After a controversial struggle with mining corporations which spanned two years, parliament has passed a law imposing a 30 percent tax on coal mine profits.
The tax will affect any company that makes $75m in profits, and with 30 Australian mining companies breaking the barrier, the government believes it will raise somewhere in the region of $10.6bn in its first three years. The levy is also designed to gradually increase employer payments into worker pension funds from 9 to 12 percent in seven years, and generate $6bn of infrastructure funding.
The tax was originally touted in May 2010. The scheme sparked a furious reaction from the Association of Mining & Exploration Companies, who embarked on PR and advertising campaigns attacking the proposal. The successful passing of the tax represents a significant victory for embattled Prime Minister Julia Gillard and her minority administration, which currently faces serious problems trying to get any legislation approved. The bill relied on support from the Green Party, who themselves had fought unsuccessfully to maintain the original rate of 40 percent, and extend the tax to gold and uranium miners.
The government was predictably triumphant in parliament upon the bill’s successful passage, with Treasurer Wayne Swan proclaiming “this is a historic day for economic reform in Australia,” and Gillard responding to criticism that the reforms will result in “the fruits of the resources boom” being enjoyed broadly, not merely by “the privileged few”.
On Tuesday, the Association of Mining & Exploration Companies again publicly criticised the tax, with the group’s CEO Simon Bennison stating “the introduction of this anti-competitive legislation in Australia will only further push investment capital offshore, and change our reputation as a safe place in which to invest.” Opposition parties immediately issued statements pledging to reverse the law if they win the 2013 general election.