hahahahaha tell us what you really think Paul


What a whopper of a green-eyed monster
By Paul Murray | View Archive May 11th, 2010, 11:52 am

If you are going to tell a lie in politics, it seems the current rule of thumb is to make it a whopper.

From Prime Minister Kevin Rudd down, Government heavies have justified their new resources profits tax by claiming that the massive Gorgon gas project had been approved under the same fiscal regime. So where's the worry?

It's a powerful argument and, at first blush, it takes the wind right out of the sails of the protesting miners.

But it's simply untrue. And the lie is biggest at the heart of the issue of this so-called super profits tax.

The petroleum resource rent tax (PRRT) under which Gorgon will operate kicks in after profits reach the long-term bond rate - about 6 per cent - plus another 5 per cent.

It is calculated at the same 40 per cent rate as the new tax, but that extra 5 per cent makes the world of difference. As do the complicated depreciation allowances and the taxation timelines which are far more favourable under the PRRT than the new tax.

All the Government ministers mouthing the Gorgon analogy must have known this - but none saw fit to tell the truth to the Australian public.

Just to put the analogy completely to bed, when the PRRT was introduced in 1987 it was only for new projects. Mr Rudd's new tax hits existing mines - and any project which might start under its more difficult economics.

And, most importantly for WA, the PRRT operates in offshore areas which are a Commonwealth jurisdiction and therefore outside the ambit of State royalties.

As an aside, no West Australian should forget Mr Rudd's pre-election promise to remit to us $100 million from the Gorgon and Pluto developments to be paid into a WA infrastructure fund which would be quarantined from the Commonwealth Grants Commission processes.

But the major difference with the new tax is that onshore minerals are owned by the States, which is why Canberra has to hit corporate profits to have any leverage over our lucrative resources.

It is to be hoped that anything the Rudd Government says in today's Budget has a little more regard for the truth than those deceitful justifications for the iniquitous resources super profits tax.

Only a government comprised of cloth-capped trade union officials could come up with something as divorced from the real world of business as that.

Interestingly, when Communications Minister Stephen Conroy was trying to justify the risky investment of $26 billion of taxpayers' money in his broadband network adventure, he described its potential to make money eventually as "a modest return of six to seven per cent".

But under Mr Rudd's new tax, a 7 per cent return is a super profit. Hardly modest.
Ken Henry made no mention of super profits in his review, merely recommending a "uniform resource rent tax". Super profits were first mentioned by Karl Marx in Das Kapital.

So Mr Rudd's resort to the term is quite Orwellian. Excuse me if I refer to the tax only as the green-eyed monster because that is all it is.

Frankly, the proper response by the miners to such treatment would be a campaign in popular newspapers, TV and radio with a tag line something like "You Lied". Or simplify that to "Liar".

Mr Rudd doesn't mind blowing off WA and Queensland and bludgeoning the industry's reputation because his eyes are firmly on average Australian voters in NSW and Victoria who look enviously at our success.

Yesterday's Nielsen poll showing most Australians oppose the green-eyed monster will come as a big shock to the Government because its whole rationale was that it would receive overwhelming support in the non-mining States. True to his duplicitous nature, and to win public support for the tax, Mr Rudd painted companies which he once boasted to be great Australians as greedy multinationals who haven't been paying their way.

And he fudged the figures to make a dishonest point, showing only the miners' contribution to State-based royalties and ignoring their huge and escalating payment of company tax.

That shamelessly made invisible $80 billion worth of company tax payments over a decade and obliterated the important story that the annual take had grown almost tenfold over that time from $2.6 billion to $21.9 billion in 2008-9.

Mr Rudd has also been openly misleading the public that the green-eyed monster will fund the planned increase in superannuation contributions from 9 to 12 per cent.

Defending the tax last week to 6PR's Simon Beaumont, Mr Rudd said he wanted to explain "what actually this does fund on the other side of the equation".

"It means a big change for superannuation," Mr Rudd said.

"Working families need more for their long-term super and, by increasing the superannuation guarantee from 9 to 12 per cent, we're giving better retirement incomes to working Australians."

That was completely untrue.

Even if you use the convoluted argument that the planned two percentage point fall in company tax will ease the burden on employers who have to fund the lift in contributions, it has nothing to do with the resources tax.

He lied.

He lied about Gorgon and super profits.

