Mining tax makes a meal of our future

PKN says:

09:12am | 07/05/10

Yeah .... did you sell your mining shares Sophie? Err no you didn’t! The majority of investors are foreigners anyway…

How much money did you receive from BHP in “political donations” Sophie, in the last few years?

You city folks and miners can suffer some pain and extra fees if that gets us some spinoff better services out west… Considering we have 100s of billions of stuff to dig up who cares about ? Are our creditor raters saying we are have a dodgey loan rating? Umm no!

Do you or the Libs have a plan for getting us into the 21st Century economy? Or letting us regional folk participate in the global economy?Umm no!

Be quiet then.

Scot says:

12:53pm | 07/05/10

TC, Very obvious you know very little about economics, as is the case with Swan and Rudd. The reason we have a mining industry is because the significant sums of money are borrowed from overseas, and must be paid back, hence the shareholders. You have no idea what it takes or costs to bring these resource projects to fruition. If you did you would be marching to a different tune. Naive Australians, city people who have never done a hard days work in their life. Always blaming others for their problems. Trust Labor to destroy our economy, history repeating itslef.

Eye4anEye says:

01:23pm | 07/05/10

@ T.Chong - Other companies will only fill the void when countries taxed at a lesser rate (if the tax goes through thats all of them) run out of resources…....so not very soon.

Simple question you have a billion dollar project here or in Canada they tax more than 20% less where do you go champ?

There may be room for some form of tax increase but making us the most heavily taxed country in the world in regards to resources is not a good move IMO.

Dave in Perth says:

03:59pm | 07/05/10

@ Eye4anEye
Simple question you have a billion dollar project here or in Canada they tax more than 20% less where do you go champ?

Good Question Champ. Could you just advise the following on the hypothetical Canadian comparo? Which commodity? What’s the grade? How deep? How many months of the year is the site frozen over? What’s the est project life? Transport costs to market?

What’s that? You don’t want to talk about the reality of investment decisions? You just want some bull—-t simplistic comparo? I guess that’s fair if you have some barrow to push..

Eye4anEye says:

06:42pm | 07/05/10

@ Dave - Curious to know what barrow you think I’m pushing?

In terms of your points those all apply to differenct projects withing Australia as well with the exception of shipping and potential freezing. In regards to shipping 20% tax difference will still kill it champ capesize ore carrier (upto 200,000 tonnes) Approx $70k/day for the increased duration of journey from Canada will still be exceeded by the costs of a tax that is over 20% higher.

In regards to the freezing issue I can’t comment with any particular expertise but I imagine with correct plant maintainence its not that much worse than Australias high heat situation.

Alice says:

02:49pm | 09/05/10

The Super Profits tax was actually submitted by the Minerals Council on behalf of the mining sector to the Henry review.
This is not a tax that appeared out of nowhere. The mining industry lobbied for it. One now has to question the motives for the hysteria we have seen displayed.
This was their idea. The giste of it is that they were fearful of the GFC impacting on their profits. They set about with a tax idea that would have the whole economy share in the profits during boom times and the same, in busts the whole economy would support and keep the mining sector afloat. What changed? The GFC didn’t have the impact on their profits that they feared. The future is looking extremely profitable for them. They also proposed welfare to work.  In walks Abbott. This would meet labour shortages and drive mining sector wages down.
Governments come and go but we should be extremely concerned when Clive Palmer can tell the viewers that he and his billionaire buddies will choose our PM. They will install Abbott as the next PM.
Now, if that doesn’t concern people from all political persuasions then this country has already gone to the dogs.
Now they threaten to take their business to a third world country.
One wonders about this threat. Just how good a deal are they getting overall when they choose to mine here in the first instance instead of a third world nation.

Indi Warrior says:

09:11am | 07/05/10

and the Liberal party stands for what right now?
anything?
anything other than NO as a policy statement?

Felix says:

03:41pm | 07/05/10

Indi dude right now we have the worst government in Australian history so even a primary school debate club could do a better job. Liberal is what is going to get this country back on track AND they will have the right policies, just you wait and see.

persephone says:

11:24pm | 07/05/10

There seems to be a touching faith held by some posters here that Tony has policies, he’s just afraid - so very afraid - to release them early, in case wicked Mr Rudd steals them and portrays them as his own.

