The mining tax is market linked so with ore prices down recently the Gov't did not collect a great deal of tax.

Sloshing about in the mining states is considerable money collected from increased royalty levels that should have turned up as mining tax revenue (these increases after the states claimed the mining tax take would kill the golden mining goose.)

The money is already benefiting the economies of those states, so is it OK to reduce their GST allocation in accordance with the extra mining royaltes that created to mining tax shortfall? Is reducing GST allocation an abuse of state rights, or a fair response?

Some claim the minerals belong to all Australians, but I don't think that is so under the Constitution, so the states have a lot of power to fight the battle.

I believe that if royalties are made undeductible before tax the miners may stand on their haunches and simply refuse royalty rate increases, but not without an almighty fight against the federal gov't against such a change.

The Coalition wants to repeal the tax, going against the majority wish of most Australians, I believe, especially those from the non-mining states who are not benefiting from the current situation.

Labor must get its act together quickly and go to the election with a reviewed position on royalties, making it a major plank in its policy platform. The fight with miners will do them a polling favour to boot, IMO

I strongly hold the view we are better if Federal governments get tax.
States raising Royalty's is a mistake, in my view, and maybe is done to harm federal policy's.
We know WE QLD and SA benefit from the extra Royalty's, but a fairer distribution comes via Federal tax.
Gillard and Swan, past their use by dates, did not get it right on changing the first plan.
Some return to all Australians is needed from international hole diggers.
Long time to elections but it seems clear Tony Abbott is unable to hold his own on this issue, Gillard trounced him today.

Quote "The mining tax is market linked so with ore prices down recently the Gov't did not collect a great deal of tax."

WRONG the Government caved in to the rich mining lobby and gave them too many concessions so they could avoid paying much.

Just like the wealthy Australians and companies have avoided paying there fair share of taxes by using off shore accounts and tax havens.

They had to be forced to reveal how much they actually received by the Senate.

The program is costing hundreds of millions to collect by more high paid bureaucrats and public servants than it gets back.

The royalties that the mining states receive effectively trickle down through the Grants Commission, as the royalties are taken into account before the distribution. This leaves more in the "pot" for the non-mining states.
The big Gambling states, on the other hand, don't have there gambling taxes taken into account for the Commissions dispensation. Hardly equitable.

A paper by Ergas, Harrison and Pincus discussed both the RSPT and the MRRT and were critical of both - saying that "the successor to the RSPT – the Minerals Resource Rent Tax (MRRT) – has many of the inefficiencies of the RSPT but adds some further serious inefficiencies of it is own."

http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1006&context=smartpapers

It has also been suggested that Ken Henry assumed that a Federal Tax would be 100% efficient, but that it is in reality less effective than royalties.

"...the Minerals Resource Rent Tax (MRRT) – has many of the inefficiencies of the RSPT but adds some further serious inefficiencies of it is own."

Yes, one major inefficiency being that it lives alongside state royalties.

The miners have already said they'll fight any change to the MRRT to the death, and they have a fair case regarding deductibility of royalties from pre-tax income. That leaves the mining states vs the rest of Australia via the Grants Commission.

That the MRRT produces volatile revenues makes it hard to incorporate into federal budgeting, which can leave egg on treasurers' faces into the future. Better that any revenue goes into the future fund, IMO.

I don't get why the Coalition is OK with royalties rising but is against the MRRT. It's never cared for state's rights much, being past-masters in withholding federal funds to force its way upon states. Just what is it, the promise of financial support from miners? When Oz mining truly was booming, where was the great social dividend? Is that what to expect again under another Coalition gov't?

lee1 mentions casinos but they'll be doing business forever whereas minerals become depleted (unlike gamblers).

Rio Tinto is expected to report underlying earnings of more than $9 billion on Thursday.

BUT

Rio Tinto have built up $1.1 billion in tax credits due to the MRRT.

So Juliars caving in and giving too many concessions means they will pay nothing this year.

Royalties should not belong either to the federal or state governments - royalties should belong to the land-owners, whatever they charge IF they agree to the intrusion on their land in the first place.

I am aware that currently farmers do not own what's under their land, so that should change by offering them to purchase it, with price based on average mineral-value expectations in their region (if unexplored, or according to actual findings if already explored).

Whether the purchase-money should go to the state or federal governments is an interesting question - any ideas?

