CANBERRA, Australia, Dec. 21 (UPI) -- Miners welcomed a government advisory group's report on Australia's controversial mining tax.
The report, released Tuesday, puts forth 94 recommendations including one in which current and future state royalties of Australian coal and iron ore miners would be credited against their federal tax exposure.
The study was carried out by the Australian government's Policy Transition Group, jointly led by Resources and Energy Minister Martin Ferguson and former BHP Billiton Chairman Don Argus.
In a televised briefing, Ferguson said the report "essentially gives us a launching pad for a new approach to taxation."
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Former Prime Minister Kevin Rudd in May proposed a "super-profits" resources tax, which called for a 40 percent tax on profits across Australia's mining industry. But Rudd's proposal faced strong opposition from mining giants such as Rio Tinto and BHP Billiton.
A compromise was agreed upon in July with his successor, Julia Gillard, reducing the rate to 30 percent for coal and iron ore miners.
In October, however, the Gillard administration said it wouldn't credit future royalty hikes, even though the agreement said all royalties would be covered.
The PTG report says measures should be put in place so that state and territory governments wouldn't have incentives to increase royalties on coal and iron ore.
The report "represents a significant milestone and vindicate(s) the industry's call for detailed consultation on resource taxation," said Mitchell Hooke, chief executive of the Minerals Council of Australia, in a statement.
Yet he said there were technical areas in which the PTG report strayed from industry expectations and standard tax practices, including limiting transferability of losses between coal and iron ore projects.
While the recommendations "will go some way to restoring Australia's reputation as low sovereign risk in investing in the development of minerals resources," Hooke said, the real test would be the adoption of the reports' recommendations, with corrections for inconsistencies, into legislation.
Australia's biggest and most profitable commodities -- iron ore, coal, oil and natural gas -- together represent three-quarters of the country's exports. Australia is the world's largest exporter of coal.
Ferguson said mining companies have plans to invest $54 billion this financial year in Australian projects, which is five times the amount invested six years ago before the country's mining boom.
"We've now got certainty to ensure further investment to continue in the future based on these recommendations," he said.
