Andrew Wilkie threat to block mine tax as Labor alliance tested

marklan001

NDEPENDENT Andrew Wilkie has threatened the Gillard government's mining tax, warning he will block it unless it is fundamentally redrawn and possibly expanded to capture profits from more mining companies.

Mr Wilkie, the first independent to pledge his support to Labor in the hung parliament, said the proposed mining tax was "unsatisfactory", must be redesigned from scratch and should be included in next year's proposed tax summit along with the rate of GST.

His position sets up a showdown with Julia Gillard and Wayne Swan, who wants the mining tax excluded from the summit and has refused to canvass changes to the GST.

Mr Wilkie told The Weekend Australian that unless the mineral resources rent tax was changed he would oppose its legislation if it were introduced into the House of Representatives.

"I think we need to go back to the drawing board because the MRRT as it is currently designed is unsatisfactory," he said.Although he would not specify his preferred changes to the MRRT, saying experts should be consulted, Mr Wilkie suggested the tax could be applied to a wider number of mining companies.

When Kevin Rudd's original resource super-profits tax was renegotiated with mining giants BHP Billiton, Rio Tinto and Xstrata in June, the rate of the tax was slashed from 40 per cent to an effective 22.5 per cent and the number of companies exposed to the levy cut from about 2500 to just 320 under the MRRT.

"It is my opinion that it has been applied too narrowly," Mr Wilkie said. "If we're going to have a super-profits tax, it should be on super profits and not necessarily a small number of small companies."

The Tasmanian MP has joined rural independent Rob Oakeshott, who yesterday turned down an offer to become a minister in the government, in calling for the mining tax to be re-examined at next year's summit.

However, the Treasurer has ruled out revisiting either the RSPT or the MRRT at the summit, called to explore the recommendations of the Henry tax review. Mr Swan believes the MRRT review being undertaken by former BHP Billiton chairman Don Argus will come up with the right model for the tax, forecast to raise $10.5 billion in its first two years. He has also ruled out discussing the GST at the summit, having excluded it from the terms of reference of Treasury secretary Ken Henry's review.

Mr Wilkie, who said the nation's richest companies could pay more tax, told The Weekend Australian he would write to the Prime Minister to urge the inclusion of both the mining tax and the GST at the tax summit.

Mr Oakeshott and Mr Wilkie joined fellow independent Tony Windsor and Greens MP Adam Bandt in pledging to support Labor on supply and no-confidence motions, giving the Prime Minister enough seats to form government. However, all three independents have indicated their guaranteed support does not extend to any other legislation introduced into parliament.

The money from the MRRT will help Labor meet its target of bringing the budget back into surplus by 2013 and fund its $9.9bn in regional promises used to win over the independents.

Mr Wilkie said he would not support the tax in its current form or a reversion to the RSPT, arguing that both had been hastily constructed and were not the products of a comprehensive consultative process.

"When legislation comes to me in the parliament, I will need to be confident . . . that it is the product of good process."

The new member for Denison said the RSPT seemed designed to secure a source of revenue before the May budget to "make the bottom line good".

When Ms Gillard took over from Kevin Rudd as Labor leader she immediately negotiated a compromise on the tax with the big three mining companies to cut the impact of the tax and the revenue it would raise. The MRRT will now apply only to iron ore and coal projects, with all other minerals excluded.

Mr Wilkie said he did not like the focus on only three companies and "a limited number of types of resources".

"Government has lost its way here," he said. "It is not acceptable just three corporations can drive the development of such a significant tax.

"This isn't simply a case of raising more money. It's a case of getting the settings right."

The former intelligence analyst said he hoped common sense would prevail and that the tax summit included a comprehensive re-examination of the Henry review - the "best review of its type we've ever had" - as well as the MRRT and the GST.

Mr Wilkie said that while he was not "advocating any change" to the GST he thought that "everything should be up for discussion".

"It's such a fundamentally important tax nationally, surely it's something that we should review from time to time or discuss," he said.

Mr Wilkie described the GST as "divisive" and "regressive" but wanted it examined to "confirm the settings are right".

He said although there seemed to be "an unfairness" in the tax and that it hit the most disadvantaged members of the community, he said he would listen with an open mind to any case made by experts for the tax to be changed or increased.

"I am an evidence-based person and I am prepared to let experts review anything and everything and try and convince me of the need for change," he said.

A spokesman for the Treasurer said yesterday that the "details of how the forum will operate and what will be discussed are yet to be announced, but we have said consistently that the government has absolutely no plans to raise the GST".

micfox001

Labor could choose to act as caretaker government. then everything might be fine...

marklan001

good idea.

jlhan

This mining tax is the key revenue of Labor budget.  It may have problems from other independents too because some their regions have mining projects.  On the other hand, if Labor does not implement this tax, monies for other projects such as $10B to regional Australia are not funded.