THE steel and metals sector wants all new resource and infrastructure projects worth more than $100 million to be required to use more Australian materials and in return get tax breaks, including on the controversial minerals resource rent tax.
In its submission to this week's tax forum in Canberra, the Australian Steel Institute states that the investment boom in the resource projects is not being shared by the metals, fabrication and machinery sector. Under siege from a high Australian dollar and cheaper overseas suppliers, it argues for increased tax concessions and discounts on the minerals resource rent tax to offset increased costs of using local supplies. It also canvasses accelerated tax depreciation on major projects assets.
"We do not believe that tax reform should be used to subsidise inefficient industries . . . [but] to create a level playing field where efficient Australian companies can compete during a period of artificially high exchange rates and crowding out in the non-resource industries," it said.
"Once an industry is dismembered, it is very difficult to put it back together again . . . the business networks have been destroyed, the equipment scrapped and the skills dispersed."
These major project owners, and their contractors would need to meet set criteria about Australian content, as a precursor to approval by bodies such as the Foreign Investment Review Board. The steel institute stated it did not propose any measures that would contravene World Trade Organisation guidelines or principles.
Another industry weathering the tempest of a high dollar is tourism, which accounts for 9 per cent of Australia's export earnings. The Tourism and Transport Forum submission also pushed the steel industry's idea of accelerated tax depreciation, this time to boost new tourism ventures and refurbish existing ones.
Tourism and Transport Forum chief executive John Lee said one of the main reasons Australians shied from domestic travel was the "lack of investment in product and experiences".
The current capital works depreciation regime applying to tourist accommodation, where a building was written off over 25 years, did not reflect the reality that hotels had a shorter operational life. He called for an additional 50 per cent deduction bonus as a short-term incentive for three years, with the remaining balance spread over 12.5 years.
The pleas by the steel manufacturing sector and tourism for specific tax assistance are but a few of hundreds of tax proposals being pushed by industry and community groups at the tax forum. The property and housing industry, superannuation and banking are arguing their own pitches for tax reform.
Frequently Asked Questions about this Article…
What tax breaks is the steel and metals sector asking for at the tax forum in Canberra?
The Australian Steel Institute asked the tax forum for tax concessions for major projects worth more than $100 million, including discounts on the controversial minerals resource rent tax and accelerated tax depreciation on project assets to help offset the higher costs of using Australian materials.
Why does the steel industry want Australian content requirements for new resource and infrastructure projects?
The steel and metals sector says the investment boom in resource projects isn’t being shared by metals, fabrication and machinery businesses. Requiring major projects to use more Australian materials and meet set Australian content criteria would, they argue, create a level playing field amid a high Australian dollar and cheaper overseas suppliers.
How would proposed tax concessions help Australian steel, fabrication and machinery companies compete?
According to the submission, tax concessions and discounts on the minerals resource rent tax would help offset increased local-supply costs, protect business networks, equipment and skills from being lost, and allow efficient Australian companies to compete during periods of an artificially high exchange rate.
What tax measures is the tourism sector proposing to counter the high Australian dollar?
The Tourism and Transport Forum supports accelerated tax depreciation for tourism projects. It proposes a short-term 50% deduction bonus for three years for tourist accommodation investment, with the remaining balance spread over 12.5 years to encourage new ventures and refurbishments.
How important is tourism to Australia’s export earnings according to the article?
The article notes that tourism accounts for 9 per cent of Australia’s export earnings, making it one of the industries affected by a high Australian dollar.
Does the steel institute’s proposal risk breaching World Trade Organisation rules?
The Australian Steel Institute stated it did not propose any measures that would contravene World Trade Organisation guidelines or principles and framed its suggestions as criteria linked to project approvals by bodies such as the Foreign Investment Review Board.
What is the minerals resource rent tax (MRRT) role in these industry proposals?
The minerals resource rent tax is described in the article as controversial; the steel sector has asked for discounts on the MRRT as part of broader tax concessions to lower the cost of using Australian supplies on major projects.
Who else is pushing tax reform ideas at the tax forum besides steel and tourism?
The article says hundreds of industry and community groups are presenting proposals at the tax forum, including the property and housing industry, superannuation and banking sectors, each arguing their own tax reform pitches.
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