Chapter 1

Chapter 1


1.1        On 10 November 2011, the Senate referred the provisions of the following 11 bills to the Economics Legislation Committee for inquiry and report by 14 March 2012:

1.2        The bills seek to introduce the Minerals Resource Rent Tax (MRRT); a tax on the economic rents mining companies make from the extraction of certain non‑renewable mineral resources.

1.3        Further progressing the government's agenda for reforming the tax treatment of the resource sector, the bills also seek to extend the coverage of the existing Petroleum Resource Rent Tax (PRRT). The PRRT is a tax on the economic rents derived from the extraction and early processing of petroleum, and currently applies to projects in Commonwealth waters with some exceptions. The bills would extend the coverage of the PRRT so that it applies to all offshore and onshore petroleum projects, such as the North West Shelf and onshore coal seam gas projects.

1.4        The bills also seek to make a number of improvements to the superannuation and business tax systems which are linked to the revenue expected to be gained from the MRRT. The bills will increase the superannuation guarantee charge from 9 per cent to 12 per cent, remove the age limit associated with these contributions and will introduce a government superannuation contribution for low income earners. The bills also seek to make a number of amendments to improve and simplify small business taxation arrangements.

Conduct of the inquiry

1.5        Details of this inquiry were advertised in The Australian and on the committee's website. The committee also wrote to relevant companies, organisations, academics and individuals inviting submissions. In total, the committee received 32 submissions. Details about these submissions can be found in Appendix 1. 

1.6        The committee held two public hearings in Canberra on 21 and 22 February 2012. Evidence was given by mining companies, peak industry associations, public policy think tanks, academics, trade unions, superannuation funds, superannuation industry bodies, Treasury and the Australian Taxation Office. The witnesses who appeared at these hearings are listed in Appendix 2.

1.7        The committee thanks all of the individuals and organisations that participated in this inquiry.

Examination by the Senate Scrutiny of Bills Committee

1.8        The Senate Standing Committee for the Scrutiny of Bills assesses legislative proposals against a set of accountability standards that focus on the effect of proposed legislation on individual rights, liberties and obligations, and on parliamentary propriety.

1.9        In its final Alert Digest of 2011, the Scrutiny of Bills Committee outlined its comments on the bills. That committee's comments on the bills against its terms of reference were limited to a specific provision in the Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011 which it considered had retrospective effect, the need for which was not sufficiently justified in the Explanatory Memorandum. The Scrutiny of Bills Committee requested a fuller explanation from the Minister on this issue.[1]

Outline of the report

1.10      This report consists of eight chapters which are briefly described below:

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