So far, Abbott has released two policies (the other day I thought it was three, but apparently one was just a ‘sort of, kinda, maybe’ rather than a policy) and I’ve seen no sign of Labor wanting to nick a word of either of them, but there you go.

But - out of curiousity - how are you guys going to react if Abbott gets all the way to the election and doesn’t release much at all?

Or will your blind faith reassure you that he has policies, and he’ll reveal them to everyone when he’s in government?

I’m not going to give you a judgement of the government, but this is really the worst Opposition we’ve ever had - the highest churning of leaders, the first to vote against a policy it took to the election, the least number of policies released, the most pathetic front bench, the most policies floated and then abandoned (remember the 5 cents petrol cut? which Malcolm Turnbull said the Opposition couldn’t walk away from, because they took the promise to a by election?)

cybacaT says:

01:23pm | 09/05/10

Indi

You have a blind man swinging a samurai sword around inside your house.  You have another man who’s standing quietly, but telling you it’s a bad idea to let the other guy keep wrecking the place.  From your comment you prefer the slasher because the other guy isn’t doing anything at the moment?

Beesh says:

08:47pm | 10/05/10

Yes Cybaca, because the other guy is blind, deaf and dumb…

DougB says:

08:12am | 07/05/10

Stephen, you have lost the plot.  40,000 workers need support in all forms of Services, Agriculture, Transport etc etc.  It is more than a fair contribution.  As for inviting Chinese Consortiums in, remember this, China is not an ally of Australia, and they have only self interest.

I have talked to others who have experienced Chinese methods, where they pay you well for the first 6 months to 12 months, while a chinese employee learns your job, (usually quietly) then all of a sudden you are redundant and some one else fills your role at a significantly less pay rate. That is not good for Australia, let alone sending the majority of profits offshore.
The mining companies are due a rework of the tax, no doubt, but this is not a fair way to do it.

Alice says:

02:56pm | 09/05/10

Oh Doug
The tactics you herald are widespread across the board and are not the sole practice of Chinese industry.
Labour shortages push wages up right! But we generally agree that without an incentive who would want to work in these places.
The supertax submission by the Minerals Council actually mentions welfare to work. This tax was lobbied for by the mining sector, so the outrage beggars belief.
Ala. Abbott’s cease welfare payments, ship them to the mines on minimum wages. What do you think this is about? Driving down wages.
The west perfected these employment tactics with the cessation of slave markets.

Craig Lambie says:

08:52am | 07/05/10

@persephone I have to agree with all you have said. 

It is a pity the media are taking the angle that it will reduce investment in the Mining industry in Australia, when it is just not true.
What investor would turn away from making 60% more than the average investment.  If one leaves, another will come. simple.

I also have to raise the population debate.  In that debate the mining industry suggests it needs an extra 40,000 skilled workers.  Yet we have not had the debate on population, so where are they going to come from?  Maybe this is the Governments back handed, and sustainable way of reducing the “need” for such high immigration rates.

As @T.Chong suggests, the PR companies are going hack now, but really the are just crying poor, it will happen again when the actual tax is put into effect.
Lets just hope the Govt receiving the cash will invest it in a sustainable future for Australia, one that doesn’t have to rely on Mining and Resources as our major export.

Anthony says:

08:58am | 07/05/10

Persphone, thats a good boy back your glorious leader, but be warned he will change his tune by either changing or back flipping on his policy on the run leaving you to champion a dud rudd cause

persephone says:

09:19am | 07/05/10

Anthony

so you agree that my arguments are correct?

Thanks.

Chris says:

09:52am | 07/05/10

Persephone,

Interesting points of view on this issue. If I may be so bold as to ask you what is your take on doing the same for the banks?????

Just a thought.

persephone says:

10:07am | 07/05/10

Chris

must say I haven’t given much thought to the issue, but I would point out that (hopefully) the banks are with us always, whereas mines and mining have a finite life.

Once we’ve dug everything up, we may not have anything left to sell, unless we’ve encouraged other forms of industry in the meantime.

I’m not sure that banks are analagous in this way, but they certainly have benefitted by government backing over the last few years and there is a good argument for some of the money made as a result of this backing to be retrieved.

