The minerals resource rent tax was the result of political ineptitude and shameless self-interest. And continues to reflect the circumstances of its birth.
The original resource super profits tax was excellent policy, abysmally communicated by the Rudd government, and particularly by Wayne Swan. It stands as a how-not-to guide to economic reform. The execution of Kevin Rudd and the shabby circumstances of the deal to replace the RSPT with the MRRT — in which three multinational tax-dodging mining companies and one of greatest rentseekers in the Australian policy environment, the Minerals Council of Australia, dictated the nature of a tax to a politically vulnerable government — have dogged it ever since.
Along with climate change and asylum seekers, the mining tax was identified by the Prime Minister as one of her key priorities when she became leader. More than two years later, it is clear Julia Gillard was no more successful at settling the mining tax than she was in settling the asylum seeker issue. The tax has been revised down twice, such that it will now provide a small fraction of the spending linked to it, and we now know the first instalment of payments have yielded not a cent.
It is true, as the Treasurer pointed out on Monday, that the MRRT revenue was always going to fall along with iron ore and coal prices — indeed, that is the purpose of a profits-based tax, to tax windfalls when they occur, but to reduce tax obligations when revenue falls. And the tax will likely yield some revenue this year, especially given iron ore prices have begun recovering from recent lows.
But it is only appropriate that a tax born out of political desperation should continue to inflict political grief on its architects.
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