Speculation has arisen that the Australian federal government’s much-contested minerals resource rent tax (MRRT) might be dead in the water, after the tax failed to raise any revenue in its first quarter, and only a minimal amount over the first six months following its implementation.

The MRRT, which imposes a 30% levy on coal and iron-ore revenues above A$75-million, was reported to have raised only A$126-million in revenue over the first half of the 2012/13 financial year,

in contrast to the forecast A$2-billion in revenue which was expected for the full year.

Prime Minister Julia Gillard and federal Treasurer Wayne Swan have blamed the waning commodity prices for the less-than-stellar performance of the MRRT, with Swan saying that commodity prices have been impacted on by the continued global insta- bility, commodity price volatility and the strong Australian dollar.

“Revenues across the board are down substantially – the MRRT is a profit-based tax that raises more revenue when profits are higher and less when they are lower,” he said.

Following the dismal results, the Australian Greens party called for loopholes in the tax, which saw the Commonwealth government reimburse miners for increases in state royalties, to be fixed.

Since the implementation of the tax, both Queensland and Western Australia, which are the coal and iron-ore pastures in Australia, have hiked their royalty rates for the commodities.

Under the MRRT, new investments would also be given an immediate write-off, rather than a depreciation over a number of years, allowing mining projects to access deductions immediately. A project would also not be liable for MRRT payments until it made enough profit to pay off its upfront investment.

The new tax would also provide recognition of past investments through a credit that recognises the market value of the investment, recorded over a period of up to 25 years.

The Greens have been so successful in their vocal disdain for the current design of the MRRT that the case has been referred to a Senate Economic Committee, which will examine the design of the tax and the extent to which it has been responsible for the mismatch between actual revenues and revenue projections.

The committee will also look at the design process and the extent of the involvement by the Treasury and mining companies.

“The Greens are committed to fixing the mining tax so that we can spread the benefits of the boom and raise the much-needed revenue,” Greens leader Christine Milne said.

“This is a win for transparency and a win for the community. It’s about time Australians found out why the Gillard government agreed to a dud mining tax, why the mining tax has failed to raise the billions that were promised, and how to fix it.”

The Senate Committee has been tasked to report back on the MRRT’s design by May 6, a week before the federal budget will be handed down.

However, the Minerals Council of Australia has warned that redesigning the tax and, more specifically, changing the crediting of all state royalties would overturn the federal government’s 2010 agreement on the MRRT and its 2011 decision to accept all recommendations by the Policy Transition Group (PTG), which recommended that government legislate full crediting of all current and future state and territory royalties in an effort to provide certainty on the overall tax impost on the coal and iron-ore mining industries.

“Full crediting of royalties is a key feature of the MRRT’s design, one that ensures double taxation is avoided and that delivers a measure of stability and predictability to the overall tax burden on coal and iron-ore projects, which are already at the upper end of global mining tax rates,” the Mineral Council’s Mitchell Hooke said.

“Enough is enough in relation to the continued obsession with increasing taxes on mining in Australia. We should be looking at how we can be internationally competitive for investment and jobs for the benefit of Australians today and future generations rather than how we can keep carving up the pie,” Hooke said.

His call was echoed by the Association of Mining and Exploration Companies (Amec), which said redesigning the tax was not the answer.

“Remove the tax. Remove the uncertainty that has been created for investors, bankers and boards and bring some confidence back into the mining and exploration industry in order that it can contribute to growth and productivity and create more Australian jobs in the national interest,” Amec CEO Simon Bennison said.

“The industry is already paying billions of dollars in income tax, royalties, payroll tax, stamp duties, levies and a myriad of other fees to local, state/territory and federal governments. The MRRT is therefore a ‘double tax’. These are crucial points that seem to have been ignored in the MRRT debate.”

In fact, the scrapping of the tax has been on the priority list for several people, including mining magnate Andrew Forrest, who has made it his personal mission to see the MRRT declared unconstitutional.

Forrest, chairperson and founder of iron-ore major Fortescue Metals, has launched a High Court appeal on the grounds that the MRRT discriminated between the states, curtailed state sovereignty, gave preference to one state over another and restricted a state’s ability to encourage mining.

Lawyers for Forrest have told the High Court that the MRRT was discriminatory because the tax was calculated based on the amount of state royalties paid by each company, which differed across the country.

Plaintiffs in the case have also submitted written arguments that the MRRT limited the ability of the states to be competitive against each other, and to raise royalties.

One of the MRRT’s biggest points of contention has been the lack of consultation with the mining industry before the tax was introduced and, in an unlikely move, former federal Resources and Energy Minister Martin Ferguson, who was succeeded by Gary Gray last month, admitted this lack of consultation.

“The mining dispute we created was our own mess, because of a failure to consult,” Ferguson said.

The comments were made as Ferguson made a surprise announcement at the end of March that he would be quitting the Cabinet, following a near-coup by former Prime Minister Kevin Rudd.

Ferguson was one of the architects of the federal government’s highly contested super profits tax in 2010, which was later replaced by the current MRRT.

At his departure, he expressed the hope that the current federal government had learned from the “mistakes” made during the initial development of the super profits tax, which, in part, led to Rudd losing his leadership position.

“You don’t have to agree but you need to consult, argue it out, and work out a balance in society,” Ferguson was quoted as saying.

Ferguson’s replacement, Gary Gray, has ruled out the possibility of restructuring the MRRT, telling the ABC radio that the mining sector was paying more tax now than ever before.

He also dismissed Ferguson’s criticism of the federal government’s handling of the MRRT, saying Ferguson was responding to “emotion, rather than understanding”.