Tim says:

10:15am | 07/05/10

Persephone,
i don’t usually agree with you but on this topic you are 100% correct.
The idiots screaming about this tax should go and read the Henry review and the work that went into coming up with this tax.
It is a great idea that will simplify things for the mining companies while providing great revenue for Australia.
Anyone that thinks mining companies will leave Australia or curtail operations because of this are kidding themselves.
Although I would prefer that we save the revenue gained from the tax, the tax itself is a great idea.
Hopefully after the next election, more of the Henry Tax reforms are put in place, whichever party wins.

NCG says:

12:18pm | 07/05/10

Persephone; You clearly have next to zero knowledge in the share market. Mining stocks had taken an initial hit prior to Greece’s request for bailout and the RSPT announcement due to BHP and RIO going ex dividend and profit taking by investors; this is standard seasonal market behaviour.

What we have seen since the RSPT declaration is an unseasonal shedding of value, investors spooked by the Rudd Governments announcement.

Anthony says:

10:37pm | 07/05/10

Persephone, if you read into my comment that I agree with you highlights just how ignorant you are.

persephone says:

08:38am | 07/05/10

Er….no, I’m not of Greek descent, Sophie Mirabella (nee Panopoulos) is.

persephone says:

08:51am | 07/05/10

And the Liberals know that it won’t, so how disingenious are they?

Darryl Price says:

09:40am | 07/05/10

Oh wow you really got me Persephone -  “... and anyway I reckon you guys are lying too so there”. Gold.

persephone says:

10:08am | 07/05/10

So you think the Liberals are so ignorant of basic economics that they really believe what they’re saying?

Good lord, they’re thicker than I thought.

ChrisO says:

11:50am | 07/05/10

Agree completely. Although it is a common tactic used by politicians, the Labor party tends to use it as much as possible. The dirtiest example being the proposed internet filter. “You don’t want the filter? Well then you support child pornography and therefore child sexual abuse”. This is no doubt one of their more powerful weapons in their arsenal of spin.

Newcastle Lady says:

10:21am | 07/05/10

Taxed payer I can answer that, they were nowhere to be found!! We lost many other Industries as well including Sulphide. And where were the Liberals while our town nearly sunk? Off giving Liberal towns a hand. It the spirit and endurance of the people of Newcastle that got us through it. Many of those very qualified tradesman left the trade unable to get work.  They didn’t care we had an earthquake and recently floods, they gave us no help while in Governement and you reap what you sew

Seano says:

06:23pm | 07/05/10

I think this is a huge point that will be ignored by the right wing ranters in the fury. No of the mining companies are pulling out because of this tax.

BobM says:

12:45pm | 23/05/10

The tax is not in place yet, so why should they pull out?

persephone says:

10:18am | 07/05/10

AdamC

Please provide a list, not an assertion - which vibrant industries? what other places?

My understanding - and I’m happy to be corrected - is that there are no real alternatives.

All this talk of packing up and going overseas is apparently not realistic.

For example, Rio Tinto has been playing with the idea of getting out of the Pilbara and going to Guinea instead.

But Guinea can’t supply the amount of the resource Rio Tinto needs -  it represents only 70% of the Pilbara reserves - costs a lot upfront to develop (costs which would not be taxed in Australia under the ALP’s proposal) and there is uncertainty about the ‘stability of tenure’.

http://www.abc.net.au/worldtoday/content/2010/s2892029.htm

And the volatility of the market, where unexpectedly high demand has led to unexpected and unplanned for profit levels, is a good reason to raise the level of tax.

When the demand falls, and the profit level falls back to ‘normal’, the super tax ceases to apply

AdamC says:

11:10am | 07/05/10

Pers, it is not so much a matter of packing up and leaving, it is a matter of not investing to grow and maintain existing operations. Rio, as an example, will keep mining the Pilbara, but they will divert capital expenditure to more attractive prospects

Look up Russia, Mexico and Venezuela as good examples of declining, investment-starved resources industries. What is more, we are talking crude oil in these countries, not just base metals and coal.

persephone says:

12:04pm | 07/05/10

Sorry, don’t follow you.

We already tax oil in a similar way to this proposal.

I can’t see a connection (which may be just me, I have a very bad cold at the moment!)

Tim says:

10:58am | 07/05/10

JA,
if the average working family do that, then i’m sorry to say that the average working family is stupid.
The majority of these companies’ shares are owned by overseas investors anyway so any thought that it will adversely affect our super in the long term is even sillier.

persephone says:

10:56am | 07/05/10

Sorry, Super D, but why will there be jobs lost?

