Lawyers doubt mining tax challenge will get up

A High Court challenge to the federal government’s mining tax has fresh support after the Queensland government said it would intervene in the action, despite its decision being branded a waste of money.


Treasurer Wayne Swan described his home state’s decision on Fortescue Metals Group challenge to the minerals resource rent tax (MRRT) as “futile”, but Opposition Leader Tony Abbott said it was a reasonable to take action against a “bad” tax.

Queensland Attorney-General Jarrod Bleijie said the Liberal National Party (LNP) government viewed the tax as a threat to the state’s resources industry and its “interested party” intervention could cost up to $300,000.

“Yes, the state is in a dire financial situation. But we can’t just sit back and let the federal government continue to tax the people of Queensland,” Mr Bleijie told reporters on Monday.

Fortescue, whose case is based on the constitutional argument that the tax preferences one state over another and restricts a state’s ability to encourage mining, welcomed Queensland’s involvement.

The High Court will conduct a directions hearing on the matter in coming weeks. But Mr Swan is “very confident” the MRRT, which came into force on July 1, will withstand any legal action. “The challenge is futile,” he told reporters in Brisbane.

The Queensland branch of the Environmental Defenders Office said it was a “complete waste of taxpayers’ money” which could lead to a costs order against Queensland.

“At a time when the state government is slashing funding from the budget, it seems bizarre to throw money at a High Court case that looks doomed to fail,” principal solicitor Jo-Anne Bragg said in a statement. But Mr Bleijie told AAP in a statement said the state government was intervening in the Fortescue challenge, rather than mounting its own challenge.

“The government will be represented by crown law and the solicitor-general. These measures will ensure Queensland taxpayers will not be out of pocket,” he said.

A similar tactic is planned by the nation’s biggest mining state. West Australian Premier Colin Barnett on Monday confirmed the state would appear before the High Court during the Fortescue case to present its point of view.

Mr Barnett says the tax is unconstitutional because natural resources belong to the state, not the commonwealth.

“I’m sure a state solicitor from Western Australia and from Queensland, they will work together to make sure that they protect the constitutional right of the states to own the natural resource,” he told reporters.

Mr Abbott confirmed the coalition’s promise to repeal the 30 per cent tax on the super profits of coal and iron ore companies when it wins government.

“There is no doubt that the mining tax particularly targets the resource rich states, and if the states in question wish to challenge in court, that’s a perfectly reasonable thing for them to do,” he told reporters in Perth.

Revenue from the impost will fund tax initiatives for small business, increase family payments, allow for a rise in the guaranteed superannuation contribution, and boost infrastructure spending.

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