Dr LIM - 1998-08-19
How will the federal government’s proposed taxation reform package impact on the largest contributor to gross state product in the Northern Territory - the mining industry?
ANSWER
Madam Speaker, this is another area where the impact of the tax reform package looks extremely positive. Mining and offshore exploration are probably the 2 biggest industries in the Northern Territory. The Minerals Council of Australia has already given the tax package its support.
Labor Party members opposite should turn their chairs around and hang their heads in shame. For a long time, the Minerals Council of Australia has been critical of inefficient taxes on business inputs, such as wholesale sales tax and excise on diesel fuel. Taxes of this kind have undoubtedly impacted negatively on the mining industry’s international competitiveness. Of course, the federal Labor Party had the opportunity to do something about that situation. It did nothing during all the years it was in power. The Territory party’s attitude has been highlighted in recent times by its sympathy with the protesters at Jabiluka.
With the Coalition government’s broad-based goods and services tax, impediments to industry development will be removed or, at the very least, substantially reduced. Certainly, the changes announced in the tax package will increase Australia’s relative competitiveness in attracting exploration and new investment.
The Territory government has led the push for removal of the fringe benefits tax on remote-area housing for mining personnel. This has been another impediment to regional and general economic growth. The FBT adds costs to the development and operation of a mine and was undoubtedly a factor in the shift to fly-in/fly-out staffing of remote mining operations. In the new taxation package, an FBT exemption will be introduced for housing provided by mining industry employers in remote areas. That change will promote regional development in the Territory because many of our current and potential mine sites are in remote areas. It will also aid our drive to attract offshore oil and gas operators to base their operational staff in Darwin.
As with any reform package, there will be swings and roundabouts. However, it is estimated that overall costs to the mining industry will fall by some 4.4%. That may not sound much, but it amounts to nearly $3000m a year.
Off-road business users of diesel fuel in excavators, trucks etc will receive a credit equal to the entire excise payment. This means effectively that they will pay neither excise or GST on diesel fuel. A company such as ERA, which supplies electricity to the township of Jabiru, will save at least $1m a year. For on-road registered businesses, a 7 per litre GST input tax credit will apply to diesel fuel. In addition, large road transport users will receive a GST credit for on-road business use of diesel, and this will reduce the effective excise rate from its current 43 per litre to 18. This will provide a big boost to mining companies that have to transport their product to Darwin by road for shipment out of the Territory.
For the many mining companies that export, the export of goods and services will be GST-free. That also will be of great benefit to the Territory. Overall, the tax package is likely to make mining in the Territory more attractive to investors and explorers. This boost to the industry will in turn create more jobs and provide positive spin-offs to the entire community of the Northern Territory.
ANSWER
Madam Speaker, this is another area where the impact of the tax reform package looks extremely positive. Mining and offshore exploration are probably the 2 biggest industries in the Northern Territory. The Minerals Council of Australia has already given the tax package its support.
Labor Party members opposite should turn their chairs around and hang their heads in shame. For a long time, the Minerals Council of Australia has been critical of inefficient taxes on business inputs, such as wholesale sales tax and excise on diesel fuel. Taxes of this kind have undoubtedly impacted negatively on the mining industry’s international competitiveness. Of course, the federal Labor Party had the opportunity to do something about that situation. It did nothing during all the years it was in power. The Territory party’s attitude has been highlighted in recent times by its sympathy with the protesters at Jabiluka.
With the Coalition government’s broad-based goods and services tax, impediments to industry development will be removed or, at the very least, substantially reduced. Certainly, the changes announced in the tax package will increase Australia’s relative competitiveness in attracting exploration and new investment.
The Territory government has led the push for removal of the fringe benefits tax on remote-area housing for mining personnel. This has been another impediment to regional and general economic growth. The FBT adds costs to the development and operation of a mine and was undoubtedly a factor in the shift to fly-in/fly-out staffing of remote mining operations. In the new taxation package, an FBT exemption will be introduced for housing provided by mining industry employers in remote areas. That change will promote regional development in the Territory because many of our current and potential mine sites are in remote areas. It will also aid our drive to attract offshore oil and gas operators to base their operational staff in Darwin.
As with any reform package, there will be swings and roundabouts. However, it is estimated that overall costs to the mining industry will fall by some 4.4%. That may not sound much, but it amounts to nearly $3000m a year.
Off-road business users of diesel fuel in excavators, trucks etc will receive a credit equal to the entire excise payment. This means effectively that they will pay neither excise or GST on diesel fuel. A company such as ERA, which supplies electricity to the township of Jabiru, will save at least $1m a year. For on-road registered businesses, a 7 per litre GST input tax credit will apply to diesel fuel. In addition, large road transport users will receive a GST credit for on-road business use of diesel, and this will reduce the effective excise rate from its current 43 per litre to 18. This will provide a big boost to mining companies that have to transport their product to Darwin by road for shipment out of the Territory.
For the many mining companies that export, the export of goods and services will be GST-free. That also will be of great benefit to the Territory. Overall, the tax package is likely to make mining in the Territory more attractive to investors and explorers. This boost to the industry will in turn create more jobs and provide positive spin-offs to the entire community of the Northern Territory.
Last updated: 09 Aug 2016