Killing the goose that laid the golden egg? Australia's resource policy regime in comparative perspective

Abstract

ABSTRACTA common criticism of the minerals resource rent tax (MRRT) was that it would ‘kill the goose that laid the golden egg’ for the Australian economy. Mining companies, their industry associations, and the Liberal–National Coalition all argued the MRRT would reduce Australia's attractiveness for mining investment, and lead to ‘capital flight’ as resource firms shifted towards lower-taxing competitors. To evaluate this claim, it is necessary to compare Australia's resource policy regime – including, but not limited to, its taxation elements – against those of its principal competitors. This article undertakes such an evaluation by comparing Australian resource policies with those of nine of its major mineral and energy competitor countries. This survey reveals that Australia's comparatively high mining tax rates are partially offset by its ‘non-interventionist’ approach to resource policy, and that it has retained good rankings on international political risk surveys. There is some evidence of short-term market response to the mining tax, but there is little evidence of sustained capital flight occurring due to the MRRT. These data collectively suggest that the MRRT did not significantly undermine Australia's attractiveness for international mining investment, despite widespread perceptions to the contrary.