There is actually increased incentives for exploration and development under this tax proposal. This, combined with a lower company tax regime, will make small mines more profitable and extend the life of existing mines which would otherwise be unprofitable.

If the proceeds of the tax are invested in the infrastructure needed by mining towns, such as more housing, lower income people will be able to afford to move there.

The bigger companies are still making massive profits - they have to be making, by definition, more money than a normal profit - so they’re still making heaps, and despite the rhetoric, there is really nowhere else for them to go.

Oh, and they will have their royalties refunded as well, which will reduce the effective tax rate to some extent.

So I’m not sure where the job losses come from. There’s no evidence that there’s going to be any decrease in mining activity (as I said, no one’s told the ASX they’re planning to withdraw anything currently on the books, which they must do as soon as such a decision is made) and there’s a lot of incentive in the package to create jobs by increasing exploration and retain jobs by extending the lives of existing mines.

Remember, at present the companies pay royalties and company tax. Under the proposal, they will pay company tax - reduced to 28% - until they make really really really really big huge profits.

Willy K says:

11:39am | 07/05/10

Exactly.  I worked for BHP and now for a smaller miner and this will have huge impact on our investment and employment plans.  Rudd didn’t consult with a single miner before he announced this garbage.

Super profits - no such thing.  What a vile mindset to believe that someone who earns good profits should pay more to people that have not invested their hard work, knowledge or funds.  How about the taxpayers pick up the tab for the dozens of failed mines too?

In one fell swoop Rudd has exposed his and Labors backward socialist agenda.

Rudd will totally back down on this or this will end his career.  Anyone who says this tax is good and will help Australia is just totally wrong.

persephone says:

12:06pm | 07/05/10

Willy K

The mining council made a submission to the Henry report, making exactly this proposal.

So yes, they were consulted, and their suggestion was taken on board.

All they’re trying to do is minimise the amount of tax they’ll have to pay, by trying to get public opinion on side.

Nothing wrong with that, we all do it, but recognise it for what it is.

Super D says:

12:14pm | 07/05/10

I’m sorry for you Persephone, you seem to be one of the very few people in the country who has a weaker grasp of economics than Wayne Swan.

As someone who has extensive experience as an investor in the resources sector I think I have a pretty good handle on the economics of the sector both domestically and internationally.  If this so called “Super Profits Tax” (another Orwellian misnomer like the CPRS)is so justified and of such little consequene then why haven’t the States introduced it themselves or increased their existing royalties?  Supporting this tax now is basically an indictment of the Labor State Governments of the past decade.

As it turns out the States have a better handle on the investment drivers of this industry than Krudd and Co.  They understand that mining is a global industry and that each state/region needs to be competitive internationally if it is to be developed. 

Australia has high labour costs relative to other mining countries.  Our royalty and tax regime prior to this impost, was not generous by global standards, it is now oppressive by global standards.  One of the best reasons for mining in Australia is long term political stability and certainty regarding taxation and royalty arrangements.  In one very foul swwop Rudd and Swan has blown this out of the water.  Even if the Liberals prevail and this foolish tax is not introduced Australia is now tainted.  The only way to remove this taint will be for a losing Labor party to announce they will never go down this path again.

Seriously anyone advocating this tax is advocating a poorer Australia.  If the government wants to stop Aussie dollars going to evil foreign investors then how about we stop bribing them to make crappy cars in Australia?

Tim says:

12:23pm | 07/05/10

Willy K,
“Rudd didn’t consult with a single miner before he announced this garbage.”
Are people really this stupid?
Do you think Ken Henry just plucked this idea out of the air and thought “What a great socialist idea to screw those miners over”.

“How about the taxpayers pick up the tab for the dozens of failed mines too?”

You do realise this is replacing the State royalties, thus charging the tax on profit and not production as it is now? This makes it easier for mining companies to spend money on less viable mines. And they only get charged the tax after they are returning abnormally large profits to investors. Most of which goes overseas.

Willy K says:

01:02pm | 07/05/10

Where do I start?  Rudd did not consult with the Miners.  Fact.  Henry might have but Rudd didn’t and Henry did not want the mining tax!

The profits absolutely do not mainly go out of country.  And if profits are good WHO says that this has to be shared by those that did not contribute in any way shape or form to them?

You are all free to invest in a publicly listed miner if you want some of the super profits.

