The Claim
“Claimed the government will be $13.7 billion better off if the Mining Tax is scrapped, even though the scrapping the tax itself would actually result in a net loss of $3.7 billion. The only savings would be through other cuts hidden in the repeal bill. The biggest of which is the Schoolkids Bonus (an initiative which was never associated with the Mining Tax). The government claims the average household will be better off, but the average household will be $3500 worse off due to repealed subsidies and tax breaks.”
Original Sources Provided
✅ FACTUAL VERIFICATION
Core Claim Verification
The claim asserts that the Coalition government claimed $13.7 billion in savings from scrapping the Mining Tax (Minerals Resource Rent Tax - MRRT), when in fact the tax itself generated revenue and the "savings" came from associated spending cuts, particularly the Schoolkids Bonus [1][2].
The MRRT was repealed in 2014: The Coalition, led by Tony Abbott, promised to repeal the MRRT at the 2010 and 2013 elections. After winning the 2013 election, they introduced the Mining Tax Repeal Bill, which passed Parliament on September 2, 2014, and received Royal Assent on September 5, 2014 [3].
The MRRT was a failed tax: The MRRT, introduced by the Gillard Labor government on July 1, 2012, was a 30% tax on "super profits" from mining iron ore and coal. It significantly underperformed revenue expectations:
- Original projection: $22.5 billion over first four years [3]
- May 2012 budget: Expected $3 billion for that financial year [3]
- October 2012: Revised down to $2 billion [3]
- May 2013: Expected receipts less than $200 million [3]
- August 2013 (PBO): Forecast increased to almost $6 billion over next four years, but still $16.5 billion below original projection [3]
Repeal included associated spending cuts: The Minerals Resource Rent Tax Repeal and Other Measures Act 2014 did indeed repeal associated spending measures including:
The $13.7 Billion Figure
The specific $13.7 billion figure requires clarification. The government claimed that repealing the MRRT and its associated spending measures would improve the budget position. However, the MRRT itself was generating minimal revenue (less than $200 million by 2013), meaning the "savings" primarily came from cutting the associated spending programs that were originally intended to be funded by the MRRT [1][2].
The $3,500 Figure
The $3,500 figure comes from analysis by the Australian Council of Social Service (ACOSS) showing that some low-income families would lose up to $3,500 per year from the combined repeal of the carbon tax and mining tax, including:
- Loss of Schoolkids Bonus ($410-$820 per year depending on number of children) [1]
- Loss of other tax offsets and benefits [1]
The Schoolkids Bonus
The Schoolkids Bonus was indeed cut as part of the MRRT repeal legislation. While the claim states it was "never associated with the Mining Tax," the historical record shows:
- The Schoolkids Bonus was introduced by the Gillard government as part of the package of measures associated with the MRRT [3]
- It replaced the previous Education Tax Refund system
- When the MRRT was repealed, the Coalition argued the associated spending measures should also be repealed since the tax funding them was being abolished [2]
Missing Context
The MRRT Was Already Failing
The claim omits that by the time of repeal, the MRRT was generating virtually no revenue. The tax had collapsed from an expected $3 billion/year to less than $200 million. The government was actually paying back prepayments made for the tax [3]. Continuing the tax in name only while it generated minimal revenue made little fiscal sense.
Labor's Own MRRT Failures
The claim doesn't acknowledge that the MRRT was a policy failure of the Labor government. Originally projected to raise $22.5 billion over four years, it raised only a fraction of that amount due to:
- Design flaws allowing significant deductions [3]
- Negotiations with mining companies that watered down the original RSPT (Resource Super Profits Tax) proposed by Kevin Rudd [3]
- Weakness in commodity prices affecting mining profits
The Palmer United Party Negotiations
The repeal bill initially failed in the Senate before passing after negotiations with the Palmer United Party. Clive Palmer, himself a mining magnate, had significant business interests in the mining sector, raising questions about whether the repeal served public interest or private interests [3].
Alternative Government Approach
The Coalition's position was that the MRRT was a flawed tax that damaged Australia's international competitiveness and investment attractiveness. Their alternative was to:
- Remove the tax to restore confidence in the mining sector
- Reduce the regulatory burden on the resources industry
- Cut associated spending programs that were now unfunded due to the tax's failure
Source Credibility Assessment
Sydney Morning Herald (SMH)
The SMH is a mainstream Australian newspaper with a center-left editorial stance. It is generally considered a credible source for factual reporting, though like all media, it has editorial perspectives that may influence story framing. The July 2014 article cited focuses on the household impact of the repeal, which is a legitimate angle but presents one side of the policy debate [1].
