WA’s Brendon Grylls intensifies mining tax war
The WA Nationals leader believes government contracts can be changed without BHP Billiton and Rio Tinto’s consent.
Renegade West Australian Nationals leader Brendon Grylls has intensified his $7.2 billion tax war with the big miners, telling a Perth business audience he believes government contracts with BHP Billiton and Rio Tinto can be changed without the consent of the companies.
Mr Grylls, a senior minister in the Barnett government, accused the iron ore miners of not complying with their so-called state agreements — acts of parliament from the 1960s — and said the state parliament had the “sovereignty” to amend them unilaterally.
His comments will further concern at BHP and Rio, which are horrified at the prospect that the Nationals will hold the balance of power after the March state election and be able to implement a plan to slug them with higher taxes.
“I absolutely believe that state agreements can be changed,” Mr Grylls said. “The companies will come back and say ‘there’s a clause here that says they have to be done by mutual agreement’. That’s a debate were having at the moment.”
The miners have warned that the WA government would be unable to force amendments to the state agreements without exposing the state to potential damages claims.
Mr Grylls has proposed a $5 per tonne tax on iron ore mined by BHP and Rio Tinto — a 20-fold increase on the existing 25 cent per tonne levy — in a move that would reap an estimated $7.2 billion over four years. This would be paid on top of existing royalties to the government.
Federal Finance Minister Mathias Cormann on Tuesday described the Nationals’ plan as “crazy policy” that “undermines Western Australia as an investment destination.”
Premier Colin Barnett has ruled out the plan, although he is attempting to convince the miners to make an upfront payment instead of continuing to pay the levy.
A spokesman for Rio Tinto rejected Mr Grylls’ claim that the company has failed to meet obligations around community investment under its state agreements.
“Rio Tinto has been investing heavily in our Western Australian communities for the past 50 years, providing much needed infrastructure and creating jobs,” he said.
“It’s very disappointing that the WA Nationals are attempting to rewrite history to justify a new tax that would destroy jobs, hurt local businesses and undermine Western Australia’s global competitiveness.
“Any attempt to unilaterally change state agreements would undermine the security of future investment and supply, and is a concern to our Joint Venture partners and customers.”
Mr Grylls said he believed the 25c levy in the state agreements was out of date.
“If you believe that we can only change state agreements by mutual obligation, you are actually accepting that in 50 years’ time when the state agreements are 100 years old, that it would be acceptable for 25c to still be 25 cents,” he said.
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