The Mining Super Tax and Its Implications for Australian Communities

1. The Mining Super Tax and Its Implications for Australian Communities Greg Chalmers, President of The AusIMM, FAusIMM (CP), Presentation to The AusIMM International Uranium Conference 2010, 16-17 June, Adelaide

2. Lessons from the past: levying unsustainable taxes • On Sunday 3rd December in 1854 an uprising took place at diggings just outside Ballarat • The Eureka Rebellion was a relatively minor revolt, with wide ranging political ramifications • Subsequent demands from industry participants for a fairer share - maritime and shearers' strikes - led to the formation of the ALP in Barcaldine in 1891. • It could be argued that, for many Australians, the stand at that stockade defined the quintessential Australian character. • That rebellion was about an unsustainable tax, levied as a licence to mine fee,  on an individual industry that happened, for that moment, to be enjoying a hard earned patch in the sun. • “Those who forget the lessons of history are doomed to repeat it” George Santayana – 19th century philosopher.

3. Super Tax: tax grab not tax reform • Delegates to the annual AusIMM Congress in May passed the following resolution: “That this congress condemns the proposed Super Tax because of the adverse impact it will have on all Australian communities.” • The AusIMM supports genuine taxation reform which benefits all Australians • The Super Tax does not constitute genuine taxation reform. It was taken: • Without consultation with States, the real owners of Australia’s mineral resources • Without consultation with industry, leading to unintended consequences • Designed to apply retrospectively, radically altering the ROR on investment from the returns projected at the time project decisions were made; • AND undermining the confidence and security of shareholders, super funds, and mine employees – including minerals industry professionals.

4. Hurting Australian communities • As mining investment is reduced, adverse effects will flow through to all communities • Mining is one of the biggest employment-generators across the Australian economy. This tax will translate into fewer jobs in engineering, retailing, finance, accommodation, travel – in fact, every area of business activity. • If this tax results in fewer successful resource projects, the tax base will shrink. State royalties and Federal tax take will be adversely affected, reducing government revenues and thus services to communities. • The AusIMM is heavily engaged in developing the relevant data to help members understand the implications and explain the situation to their communities • This tax does not just affect Western Australia, Queensland and South Australia - it will impact all states regardless of the size of their mining industry through the flow on effects of lost mining and service jobs and revenues to the Australian economy.

5. Uranium: the decade for development? • The theme of the AusIMM International Uranium 2010 Conference is ‘the decade for development’ • As a result of the culmination of policy shifts, and the exploration efforts of the past decade it was anticipated: • New mines will come on-stream • Significant discovery of new uranium deposits would be made • Super tax has placed these developments at risk: • The combination of Super Tax and Company Tax will make Australian mining projects the most highly taxed in the world, in one of the most unpredictable tax regimes in the world, reducing expected rates of return and restricting access to finance • As we know Australia does not hold a monopoly on resources. Mining companies will redirect their focus to other countries where they can get a more reasonable return on their risk, and whose governments have a better reputation for stable and predictable taxation arrangements.

6. Australians do not accept unsustainable taxes • The Federal Government has misjudged Australia’s attitude towards the mining industry • Australians recognise: • That the mining industry has insulated Australia from the worst affects of the GFC • The multiplier affects in terms of jobs and prosperity that flow from the industry • That the health of mum and dad shareholdings, and superannuation is tied to the fortunes of our industry • The industry does have a vote. It votes through its employees, shareholders, drillers, camp caterers, small business and other service providers in the many towns in which we work etc etc. If you want to inform those around you clearly how they may best exercise that vote, for regular updates go to http://www.ausimm.com.au/supertax

7. We need genuine consultation • The debate should never have been about one super tax measure on one industry • The AusIMM supports structural tax reform that is fair and equitable • This can only be achieved through genuine consultation with the States, industry (including our members) and their communities. • To borrow the Prime Minister’s own argument – the AusIMM wants to see Australia’s resources developed in a way that is truly in the interests of our members, their communities and all Australians.