Aust unveils mining tax, cuts company rates

Australian treasurer Wayne Swan. Photo / Mark Mitchell

Australia is to impose a new 40 per cent tax on mining projects from July 2012, boost pension savings for workers and cut company tax rates under a sweeping pre-election overhaul of its tax system unveiled today.

The new Resource Super Profits Tax is set to raise about A$12 billion (NZ$15b) in its first two years, Reuters reported.

In return, the government will cut the company tax rate from 30 per cent to 29 per cent from mid 2013 and to 28 per cent by mid 2014, and plans to refund the royalties currently imposed on mining projects.

"We are under no illusions about how difficult it will be to win support for this package," said treasurer Wayne Swan.

"Support will never be unanimous, and we understand there will be many who will oppose parts of this reform."

To allay mining concerns, Swan said Australia would also give mining companies a tax rebate to offset the cost of resource exploration from July 2011.

In addition, it will set up a new infrastructure fund with an initial payment of A$700 million from 2012-13 to help pay for roads, ports, railways and water and electricity supplies for resource industries.

Swan said the new tax would help all Australians share the benefits of a prolonged mining boom which helped Australia avoid a recession during the global financial crisis.

And Prime Minister Kevin Rudd told Reuters the tax changes would help stimulate and expand the mining industry, quoting independent modelling as finding that the mining activity would grow 5.5 per cent over 5-10 years.

The government says the changes will lay the base for a 10-year reform programme and will not seek to legislate for them until after the next election.

Queensland backs 'landmark' Henry Tax Review

Treasurer Andrew Fraser welcomed the "landmark" Henry tax review, saying it passed the government's initial test on ensuring Queenslanders would be no worse off.

In particular, Mr Fraser strongly backed the Resource Super Profits Tax (RSPT), saying it would give Queenslanders a greater share of resource profits that they were entitled to.

The RSPT will tax super profits made from non-renewable resources at 40 per cent from July 1, 2012.

However, he had no sympathy for the mining companies that will be hit by the tax.

"I've never met an interest group or an industry group that wants to pay more tax," Mr Fraser said.

"But the reality is that the mining boom has been good for the Queensland economy, it's been very good for the national economy and it's been very, very good to the bottom line of mining companies.

"We want to make sure that the people who own the resources, the people of Queensland, get a fair rate."

He also said he did not believe the tax would impact on the appeal for mining companies to invest in Queensland.

"Queensland has fantastic resources, a great wealth of them, a very stable regime and compared to most other nations around the world provides a very attractive place for investment."

Mr Fraser said the proposed state infrastructure fund was important in ensuring communities shared in the benefits of any new regime.

He also highlighted the federal government's plans to up the superannuation guarantee (SG) from nine to 12 per cent by 2019/20.

"On the superannuation front, I think this is the most important part of what's being proposed," he said.

"We need to bite the bullet and fund superannuation in a way that provides for an ageing of the population."

'Early Christmas' for workers

With an election due within six months, the government also announced an increase in employer-paid pension fund contributions for workers, to 12 per cent from the current 9 per cent by 2019-20.

Investment and Financial Services Association CEO John Brogden said this meant those earning less than $40,000 were effectively doubling their super.

"Our Christmas came early today," Mr Brogden said in Canberra on Sunday.

"We were expecting some sort of sting in the tail somewhere ... but everybody wins in this."

The former NSW Liberal leader said the government deserved due credit for its "stunning announcement".

"Just as it was pretty ballsy for (former prime minister) Paul Keating in 1992 to look to the future and do this, it's just as brave for the government to do it now."

The government will also contribute A$500 a year to pension-fund savings for low-paid workers. Older workers would receive a low tax rate on contributions up to A$50,000 a year, up from a A$25,000 cap now.

But National Seniors Australia boss Michael O'Neill said those over 75 were still losing out.

Workers aged 70 to 74 will be eligible for compulsory super for the first time from July 2013.

Mr O'Neill accused the government of being ageist.

"If you're able to work from age 15 to age 90, why should super be treated differently?

"Get rid of the cap."

- NZHERALD STAFF, AAP