The Prime Minister-elect, Tony Abbott, has declared Australia is now ‘open for business’ with the pledge of ‘real change’ to bolster Australian business. The promised repeal of the Carbon Tax and the MRRT are particularly significant for the mining industry.
But will the promises convert to real changes? Despite its electoral success, there may still be some roadblocks to the Coalition’s plans for real change...
RESOURCES AND ENERGY POLICY
The Coalition Government brings with it a raft of policy ideas aimed at improving business and investment conditions for Australia’s mining sector. These include:
- abolishing the Carbon Tax;
- abolishing the MRRT;
- establishing a ‘one-stop-shop’ for environmental approvals;
- introducing an Exploration Development Incentive;
- updating the Energy White Paper;
- formalising the agreement to enable the sale of uranium by Australia to India;
- examining the potential of thorium as an energy source export; and
- establishing an industry advisory council for the energy and resources sector.
CARBON TAX REPEAL
The Coalition has set an aggressive timetable for repealing the carbon tax, promising to present legislation to parliament in its first 100 days of government.
However, the Senate could prove to be an Achilles heel for the Coalition’s crusade against the carbon tax. It needs the support of the Senate to pass legislation and that may prove difficult.
If the Labor Party and the Greens block the Coalition’s changes, then the Coalition will be faced with a choice of either calling a double-dissolution election or waiting until 1 July 2014 when the newly elected senators arrive in the Senate.
Even if the Coalition waits for the new Senate, the Government will probably still need to negotiate with independent and minor party senators to pass legislation.
What impact (if any) this might have on the Coalition’s plans to scrap the carbon tax remains to be seen.
'ONE-STOP-SHOP' FOR ENVIRONMENTAL APPROVALS
Regulatory overlap and delays have been at the heart of concerns raised by the mining industry for many years. In an effort to streamline approvals processes, the Coalition promised to offer State and Territory governments the opportunity to act as a 'one-stop-shop' for environmental approvals.
If they accept, the States and Territories would administer a single approvals process, including approvals under Commonwealth legislation such as the Environment Protection and Biodiversity Conservation Act. The Coalition’s policy also envisages that the ‘one-stop-shop’ process could be extended to local governments that wish to be involved.
This move is likely to be strongly supported by the mining industry.
EXPLORATION DEVELOPMENT INCENTIVE
The Coalition has sought to incentivise mining exploration through an 'Exploration Development Incentive'. The scheme will target small exploration companies by limiting eligibility to companies with no taxable income. Under the scheme, a tax credit will be provided to Australian resident shareholders for eligible greenfields exploration expenditure incurred in Australia. The proportion of expenses that can be claimed as a tax credit will be determined by the ATO. The scheme will start for investments made from 1 July 2014 and will be capped at $100 million over the forward estimates.
CUTTING COMPANY TAX
The new Government has also promised a 1.5% cut to company tax from 1 July 2015, bringing it down from 30 cents to 28.5 cents in the dollar. However, this tax relief is counterbalanced by the proposed paid parental leave levy of 1.5% on Australia’s top 3,200 companies.
The Coalition believes the tax cut will boost Australia’s attractiveness to foreign investors and encourage Australian businesses to invest, expand and employ more Australians.
Again, it remains to be seen whether the Coalition Government will face any blockades in the Senate with respect to these proposed changes.
REAL CHANGE AHEAD?
The new Government can be assured the mining sector will closely observe and monitor the implementation of its election promises in anticipation of its broader promise of real change.