The bottom line is, that people on the land should feel safe that no intruders may come without their consent, dig up their land and ruin their privacy, lifestyle and health.

Luciferase, the mining tax is a typical example of government being outsmarted by big business, as the miners are now using up a combined (reported) 1.7 billion in tax credits, rather than paying the tax.

In any case I am opposed to the tax being for all Australians, my argument being, that if all Australians wish to share in the states mineral taxes, then all state taxes should be combined and spread equally, otherwise it is simply unfair to take from others but give nothing in return.

An example being the median house prices in say Melbourne and Sydney, compared to say Brisbane and Cains, as all raise stamp duty when sold, but these duties are not shared, or more so, Queenslanders don't get a top up from the wealthier states when it comes to these taxes.

As for any changes prior to the election, not a chance as the last thing labor wants is to wake the sleeping dog. (the big miners) but I think they may be too late already.

I constantly wounder how much of or views, and the actions of both sides of politics, federal and state.
Forget the common good.
I can not believe the thought land owners are the ones who should benefit from Royalty's not the nation.
And in truth can not except, under any form of government, only rich states owners? of the minerals should prosper .
Australia surely is one nation not different states wanting to take from the nation but not share.
If mining tax had not been fought over by politicians, miners may well have not forced Gillards cave in.

Dear Belly,

<<I can not believe the thought land owners are the ones who should benefit from Royalty's not the nation.>>

But what you mentioned is only half the deal - first the land owners must BUY the rights to what's under their land. Instead of maybe getting royalties in the future, the state(s)/federation will receive cash in advance.

It is an anomaly that farmers own what's above their land but not what's below. Further, any corporation, including foreign corporations, currently has rights to intrude on private properties, explore, dig and create a toxic environment that makes the owner's life a hell and ultimately drives them out. Put yourself in the farmer's place and imagine those people and machines coming and digging your own front/back yard and under your home without you having a say...

Why is it that anyone else, even foreigners, can buy what's under the farmer's land EXCEPT the farmer herself? The farmer should have the first right to buy it!

Some farmers would buy what's under their land in order to ensure their peace, others may lease it to mining corporations, perhaps charging 90% royalties - take it or leave it, while others still may dig under their own land themselves.

Your so-called "nation" would not lose from the deal because it would receive the royalty-money in advance. Hopefully it will not waste it straight away!

Belly you easily forget the old import duty, & import quotas of not that long ago.

These propped up inefficient Oz industry, mainly in NSW & Vic, with a little around Adelaide. This gave high profits to industry, & paid inflated wages to industrial workers, at a large cost to the rest of Oz.

Most of the country were paying hugely inflated prices for everything manufactured here or abroad for decades, & there was precious little subsidising of the non manufacturing states. Now that manufacturing is dead the same ripoff states have their hand out.

You are sounding like a feminist now Belly. What's mine is mine, & what's yours is ours.

Well mate, it's going to take about 30 years for our roads, particularly in mining areas to come up to the old manufacturing states standard. Try asking for a hand out after that.

"....miners are now using up a combined (reported) 1.7 billion in tax credits, rather than paying the tax."

Just wondering, rechtub, if you know what the breakdown is, i.e. what proportion is royalty offset, start-up concessions for new mines (eg FMG) etc. This 1.7 billion may be a normal offset unrelated to the MRRT arrangement.

There was always going to be a collision between the mining and non-mining states here. There are no changes to the MRRT that could have avoided it.

In Australia the states have the responsibility for the lions share of education, health, age care, policing, and infrastructure with no access to income or company tax. The costs of the services are increasing faster than the income, and mining royalties are a major source of income.

If Juliar wants the states to get rid of the royalties, she needs to replace the income with something else.

Both the RSPT and the MRRT were a cynical grab by an impecunious Federal Government, on the back of reduced income and prolifigate spending, to put money back into the coffers; wrapped in the populist flag of "the minerals belong to all Australians".

The tax was designed by Julia Gillard, Wayne Swan and Martin Ferguson, without input from Treasury, and agreed to with Rio, XStrata and BHP. An agreement supposes that all parties are happy with the outcome at that time. It seems they thought they were Brainiacs instead of politicians- when the reverse was true.

Gambling taxes may be forever, but they still form part of the income of those states, so should be included before carve up.

It is the states that provide most of the infrastructure for startup mines, not the federal government. They merely want to ride the "gravy train".

