Brendon Grylls' Mining Tax Facts Revealed

Revealed because they're often ignored, overlooked or misrepresented...but they're not new.

1. Its not a Mining Tax. Its a rental lease fee and despite 2 Labor MP's odd tweets, that the facts Jack. Not a tax, its a cost of doing business, hence its tax deductible. It cannot be claimed as a cost of doing business if its a tax. The reason I called it a "Mining Tax" is the same reason some lazy journos do...it gets your attention. Fact is, its not a tax, never was, never will.
2. Its not a Royalty and the only commonality with Royalties is it's assessed "per tonne" That's it. It shouldn't be lumped in with Royalties in the CME adverts at all. Very deceptive, very deliberate and very very wrong.
3. Its been around since the 1960s
4. It was set at 25c a tonne since the 1960s which wasn't high then but now its well below a peppercorn rate thanks to it being devalued by time, by not being subject to inflation, CPI indexing or any other growth in nearly 50 years
5. Despite what the CME adverts on TV tell you...100% of the planned $4.75/tonne increase will stay in WA. ALL IT, because its a fee paid to & charged by WA. CME says falsely otherwise.
6. CME has spent a big chunk of money on this campaign. The campaign is a political campaign, the CME says its not about the money its about politics & power. CME also suggests it won't go through. Why then would you spend millions opposing it? There's 2 choices...
   a) It is about maintaining their financial gain paid for by WA citizens or
   b) If its really about "power and politics" then they're a political power base trying to influence the political outcome of the election...on behalf of Rio Tinto & BHP. Be good to sort this out properly once and for all. A clarity would say a lot more about the CME and the 2 hugely wealthy foreign mining companies its the muppet mouthpiece for.
7. CME is supportive of WA getting fair GST apparently yet it won't spend one cent campaigning on that. Not one cent.
8. Chamber of Commerce & Industry WA say that payroll tax is by far the #1 issue affecting businesses in WA. Asked why they don't support the NationalsWA Payroll Abolition Plan they then say they support it but not if it comes by way of introducing the increase of the Rental Lease Fee.
   Which really means that the payroll tax abolition is not as important as the increase of the lease fee that's well below even a peppercorn rate.
9. So if Rio/BHP have had this fee in place since the 1960s, its never been touched reviewed or raised ever its really a subsidy paid for by the WA citizens. That missed revenue is massive compared to the paltry amount the NatsWA hope to raise. No already foregone monies to be paid. No retrospectivity for the staggering 100s of billions of dollars we in WA have paid over the decades.
10. Colin Barnett recognises it has some merit, otherwise he would not have offered a one off payment scheme to replace the fee which Rio/BHP rejected. Brendon Grylls has highlighted the rise is fair and not negotiable.
11. Mark MacGowan has said very little. Both the Liberals & the Labor camps need to clarify precisely do they support the multi billion dollar earning foreign multi national mining company continuing to benefit from what is in effect an unfair subsidy paid for by struggling Mum & Dad citizens of WA who really own all the ore.
12. Did we mention Rio's record profit? From an ABC report (1) on the massive Rio profit turn around "Iron ore — which accounts for around 90 per cent of Rio's profits — reported a 17 per cent increase in underlying earnings to $US4.6 billion."
13. Did we mention that Rio Tinto & BHP not only entered into a agreement that somehow has never been reviewed and updated to current rates but...IT WAS WAIVED FOR THE FIRST 15 YEARS - YEP, FIRST 15 YEARS THEY DIDN'T EVEN PAY IT AT ALL.
    
