Transnational corporations and mining tax reform: the story of the Australian mineral resources rent tax revolt

Abstract

Transnational corporations (TNCs) in Australia have been active in seeking to minimize their tax obligations and have resisted national government efforts to impose higher tax obligations upon them. This is well illustrated by the actions of TNCs in the Australian mining industry. On some occasions Australian governments have successfully imposed mining taxes where the legal and commercial environment was relatively uncomplicated. However, where new tax liabilities were broadly based, and where these liabilities overlapped with obligations to pay State government royalties, they encountered swift and severe reactions from TNCs in Australia. The fate of the Rudd Labor Government’s proposed Resources Super Profit Tax (RSPT) provides an illustration of such a reaction and highlights strategies used by TNCs, such as BHP Billiton, to prevent the national government from imposing higher mining tax obligations on such corporations. In response to a national media campaign, and lobbying efforts by the mining industry, the RSPT was dramatically watered down by the Gillard Labor government after Rudd had been removed as Prime Minister; a much weaker version of the tax was then framed by the mining industry and enacted by the Gillard government; it was renamed the Mineral Resources Rent Tax (MRRT). This controversial tax was eventually repealed by the Coalition Abbott Liberal-National Government which had come to power on the back of the mining industry tax revolt that had been led by TNCs. This was an enormous victory for mining industry TNCs over a chaotic national government. This chapter seeks to examine how this outcome came about.