each state was likely to elect three from one of the major parties and two from the other, although occasionally it would be two each with a minor party senator getting up. A party with a substantial majority in the house was likely to be able to implement its legislative agenda.

  37. motherhubbard'sdog

    PS, of course I still think the whole argument of an election conferring a mandate for particular policies is a bit weak. You would be hard pressed to find a single person even among government members who agreed (privately) with everything in the election manifesto. The mandate conferred is at once a much broader thing (ie it is a mandate to govern for the next three years) and at the same time more restricted (in that it does not mean the voters agree with every single policy proposed).

  38. Robert Crew

    For everyone else, I’m sorry to stay sort-of off topic on this “mandate” question, but the topic deserves a far deeper discussion, so to motherhubbard’sdog, I’d say… Hmmm… This is one of those fundamental issues where the nexus between my anarcho-capitalist and conservative beliefs (which I think I’ve described here before as “Constitutional Minarchy”) ends up without a clear, logically derived position to add to my value system.

    Thinking aloud, I think that ultimately Governments are a relic of the pre-industrial and industrial ages, and that we are rapidly evolving hyper-networked, peer-to-peer institutions that will make the old-fashoned, Bonapartist/Prussian/Mandarin ideas of “government”, “nations”, “education”, and “bureaucrats” utterly irrelevant within this century, soon to be consigned to the ashheap of history.

    On the other hand, I feel while we (for now) continue to suffer our governments to exist, they must remain as democratic as possible, while restraining the Demos under republican principles (something our “crowned republic” does extremely well), and always striving towards the eventual ideal of total Liberty for all people.

    Under the Democratic ideal, the mandate is nonsensical, because the “majority of the people” rules – always, directly, and forever. Under the ideal of Liberty, the mandate is again nonsensical, as no free man can possibly have a mandate to rule any another, nor be required to subject himself to another in the absence of criminal justice. Yet under our republican system of government (apologies to the Constitutional Monarchists out there, but our Commonwealth is indistinguishable in practice from the Res Publica), we restrain both Liberty and the Demos under the rule of law, precedent and convention (the basic principles of Conservatism), to allow an indirectly elected leader to command, subject to checks and balances. The leader’s authority to command is derived from both the clarity of the people’s will (the strength of the election result), and the honest mandate. In this republican ideal, the mandate is the platform on which the leader is selected or elected to govern, and once elected, it is their right to implement it until their term expires.

    Where that balance should be drawn today – while we pass through the millennia-long valle lacrimarum that is rule by government fiat, on our way to our eventual liberty – between the conservatism embodied in the republican ideal, the populism embodied in the democratic ideal, and the logic and reason embodied in the ideal of liberty… I haven’t a bloody clue, so I’d appreciate some more of your thoughts, MHD, or anyone else…

  39. motherhubbard'sdog

    Robert, that’s all a bit deep for me. I’m afraid I don’t have a bloody clue either. One thing I am very doubtful about is your suggestion that we are on the way to liberty. I’d like to believe it, but the evidence is agin it.

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