Resources companies are at risk of losing lucrative tax perks worth hundreds of millions of dollars as a result of a Federal parliamentary committee report likening fly-in, fly-out work practices to cancer.
According to The West Australian, the committee headed by rural independent MP Tony Windsor will recommend that fringe benefits tax exemptions be scrutinised, with a view to eliminating them. Removing FBT exemptions could risk making some mining operations unprofitable, threatening jobs.
The regional Australia committee's majority report, to be made public on Wednesday, is sub-titled "Cancer to the Bush or Saviour to the City?" and is critical of the social and economic effects of FIFO and drive-in, drive-out workforces.
It says tax policies, especially the FBT exemptions introduced from 1986, have contributed to the explosion in FIFO workers in places such as the Pilbara in WA and the Bowen Basin in Queensland. FBT exemptions apply to transporting, accommodating and catering for FIFO workers and can be worth thousands of dollars for every employee.
Fortescue Metals Group has calculated that flight and accommodation costs for a FIFO worker in the Pilbara are $48,000 a year. The cost would be about double if FBT exemptions were removed. FMG told the committee that the cost of employing a residential worker was $150,000 because the company paid "substantial" tax on housing subsidies that were not FBT- exempt. It said more land should be released for housing to lower costs.
According to the Chamber of Energy and Minerals WA, about 52 per cent - or 46,800 - of the almost 90,000 workers in the State's minerals sector in 2011 were employed on FIFO rosters. WA Liberal MP Barry Haase is one of the three coalition MPs on the committee. It is understood that Victorian Liberal Dan Tehan wrote a dissenting report.
Mr Windsor signalled several months ago that FBT exemptions and other tax incentives were in the committee's sights. "We want to ensure that Australians living in regional and remote communities are assisted, not disadvantaged, by taxation policy," he said in August.
Some remote councils have complained that FIFO employees do not pay rates in their place of work yet use all of the local infrastructure.
Minerals Council of Australia's CEO Mitch Hooke said it was a myth that mining was "hollowing out" regional Australia.
He said a KPMG study had debunked the idea, showing that in mining regions there were higher incomes, greater educational attainment, lower unemployment and more families and working-aged residents than in regional Australia. In the Pilbara, the permanent resident population grew 7.3 per cent per year between 2006 and 2011 compared with 0.8 per cent for the rest of regional Australia.
"Any report on FIFO that likens it to a cancer on regional Australia should be treated with scepticism," Mr Hooke said. "FIFO is one of the principal mechanisms for spreading the benefits of the boom."
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