The Abbott government will delay the introduction of the 12 per cent superannuation contribution by two years as it abolishes Labor’s mining tax.
Treasurer Joe Hockey has released draft laws fulfilling the coalition’s election promise to scrap the minerals resource rent tax (MRRT) and axe spending such as the School Kids Bonus.
In releasing the draft bill on Thursday, the government also revealed it would cut red tape for coal seam gas development, but will keep Labor’s extension of the petroleum resource rent tax (PRRT) to cover onshore gas production.
“The MRRT is a complex and unnecessary tax which struggled to raise the substantial revenue predicted by the former government,” Treasurer Joe Hockey said.
“This failed tax imposed significant compliance costs on one of our most important industries, while damaging business confidence.”
Shadow treasurer Chris Bowen said Labor remained committed to spreading the benefits of the mining boom and believed axing the School Kids Bonus and small business tax cuts was “fundamentally wrong”.
“This is very concerning legislation,” Mr Bowen told AAP.
“We have a fundamental view in the Labor party that the minerals of Australia belong to Australians and there is an obligation on government to ensure wealth is spread right across Australia.”
Mr Hockey estimated that axing the mining tax from July 1 next year and its linked spending would save the government $13 billion over four years.
The linked spending policies to be scrapped include: the School Kids Bonus, the business loss carry-back, accelerated depreciation for motor vehicles, geothermal exploration provisions, the low income superannuation contribution and the income support bonus.
The bill also axes the reduction in the small business instant asset write-off threshold.
The government will pause the superannuation contribution rate at 9.25 per cent for the 2014/15 and 2015/16 financial years, and increase it to 9.5 per cent from July 1, 2016.
It would then be gradually increased by half a percentage point each year until it reaches 12 per cent starting on July 1, 2021 – two years short of Labor’s target.
Industry Minister Ian Macfarlane said big players in the petroleum and gas industry wanted the PRRT to remain but wanted more streamlined regulations, on which the government would consult.
He hopes “common sense will prevail” and Labor will support the legislation when it is introduced in the first week of parliament.
“Our agenda is about government getting out of the way of business, so business can invest in Australia with confidence,” he said.
Australian Greens leader Christine Milne said the government should instead make the tax more effective by increasing the rate and fixing loopholes which led to the lower than expected revenue.
“Letting the billionaire miners off the hook will hurt small business and some of the most vulnerable in our community like low income earners and the unemployed,” she said.