This tax is wrong, anti-business and socialist 101.

Mining is a global playing field and Rudd has just scored the own goal of the century.

I think I know a bit about the mining industry after 16 years in fin and man.

Just parroting the Rudd mantra is quite honestly insulting to those in the industry and makes you seem even more foolish. You must get paid by the ALP to back such rubbish.

Tim says:

02:07pm | 07/05/10

Willy,
Henry didn’t want the mining tax?
Then why did he propose it?

“And if profits are good WHO says that this has to be shared by those that did not contribute in any way shape or form to them?”

Did the mining companies put those minerals in the ground Willy? No, and the whole point of this tax is that those minerals belong to every Australian. Now whether the 40% amount is the right level is questionable but the idea of this tax is extremely smart.

“Just parroting the Rudd mantra is quite honestly insulting to those in the industry and makes you seem even more foolish. You must get paid by the ALP to back such rubbish.”

Why do people assume that someone is getting paid from either Labor or the Liberals if they disagree with them?
Willy,
most people are capable of critical thinking on different issues and don’t have to spout some party line.
I think Rudd and the government have handled the Henry Tax review extremely poorly. They should have implemented many of the other recommendations. They’ve had five months to look at it and done bugger all.

Willy K says:

03:38pm | 07/05/10

Tim.  Mining companies pay RRT, and Company Tax. That is Australia’s share of miners hard work you goose.

me my mo says:

12:24pm | 09/05/10

“The bigger companies are still making massive profits - they have to be making, by definition, more money than a normal profit - so they’re still making heaps, and despite the rhetoric, there is really nowhere else for them to go.” This statement epitomizes the stupidity of those favouring the mining tax.

Frederico Von Conspirinista says:

11:45am | 07/05/10

And neither do you Brad Price.
Unless you’re one of those freaky people without a middle name or a weirdo who’s parents actually named him Brad instead of Bradley.

Wait a minute, how do I know your name really is Brad?

persephone says:

12:10pm | 07/05/10

I have very very good reasons for not using my real name, and am in good company here, where very few posters do.

And you don’t have the guts to actually tackle my arguments, which suggests you can’t.

If they make you uncomfortable, then take a few moments to wonder why: is it because you’ve been judging the issue on gut reaction, and your judgement doesn’t stand up to scrutiny?

If that’s not the case, then you must have reasons for opposing this tax that you can post here.

Go ahead.

Saskia says:

12:11pm | 07/05/10

Brad is just articulating what we all suspect - that Persephone is an ALP staffer that trawls these blogs to post the Rudd line verbatim.  It is quite amusing.

I give him his dues he is loyal though not intelligent.

Brad Price says:

02:41pm | 07/05/10

Yer you really got me there Fred with that one. Did you get that off a Sixth Grader at the bike racks?
Saskia, you started out with making a great point. You’ve done a Catherine Deveny on the finish though.
Last but not least Perse’. I’m happy to argue with you about your beliefs on this matter. But you are not truthfull when it comes to your comments. If you were to put up an idea that wasn’t what you’re told to say, or just KRudd’s mouthpiece material, I would bother to argue against you.
Instead I take great pleasure in not attacking your arguments, but pointing out the facade that is “persephone”.
Burn!

persephone says:

03:10pm | 07/05/10

I repeat, as I so often do: I am a private individual. I am not employed by the ALP or the government. I am an ALP member, however.

Look, keep these lines of attack coming. They suggest to me that you don’t have anything else to throw at me.

If I make you uncomfortable, so that you want to attack me, that’s good. It means I’m hitting a nerve. It means I’m challenging a few of your preconceptions and you don’t have any other comeback except to lash out at me.

And it suggests that I’m really, really good at this.

So, keep stoking my ego - attack me and not my arguments.

If you guys really want me to go away, than I suggest people not address posts to ‘persephone”, not ask where I am when I haven’t responded and not respond to my posts.

Oh, and I’m a ‘she’.

Saskia says:

03:34pm | 07/05/10

Brad.  My final comment was not directed at you. And its hardly Deveney!

Kordez says:

03:57pm | 07/05/10

@Brad Price, if persephone were working for me, she wouldn’t last long because her productivity is about as good as Big Kev’s. She daylights on The Punch all day! Although she is a good read most of the time.