He lied about the contributions of the mining companies to national revenue.

He lied about the new tax funding the superannuation guarantee changes.

Our Prime Minister is simply a liar.

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Funny looking German Subaru

aint that the truth!

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Long live the WRC

Love it Dave. This super tax better not go through, otherwise Mining in Australia might as well shut up shop.

As a member of a few geological societies etc. we are on the mailing lists for them as part of it, my inbox has been piling up with emails relating to this and how there will be more bad than good to come of it.

Exploration spending is what fuels tomorrow mining. Boards of Directors make these decisions based on risk and expenditure vs return....6% return on investment will not cut it for directors anywhere in the world.

More feedback from the boardroom for Krudd

Rio Tinto 'shocked' at resources tax
12/05/2010 4:44:09 PM

Rio Tinto Ltd chief executive Tom Albanese says the mining giant is "shocked" and "concerned" about the federal government's proposed Resources Super Profits Tax.
Mr Albanese also told a conference in the US on Wednesday that the company was "not opposed to tax reform per se but it should protect against sovereign risk and improve industry competitiveness."
"We are especially concerned about the inclusion of existing businesses and the arbitrary nature of the 40 per cent tax rate.
"Over the past few weeks, we have been shocked by the Australian government and their recent proposal for an excess profits tax," he said.
Mr Albanese said Rio Tinto would not have invested as heavily in Australia in recent years, especially Western Australia's Pilbara region, if the RSPT had been in place.
"We have ourselves invested about A$38 billion since 2000 - fully reinvesting everything we've earned on an after-tax basis," he said.
"If the super tax had been in place, I think you can be assured that the Pilbara business would have been a lot smaller business now than it actually is today."
Mr Albanese said Rio Tinto would continue to invest in Australia "but on different terms and under different risks".
"I've already asked our managers to re-evaluate all new capital projects under worst-case tax scenario.
"Anything that reduces competitiveness and increases country risk will undoubtedly affect that country's investment.
"Unfortunately Australian policymakers will risk de-rating their mining industry if they're not careful.
"And if the government had chosen to engage with us at first, before announcing what they did last week, perhaps they could have avoided the damage that now has been done."
Mr Albanese said commentary that Australia was going down the path of nationalisation was warranted.
He said it was "a bit bothering" that the government was in effect saying it would like to be Rio Tinto's partner, taking 40 per cent of its pre-tax profits on past, present and future investments.
"But of course, we're still allowed to run the business.
"For good reason, people are beginning to use terms like nationalisation and expropriation for this new partnership.
"And this will not help Australia's future investment climate."
Mr Albanese also said the miner had been surprised by the government's rhetoric surrounding the proposed tax.
"First, we've been referred to as a foreigner as has BHP," he said.
"Now I know I don't have the right accent, but we have been a key part of the investment fabric and the social fabric of Australia for most of the last century."
These were the first comments the New Jersey-born executive had made about the RSPT announced last week, which triggered a stream of outraged statements from other mining companies.

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Funny looking German Subaru

I agree in principal in higher taxation of resources (even though i work for mining). I would have supported a revision of royalties, or an additional federal tax of say maybe 5-10% (especially when you consider some of the record breaking profits posted), but 40% is an absolute ass raping. Especially when Barnett is already reviewing royalties.....

Additionally, if you are going to target mining, what about the friggen banking sector posting record profits in a friggen GFC!

Oh and its not just WA and Qld that will fill the effects

Taxing times bring jobs threat

Noel Dyson
Wednesday, 12 May 2010
ABOUT 140,000 jobs could be under threat in New South Wales if the Australian government’s resource super-profits tax proceeds in its present form.


That is the view NSW Minerals Council chief executive Dr Nikki Williams gave to the Schneider Electric Connects User Conference in Sydney today.

The figure of 140,000 comes from the fact that there are 35,000 people employed in the NSW mining industry and that the accepted mining multiplier effect is four-fold.

Williams pointed out that those non-mining jobs were not just with suppliers to the mining sector. It included the small businesses in mining towns that only exist because of the mining sector.

The closure of BHP Billiton’s nickel operation in Ravensthorpe showed just how devastating a mine closure could be on the businesses.

What has Williams worried about the RSPT is not just the fact that it is 40%, nor the fact that miners have to pay 40c for every dollar they make over a 6% profit rate. Her concern is the fact that the tax is retrospective.

