Behind the push for independent modelling ... Greens Leader Christine Milne. Photo: Alex Ellinghausen
THE government would make an extra $26 billion over the next four years if it reversed a handful of changes made to the mining tax after it dumped Kevin Rudd in 2010 and sought to soothe the big miners.
Independent modelling by the new Parliamentary Budget Office finds the changes would assure a budget surplus and provide enough revenue to increase the dole and fund key policy promises on disabilities and education.
The modelling was commissioned by the Greens leader, Christine Milne, who is urging the government to amend its mining tax following revelations it will raise little or no revenue in its first three months of operation and amid rising doubts about overall revenue forecast.
High speed rail ... how the $26 billion could be spent.
Senator Milne will use the findings to further her push when she addresses the Greens national conference at the University of NSW on Saturday.
"These costings show that there's still time to raise $26 billion over the next four years if the government is willing to stand up to the mining lobby and work with the Greens,'' she said. "Instead of confidently investing in a happier, healthier, smarter Australia, Wayne Swan is scrambling to meet a political surplus target by slugging single parents, cutting support for research, education and training and refusing to lift Newstart to a liveable level.''
In the midyear budget update, the four-year revenue forecast for the mining tax, which began on July 1, was reduced from $13.4 billion to $9.1 billion.
The government attributed this downgrade to a dramatic slump in iron ore and coal prices since the May budget.
Days later, it emerged the mineral giants BHP Billiton, Rio Tinto and Xstrata did not pay any Minerals Resource Rent Tax for the first three months of this financial year.
The government says this initial shortfall was factored in to the midyear budget update and it is sticking to the $9.1 billion forecast.
The Parliamentary Budget Office, or PBO, was established by the Gillard government so oppositions and minor parties could have their polices costed independently and professionally. The mining tax changes are the first policy costed by the office and use the same economic assumptions, such as commodity price forecasts, as were used in the midyear budget update.
The Greens asked the office to model the effect of several changes. It found that taking the mining tax rate back to its original 40 per cent would raise an extra $20.2 billion over four years.
Under the changes in 2010, the rate was reduced to 30 per cent but once deductions were factored in, the rate is effectively 22.5 per cent.
Another change was to allow the miners to deduct from their mining tax liability all present and future mining royalties they pay to state governments.
If this loophole was closed by limiting the deductions to royalties as of July 1, 2011, the tax would raise another $2.2 billion over four years.
Another change was to allow the miners to deduct from their liability over the long term the market value of current operations. If this reverted to allowing miners to write off the book value over just five years, there would be another $2.5 billion raised.
The budget office finds that if all three measures were adopted, the total revenue increase would be about $26 billion.
The Greens have previously insisted the tax also be applied to other minerals beyond coal and iron ore and include gold, copper and uranium. But this was not costed by the budget office.
The government, which backed down after a $22 million advertising blitz by the miners in 2010, has ruled out making any changes to the tax.
What could be done with $26 billion over four years
Fully fund the Gonski recommendations to boost school funding by $5 billion a year
Increase dole by $50 a week
Fund the Disability Insurance Scheme, estimated to need $8 billion extra a year by 2018.
Fully fund Denticare, estimated at about
$4 billion a year
Invest in high-speed rail