Senators to rake over mining tax

RESOURCE companies either want the federal government's controversial mining tax scrapped, or left as it is, as Treasury tries to work out how it got its revenue forecasts for the impost so wrong.

Senators will again rake over the minerals resource rent tax (MRRT) at a hearing in Canberra on Wednesday brought on by opposition parties, after the tax raised a paltry $126 million in its first six months of operation.

Treasury had forecast in the mid-year budget review released in October that the 30 per cent MRRT on the super profits of coal and iron ore companies would raise $2 billion in the first year.

Treasury secretary Martin Parkinson will front the inquiry, alongside other officials from the department and the Australian Taxation Office, as well as several academics.

In its submission to the inquiry, Treasury concedes MRRT revenue collections for the 2012/13 year will be lower than that estimated.

"Treasury and the Australian Taxation Office are examining the reasons for the apparent deviation between the revenue forecasts and collections to improve revenue forecasting outcomes going forward," it says.

MRRT revenue estimates will be updated in the May 14 budget.

The Minerals Council of Australia says in its submission that the coal and iron ore industries have entered a phase of heightened uncertainty and volatility in the last 12 to 18 months, with a marked deterioration in business conditions in the coal sector in particular.

"Lower prices, a high exchange rate, rising costs and increased government imposts have combined to reduce profit margins, leading in some cases to mine closures, job shedding and cancelled or delayed capital expenditure plans," it says.

It agrees with recent comments made by new Resources Minister Gary Gray, that even to discuss changes to the MRRT right now would create uncertainty.

The Association of Mining and Exploration Companies remains opposed to the MRRT, saying it was ill conceived, unfair, discriminatory, complex and not a long-term strategic tax reform.

It says it was "not consulted in any way" during the the private negotiation process between the government and three major mining companies - BHP Billiton, Rio Tinto and Xstrata.

Resource company witnesses have been invited to the second hearing of the inquiry in Perth on April 8.

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Macdonald 'gifted' mining licence: ICAC

FORMER Labor minister Ian Macdonald acted delinquently when he essentially "gifted" a mining exploration licence to a group of well-connected entrepreneurs, a corruption inquiry has heard.

The Independent Commission Against Corruption (ICAC) is examining whether the former mines minister gave an improper benefit to ex-union boss John Maitland and his associates relating to the licence given to Doyles Creek Mining in the NSW Hunter region in December 2008.

The ICAC is also looking at whether Mr Macdonald took improper steps to overcome departmental advice on the grant, and if he concealed any improper behaviour.

In his opening address to the ICAC, counsel assisting the commission, Peter Braham, SC, said Mr Macdonald all but handed the licence to a group of Newcastle entrepreneurs.

"This hot property was essentially gifted to a group of entrepreneurs which included John Maitland, the former national president of the Construction, Forestry, Mining and Energy Union," Mr Braham said on Monday.

"The process that was adopted is astounding."

He said the venture was promoted as a training mine, but was "in fact a mining mine".

"The proposal was for a large commercial mine," he said, noting the grant "involved real delinquency on the part of the minister in the discharge of his public office".

Mr Braham said a key question for the inquiry would be why Mr Macdonald decided to issue the licence to the entrepreneurs rather than hold a tender.

Mr Macdonald was aware a competitive bid could raise millions of dollars for the state, but the state had gained almost nothing from the process that went ahead, Mr Braham said.

He said Mr Maitland outlaid about $165,000 in relation to Doyles Creek and within three years of the grant the investment was worth about $15 million.

ICAC also heard that in addition to Mr Maitland, the inquiry would look at whether entrepreneurs Craig Ransley or Andrew Poole were involved in any wrongdoing in relation to the Doyles Creek tenement.

The inquiry continues before Commissioner David Ipp.

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