Lee 1

Here, here

lee1 - Are these the same incompetents that thought giving Malaysia 800 refugees and getting 4,000 back PLUS we have to pay ALL the costs of supporting the 800 + the 4,000 was a GOOD NEGOTIATED DEAL.

The current mob in government wasted, threw away, gave away all the tax money and the miners tax was devised to raise more money so they could continue their spend thrift ways.

They chose to tax a group that would have the least electoral impact on them and so far it has backfired on them, with little raised because of a drop in mineral prices.

Just another bungle by the current mob which has to be added to the other 50 or so stuff ups.

Luciferase, there were changes avaiable, it was called no new tax, just increase or better charge for EXISTING royalties.

How they are distributed is another topic.

Shadow minister, QLD is a prime example, as while we do have plenty of resources, we also have a huge diverse state, with infrastructure per capita much higher than most other states, especially those with their hands out.

But the big issue is, given this incompetent mob have either spent, or allocated the two billion dollars they thought they would get, where will these funds now come from.

Remember, our borders, although not in the spot light, are still being breached with no real solution in sight.

Rechtub asks where will these funds now come from. Well, some is already sloshing around in the mining states due to them raising royalty levels, so those states are OK.

The expected take from the MRRT didn't eventuate due to the guts falling out of ore prices, although opponents claim unspecified concessions to miners to induce them into getting the MRRT flying to be the culprit.

Whatever, somewhere between the forecast MRRT tax take and the sum total of extra state royalties plus 126 million collected is a shortfall to be made up by higher taxes and/or cost cutting. Concurrently, non-mining states will receive more GST at the expense of mining states when the pie is sliced.

Going forward with the MRRT would require the mining states to yield sovereignty over their assets by pegging royalty rates where they are now and, IMO, raising the GST. Pegging royalty rates while commodity prices rise over time will raise mining profits, yielding increasing MRRT collection. The GST rate could be raised above 10% to provide enough money to compensate mining states for foregoing higher royalty rates. The GST rate could even be raised to a level where mining states are fully compensated for abolishing royalties altogether, with an accompanying greater MRRT collection. Raising GST requires offsetting with lower income taxes, paid for by the MRRT collected.

It is my belief miners are happy with royalties because they are way, way lower than will stop them risking a venture. Beyond start-up, they have killed the pig in Australia for decades, whether ore prices are high or low. Some market based arrangement like the MRRT would give Australians a better deal, IMO, but it does look like a bridge too far, even for a flying pig.

And yet the argument, by the government and Ken Henry, has been that royalties are not profit based as a tax would be, therefore being a cost to mining greater than a tax. On that basis miners would prefer a tax, under your scenario.

And yet it seems not.

The story is now out at

http://www.smh.com.au/opinion/politics/how-canberra-got-diddled-20130213-2edhg.html

Here are the 3 stooges - Julia Gillard, Wayne Swan and Martin Ferguson.

More proof that the incompetents have to go before they completely ruin the country.

Don't feel sorry for these idiots they leave with a massive tax-free indexed for life pension if not re-elected.

"Going forward with the MRRT would require the mining states to yield sovereignty over their assets"

and increase GST and further reduce royalties to zero in the hope that eventually the mining states would attain the current status quo. What happens in the meantime?
As royalties are state based and are not set at the same level; would you anticipate the combined MRRT and Royalty regime would -
a. Put a hit on all the mining companies - some more than others because they currently pay less royalties?
b. Put a hit on some mining companies but not others? or
c. Give a free kick to all mining companies by having a lower overall rate?

Of course increasing GST does not only affect the lower paid. It drives up prices.The mining states would have an increased cost to bear because of higher infrastructure costs; unless the federal government assumes that mantle. That of course would reduce the return to the states.

Interesting link Phillip.

It is typical of this gvernment, as to them, passing legislation is a priority and it appears that they move on to the next piece of legislation, while icompitenly goimg about trying to implement what they have already passed, only to fail miserably time and time again.

While I accept that passing legislation is an important role of governments, I liken this government to that of building a new house.

You can obtain the best designed plans, then engage the worst builder, and the result is a failure.

Back to the topic, these three are living proof of just how incompitent, not to mention arrogant they are.

They no doubt had an agenda for this meeting, and that was to rid the airways of the negativity being publicized by the miners, but to do so, they thought it would be easier to not have the smartest people attend.

