Coalition Senators' Additional Comments
1.1
Coalition Senators support the proposed legislation to convert to a
profit based royalty system for all future uranium mines in the Northern
Territory.
1.2
Coalition Senators are aware that, apart from uranium, a wide variety
of minerals are mined in the Northern Territory including gold, bauxite,
manganese, iron ore, lead, and zinc. It is further noted that the royalties
system applied to mines other than the Ranger Uranium Mine is on a profit
basis. Accordingly Coalition Senators support the position of the Northern
Territory Government that it would be more consistent to apply a profits based
royalty system to any future uranium mines which may be established.
1.3
During the hearings, quite a lot of discussion centred around the
possibility that Indigenous communities might receive both less money in gross
terms and a less consistent payment of those monies under a profit based system
rather than a volumetric or turnover system of paying royalties. However
Coalition Senators were persuaded by the evidence given in the Northern Land
Council submission that overall there was no real difference in the sum of
royalties which would be paid to Indigenous communities if a profit based
system were to be adopted.
Under existing NT laws compensatory payments negotiated
between traditional owners and miners do not affect the calculation of
royalties, and thus do not affect the quantum of royalty equivalents paid into
the Aboriginal Benefits Account under the Aboriginal Land Rights (Northern
Territory) Act 1976 (Cth).
While both an ad valorem regime and a profit based regime may
deliver a similar quantum of royalties over the lifetime of a mine, the latter
is advantageous to mining because the cost of paying royalties does not arise
during non-profitable periods...[1]
1.4
Coalition Senators believe it is important to understand that the
majority of ongoing funding received by Indigenous communities is derived from
the Commonwealth and Territory Governments under various programs provided by
those governments including provision of services such as various forms of
social security, unemployment benefits, training programs and for education and
health programs.
Senator EGGLESTON — “...the funding to Indigenous people in
general and communities is not dependent on royalties from mining. It generally
comes from government in various forms—from social security to payment for
health services, art centres and many other things—doesn’t it”
Mr Vukman — “Yes, I presume it does”
1.5
In light of this fact, Coalition Senators regarded as potentially
misleading, evidence which implied that Indigenous communities and people would
suffer a substantial loss of income if a profits based royalties system were
adopted for future uranium mines in the Northern Territory. There is no doubt
that all Indigenous people who currently receive funding from Government
programs will continue to do so as will the minority who receive the additional
funding represented by royalties.
1.6
Coalition Senators had some concerns about remarks in the NLC
submission relating to decision making practices which referred to senior and
authoritative Aboriginal persons as the main decision makers of Indigenous
communities. The point was made by the NLC that such senior persons, who can be
taken as elderly males, are concerned that given their age, they themselves may
not benefit personally under a system were the system payments changed.
Coalition Senators can understand such concerns however trust that the change
to the profits based system of royalty payments will mean that future decisions
relating to the expenditure of royalties will be based on consideration of the
long term benefit of all people within the Indigenous communities receiving
such royalties.
1.7
Another matter of concern which was raised by several witnesses was that
mining companies, particularly if owned by an overseas based parent company,
could avoid paying any royalties based on profit by use of creative accounting
methods which has been referred to in the Chair's report. Coalition Senators
wish to specifically express their concurrence with the Chair's view and were
satisfied by the evidence given that the Northern Territory Government has the
legal means to determine what royalties a mining company (of any kind) should
be paying based on production and sales. Given this evidence Coalition Senators
do not accept that actual profits on sales can be concealed by creative
accounting leading to avoidance of royalty payments. Accordingly the Coalition
Senators are of the view that the concerns that were expressed regarding the
concealment of actual trading profits as a means of avoiding the payment of
profit based royalties were unfounded.
Mr Vukman- ...In relation to the second part of your question
on the sorts of processes the Territory Revenue Office goes into to ascertain
whether royalties are correctly paid, the Mineral Royalty Act has a process
whereby royalty payers pay two estimated payments at six monthly breaks and at
the end of the year they file an annual return and every one of those annual
returns is audited by our office-that is, we have compliance officers who
attend and satisfy themselves that the royalty payment is correct.[2]
1.8
Coalition senators believe it is important to emphasise in the context
of this new legislation that the one existing uranium mine in the Northern
Territory on Indigenous land, namely the Ranger Mine, is exempt from the new
legislation and the income stream from royalties derived from that mining
operation to the Indigenous land holders would not be effected by the
legislation.
1.9
In conclusion, Coalition Senators are of the view that the measure will
provide for administrative consistency in the generation of royalties across
all mineral mining in the Northern Territory and do not believe that any
convincing case was made for uranium mining to be administered under a separate
regime.
Senator Alan Eggleston
Deputy Chair
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