Brad Price says:

04:13pm | 07/05/10

Yes you are very righteous aren’t you when it comes to “my” preconceptions. Well i’ll continue them with my mental picture then. I can’t imagine that your a coal miner, working big hours for big money, sitting in front of your computer for a few hours on your RDO’s, making some comments on The Punch.
But what i am seeing is a tree house, a composting bin, composting toilet, a cigarette hanging out of your gob, big red lipstick and a rash of some kind that your not sure when it started.
But now i am bored with this. As i’m sure you are. I have one more question before i disappear. We could easily tell that you’re female but are you the “boy one or the girl one”?

Christian Real says:

10:54am | 09/05/10

Brad Price,
It is obvious that it is you, that is a mouthpiece for the Liberal/National party that you appear to support,because when you can’t think of an answer or any rely to persephone’s comments, you attack her with your typical Liberal diatribe.
Persephone puts forward good comments in what she writes, but then Liberals like you only appear to attack people that is smarter and more knowledgeable then people like you are.

Dognuts says:

02:53pm | 07/05/10

And the problem with capitalism is that you also will eventually run out of other peoples money…............................see what free markets and easy credit have done for Greece? I’m afraid we are all living in a bit of a deluded world if we think that the sudden surge in prosperity we have seen over the last 15 years can continue. The majority of the world is living beyond its means. We no longer have an economy where moneys are paid for services rendered, and moneys lent for growth and expansion. Our financial systems have become Ponzi schemes reliant upon greed and stupidity.

What the good Senator has overlooked is the fact that we as Australians are as greedy and self-centred as they come. We have one the highest living standards on the planet, but no one wants to pay for it. The Greeks have proven that you can’t keep borrowing, and a word to the wise to many of you here; resources are finite and the threat of the Banana Republic is more real than ever unless we make the most of it and invest in more than digging up rocks. All it will take is a slight Chinese downturn, and the excesses of the last decade will begin to unravel. Our love of money is bound to bite us in the bum, and the sooner the reality check comes, the less the pain will be.

Henry says:

03:30pm | 07/05/10

Greece has a Socialist Government, has had many Socialist governments and was lent money by the EU which is majority Socialist.

The problem is the artificial manipulation of market forces by socialist style initiatives.  Eg Clinton loosening credit to those with no chance of repaying it lead directly to the US credit crunch and GFC.

stevem says:

05:15pm | 07/05/10

Dognuts, you’re correct just look at what their Socialist government has done to Greece.

David says:

06:20pm | 07/05/10

So if a socialist government is intrinsically responsible for a failing economy are they responsible for booming economies?

I suggest those of you parroting this form of failed logic check out countries like Norway and other Northern European nations rish in resources and making the most of it (unlike Australia).

Eye4anEye says:

01:38pm | 07/05/10

Ok not sure if your jokling but I’ll bite - Working man should pay tax to pay for services said working man and his family use…...hospitals, roads etc etc. you savvy?

Eye4anEye says:

01:36pm | 07/05/10

Pretty sure if your taxes went up 10% you’d have a whinge mate.

Darryl Price says:

01:41pm | 07/05/10

The 30% company tax is what they pay on profits. In ADDITION to that, any profit over and above about 6-10% return will be taxed at an ADDITIONAL 40% rate, less what they have paid in royalties. If you take what Kevin Rudd said as gospel you might be expected to be confused as to how it works, he made a meal trying to explain it the other day.

Taxed payer says:

02:50pm | 07/05/10

The way the tax works is they pay 40% as a tax on the sale of the mineral/resource

They get a credit for any royalty that have paid to the state government

Then they pay the corporate tax rate on their profits after deducting the initial 40% super profit tax.

The effective tax rate will be about 57%. This is not much different to what they pay now (corporate tax rate + royalties)

The main thing to remember is minerals and resources are public goods. They are not private goods developed by the miners.

Kathy says:

10:38pm | 07/05/10

Actually they currently pay around 43% in tax all up (royalties + company tax). Under the new scheme they will pay 57% + any additional upping of state royalties (the scheme only credits royalty rates as they stand, and several states - WA and the NT - have announced in the last few days that they will be raising those).

So that’s a minimum 14% increase in tax, on top of an already world leading 43%.

Those comparing it to the petroleum rent scheme are a bit off the mark - there a company only has to pay the “super profits tax” on anything above an 11% annual return on total capital sunk. With this tax it’s on everything above a bare 6% return. It makes a big difference. As do the different rules in relation to the timing of deprecation of assets.