It was all about saving the governments reputation, not about doing the right thing, not that I am a fan of the mining tax I might add.

http://au.news.yahoo.com/thewest/a/-/article/16141773/rio-tinto-posts-first-loss-pays-no-mining-tax/

Rio Tinto has confirmed that it did not pay MRRT in 2012. "Given that the MRRT is a tax that kicks in when prices are high, you certainly won't expect to have an MRRT liability when commodity prices are low," Mr Walsh, Rio Tinto's new CEO said.

"Rio's boss says the tax is functioning as it was designed, which is to tax "super profits" not "normal profits....."

Swan struck out when Treasury crystal-ball forecasts of ore prices failed. Result, he wears the egg on his face and learns not to budget using a volatile tax, hence my suggestion to quarantine MRRT proceeds in the Future Fund.

Given federal gov't revenue was a forecast 376 billion, isn't a 2 billion dollar cock-up over the MRRT contribution a storm in a teacup?

The disparagement of Swan over by the Coalition is a smokescreen for itself being too in bed with miners, watching by as our mining wealth disappears for too little return, and for being at the ready ready to repeal the tax.

The vitriolic denigration of the MRRT and Swan here on OLO is unaccompanied by any better suggestion of how Australians can benefit more from the depletion of our minerals than we did under the Howard government.

We have states competing for mining investment as if we live in different countries, undercutting each other to the detriment of all Australians. IMO, the states acting this way is reason enough for federal action, be it by a super-tax or otherwise. What's the Coalition got other than repealing every reform of the last five years?

Belly, here are the median house prices for Australia.

NSW -Syd $600K+
Vic -Mel $500K+
SA -Adl $$380K
WA -Perth $470K
QLD-Bris $430K

Now on top of this would be the increased number of sales in both Syd and Mel that would no doubt out strip the likes of Bris.

So, considering every sale attracts state based stamp duties, it is fair to assume that the likes of Vic and NSW would collect far more in this type of state based revenue than say SA or QLD.

Then there are the likes of car Rego's, as there is no doubt there are more rego receipts in these two states, Vic and NSW, than in the other states.

You then have pay role taxes, which are state taxes and, considering Sydney is the business capital of the country, they would collect far more of this tax than the likes of QLD.

So, can anyone explain to me why it is fair for these states (NSW&VIC) to enjoy the win falls in these taxes, without wanting to share them, while at the same time wanting a share of state based royalties, that the likes of WA,SA and QLD just happen to generate due to their mineral wealth.

As I say, it's fine to share royalties, but not unless ALL STATE REVENUES are shared.

I ask, Where is that being unfair.

'Rio Tinto has confirmed that it did not pay MRRT in 2012. "Given that the MRRT is a tax that kicks in when prices are high, you certainly won't expect to have an MRRT liability when commodity prices are low," Mr Walsh, Rio Tinto's new CEO said.'

That's exactly right. You are going to rely on a "super profits tax' in years where there is none.

How do distribute funds to the states garnered from the MRRT, when none has been collected? You would really have to ramp up GST to make an impact.

Have you noticed that it is not only the opposition that calls this tax a failure? Why do you think that is?

Yesterday, it was reported that the Carbon Tax needs to be at least re-worked because the numbers don't add up. Is that the Oppositions fault too?

It must be the oppositions fault Lee, Swanny is not smart enough to make a big mistake, he is too busy making lots of little ones.

It might be hard for you to understand Luci, but a lot of us, with no connection to the mining industry are pretty happy with what it does for us.

They all ready pay heaps of tax, while earning the export income we so desperately need. With out that income, we would not have enough foreign exchange to buy even the food we now import.

We most definitely would not have the money to pay the manufacturing industries the subsidies we now pay them to stay in business employing all those southerners.

Without mining we would have to shut down the defence & auto industries in SA. It could become a nice, if very poor vineyard. Meanwhile Vic & NSW could go back to rusting back into a grazing paddock, as it was doing before all that mining tax money went in.

With out Qld & WA mining, the rest of Oz is a banana republic, fit to make Greece & Spain look like roaring success stories. It just might be a good idea to say thank you to them some time.

