Rudd's great big mining myth

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CoalThe proposed Resource Super Profits Tax is generating considerable interest and debate. I wrote an article which was published in The Australian on 25 May, despite being somewhat reluctant to become involved in the debate, having retired some time ago from corporate life.

However, I was motivated to write the article because of my concern that the consequence of implementing the new tax, as currently proposed, could lead to a change in the way external investors and lenders view Australia in relation to sovereign risk. Australia has enjoyed a very good reputation over many decades. Any downgrading from this strong position will have consequences, not just for the mining industry, but for the Australian community generally.

Where sovereign risk is perceived to be an issue, two consequences follow. Capital becomes more difficult to obtain to fund activities in the nation generally, and it becomes more expensive, including for the funding of budget deficits, because the perception of sovereign risk gets priced into financial transactions. It is this factor that mostly concerns me because of its implications for the community over a lengthy period into the future.

Collecting a higher level of taxation from the mining industry for government to disburse for other worthwhile purposes may be perceived as a positive contribution to the Catholic principle of the 'common good'. However, if a badly designed and executed change results in much reduced government revenue in the future and a higher cost of funds that Australia, as a capital importing country, requires, then the contribution to the common good is negatively affected. Such an outcome would impact on the whole community, because borrowing will be more expensive. 

Governments have the power to change regulations, including taxation, and to trade off future investment and jobs for a larger tax take in the shorter term. But the consequences need to be understood and appreciated, and the community needs to be fully informed about them.

There are flaws in the currently proposed model that will have unnecessary adverse impacts on future activity in the mining and associated industries. While markets remain strong, current mines would continue to operate under the proposed new tax arrangements because the capital is already sunk. But future capital expenditure will be constrained because only very rich ore bodies will be viable with an effective tax rate of 57 per cent, and only if funding, which depends on the confidence of lenders, can be raised for such projects. Also, exploration expenditure will fall, further restraining future investment growth.

The Government's model is a theoretical approach that does not stand up to scrutiny in the real world. It is based on the so called 'Brown Tax' concept developed in 1948 in the USA, but never implemented.

Essentially, the Brown model proposes that governments share in the natural resources of the nation by taking a 40 per cent joint venture interest in every mining development. Government would contribute 40 per cent of the capital required for development and construction, receive 40 per cent of profits and bear 40 per cent of losses. This arrangement would not affect the return on capital to the mining company on its 60 per cent investment, but merely reduces the size of the investment available to it from 100 per cent to 60 per cent.

The model proposed by the Australian Government is that the Government would take 40 per cent of profits over the bond rate and underwrite losses to the extent of 40 per cent, if these are incurred subsequently. This is perceived as sharing the losses as in the Brown Tax but there is a fundamental difference between the two proposals. Under the current Government proposal, the mining company has to find the funding for 100 per cent of the project versus the 60 per cent envisaged by Brown.

There is another crucial difference between the view adopted by the Government and its advisors, and the value of this arrangement to the industry. The Government's theoretical approach is that its underwriting of future losses is equivalent to the Brown sharing in the risks associated with the investment. They clearly felt that this would be regarded favourably by smaller operators and make it easier for them to raise funds.

But the companies live in the real world and realise that, in fact, the opposite is true. The potential partial underwriting of losses would not come into the calculation of return on investment, nor in the assessment of economic viability by financial institutions, but the tax rate of 57 per cent would, and it would make it that much more difficult for all companies, but small companies in particular, to raise funds for development.

So what is apparently seen as a positive by the Government is not regarded as such by the companies. Thus, it would seem to be sensible, and in everybody's interest, to eliminate this complicated element from the proposal.

It would also, in the event of a downturn in the economy leading to losses in the mining industry, eliminate the possibility of the Government facing the unpalatable prospect of having to make substantial payments to mining companies at a time of belt tightening in the rest of the economy, with pressure already on government revenues at the same time.

Another flaw in the model is the claim that the level of future investment would be insensitive to the RSPT, irrespective of the rate at which the tax was imposed. It was astonishing that this should be an outcome of the modelling, until KPMG Econtech, the consultants engaged by Treasury to do the modelling, explained that they were instructed by Treasury to make this assumption and include it in the model.

Currently mining companies generally pay royalties to State governments on an ad valorem basis. The proposal is to replace the royalties with a tax based on profits. State governments have favoured royalties based on revenue because there is less volatility than there would be if they are based on profits. In principle, most industry participants would prefer a profit based system, provided the rate was seen to be reasonable, in preference to an ad valorem based system, because it lowers the investment risk. The issue for the Government in such a change is that its revenue would be subject to greater volatility. In economic downturns, it could be receiving less additional tax than it would be disbursing to rebate royalties paid to the States.

