Senate votes to scrap mining tax but keep the spending it funded

http://www.theguardian.com/world/2014/jul/18/senate-votes-scrap-mining-tax

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The Abbott government has succeeded in repealing the mining tax but only after the Senate voted to keep $10bn in associated spending.

The mining tax repeal passed the Senate late Thursday night and will now go back to the House of Representatives on Friday, where the government will have to decide whether to accept its amended form.

The finance minister, Mathias Cormann indicated that the government intends to call the Palmer United party’s bluff by reinserting the spending cuts into the bills in the lower house on Friday before returning them to the Senate.

Cormann tweeted after the Thursday night vote: “Tomorrow the Senate will have to decide whether it wants the MRRT gone or not. Those wanting MRRT gone won’t be able to insist on today’s amendments.”

Labor, the Greens and Palmer United senators combined to strip from the mining tax bills the proposed abolition of:

• The schoolkids bonus – which provides eligible families with $410 per primary school child and $820 per high school child. Retaining the bonus will cost the budget $5.2bn over four years.

• The low income superannuation guarantee – which provides a $500 top-up to the superannuation accounts of very low income earners to make up for the vastly higher tax advantage super savings offer higher income earners. Retaining the guarantee would cost $3.8bn over four years.

• The income support bonus – a top-up for unemployment and other benefits – at a cost of $1.1bn.

After the amendments to keep the spending measures were passed the PUP senators voted with the government to repeal the mining tax – delivering the government its second major election promise after the Senate voted to repeal the carbon tax earlier on Thursday.

PUP senator from Tasmania Jacqui Lambie accused the Abbott government of seeking to take money from battlers for “blind ideological reasons”.

The Greens leader, Senator Christine Milne, said “the schoolkids bonus and the low income support bonus are not large sums of money but they really matter to people who have very little”.

But Cormann, said the government could not support the amendments because “we cannot scrap the mining tax while keeping the unfunded promises Labor has attached to it”.

Both houses of parliament will sit again Friday, when the Senate will consider the amendments to the legislation governing Qantas and a bill to continue roads funding to local governments.

The mining tax was originally announced as the resource super profit tax by the then prime minister, Kevin Rudd, in 2010. It was dramatically scaled back soon after Julia Gillard took over as prime minister, in the wake of a multimillion dollar campaign by mining companies.

After these changes, negotiated with the mining companies themselves, the tax raised very little revenue, and no longer covered the spending measures nominally funded from it. In 2012-13 it raised only $200m.

Tony Abbott said on Thursday the Coalition had been upfront with Australians before the election that it would axe the low income superannuation payment, low income support payments and the schoolkids bonus.

“Not because we are indifferent to the plight of the parents of kids at school, but you can't give what you haven't got,” the prime minister said.