If in any doubt, just think what our mining industry would look like if run by Gillard, Swan & Rudd. If that doesn’t frighten you into shutting up, there is no hope for you

If ore prices had held up, mining states hadn't raised royalties and big companies had not written down massive failures due to poor management, Treasury's forecast may have held and Swan would be looking less egg-faced. Assuming zero volatility in was his mistake, for which he is being well pilloried. None of the unforeseens mentioned, nor Swan's judgement is caused by the Coalition, and I have not said so.

The Coalition opposed Rudd's and now Gillard/Swan's mining taxes. It has no proposal for Australia to benefit more from the depletion of its minerals other than for the states to continue to give them away for a song.

Rechtub, you sound like a good person to borrow from. How about I give you one percent interest on you lending me a hundred dollars? You'd be satisfied with that wouldn't you? Royalties could be substantially increased without affecting mining investment and/or be market linked to ore prices.

Also, Rechtub, I'm failing to see the comparison between mineral depletion and house prices, stamp-duty, rego etc which are a function of the same population size that will receive the benefit of these collections.

With more foreign workers coming in and miners fabricating offshore, Australia benefits less and less with fewer Australian jobs and apprenticeships, and lower GDP. It's a scandal in the light of the massive after-tax miner's profit percentages we see (Rio Tinto's management caused loss excepted).

cont'd

Whether it's via a super-tax or raising royalties, something should be done, IMO, to gain more for Australia from our mineral assets rather than states pitting against eachother. I've previously suggested other alternatives but if it were via royalty increases, the Grants Commission can handle the necessary money redistribution among the states.

The Coalition has thus far proposes nothing on so many fronts (ah yes, dams!) and intends us to have only five minutes to inspect whatever its policy platform is prior to Sept 14. Meanwhile all it does is carp and play the man. Obviously this has been a successful strategy based on recent polling, but I'm hoping for better for the electorate, and from it.

'If ore prices had held up, mining states hadn't raised royalties and big companies had not written down massive failures due to poor management, Treasury's forecast may have held and Swan would be looking less egg-faced.'

Except Treasury weren't involved- It was Gillard, Swan and Ferguson on their own.
Even so, if Treasury had been involved the forecast MAY have held and Swan MAY ( not would) be looking less egg-faced.

Commodity prices have always been volatile, why wouldn't you take it into account?

'With more foreign workers coming in'

Isn't this a current Government policy?

Luciferase, what younhave to realize is that the salary that is paid to Swanny, is weekend spending money for the big mining exects, he, Swanny, has simply been outsmarted.

The whole tax was the wrong way to go from the outset, as to assume a huge GLOBAL company, would accept the tax was nieeve to say the least.

Then of cause there are the billions spent bynthe miners in their anti tax campaign, all of which is a tax deduction.

As I say, he was simply outsmarted by a much smarter person.

It's not the pollies fault, because after all, most pollies are drawn from those who the corporate world didn't want.

Why else would a qualified barrister want to work for peanuts, knowing full well at least two thirds of the population dislike you.

I'm getting old and sloppy, it was Hasbeen I want to borrow money from and Hasbeen's comments about house prices etc. Sorry Rechtub, put your money away.

lee1, Treasury makes the forecasts, and I agree that it made insufficient allowance for volatility, perhaps caught up in Labor's dire wish for a balanced budget, when it should have asked hard questions. Hopefully it'll all come out, but Gov'ts have always made heroic assumptions with a balanced budgeyt in mind. Again. I'd point out that total forecast revenue was 376 billion and a 2 billion error is about 0.5% off forecast. (a we look like a further 1% short of forecast revenue by May if the economy doesn't pick up).

"'With more foreign workers coming in' Isn't this a current Government policy?" Yes, but the rules seem to be being bent and that needs a hard look at by Labor. I doubt the Coalition has any intent to deny miners their wishes with so much of their financial support tilting its way.

Rechtub, how about something more substantial than pot-shots at certain politicians' salaries and not others. Australians, through our politicians, will determine the basis upon which miners do business in Australia, not the miners. If something is broken, we'll fix it, but let's see if it's really broken first.

This is my fourth post so it's all quiet from me for a bit.

Luciferase, if something is broken we fix it, you say.
well, it wasn't broken when the big miners were in exploration mode.

It wasn't even broken when they commenced mining and were fetching pre boom ore/coal prices.

It has only ever appeared to be broken, when this useless, incompitent government, started by Rudd, continued by Gillard, with the support of those two useless independents, wasted every single cent we had, and more.

