Engineering Recruitment, Engineers Recruitment, Engineering Employment, Engineering Professionals, Engineering Jobs, WA, Australia

According to this morning's West Australian miners are to be offered fast-tracked recovery of project costs under a Rudd government plan to win support for a vastly reworked tax on miners' so called "super" profits.

This move, which could have a profound impact on engineering employment in Australia's resources sector, comes after mounting pressure from the mining lobby. This week Rio Tinto Limited sent a letter to its shareholders following a discussion of the Government's proposed Resource Super Profits Tax at the company's Annual General Meeting in Melbourne. Rio Tinto's Chairman, Jan du Plessis, said the board has serious concerns about the impact of the proposed new tax, not only for Rio Tinto and the mining industry, but for the whole of Australia's future economic prosperity.

When the Henry Tax Review was first announced by the Government two years ago, Rio Tinto clearly indicated that it wanted to be positively engaged in the process. “We have been long time supporters of genuine tax reform that enhances the efficiency and competiveness of the Australian economy,” says Du Plessis. “The proposed super tax does not deliver either of these goals. In fact, the Government's proposal will penalise efficiency, discourage competitiveness, curtail investment and limit jobs growth.”

Rio Tinto has grave concerns about the fundamentals of the new tax, suggesting it has been developed in a vacuum and is divorced from the day-to-day realities of business. “The mining industry invests billions of dollars a year in new projects and most of these projects take years, even decades, to pay back that investment. Companies like Rio Tinto are naturally only prepared to make such major long term commitments in stable legal, tax and regulatory environments. The Government's current proposals, arrived at without consultation, have now significantly destabilised that investment framework. As a result, there has been a considerable increase in the perceived risk of investing in Australia, threatening to make Australia a much less attractive place in which to invest.”

Under the proposed super tax, the industry will be taxed at a rate approaching 57%, which means that Australia will have the highest taxed mining industry in the world. With such a high tax rate, the attractiveness of investing in mining in Australia will be further reduced. “The mining industry has assumed a critical role in the ongoing economic success of Australia and as such it is crucial that any tax reform does not undermine Australia's strongest industry,” says Du Plessis.
 
In particular Rio Tinto recently released data independently verified by its auditors, PricewaterhouseCoopers, which confirmed that the company has paid tax at an effective rate of 35% on its Australian profits over the past decade. From 2000 to 2009 its corporate tax and royalties paid amounted to A$20-billion and they also generated net profit after tax of about A$37-billion in Australia and re-invested about A$38-billion back into Australia.

“We are keen to work positively with the Government on tax reform that would not damage Australia's competitiveness, its mining industry or the superannuation funds of millions of Australians.”

Excerpt from: Rio Tinto (www . riotinto . com), 16 June 2010.