Australia’s surtax on miners won’t deter investment in the resource industry and will help small businesses and workers with their retirement plans, Treasurer Wayne Swan said.
The Mineral Resources Rent Tax, or MRRT, is scheduled to be voted on today by the Australian Senate and with the Greens Party pledging on March 13 to support the ruling Labor Party, the law has enough votes in the upper chamber to pass.
BHP Billiton Ltd., Rio Tinto Group and other iron-ore and coal producers face paying about A$11 billion ($11.7 billion) in extra charges in the first three years of the levy. The government plans to use the proceeds to reduce the corporate tax rate to 29 percent from 30 percent and help increase the amount paid to people’s retirement savings by 2020 to 12 percent from 9 percent of their salaries.
“One of the downsides of the mining boom is that it’s accompanied by a higher dollar which is making life a lot tougher for industries that compete in international markets like manufacturing,” Swan said yesterday in his weekly economic note. “That’s why, as well as increasing superannuation, the MRRT will also help businesses, particularly small businesses outside the fast lane of the resource sector.”
The Australian dollar has gained 15 percent against its U.S. counterpart in the past two years.
The Australian central bank is struggling to balance a slump in non-mining industries during the nation’s biggest resource-driven investment boom in a century.
The nation’s auto exports plunged to the lowest since 1998 last year, leading to job cuts at General Motors Co. and Toyota Motor Corp.’s local units.
The slump is taking a political toll on Prime Minister Julia Gillard, who withstood a leadership challenge from predecessor Kevin Rudd last month. Her Labor Party trails opposition leader Tony Abbott’s coalition by 12 percentage points, according to a Newspoll published in the Australian newspaper on March 13.
Abbott has opposed the resource tax, as have Australia’s mining magnates including Gina Rinehart, chairman of Hancock Prospecting Pty. and Andrew Forrest, chairman of Fortescue Metals Group Ltd.
“We all know these resources can only be sold once,” Swan said in yesterday’s note. “That’s why the government is committed to locking in the benefits of the mining boom and ensuring Australians receive a fair return.”
New investment in the resource sector more than doubled to A$95 billion this financial year, from A$47 billion in the 12 months ended June 2011, Swan said. It will probably rise to A$120 billion in 2012-2013, he said.
“That’s 68,000 mining jobs created since the MRRT was announced,” Swan said.