Pre Kevin 07, we were palin flying, we had money in the bank (after struggling for years to pay off previous labor debt), everyone who wanted a job, had one, the word 'underemployment' hadn't been invented and our borders were safe, sound and secure.

Then along came these incompitent fools, wasting billions on failure after failure, then, once they realized that they had made monumental stuff ups, turned to about the only sector that wasn't suffering under labor's incompetence, and decided that all of a sudden, it wasn't fair that they (the miners) were making all this money.

Dont spare a thought about the risks they had taken.

Don't worry about the taxes they were paying.

Don't worry about the thousands of jobs they were creating, or the other thousands they were supporting, and most of all, don't worry about the banks, as they (the banks) could pack up office and move elsewhere at a heart beat, despite makimg insane profits without the risks the miners take.

Now while you say you can't fix it till it's broken, does not mean you can go out and break it just so you can then TRY to fix it, as the word TRY, in labor terms is a very risky word indeed.

So its all a one way street, rechtub. Company tax rate lowered since mine inception, miners win. Depreciation provisions improve since inception, miners win. Infrastructure improvements laid on with fed and state gov't input, miners win, etc.

Yet, one small market linked tax doesn't go their way and they wailing like banshees. When state royalties rise beyond the piffling levels set, where is the wailing then?

Sure, while miners kill the pig they contribute greatly to our economy, making up 10% of GDP. However, our descendants will look back and rue our stupidity if we don't make more of our assets, starting now.

You say, small tax.

Name any other large company, who pays their 30% company tax, then once they earn about 12% return on investment, they are expected to pay ANOTHER 30% on each dollar thereafter.

Now of cause they are our assetts and, we are being paid royalties for them. If the way royalties are formulated and distributed, then change it, but not mid stream, as shifting the goal posts mid stream of such huge projects simply effects confidence.

Now if you want more, then take a risk and buy shares inn these mining companies, because at least then, you share the risks as well as the gains.

"Name any other large company, who pays their 30% company tax, then once they earn about 12% return on investment, they are expected to pay ANOTHER 30% on each dollar thereafter."

The MRRT has generous write down provisions for depreciation, once for determining company tax liability then again for the assessment of MRRT liability. So established high infrastructure mines with plenty to depreciate have a big buffer, especially as they don't pay MRRT until all their depreciation credits are eroded. Furthermore, market valuation of mines rather is allowed instead of book value in calculating depreciation.Many mines will have years before the tax bites, should it not be repealed that is.

All the whipped-up political hysteria over the shortfall in the MRRT collected now should be balanced against the benefit in the longer term, like other great initiatives that wrought the same hysteria, such as floating the dollar, removing tariffs etc.

The Coalition has done a brilliant job of maintaining the hysteria level so consistently over the term of this hung parliament with hyperbolic attacks on every visionary reform and even normal occurrences such as the retirement of ministers intending to leave parliament at the next election etc. etc. This frenzied attack will continue until a minute before midnight when the Coalition's vision and detailed, costed political platform is hopefully revealed. We'll see if Johnnie's small target game works again, I guess, but I digress.

I can't name a large company, other than a mining one, that is paying a super-tax, but any that are depleting an unsustainable resource and not paying enough for doing so should be super-taxed, IMO. I don't believe banks fall within that category.

Can you guarantee that that the MRRRT will generate super profits in the future; not forgetting costs of production will also increase?

In yesterday's West Australian, there was an analysis of the mining tax by Andrew Probyn, their Federal Political Editor, which shows the income and costs of production of iron ore.
Assuming a price of US$155 a tonne, which is for 62% iron ore, including cost and freight.
'It includes freight, moisture, royalties, product discount and currency, which the companies don't get.' (The banks make a motza on the exchange rates).
The average grade is 59% from the Pilbara, but varies between 54% and 63%.
Deduct $10 a tonne for freight, convert to Aussie and deduct 7.5% for moisture (either added or natural, as a dust mitigation factor), then their is a discount to the headline price to achieve a sale of between 4% and 8% (depending on grade), 6.5% rising to 7.5% for royalties.
There are other factors like depreciation etc.
It goes on to say that for big companies they realise $72/tonne profit, mid-caps $52/tonne and small caps $32/tonne.

All that is before the design of the MRRT allows the big miners to "effectively double dip on depreciation".

It goes on to say that due to the design of the tax it will be 5-10 years before the big boys pay MRRT.