ABC News
The ABC is Australia's public broadcaster with a statutory obligation to accuracy and impartiality. The April 2014 fact-check article on Mathias Cormann's claims provides a more balanced assessment, noting that while the government's $13.7 billion figure was technically accurate in terms of budget impact, it required context about how that figure was achieved (through spending cuts rather than tax revenue) [2].
Wikipedia - Minerals Resource Rent Tax
While Wikipedia is not a primary source, the MRRT article cites parliamentary records and government documents. The information about the repeal dates, revenue shortfalls, and associated measures is consistent with official government records [3].
Labor Comparison
Did Labor do something similar?
Search conducted: "Labor government tax repeal spending cuts associated measures"
Labor's Resource Super Profits Tax (RSPT) Collapse
The most relevant comparison is Labor's own handling of the original RSPT, which preceded the MRRT:
- In 2010, Kevin Rudd's Labor government proposed the RSPT, a 40% tax on mining super profits
- This triggered a $22 million advertising campaign by mining companies opposing the tax [3]
- The campaign contributed to Rudd's removal as Prime Minister
- Julia Gillard replaced the RSPT with the weaker MRRT after negotiations with mining companies
- The MRRT raised only a fraction of projected revenue, making it a policy failure
Labor's Carbon Tax Repeal Opposition
When the Coalition sought to repeal the carbon tax (another Labor policy), Labor opposed the repeal despite the carbon tax also having revenue implications. The Coalition argued that removing the carbon tax would reduce costs for businesses and households, while Labor argued it was necessary for climate action.
Precedent for Repealing Taxes with Associated Spending
The principle of repealing associated spending measures when repealing a tax is not unique to the Coalition:
- When taxes fail to generate projected revenue, governments typically must adjust spending
- The Gillard government itself had to revise spending plans when MRRT revenue fell short
- The Coalition's argument was that if the tax was abolished, the unfunded spending should also be abolished
Balanced Perspective
Coalition Government Justification
The Abbott government justified the MRRT repeal on several grounds:
Tax was failing: By 2013, the MRRT was raising less than $200 million instead of the projected $3 billion annually. Continuing a failing tax made no fiscal sense [3].
Investment concerns: The mining industry argued the tax reduced Australia's competitiveness for mining investment compared to other jurisdictions [3].
Integrity of budget: The government argued that spending programs should not continue without the tax revenue that was supposed to fund them.
Simplification: Removing the MRRT reduced regulatory complexity for mining companies.
Critical Perspective
Critics raised legitimate concerns:
Timing: Repealing the tax when commodity markets were down meant the government gave up potential future revenue if commodity prices recovered.
Associated cuts: The repeal of the Schoolkids Bonus and income support bonus hurt low-income families who had come to rely on these payments [1].
Distributional impact: The $3,500 figure for some families represented a significant loss, particularly for those with multiple children and lower incomes [1].
Palmer United influence: The negotiations with Clive Palmer (a mining magnate) raised concerns about whether the repeal served public or private interests [3].
Key Context: How Common Is This?
Tax repeals with spending cuts is a standard government practice:
- When governments repeal taxes, they typically must adjust associated spending
- The Labor government itself had to revise MRRT-linked spending when revenue fell short
- The issue here is the scale of the spending cuts relative to the minimal tax revenue being lost
The Schoolkids Bonus specifically:
- Was a Gillard government initiative that replaced the Education Tax Refund
- Was linked to the MRRT revenue package (contrary to the claim that it was "never associated")
- Its repeal affected millions of families with school-aged children
PARTIALLY TRUE
6.0
out of 10
The core factual claims are substantially accurate:
- The government did claim budget improvements from repealing the MRRT
- The tax itself was generating minimal revenue by 2013 (less than $200 million vs. $3 billion projected)
- The "savings" came primarily from cutting associated spending measures including the Schoolkids Bonus
- Some households did face losses up to $3,500 from the combined repeal of various tax benefits
However, the claim is misleading in several ways:
Incorrect about Schoolkids Bonus association: The Schoolkids Bonus was indeed associated with the MRRT package, introduced by the Gillard government as part of the same policy suite. It replaced the Education Tax Refund and was intended to be funded by MRRT revenue.
Omits MRRT failure: The claim doesn't acknowledge that the MRRT had already collapsed as a revenue source, making its repeal largely symbolic from a revenue perspective. The tax was generating virtually nothing by 2013.
