Coalition Members’ Dissenting Report
Liberal Members of the House of Representatives Standing
Committee on Economics outline herewith dissenting remarks from the majority
committee advisory report on the Tax Laws Amendment (2012 Measures No. 6) Bill
2012 (TLAB No. 6).
Liberal Members do not support the majority report
recommendation that the House of Representatives pass the TLAB No. 6 as
Rather, it is our considered view that the TLAB No. 6 Bill
be amended such that Schedule 1 – Native title benefits be excised from the
Additionally, Liberal Members reinforce our opposition to
the Government’s Minerals Resource Rent Tax (MRRT) and its associated
expenditure and our intention to repeal the MRRT should the Coalition form
Government following the next general election.
Issues in the Bill
Schedule 1 – Native title benefits
Liberal Members of the Committee note and agree with
paragraphs 2.4, 2.5, and 2.6 insofar as the majority advisory report highlights
that opinions provided to the Committee fell into three broad categories.
Paragraphs 2.5 through 2.10 reasonably outline the evidence
provided to the Committee.
The concerns raised in paragraph 2.15 encapsulate legitimate
concerns that Liberal Members found compelling and overwhelming such that excision
of Schedule 1 from the Bill is warranted.
The legitimate concerns raised by the Minerals Council of
Australia and others, and supported by Liberal Members, are not borne from
nefarious intent. Rather, the concerns are a consequence of uncertainty driven
by the TLAB No. 6 Bill as highlighted by the Minerals Council of Australia and
supported by BHP Billiton and the Chamber of Minerals and Energy of Western
The Minerals Council of Australia supports the government’s
policy objective to deliver a more flexible and less legalistic approach to
native title and to deliver practical outcomes for Indigenous Australians. We
are committed to working with the government to ensure that agreement monies
constructively contribute to socio economic outcomes for Indigenous Australians
in line with the government’s Closing the Gap policy objectives. While
we support reforms to the taxation system to maximise the economic value of the
native title compensation and benefits packages, we are concerned that the proposed
native title payment tax treatment may have a range of unintended consequences.
Specifically, we consider that those amendments disincentivise investment in
intergenerational wealth creation, as tax will be payable on any transfer of
monies to future generations or on income earned. It disincentivises the
provision of benefits under agreements to Aboriginal people who are resident in
an area but who are unrelated to native title determination and it limits the
main tax treatment to the defined beneficiaries.
The majority advisory report in paragraph 2.19 outlines that
the concerns raised by many witnesses were not compelling and “unlikely to
eventuate … because native title agreements are now structured to prevent it
occurring, and this feature of the contracts has been largely driven by the
mining companies themselves …”.
Liberal Members find the conclusion reached in paragraph
2.19 counterintuitive. It is compelling that the authors of the agreements to
which the majority members refer and rely are the very parties highlighting the
problems arising from the TLAB No. 6 Schedule 1.
Ms O’Dwyer: I want a pretty simply short answer to the
question as to whether, in the view of the people who are sitting around the
table today, it would be better not to proceed with this aspect of the
legislation, assuming that no changes were made to it, because it would do more
harm than good. I just want to understand where people sit on this question.
Mr Murphy: The position of the State of Western
Australia is that it would do more harm than good. Clearly, there are many
issues that have been raised just in this short session today which indicate
that there are differences of opinion about what is the best way to deal with
the matter. I think the only point of agreement that you actually have is that
there is much disagreement about what should be done. So until such time as
there is further investigation and data about what is the likely consequence of
change and the best way to proceed, the state of WA’s position would be to do
nothing – do no harm at this point in time.
Chair: So far we have got ‘don’t proceed’ from BHP and
Dr Fletcher: And CME members overall support that
position as well.
This position was also promulgated by the Minerals Council
Ms Stutsel: The position of the Minerals Council would
be that, no, we do not think the legislation should proceed. Our preferred
position would be to stay with the status quo, and that is largely because the
differences that will be formalised by these arrangements will lead to a diminution
in the sustainable outcomes being achieved from agreements.
Further, the sentiment of paragraph 2.23 of the majority
advisory report demonstrates the breadth of concern raised.
As highlighted above, the principle adopted by the majority
advisory report that is contained in paragraph 2.26 again is counterintuitive
and betrays the compelling weight of concern expressed by the authors of the
very agreements Government Members rely upon.
It is also noted by Liberal Members of the Committee that
there are matters of principle that are potentially offended by Schedule 1.
Making compensatory (or any other) income exempt from tax
violates the key tax principle of horizontal equity (ie a dollar earned by one
person, regardless of how it is earned or from what activity, is given the same
tax treatment as if it were earned by another person).
However, if this income was to be taxable in the hands of
the indigenous recipient(s), it would likely increase the compensation sought
by the amount of tax expected to be paid. As such, the incidence of any tax
paid would likely be borne by the compensator (likely to be a mining or
agri-business), increasing their costs as a consequence.
Schedule 3 – Geothermal energy explorers
Schedule 3, which provides a deduction for certain costs
associated with exploration for sources of geothermal energy, was announced by
the Government as part of the final design of the Minerals Resource Rent Tax
(MRRT) and is an expenditure associated with the MRRT.
The Coalition will repeal the MRRT.
The MRRT has proved to be a public policy farce from its
inception as the Resource Super Profits Tax. It is a tax that has not raised
any meaningful revenue.
|Mr Steven Ciobo MP
|Ms Kelly O’Dwyer MP
Scott Buchholz MP