How The Mining Tax will Fuel Growth - With Fairness
Matt Thistlethwaite posted Tuesday, 22 November 2011
It’s no secret, many Australians are doing it tough. With the constant demands of the mortgage, bills and school fees, it’s difficult for many to provide for their families.
Meanwhile, at the other end of town, big mining has not only remained immune to the financial squeeze, they’re doing better than ever.
Australian mining darling Fortescue Metals last week announced a $1 billion profit for the last financial year, a profit made without one cent of corporate tax. This comes on the back of a record $22.5 billion profit announced by BHP Billiton earlier this year and Rio Tinto’s 30% increase in first half profits.
Our nation is in the midst of a mining boom fuelled by an insatiable appetite for our natural resources in Asia.
But despite this unfettered growth, resource taxes have failed to keep pace with the boom and have declined as a share of profits.
The Labor Government believes it’s about time our wealthy mining companies paid their fair share, which is why we have introduced a Minerals Resource Rent Tax (MRRT) into the Parliament.
The MRRT is a tax that will fund superannuation increases for Australian workers lifting the compulsory contribution from 9% to 12%. It will fund a decrease in the company tax rate and allow small businesses to instantly write off any asset valued less than $6,500. And it will fund the building of new critical infrastructure in regional Australia.
Unfortunately the Liberal and National Parties oppose the introduction of the MRRT. They claim this proposal will put the brakes on growth and development in this industry and the economy. These claims are false and fail to comprehend the long term growth and benefits of returning a fairer share of the nation’s mineral wealth to the Australian people..
Increases to the pool of superannuation funds not only ensure Australians have a larger retirement income, which decreases the pension burden on our economy, but they also add to our pool of savings, providing long term stability for our economy and growth.
Australia currently has about $1.3 trillion in superannuation funds. During the global financial crisis (GFC) when international debt markets were frozen, these funds became a source of investment for Australian companies mainly through share raisings. Some of these funds were invested in our mining companies hungry for funds to fuel their expansion. For example Cbus, one of Australia’s largest superannuation funds has BHP Billiton and Rio Tinto in its top 10 share holdings. So our large pool of superannuation savings was a source of stability for our economy during the GFC.
A recent report by the Allen Consulting Group estimated that the increase in the superannuation guarantee from 9% to 12% will raise GDP by 0.33% to 2025. In 2010 dollars this will mean an extra $5.4 billion in our economy. That’s extra funds for investment and jobs growth.
The MRRT will not smother growth in our resources sector or our economy, rather in the long run, it will increase savings, fuel investment and growth, and ensure our tax system is fairer than ever before.