The Association of Mining and Exploration Companies (AMEC) is urging the Australian Government to not repeat the 2018 GST reforms.
AMEC is pushing for the federal government to stand by its commitment to Western Australia’s GST arrangements and says that returning to the 2018 reforms would “send the wrong economic signal to every state and territory”.
The Productivity Commission’s interim report into GST distribution is in support of returning to the pre-2018 system.
The report outlines the reforms to have cost the Australian Government almost $23 billion by 2024–25.
AMEC is encouraging the Australian Government to consider what the states and territories should each be doing to grow the national economy and look beyond what Western Australia receives.
CEO Warren Pearce says the issue is not confined to Western Australia and has consequences for investment right across the country.
“We need a system that encourages states and territories to grow and develop their own economies. We do not support policy that discourages state development,” Pearce says.
“Australia’s resources sector has contributed around $225 billion in company tax over the six financial years since the GST changes began. And nobody is blind to the enormous share of Australia’s resources wealth that is generated right here in Western Australia.
“The Productivity Commission might be talking about the $23 billion cost of the GST reforms, but that needs to be put into the context of around $225 billion in company tax generated by the resources sector over roughly the same period.
“That tax revenue does not just benefit Western Australians. It helps pay for hospitals, schools, infrastructure, defence, and services across the entire country.”
In the 2023–24 financial year, the Australian Taxation Office’s (ATO) Corporate Tax Transparency report indicates that the mining, energy, and water sector accounted for 50.6% of company tax payable by large corporations covered by the transparency regime, equating to $48.5 billion.
AMEC says Western Australia benefits most visibly from the GST floor due to the “extraordinary strength” of the state’s resources economy.
“Western Australia did not become a resources powerhouse by accident. Governments and industry have spent decades exploring, investing, building infrastructure, approving projects, and taking risks,” AMEC CEO Pearce adds.
“We want South Australia discovering and developing more copper. We want Queensland continuing to develop its critical minerals. We want the Northern Territory attracting exploration investment. We want Victoria and New South Wales bringing new mines into production.
“You cannot have a situation where state and territory governments, when making decisions about how to grow their economy, first have to calculate how much GST revenue they might lose as a result.
“The GST system should encourage that ambition, not punish it.”
Geoscience Australia reports that 80% of the country is underexplored, which AMEC presents to the Productivity Commission to encourage states and territories to develop the mineral, groundwater, and energy resources within their jurisdictions.
“We should also remember that mining and exploration are highly volatile and exposed to global economic conditions and commodity prices,” Pearce says.
“And let’s not forget that without exploration the $225 billion in company tax does not happen. It does not happen without investment. And it does not happen unless governments create an environment in which companies are prepared to take those risks.
“Our federation should reward states for growing the national pie, not penalise them for doing it. Some people might think this is just a WA issue, but it’s not.”
AMEC is a leading voice in Australia’s mineral exploration and mining industry, representing over 500 member companies. Members include explorers, emerging miners, and producers, as well as associated businesses and service providers.
Write to Maddison Elliott at Mining.com.au
Images: AMEC
