Mining tax to hurt WA: business leaders

West Australian business leaders have urged Treasurer Wayne Swan to ditch the
federal government's new mining tax, saying it will hurt all companies in the
resource-rich state.
Mr Swan addressed members of WA's chamber of commerce in Perth on Monday, selling
the government's 40 per cent tax on mining company super profits.
His meeting with WA business leaders came as a key minerals council said government
concerns over Australia's "two-speed economy" were misplaced and BHP Billiton called
for the tax to only apply to new investments.
Mr Swan's visit to Perth also coincided with the launch of a $50,000 campaign by the
WA Liberal Party against the tax.
WA, the nation's only Liberal-held state, will be a key battleground in a federal
election likely later this year, with a number of seats up for grabs.
Mr Swan said the government was offering mining companies "generous transitional
arrangements" and many miners recognised they had to pay more tax as a fairer share
to Australians.
But WA Chamber of Commerce and Industry chief executive James Pearson said members
at Monday's lunch had made it clear to Mr Swan the business community's deep
opposition to the tax.
"The mood in the room was clear and that is that this is a bad policy decision by
the government and it's one that should be reversed."
Mr Pearson said the tax would penalise a successful sector, limit international
competitiveness and cost jobs.
"It has galvanised the entire business community, large and small companies and
everything in between."
Mr Swan told the meeting he believed WA would be a big beneficiary of the total
package through more infrastructure, cuts to business taxes and less red tape for
small business.
He earlier told reporters that last week's federal budget had moved on the challenge
of a two-speed economy as mining boom Mark 2 got under way.
The new tax would deliver fairer returns to Australians for the use of resources
they owned and allow tax breaks for small business and investment in infrastructure,
particularly in the resource-rich states, he said.
BHP Billiton on Monday called for the super profits tax to only apply to new
investments and said any tax reform should not disadvantage the resources industry
relative to other industries.
In a letter to shareholders, BHP Billiton chairman Jac Nasser said the company had
no issue with a reform of Australia's tax system.
But any reform must not destroy incentives to keep investing in the resources
industry, he said.
"Any reform must only apply to new investments: not to existing investments," he
told shareholders.
"Additionally, any reform should not disadvantage the resources industry compared to
other industries in Australia, and it absolutely must not disadvantage the
Australian resources industry compared to other countries.
"The proposed super tax fundamentally, abruptly and unfairly changes the rules of
the game," he said.
A paper commissioned by the Minerals Council of Australia (MCA) and produced by tax
and economic advisory firm Deloitte says the idea of using the new tax to slow
growth was misplaced.
The paper says the difference between the fastest and slowest growing states is at
one of its lowest points since 1991 and the discrepancy had been more pronounced in
years when the minerals industry was not booming.
MCA Chief Executive Mitch Hooke on Monday said the government was trying to fix a
problem that didn't exist.
"The facts simply do not support the two-speed economy thesis.
"Job data released last week showed that half of the new jobs created in the last 12
months were generated in Victoria, giving the lie to suggestions that resource
states Queensland and Western Australia are leaving other states in the slow lane,"
Mr Hooke said.