And that is why it raises bugger all; because there is no super profit to start with.

lee1, all of the above was true when ore was below 100/tonne and miners were making more than 10% on investment capital.

How was 126 million collected if the whole deal you describe is so miserable for miners and the ore price spent time at $80/tonne? The per tonne price of a certain grade of ore is the per tonne price. Then the cost of producing that tonne is deducted to determine the profit. That it is 60% iron is irrelevant other than establishing the ore grade.

The next thing we'll hear is miners are doing Australia a charitable service. In fact, that's what their advertising against the mining tax boiled down to, and the Coalition supports that to ensure the financial support of miners.

How was $126m collected? Simply because the small miners and the startup miners don't have the advantage of the grandfather clause that the big established miners do.

The figures were provided by the Economics editor, not me.

The figures, as stated, were provided as at $155/tonne.

Don't shoot the messenger, because it doesn't agree with your beliefs.

"How was $126m collected? Simply because the small miners and the startup miners don't have the advantage of the grandfather clause that the big established miners do."

What is your source of information to be able to make this statement, lee1?

I thought you were the messenger. What is Probyn's source of information? Official, unofficial, an accountancy firm? He is a journalist with artistic licence isn't he?

I come back to it, Swan and/or the Treasury have made the error of not expecting ore price volatility, of not accepting that the states might lift royalty rates, and not forecasting that bad management decisions might affect the bottom line of big mining companies. He/Treasury is not yet guilty of levying a tax that will not benefit Australians in the future, especially once depreciation passes through the system.

The Coalition appears to have no plan for Australians to benefit better from this rare opportunity to ride on the coat-tails of huge growth in Asia that is driving commodity prices. Or maybe it does and is keeping it a secret to spring upon us later, along with other revelations that demonstrate it is forward thinking and not just the stymieing, carping pack of whiners, who play the man rather than the ball, it is at present, along with its supporters.

Grandfather clause-

'The MRRT starting base is intended to recognise the investment in certain assets relevant to the upstream mining operations that entities had before the announcement on 2 May 2010 of the new resource tax arrangements. It also covers, in some circumstances, certain further expenditure incurred in relation to these assets, new assets or certain specified activities before 1 July 2012.

The benefit of a starting base is available for all interests in coal and iron ore tenements that existed on 1 May 2010.'

Source: http://www.ato.gov.au/content/00340553.htm

Obviously mines not in existence at that time will not have a starting base.
Small cap miners, that were in existence,will not have as big an asset base as the large miners and will therefore pay MRRT before the big miners.

It has already been reported that the big miners did not pay ANY MRRT. Where then did it come from?

Andrew Probyn is, as I said the Federal Economics Editor for the West.

Yes, I was merely the messenger reporting on what someone else wrote, that's why I said don't shoot me.:)

Luciferase, you are starting to act like a 'it's not fair labor supporter' who's party is in for the flogging of a life time.

The simple fact is that the three amigos, went into a meeting with the big miners, with one agenda, that was to shut them up, at any cost, and what a cost it turned out to be.

Utter incompetence is about the only way to describe these fools who call themselves the brains trust.

Their list of failures is too long to describe, as there is a limit per post on OLO, so perhaps it would be so much easier to post their list of achievements and remember, simply passing legislation is not an achievement until the legislation has been successfully implemented.

As for the big miners, they would already have a 'plan B' worked out for when the depreciation credits have been exhausted. So it is most unlikely they will ever pay the MRRT, thanks in large to the brains trust we call the government.

"It has already been reported that the big miners did not pay ANY MRRT. Where then did it come from?"

Well, if it came from low cap miners making small margins then it demonstrates that the bigs with their big margins will be contributing significantly when their credits run out.

As for miner's plan B, we make the rules. Australians run Australia and the miners will meet the letter and the spirit of our laws, unless the Coalition lets them off the hook as they want to do now by repealing the MRRT.

It's not fair, rechtub? Those minerals belong to our children and damned if I'll see them keep going for a song, even if you're happy. A little shortfall in MRRT collected now doesn't phase me but don't be too cut, rechtub, that the MRRT hasn't cough up much yet. It will.

Luciferase, I didn't say they weren't making profits; just not making super profits.
'Data from the Australian Bureau of Statistics show that from 1987 to 2009 the nominal before-tax rate of return on capital in the mining sector averaged 12.5 per cent.'

http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1006&context=smartpapers

'It goes on to say that due to the design of the tax it will be 5-10 years before the big boys pay MRRT.'