    
    (1) http://www.abc.net.au/news/2017-02-08/rio-tinto-net-4.6-billion-in-net-profit/8250954
    
    LATE ADDITION - Ken Travers has argued the follow points via Twitter
    
    Ken in Red...
    1.The rate is set by a legally binding agreement
    This is quite correct its a legally binding agreement in which you do not include provision for paying taxes, you need a Tax Bill for that. This is not a tax, its Special Mining Lease Fee. The legally binding agreement, called "State Agreements" are lessening in their use except in developing countries where sovereign risk is an issue or other risks need to be lessened.
    It is legally binding but its ratified by the Parliament and no past parliament can lodge anything that is immovable or un-amendable by subsequent parliaments. THAT is un constitutional & illegal...just saying
    
    2. Any change will require legislationMost likely. That does not present a problem. It may present a problem for a political party that does not want a mining company pay its fair share at a modern day rate. If for example a social justice based party were happy to oblige 2 foreign miners, to very wealthy foreign miners who are well out of construction phase and many decades into production phase to continue paying a special lease fee at 1960s rate then the Mums & Dads, the struggling Mums n Dads of WA (who actually own the ore) need to be convinced its in their best interest to continue paying foreigners.
    In any case, legislation is not a barrier, its the mechanism required to achieve it.
    
    3. Any legislation to change is likely to require separate Tax Bill
    Well no, its a condition within a legally binding & parliament ratified contract called a State Agreement. It is not a tax. If you cannot have a tax without a Tax Bill then where is the Tax Bill that created the "tax" called the Special Mining Lease Fee???
    Its therefore not a tax, its name even shows its not, its a lease fee in a state agreement.
    The contract is ratified by statute of parliament, it can be amended as such and any MP with an credible ounce of social justice, decency and fairness would happily vote to end the outdated practice of 2 foreign miners paying below peppercorn rates, 1960s rates that they didn't even pay in the first 15 years.
    NOT. A. TAX.
    4. That makes it a TAX and probably unconstitutionalWell no its NOT A TAX, Ken's comments are whilst perhaps unintentional they're "probably" totally incorrect, false & misleading.
    FWIW A State Agreement can be altered as BHP did with royalties (http://www.bhpbilliton.com/media-and-insights/news-releases/2011/11/amendment-to-western-australian-royalties-and-state-agreements)
    
    Oh here's another (http://www.riotinto.com/media/media-releases-237_6053.aspx )
    7 years ago & ratified by State Parliament.
    Not a biggie Ken, no dramas at all. Paper hoops to jump through is all.
    And Royalties, raised royalties and the premier quite rightly stated " it provides the people of Western Australia with increased value from this State’s resources" which the exact same reason why the Special Lease fee should be pegged to 2017 prices and indexed to a growth index thereafter.
    
    Fact overlooked, ignored or omitted is generally amendments to State Agreements must be mutual and in writing. It cannot be changed unilaterally. So Rio & BHP wold have to enter negotiations with the State Government, should the state wish to fix the Lease Fee amount.
    
    Now I ask you to think seriously for a moment, why would you fight this on the political hustings, why would the CME & the CCIWA be fighting this, why would Rio & BHP bother fighting this???
    Why would they not just say "Hey, we have an agreement & we don't agree to the proposed amendment so SEE YA..." ?
    
    Because it would be a monumental failure in Corporate Social Responsibility to keep a Lease Fee at 1960s rates, subsidised by average Western Australian families. The backlash on the company would hurt their share price and would be a very unwise move. So to lessen impact they've got others fighting the fight and if it does come in, they'd pay or their shareholders would see a negative press field day...potentially impacting on the company's reputation.
    
    This has to be nipped BEFORE it gets to a SA negotiation process.
    
    Paying Lease Fees at 2017 rates does not alter the fundamental nature of the contract, so the Crown can do it. It puts it at current day rate, nothing fundamental in the contract is changed...
    Unsure?
    Go to 3.5.1 of http://www.austlii.edu.au/au/journals/AURELawJl/2006/58.pdf or more specifically page 320 second paragraph.
    
    It should be noted "Although State Agreement provisions are not capable of being changed unilaterally, State Agreements do not fetter the power of the Parliament to repeal State Agreements. It is testament to the importance of State Agreements that no Parliament has even attempted such action" (page 317 of http://parliament.wa.gov.au/parliament/library/MPHistoricalData.nsf/bdcebf6403782d9448257cae002a1d9c/2c8715c99fac9eb4482577e500082b76/$FILE/MP325%20Barnett%20C.pdf.PDF )
    Its not a tax, its a lease fee and changing the rate of the lease does not alter the fundamentals of the contract and therefore the Crown is probably very easily within its rights to update the rate to 2017 rate and peg it to a suitable index.