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MCA blasts windfall tax proposal

16th December 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The Minerals Council of Australia (MCA) has lashed out at a report by think tank The Australia Institute, which advocated for a windfall profits tax on coal and gas.

The report stated that Australian coal export revenue reached A$112-billion in 2021-22, up from the A$73-biliion reported in the previous year. Windfall profits to coal companies in 2021-22 were between A$39-billion and A$45-billion, of which between A$13-billion to A$23-billion was directly attributable to the Russian invasion of Ukraine.

The new report follows earlier research from October which found gas exporters reaped windfall profits of between $26-billion to A$40-billion. Combined, the gas and coal export sectors have received an extra profit windfall of up to A$85-billion. A windfall profits tax could collect 100% of this revenue and be used to transition away from coal and gas, while supporting consumers to deal with high prices, the Australia Institute said.

This research shows that while Australian consumers have been hit with surging prices for energy, coal companies have been making windfall profits from exporting Australian coal,” said the Australia Institute executive director Dr. Richard Denniss.

“This research shows it’s not just gas exporters who have been reaping the benefit of Russia’s invasion of Ukraine. Coal companies have also been making a killing while households and businesses are slugged with surging prices for Australian energy.

“Combined, the gas and coal export industries have banked up to A$85-billion in windfall profits in 2021-22. A windfall profits tax could collect almost 100% of this money for the public. That’s why a wide range of experts including Nobel Laureate Joseph Stiglitz describe it as a ‘no-brainer’,” said Denniss.

“This money could be being used to assist low/middle-income Australians with cost of living, and help transition our economy to cheaper, cleaner energy.

“Earlier Australia Institute research estimated windfall profits to liquefied natural gas (LNG) companies in 2021-22 at between A$26-billion and A$40-billion. Adding this to the estimates of windfall coal profits, Australian fossil fuel producers have benefited by between A$65-billion and A$85-billion in 2021-22 relative to 2020-21.

“The fact that companies are making these record profits while Australians struggle with the cost of living crisis is likely why almost 9/10 Australians support government intervention to into the energy market, according to Australian Polling Council certified research.”

The MCA this week said that attempts to add an extra tax on the mining sector, or add further restrictive regulation, would impede the sector’s critical role in Australia’s economic recovery.

“[The] report released by the Australia Institute not only ignores that reality, but fails to understand the cyclical nature of coal mining company profits,” said MCA CEO Tania Constable.

“In five out of the last seven years, coal companies in Australia made annual losses, as low commodity prices combined with increased costs of production to impact the sector. The profitability of coal mining companies must be viewed over the long term.

“In the last decade, mining companies have contributed $142.6 billion in company tax and A$112-billion of royalties - payments that help fund vital government services including mental health, aged care and childcare. They also pay for schools, hospitals and critical infrastructure.

“According to the Australian Taxation Office, the Australian mining industry remains the largest contributor to the Australian economy.

“In the 2020-21 financial year alone, the 2 468 largest entities in Australia paid A$68.6-billion in company tax. More than 40 per cent of that figure was paid by mining companies. Mining has underpinned the nation’s prosperity and will continue to into the future,” Constable said.

Edited by Creamer Media Reporter

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