From my earlier post.

But then again that is only on the basis that they will continue to make these profits. There is no guarantee.

'Those minerals belong to our children'

They belong to the mining states.

OK, Western Australian, Queenslander and South Australian kids largely own the mineral wealth. What passport is necessary to pass from state to state other than being an Australian citizen?

A Victorian kid can enjoy Queensland's mineral wealth just by moving there, but why put them to the bother when the Grants Commission can help out?

The MRRT is a tax, not an appropriation of mining states' wealth. If the mining states want to secede because they feel otherwise, then they should remember that they were propped up by the manufacturing states long before boom resource prices got them on their feet.

It is a tax that cannot guarantee income.

I would think any grants would be well and truly passed back; however a grant does not require paying back; only a loan.

Luciferase, you say....Well, if it came from low cap miners making small margins then it demonstrates that the bigs with their big margins will be contributing significantly when their credits run out.

Or they may go elsewhere.

Then what?

You must remember they are much smarter people than those making these mid stream tax laws.

As for being the wealth of all, as I have said before, if you wish to share state taxes/revenues, share them all.

What's unfair about that Luciferase

Then what?

A range of issues determine mining investment, including sovereign risk, political stability, company tax rate, exchange rate, and so on. Mining countries apply a range of approaches to getting miners to pay their way, and and our state royalties and federal MRRT will be weighed against these. See http://www.commdev.org/files/1395_file_comp_mining_tax_regime.pdf for a brief overview.

Other mining countries have extracted more from miners without the sky falling in, and we can too. The important thing is for the world to be able to buy resources at affordable prices while the mining countries are adequately compensated for them. Mining companies should do well out of delivering the service of extracting minerals, not sharing in the compensation received by mining countries for their assets, which will continue to happen without an MRRT or higher state royalties.

Do these other countries have low tax regimes on company taxes? Are the miners paid the same as in Australia? Do the companies pay superannuation for these employees? Are the minesites remote?

Luciferase... Or higher royalties.

Yes, you hit the nail on the head.

Now as for other countries, it is almost impossible to compare us with other mining countries, this is due to the likes of,
our isolation and sheer distance from our customers,
our wages and over all IR conditions and restraints.

Our miners are already telling us that costs here are far far too high and, if we don't listen, we may pay the ultimate price.

Either way, it is simply unfair to expect the miners to pay for to void left from labor's gross incompetence and total miss management of the economy.

Not one word of this was spoken of prior to labor taking office and commencing their quest to waste every single cent we had, or should have had.

Thank god they are on their last legs, and good riddens to bad rubbish I say.

September just can't come fast enough I am afraid.

"Are the miners paid the same as in Australia? Do the companies pay superannuation for these employees? Are the minesites remote?

"...our isolation and sheer distance from our customers,
our wages and over all IR conditions and restraints."

Some companies have been taxed on super profits so, with your list of parameters deducted before super-tax. No super-profit no MRRT.

"...labor's gross incompetence and total miss management of the economy."

Many things you'd highlight as complete disasters were only so at the margins. For example, 5% of the money going into school halls was squandered, but my local primary school now has a wonderful facility organized by a school council with savvy. The insulation scheme worked well, my folks got a nice job done, except that some consumers paid for poor work (their own stupid fault) and some installers with dollar signs in their eyes put workers into lethal situations, which happens everyday in Australia (eg. mining, and construction, but the Coalition goes very quietly on those). State consumer and industrial safety laws address these matters. All we heard were hysterical, sensational headline on these and other programs, but its how we kept everyone employed in Australia through a huge contraction in the world economy that's still contracting against Treasury forecasts, leading to cost-cutting and a deficit.

Sure, there are stupid ideas like cash for clunkers that never flew, and I'm not too big on the idea of large companies wasting money on "Buy Australian" officers(although I would like some action on buying locally and contribution to training/employing apprentices). These, however, are not the things that are killing our bottom line, and the same crap happens in all parties (who sent us into Iraq and gave us middle-class welfare?)

Rehctub, I hate Gov't waste and mismanagement as much as anybody, but I'm not partisan about it. Take Rudd's advice and have an ice-bath, wait like everyone for September, and accept the will of the people, even a split parliament. Just stop carping, carping, carping and grow another eye.