The prospect of introducing a mineral resource rent tax (MRRT) would undermine Australia’s economy at a time of great global uncertainty, says CCIWA Chief Economist Aaron Morey.
The idea was floated by economist Professor Ross Garnaut, who told the ABC the MRRT is an economic reform the returned Labor Government could consider.
The MRRT was abolished in 2014 after just two years and would apply an additional tax to iron ore and coal production.
Morey criticised Garnaut’s suggestion, saying the Government should not compromise the resources sector in a bid to boost the federal budget.
“Some outside Australia’s industrial states appear to need a sense check on how fundamental the resources sector is to the national economy,” he says.
“The global contest for capital is heating up, not cooling off. We need to be ahead of the pack, not implementing tax and regulatory changes that would see capital flow elsewhere.
“The sovereign risk that changing the goal posts mid-game pose to Australia’s attractiveness as an investment destination, should not be underestimated.”
Minerals tax would go beyond rocks
Morey said any decision that undermined WA’s resources sector would be to the detriment of the entire economy.
WA’s resources industry injected $150 billion into the national economy in 2023-24, a survey by the Chamber of Minerals and Energy WA found.
And, Australia’s whole mining sector contributed 13.3% to the country’s economy in 2024, according to the Australian Bureau of Statistics.
“WA’s world-leading resources sector is critical to sustaining and raising the living standards of all Australians,” he said.
“It provides tens of thousands of jobs, critical business investment and leads the nation’s innovation efforts through its adoption of technology, including decarbonisation.
Morey says it is clear the Government needs to pull some levers to lift productivity, which has fallen over the past decade – from a 1.7% 20-year average annual growth rate in 2015-16 to 0.9% in 2022-23.
“Taxing the nation’s economic engine room is not the answer. That will only hurt the economy and threaten jobs,” he says.
“Our nation had this discussion on the MRRT 15 years ago and very clearly sided against changing the goal posts mid-game for the resources sector.
“It is critical that debates about the MRRT and other regulatory costs for the minerals and resources sector are now settled.”
More information: Key tax changes under Labor’s second term.
To be part of WA’s peak business organisation, get in touch via 1300 422 492 or [email protected].