Misleading on $3.7 billion net loss: The claim that scrapping the tax would result in a $3.7 billion net loss appears to conflate different figures. The actual MRRT revenue was minimal; any "loss" figures would relate to projected (but never realized) future revenue.
Frames as hidden cuts: Describing the spending cuts as "hidden in the repeal bill" is misleading - the repeal legislation explicitly included the associated spending cuts, as noted in the parliamentary record and public debate.
Lacks Labor context: The claim doesn't acknowledge that the MRRT was itself a failed Labor policy that never achieved its revenue targets, making the Coalition's repeal of a failing tax politically understandable even if the associated spending cuts were controversial.
The fair summary would be: "The Coalition repealed the failing MRRT (which was generating less than $200 million annually instead of projected $3 billion) and used the repeal to also abolish associated spending programs including the Schoolkids Bonus. While the government claimed budget improvements from this package, low-income families lost benefits worth up to $3,500 annually. The repeal benefited from support by mining magnate Clive Palmer's party, raising questions about whose interests were served."
Final Score
6.0
OUT OF 10
PARTIALLY TRUE
The core factual claims are substantially accurate:
- The government did claim budget improvements from repealing the MRRT
- The tax itself was generating minimal revenue by 2013 (less than $200 million vs. $3 billion projected)
- The "savings" came primarily from cutting associated spending measures including the Schoolkids Bonus
- Some households did face losses up to $3,500 from the combined repeal of various tax benefits
However, the claim is misleading in several ways:
Incorrect about Schoolkids Bonus association: The Schoolkids Bonus was indeed associated with the MRRT package, introduced by the Gillard government as part of the same policy suite. It replaced the Education Tax Refund and was intended to be funded by MRRT revenue.
Omits MRRT failure: The claim doesn't acknowledge that the MRRT had already collapsed as a revenue source, making its repeal largely symbolic from a revenue perspective. The tax was generating virtually nothing by 2013.
Misleading on $3.7 billion net loss: The claim that scrapping the tax would result in a $3.7 billion net loss appears to conflate different figures. The actual MRRT revenue was minimal; any "loss" figures would relate to projected (but never realized) future revenue.
Frames as hidden cuts: Describing the spending cuts as "hidden in the repeal bill" is misleading - the repeal legislation explicitly included the associated spending cuts, as noted in the parliamentary record and public debate.
Lacks Labor context: The claim doesn't acknowledge that the MRRT was itself a failed Labor policy that never achieved its revenue targets, making the Coalition's repeal of a failing tax politically understandable even if the associated spending cuts were controversial.
The fair summary would be: "The Coalition repealed the failing MRRT (which was generating less than $200 million annually instead of projected $3 billion) and used the repeal to also abolish associated spending programs including the Schoolkids Bonus. While the government claimed budget improvements from this package, low-income families lost benefits worth up to $3,500 annually. The repeal benefited from support by mining magnate Clive Palmer's party, raising questions about whose interests were served."
📚 SOURCES & CITATIONS (6)
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1
smh.com.au
Projected annual savings in electricity costs of $550 per household from scrapping the carbon tax may be dwarfed by the withdrawal of up to $3500 per household in other government payments linked to it and the mining tax, according to new research.
The Sydney Morning Herald -
2
abc.net.au
The Federal Government says the mining tax is not raising any money. At the same time, it says scrapping the tax will benefit the budget by over $13 billion. "The fact that scrapping the mining tax would actually improve the budget position by $13.8 billion tells you everything you need to know about the mining tax," Finance Minister Mathias Cormann said. ABC Fact Check examines Senator Cormann's claim.
Abc Net -
3
en.wikipedia.org
Wikipedia
-
4
legislation.gov.au
Federal Register of Legislation
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5
theguardian.com
Luke Mansillo: The mining boom has resulted in a huge extraction of wealth. But while Norway has been prudent with its resource bounty, turning it into a fund for future generations, Australia has not
the Guardian -
6
smh.com.au
Most Australians think multinational mining companies don't pay enough tax, only one in 10 Australians thinks mining is over-regulated, and many people think miners have more influence than the environment movement.
The Sydney Morning Herald
Rating Scale Methodology
1-3: FALSE
Factually incorrect or malicious fabrication.
4-6: PARTIAL
Some truth but context is missing or skewed.
7-9: MOSTLY TRUE
Minor technicalities or phrasing issues.
10: ACCURATE
Perfectly verified and contextually fair.
Methodology: Ratings are determined through cross-referencing official government records, independent fact-checking organizations, and primary source documents.