Inquiry Targeting Green Groups Accidentally Exposes $145 Million Mining Tax Dodge


The Australia Institute has revealed that the mining industry enjoys a bigger tax break on its lobbying activities than the environmental organisations forced under the microscope of a parliamentary inquiry.

Lobbying organisations like the New South Wales Minerals Council kicked up a stink earlier this year, complaining that environmental groups have been engaging in ‘political’ lobbying at the same time as enjoying a tax-deductible status on donations.

The Chief Executive Officer of the NSW mining lobby, Stephen Galilee, argues “the fact that these groups can ask the public for money, promoting donations as being ‘tax deductible’ is an outrageous abuse of taxpayer dollars”.

“These protest organisations should not receive special tax treatment,” Galilee said in February.

By March, the Federal Environment Minister, Greg Hunt, had established a lower house inquiry into the tax-free status of donations made to green groups listed on the Register of Environmental Organisations.

In an ironic twist, the inquiry has now put the spotlight on the fact that mining companies are able to claim their expenses on lobbying activities as a business activity and reap deductions in company tax.

The Australia Institute report estimates that, of the roughly $484 million spent on lobby groups like the New South Wales Minerals Council and Australian Petroleum Production and Exploration Association, $145 million has been forgone in company tax.

Over the last five years, the Australia Institute report found, mining companies have avoided around $20 million of company tax each year. By the New South Wales Mineral Council’s own calculations, key environmental charities avoid just $18 million because of their privileged tax status.

This makes up just 0.005 per cent of Federal revenue, but in its submission to the inquiry the New South Wales Minerals Council expresses its concern that a “significant amount of tax [is]lost through professional activist groups like Lock the Gate receiving Deductible Gift Recipient status”.

In its report, the Australia Institute moves to allay the lobby group’s fears, arguing that because of the simplistic analysis the significance of the foregone tax from environmental charities is likely to be overstated.

The $20 million of tax lost to mining lobbying, however, “is likely to be just the tip of the lobbying iceberg” because it only takes into account the money paid out to big lobbying organisations, not third party companies or in-house lobbyists.

In fact, the mining sector employs 15 per cent of the third-party lobbyists on the Commonwealth Register of Lobbyists, but just two per cent of the broader workforce. The expenditure for that lobbying activity is not covered by the Australia Institute report.

In what some might consider a testament to their lobbying success, the Federal government has been supportive of the mining industry’s outrage at environmental organisations’ tax status, with some MPs backing calls for the not-for-profits’ work to be restricted to ‘on-ground’ activities if they want to continue to enjoy a tax-deductible status.

The Law Council of Australia, however, takes a very different view. “Advocacy activities [should]continue to be recognised as legitimate activities undertaken by environmental groups to protect the environment,” the Law Council said in its submission to the inquiry.

In fact, it recommends that the government “broaden the scope of legitimate charitable activities for environmental organisations” because “activities that can be characterised as seeking to protect the natural environment are not limited to those that involve physical on-ground works”.

“In particular, education activities, advocating for effective regulation of activities that may impact on the environment, and providing legal advice and representation in respect of environmental law matters can be activities directed to the achievement of protection of the natural environment.”

It’s a point the Australia Institute echoed in its report when it noted that “in contrast to the activities of environment groups, which often deliver clear public benefit, tax-deductible lobbying from the mining industry tends to work against the public interest”.

“These organisations provide a counterpoint to the hundreds of millions, perhaps billions, of dollars spent on lobbying by the mining industry in recent years”.

The inquiry continues.

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