An incidental point worth noting, is that members of superannuation funds have a substantial part of their funds invested in the Australian resource industry. While current mining operations will continue, the additional RSPT payable will reduce the capacity of companies to pay dividends. The lower profits and dividends will also negatively impact the market value of these investments, as will the lower growth expectations. It is not only the foreign and local direct investors who will feel these impacts, so will employees who are members of superannuation funds.


John RalphJohn Ralph was formerly CEO of CRA Ltd, Chairman of the Commonwealth Bank and Deputy Chairman of Telstra. He is a Catholic layman active in Church organisations. 

Topic tags: Resource Super Profits Tax, CEO of CRA Ltd, Chairman of the Commonwealth Bank, Deputy Chairman Telstra

 

 

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Existing comments

And on that incidental point, John, we are retirees whose superannuation funds are in freefall.
Patricia Taylor | 15 June 2010


Interesting, and good to see ES including articles from this perspective, though the theological perspective is somewhat implicit.

But would you mind answering these two questions, please -

a) Where does the 57% rate figure come from, and do you mean that it would apply across 100% of profits made?

b) The 40% tax applies for profits over the bond rate (currently 6%), which for an equity stock would be a healthy long-term investment return. Why then are we being told that the new tax threatens the viability of mining companies? Any company making 6% is surely viable?
Charles Sherlock | 15 June 2010


Norway apparent has a viable model for collecting revenue from resources.

If it works there, to the advantage of the community, why not here. Is it a matter of tweaking the Rudd model to something that will work.

Some little concern about a CEO of mining interests directing the agenda
GAJ | 15 June 2010


It's hard to take an article seriously when it begins by implying so strongly that the proposed mining tax could threaten to expose Australia to sovereign risk.
Joe Castley | 15 June 2010


It is a sad fact that corporate decision-makers have little regard for future generations but focus on maximising short-term profits and grotesquely huge bonuses.

The 'dig it out quick and grab the cash' attitude ignores the fact that our mineral resources should not only benefit all Australians now living but should also help future generations. We should not bequeath them big holes in the ground and nothing more.
Norway has set a good example by allocating part of the financial benefits from the extraction of natural resources (mostly oil)so that future Norwegians will continue to benefit long after the oil has gone.
Bob Corcoran | 15 June 2010


This is misleading- it stirs up the kind of fear of 'jobs/ capital going offshore' that has been shown to be wrong elsewhere.

What about Norway? http://www.abc.net.au/rn/rearvision/stories/2010/2903587.htm Why can't a democratic sovereign nation gain more from the resources that are stripped off its land leaving it useless for decades to come? Norway has heavily taxed its oil drillers for many years and the public has received more of the dividends.

The performance of super funds or shares or even sovereign risk are not good proxies for the common good. Governments these days are captive to triple A credit ratings to the detriment of long term thinking and investment.
Anne O | 15 June 2010


"the companies live in the real world" writes John Ralph and so by implication the Government does not?
Mr Ralph may know how the CEOs of mining companies operate but that does not mean they operate fairly and justly. Nor does it mean that Governments should not try to ensure that they change their ways.

Mr Ralph's opposition to the proposed RSPT is certainly argued quite dispassionately. In contrast with the hyperbole used by our present captains of industry. But surely he can see that these people will pull every trick in the book to maintain their huge wealth and resist every effort by Government to see 40% of it more fairly distributed throughout the community. The Government may not have gone the best way in trying to implement its reform but it deserves credit for trying against what I can only describe as economic blackmail.
Uncle Pat | 15 June 2010


This comment by Mr Ralph is largely self-serving. The very concept of "sovereign risk" refers to OVERSEAS investors [and overseas profit-takers]. The notion that Australia -- with its highly stable political system, its law-abiding citizenry, its educational standards and its economic stability -- could remotely be considered a "risk" is plainly absurd. One of the mining companies' big fears is that other countries will see the advantages of our proposed system and increase their own tax regimes.

Royalties [for all that the mining companies are duplicitously trying to pretend otherwise] are NOT taxes: they are [like the purchase of materials by builders] a cost of doing business and, as the Mining Council's own advertising has to concede, royalties have fallen substabtuially as a proportion of profits over the past decade].

There is nothing inherently wrong with a graded taxation system: it has been an accepted part of personal tax for generations -- and nit has never stopped people from being keen to join the workforce. not will a tax on "super profits" deter mining investors: self-evidently, there are still significant profits to be made.