What stinks the most about this is the way that the Rudd government put out misinformation leading into the announcement. This is not a “super profits” tax, imposed only on fat profits. It’s a tax that applies to all profits essentially above what they could have earned if they’d stuck the money in the bank on a 10 year term deposit. Why not do that instead then? There’s a hundredth of the risk. Foreign investors will be much less likely to back our small mining start ups now, and the Australian banks haven’t been interested in investing in the industry for years.

I have no doubt this will lead to a capital strike in mining in this country. People in Canada, Chile, Brazil and Guinea will be the long term beneficiaries.

NCG says:

02:09pm | 07/05/10

Graham; Thats the plan mate. Laughing my arse off at the idiots who back this on the pretence that it will help the “working family”, long term guess who’s going to suffer?

Graham S says:

02:47pm | 07/05/10

And I almost forgot, tens of thousands of grateful labourers on tap at a $1.00 a day with discounted rates for the under 14’s, no pesky unions whining about work conditions, no tiresome OH & S problems to worry over, no need to build mining towns with all the western comforts such as schools, medical facilities and the like…...gee why ARE they still here when corporate nirvana is only over the horizon

persephone says:

11:35pm | 07/05/10

Rio Tinto is looking at Guinea - was, before this tax was proposed.

But there are big minuses against most African nations.

Firstly, they don’t have any infrastructure to speak of. Mining moves lots of bulky material long distances to the sea. It requires good roads, railways and ports to do this efficiently. Very few African nations have these, so the mining companies have to build them.

Secondly, they have the resources, but usually not in the quantities Australia can provide. So the Guinea mine Rio Tinto’s looking at has only 70% of the material their Pilbara operation can produce - not enough to meet their forward commitments.

Thirdly, yes, the workforce is cheap. And uneducated. And generally unreliable. This problem can be mitigated somewhat by bringing in managers etc from elsewhere, but they demand much higher wages than they do here, because no one with managerial expertise wants to spend their time in the middle of nowhere in Africa.

They’ll also be demanding good housing, medical and educational services, if they’re going to stay there long term.
And, as has been pointed out on previous posts on mining workforces, mining operations do require workers with some degree of expertise - very few mines work on the digging it out with shovels principle; most require expensive machinery.

And lastly, impoverished workforces generally go with unstable political situations. When you’re planning to start a mine which you hope to then exploit for a couple of decades, you like to know that the political situation won’t go the way of Zimbabwe - especially when you have to put in a lot of expensive infrastructure up front.

Tim says:

03:06pm | 07/05/10

Luke,
are you slow?
We don’t think we own the mining companies income, we think we own the minerals in the ground.
Why? Um maybe because we do.

This tax only involves resources that are non-renewable.
Grass? Nup, that’s renewable.
Water from rain? Sorry that’s renewable too.

luke09 says:

06:05pm | 07/05/10

Tim, the point I made why only apply Rudd’s socialist and nationalistic ideals to the miners that you agree with, there are many renewable and non-renewable industries making a profit (using your analogy, why should companies be allowed to make money, its not their right). Handouts for everyone then, especially the reckless unaccountable spending Rudd government.

The miners aren’t digging up minerals for free, they already pay billions in tax, billions in wages and billions in dividends to all investors before taking their share for future revenue and expenditures.

The real losers with this tax will be investors personal wealth and that affects everyone in the long term, retailers etc… and mining workers now with unsecure jobs.

Steve Putnam says:

10:18am | 23/05/10

Get real Brad! Over the last decade mining companies paid $9bil in tax on $80bil profit, about one third of income tax rates - not nearly enough!

NCG says:

04:39pm | 07/05/10

Who pays for those commodity prices Shane? Quite simply the cost will be transferred to the consumer; miners are hardly going to absorb it solely.

Shane From Melbourne says:

07:04pm | 07/05/10

Mainly Chinese Steel Mills, which have been screaming about the spot priceon the market. It’s not like Australia has a huge industrial base to stimulate demand for commodities…......

L Rho says:

09:39am | 09/05/10

Far less than the legal organised crime called unions donate to labor Anyone who votes for labor at the next election deserves to loose everything. One eyed dickheads

Darryl Price says:

11:34am | 09/05/10

$9,000,000,000 per year donation to the Liberal Party?
Get real.