THE federal opposition has attacked the Australian Government’s GST Distribution Review as a ‘sharp rebuke of (treasurer) Wayne Swan’s threat to penalise states for increasing royalties which are creditable under his MRRT’.

In a joint statement with Senator Mathias Cormann, Shadow treasurer Joe Hockey said Julia Gillard and Wayne Swan personally negotiated the mining tax; and their agreement to ‘credit all present and future state royalties has blown back in their faces’.

They have clearly shown they are incapable of negotiating on behalf of the Australian people. Wayne Swan has, on many occasions, threatened to punish states for raising royalties,” Mr Hockey said.

“The Coalition plans on fixing the mining tax and the impasse it has created with the States by abolishing it.

“Only Labor could introduce a tax that raises no money, yet increases Australia’s sovereign risk profile, adds record levels of red-tape for business, and still hangs as a threat over successful mining companies. This is Labor’s new low benchmark in public policy.

“The Coalition will consult with the State Governments before responding to the report and watch with interest what the Federal Government will tell them next month.”

When releasing the review’s final report on November 30, Treasurer Swan said the panel recommended ‘a series of refinements to the current horizontal fiscal equalisation arrangements which I look forward to discussing with the States and Territories’.

“The Panel considered the interaction between the Minerals Resource Rent Tax and state mineral royalties and confirms that resource rent taxes are more efficient than royalties,” Mr Swan said.

“The Panel finds that royalty increases are neither desirable nor sustainable, and makes a series of recommendations to remove the incentive states currently have to raise royalties.”