From the ABC:
The Western Australian Government could lose $120 million in revenue if the major miners challenge a proposed $5-a-tonne fee on iron ore exports in court.
Murdoch University law lecturer Lorraine Finlay told the ABC there were legal precedents which paved the way for a successful challenge to the iron ore rental fee as ‘constitutionally invalid”.
…”The concern with the production rental levy is that it’s really an excise duty dressed up as a levy, and if the High Court held that that was the case, then the levy would be constitutionally invalid.”
Under Section 90 of the Australian constitution, states are barred from introducing their own taxes or excises on the production, manufacture, sale or distribution of goods.
Billions of dollars have been lost by state governments in similar cases launched in recent history, Ms Finlay said.
“There were a number of cases particularly in the 1990s where the state governments found High Court decisions removed something like $5 billion in revenue from the states overnight in a case called Ha vs the State of NSW,” she said.
In that case, tobacco companies successfully argued that a licensing fee imposed by the states was in fact an excise duty and therefore constitutionally invalid.
…Nationals Leader Brendon Grylls defended the levy increase, stating that it was perfectly legal to adjust the terms of the State Agreement to bring the 25 cent fee closer to a value that made sense in 2016.
“The Auditor-General reviewed State Agreements in 2004, he made it very clear that future parliaments shouldn’t be shackled by the terms of a 1960s agreement,” Mr Grylls said.
“If the will of a duly elected parliament where the election campaign has been fought on this issue, delivers this outcome, I don’t think we’ll be seeing this going to the High Court, because the companies would need the continuing partnership of the State Government.
“The notion that the companies can override the elected people of Western Australia, I just don’t agree with.”
Lol, good one Brendan! They’ll simply have it changed, matey.
The definitional difference between an “excise duty” and “levy” is very vague indeed. But the levy is rendered as part of the WA royalty regime so the obvious defense is that it is some kind of adjunct royalty.
And, there is no doubt whatsoever that WA should be hiking all of it royalties. WA is clearly not charging enough when BHP and RIO are operating on margins well north of 100%:
These are super profits and the people of Australia are being reamed for the privilege of developing their dirt. Remember that this is a non-renewing natural resource owned by the people of WA. It’s depleting nature needs to be reflected in the revenue being received by them.
But, this debate is about equity and investment. First, the Australian people should be getting more. Second, the amount should be calibrated so that BHP’s and RIO’s competitiveness is not adversely impacted causing them to lose volumes (and investment). That level is more like $2.50 per tonne than the $5 which would put them on par with Vale, from UBS:
I would like to see Mr Grylls also commit to paying down debt with the windfall (or invest it strictly in infrastructure or an SWF). If the debate is about equity over generations then the revenue should be accordingly distributed over time.