Her reasoning is that the tax could threaten the economic viability of a number of mines. That would mean they would have to close and that could trigger a devastating impact on the regional economies they operate in.

That is not to mention the prospect of losing out on projects that were close to being given the green light. The 40% tax might just make those numbers fail to stack up.

In essence, Williams said, the Rudd government had made Australia the highest taxing mining regime in the world. With the way the tax is proposed to work, the effective tax rate is 57%, she argues. (While Norway has a rate of 78%, much of its industry is nationalised so it could be argued that it does not really count.)

Capital is highly mobile in the mining sector. While Australia has an abundance of resources and close proximity to key mining markets such as China, this 40% impost on every cent of profit above 6% changes the picture a bit. Suddenly other jurisdictions become more attractive.

“The collective rubbing together of hands in other mining jurisdictions is completely different to the sounds coming from here,” Williams said.

“In April 2009, the Fraser Institute ranked Australian states alongside other mining jurisdictions. New South Wales was ranked 20th, one place above Botswana as an exploration destination. I can only speculate on what will happen with the super profits tax.”

Williams pointed to the signs that the mere thought of the tax was proving enough for some companies. Peabody, she said, had cut its bid for Macarthur Coal, citing the RPST as one of the reasons, while Incitec Pivot and Xstrata Copper have said they would stop exploration drilling programs.

“What the prime minister has done is hand the reins to the middle classes of the emerging economies in China and India,” Williams said. “God forbid if China sneezes. Australia will catch pneumonia.”

Not that the NSW Minerals Council is against changes to the tax system.

It wants taxes that are prospective – meaning they apply to new projects only. Williams said making taxes retrospective, such as the RSPT was, would create issues of sovereign risk.

Any tax changes need to be internationally competitive. They also must recognise that not all taxes on minerals are equal and tax each one accordingly. The changes should be levied on the primary resource value only. Finally, the taxes must be efficient.

“We believe that the resource super-profit tax should abolish state royalty regimes,” Williams said. “But I also believe that the states must not lose control of the revenues from the replacement regime.

“As an industry we’ve been arguing for a flow-through share scheme that would allow a company’s unused deductions to flow through to shareholders.

“What we’ve ended up with is the resource super-profits tax, a resource exploration rebate, a state infrastructure fund and a reduction in the company tax rate.”

Williams said while there were some positives in the tax package, it fell short of the principles the Minerals Council wanted applied to tax changes.

There is a little bit of hope though.

While Prime Minister Kevin Rudd has insisted that the 40% rate will remain, Williams believes there is room to move on other issues.

The 6% rate that the tax kicks in, for example. Maybe that can move to a higher level. Williams said the Petroleum Rent Tax kicked in at about 11%.

The way the RSPT is structured does not allow companies to claim for interest. That may be another area for negotiation.

Williams said a major difference between the petroleum and mining taxes is the way capital is invested.

With petroleum, she said, the bulk of the capital is invested up front and then there is a steady revenue stream.

With mining, however, there is an initial large capital investment followed by fairly regular capital investments throughout the life of the project.

Fortescue Metals Group is a case in point. Williams said that company had high debt levels and the fact that it would not be able to claim the interest on those repayments would be a disadvantage to it.

The other is that the government could agree to apply the tax to prospective projects only and not those that are already operating.

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Funny looking German Subaru

Company tax rate being lowered means nothing - shareholders pay tax at their marginal rate. More smoke and mirrors from the Govt as most shareholders are ultimately an individual and if their marginal tax rate is less they receive a refund of imputation credits, more and they pay more tax.
Make up any number you want for small company tax it means nothing and helps no-one.

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Arguably my Automobile is Awash with Alliteration - Subaru Sti S202

Agreed, there should be some more tax placed on miners, simply because of the huge profits they haul in, but no other companies seem to have the same taxes.

EDIT: taken from an abc website comment from an article:

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[SIGPIC][/SIGPIC]

Look I'm REALLY trying to not look like the grumpiest person on P-WRX SO . . . can we just succeed and get it over with . The eastern side can bury themselves in whatever BS they want to and the West can just get on with having a higher per capita wealth then Dubai.

Works for me

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[COLOR=Black]Liberty GT Spec B tuned 240 HP & 372 Nm at the hubs.[/COLOR] "Instead of banning high performance cars - ban low performance drivers"