Promises will be met despite mining tax shortfall, says Swan
Treasurer Wayne Swan under pressure to explain how billions in new spending will be paid for by the government's mining tax. Photo: Alex Ellinghausen
Wayne Swan has renewed his commitment to meet promises funded by the government's underperforming mining tax.
The Treasurer, who departs today for a G20 finance ministers meeting in Moscow, is under pressure to explain how billions in new spending to fund tax breaks for superannuation and businesses, and new infrastructure projects, will be paid for by his Minerals Resource Rent Tax.
The mining tax was supposed to raise $2 billion in its first year from the big miners but has instead left them largely untouched and garnered just $126 million in its first six months.
''We can keep those promises, they are fully factored in and budgeted for in our bottom line,'' Mr Swan told ABC radio.
In late 2011, Mr Swan had confidently predicted the MRRT would spread the benefits of the mining boom across the country while raising almost all of its projected $9 billion in four years from the big miners, BHP Billiton, Xstrata, and Rio Tinto.
''The simple fact is . . . the vast majority of the tax will be paid by three companies, BHP Billiton, Rio Tinto and Xstrata,'' he said in a press releases dated November 20.
However, it is increasingly clear that the tax does not work.
The Greens have launched a new bid to force the biggest miners to pay up under the mining tax, raising the pressure on Prime Minister Julia Gillard to admit the deal signed off with them in 2010 was botched.
The minor party, whose support is crucial to the Labor government's survival, wants to fix the MRRT to fund schools, dental health, and disability insurance.
Armed with fresh data from the new Parliamentary Budget Office, it will build on its existing motion to plug the royalties hole with a second amendment to limit the scope of the biggest miners to deduct asset values from current earnings.
Along with other cross-benchers and the opposition, the Greens believe Ms Gillard and Mr Swan were outmanoeuvred by the big three when cutting the new MRRT deal following the leadership change from Kevin Rudd.
The Greens say closing the loophole that allows state governments to lift royalty charges, which must then be refunded by Canberra, would save more than $2.2 billion.
Its other change would close a further loophole that allows the big miners to write off the market value of existing assets over a number of years rather than deducting the lower book value over just five years.
It says this would secure more than $4 billion in revenue by 2016-17 and an extra $1.8 billion a year.
''Labor is taking more money off single parents than it has collected from the mining tax,'' the deputy leader, Adam Bandt, told Fairfax Media.
Its move comes as the failure of the tax emerges as a potential flash-point for the Labor leadership.
MPs loyal to the Prime Minister are fuming at public criticism of the tax this week by Mr Rudd, the chief whip, Joel Fitzgibbon, and others.
Mr Rudd used a Sky News interview on Tuesday to remind colleagues that the original Resource Super Profits Tax had been stronger but had been replaced with the watered down MRRT by Ms Gillard and Mr Swan after the leadership change of mid-2010.
He said it was never right for governments to take a backward step when pursuing the national interest.
Amid the tension, an email from an ALP supporter to Mr Rudd on Wednesday was distributed widely among Labor MPs, reviving memories of the bitter personal campaign against the former prime minister's character last year.
''Mr Rudd, your disloyalty to your leader and party is shameful,'' wrote a retired school teacher, Sue Martin, of Avalon Beach.
On Thursday morning, Mr Swan also came under fire for his apparent refusal to rule out an increase in income tax - to fund budget shortfalls - during the ABC interview. Mr Swan later issued a saying the question was "utterly ridiculous and absurd."
with Judith Ireland