And Ms Taylor needs to look more carefully about the realities of the stock market: mining shares have been doing rather better than other stocks. The "free-fall" which she over-dramatically refers to has other causes entirely [most of them having nothing at all to to with Australia]. Just let her look at how much more her portfolio is worth than a year ago [whatever its composition] and let her ponder how much better this country has weathered the GFC than many others.
Dr John Carmody | 15 June 2010


I'm somewhat unimpressed by this mining super profit tax. It seems no more than an opportunistic tax-gouge derived from ALP ideology rather than sensible tax reform.

That said, there are a couple of anomalies in mining industry taxation that warrant considered reform.

1. End the fuel excise rebate that goes to mining. This is worth $1.7 billion per year.

We all pay 38 c/L fuel excise, but the mining industry gets the excise reimbursed. Effectively, other taxpayers subsidise excessive mining industry CO2 emissions.

2. At present, miners get to blow up bits of Australia, and ship it straight to some other country, which gets all the benefit of the metal in the ore, without the hole in the ground. All the value-adding and the benefit that thereby accrues is won by the country that does the processing that turns it into metal. Australia gets a hole in the ground.

So instead of a mining super profit tax, how about a resource removal fee, with exemption if downstream processing (metal extraction and purification) is done in Australia, with Australian jobs and taxes, and a value-added metal export industry?
David Arthur | 15 June 2010


What, do we really think that BHP and Rio are out for the good of the country?

This whole thing should be shown up for the scandal it is - the future of Australia being taken out of the ground and the country getting little for it.

And the unseemly - appalling - sight of Tony Abbott cosying up to the big boys, apparently on the strength of a single visit from a few of the CEOs.

Superannuation funds have much more to fear from the antics of the banks and financial industry in general than from the Rudd changes.
Frank | 15 June 2010


John-Thank you it is good that someone with your outstanding reputation is taking the trouble to warn of the dangers to Australia of this new tax on the mining industry. It is incredible that such a potentially damaging approach has been adopted without extensive consultation and review-----CHARLES----From experience i can vouch that to achieve Bank funding for a 20 year major project a feasibility needs to include a risk weighted rate of about 12%.I am happy to see government get more from miners--But take alesson from Hawke & Keating who took months of careful thought and analysis and involved Industy before adding the Petro tax---This current unnecessary brawl with some of the Worlds biggest Companies is certainly damaging Australias image Internationaly
Brian | 15 June 2010


The mining industry is said to be spending about $100 million in advertising to oppose the proposed RSPT. Apart from John being a Catholic I cannot see why further repeating of the same old argument, invoking bogies such as sovereign risk and supposed threats to superannuation, gets a run in Eureka Street.

Surely, by the mining industry's logic, the best thing Australia could do would be to remove all taxation from the industry so they could maximise profits, therefore increasing supperannuation dividends and removing sovereign risk altogether (think Chile 1973).

Of course, and merely coincidentally, current and former mining industry executives are likely to have quite large mining share portfolios and would stand to gain or lose a considerable amount of money depending on the outcome of the debate, but as they are all honourable men that would have no effect on their positions and they would only ever be acting for the best interest of the nation.

Eureka Street needs money, if you are going to publish mining industry propaganda, at least get paid for it!
chris | 15 June 2010


While this article is not as bombastic as much of the hyperbole and scaremongering coming out of the mining sector, it remains an expression of clear self-interest from a former CEO of CRA and their ilk. Even with us moving into climate change, there is no acknowledgement within this article that mining needs to be pulled right back and that this consumption frenzy has to stop. It is as if there were no environment (and if the mining sector was allowed unfettered access to all that they wanted, there pretty much wouldn't be an environment). It is as if corporations have always been all-wise, all-knowing, all-caring. Ha! Many companies such as CRA, CBA and Telstra may have a lot to answer for in terms of some of their anti-social behaviour and money-grabbing moves, so forgive me if I'd prefer to look to govt regulations and proper taxation of super-profits (inadequate though they may be in many respects) rather than laying all power and confidence in the hands or these large corporations who sometimes see Australia as little more than a quarry for the taking. If you think some of these corporations made a hole in your super, you should see the hole they're making out of Australia!
Wendy V | 15 June 2010


Just a point that I find distracting in this debate... the suggestion that the resources of Western Australia belong to "all Australians" as though Iron Ore in the Pilbara belongs to Australians in (say) Tasmania or South Australia, is simply misleading.

The minerals of the nation are reserved to the states (with some minor exceptions). Certainly regarding Coal or Iron Ore or Coal Seam Gas, there is no question, the Commonwealth has no claim.

I think the constitutional head of power they're advancing on is simply the Corporations power but there is a lot of disquiet in Queensland and Western Australia when it comes to the suggestion that minerals which are reserved to the state governments ought to be instead effectively owned by the Commonwealth.

This part of the debate requires additional consideration, I think.

On the Norway point, we're talking about oranges and apples. Norway is not an Iron Ore exporter and the international tax provisions with respect to Petroleum are substantially different to those of Iron Ore or any of the other mineral or energy resources (i.e. coal) that Australia is so rich in.

The other assumption that is getting traction, but I think lacks depth is the idea that government is necessarily concerned with the long term viabilty of the country, an industry etc. while industry is simply looking at short term profits. There's an argument that goes something like this "the stimulus package was expensive, the miners have a lot of money, subtract from the latter to pay the former". If the government is looking at the long term future of the country (what on earth does that even mean?), it's certainly possible that it's not looking at the long term interests of an industry (consider manufacturing and deregulation in the Keating/Hawke years).

Both sides are clearly heading towards soundbite debate, but I don't think John Ralph is doing that.
Luke O'Callaghan | 15 June 2010


Thank you John for your welcome opinion. However, I believe that the government/Rudd are quite right on this, although they have sold it extremely badly. Firstly, this is really a windfall-profits tax, in that the price for `our` raw materials has gone up hugely in recent years, and so have profits, and that was not expected at the time of investment. Secondly, we need to slow activity in the mining sector for the good of the rest of the economy and indeed future generations who need a bit left for them! I do concede that the Tax and the details surrounding it could do with improving in a number of ways, but the hysteria coming out of the extremely rich miners does not help the debate or public understanding.
eugene | 15 June 2010


There really isn't any question that the net effect of the large tax increase is to reduce mining activity in Australia. Basic economics mandates this and everyone but the ALP seems to recognize it. You have Chilean and Canadian officials licking their chops at the prospect of that investment coming to their countries. Last I checked those folks don't work for BHP. Bond rating agencies are also using terms like Australia and sovereign risk in the same sentence. As a US investor who does dabble overseas I am pretty much done with Australia now outside of a few existing holdings.

If you want to stick it to some wealthy mining ceos you will succeed but a lot of jobs and investment will be collateral damage. That is an expensive price to pay for stubborn ideology.
Michael Alexander | 15 June 2010


My question is why are not the mining companies putting up valid arguments. It is because they have none. The only thing at stake is the profits of the large mining companies who have become the wealthiest people in the nation with the help of Australia’s resources. If both the Labor and Liberal governments capitulate to the mining industries it will show that democracy is dead in favour of a plutocracy. What is wrong with Australians? Can they be so easily hoodwinked. I have a picture in my head of a grinning mining tycoon being carried aloft by ordinary people shouting in unison tax us tax us leave the miners alone tax us. Tax our pensions, tax our food, tax our clothes,, tax our incomes, tax our children but leave the miners alone.

Let’s not forget that there is a strong correlation between the miners profits and the wealth in the ground.. This wealth in the ground belongs to all Australians. The Rudd governments RSPT, based on the findings of the Henry Review, is a very sound model, despite what John Ralph says. Many of our leading economists have said as much. We are not collecting a tax so much as a resource rent. And this is what the government should be emphasizing. Mining companies should be complaining about company tax rather than the resource rent. Taxes hinder productivity but resource rents do not. Despite the rhetoric Australia is a very stable country in which to operate. This will always influence investment in this country.
Anne Schmid | 15 June 2010


So under the Brown model, governments take a 40% joint interest in a mining venture, being entitled to a share in Australia's resources. Then they might ensure that a decent proportion of profits in this event would flow to Australia's first people. They have longer entitlement to the land's resources than anyone else.

It would be interesting to know why the US never implemented this model - for the reasons John Ralph enumerates today against the Australian proposal?
Julia Nutting | 15 June 2010


An interesting debate! Please read Clive Hamilton's article in the Melbourne Age on 15th June. The mining industry needs to understand that we have a democracy in this country and that when the elected Government attempts a much needed tax reform, however inadequately,the response should be through the political process. It is disengenuous of the industry to turn the event into a plutocratic circus using fear and falsehoods to convince the gullible. Please we need some ethical behaviour on both sides to reach the right solution which will benefit all sectors of the community.
Peter Bugden | 15 June 2010


Some observations:

The Australian government is not alone in seeking to plan for the country's future by increasing its revenue from our natural resources. A recent article in The New York Times indicated that the Obama administration proposes to repeal oil and gas breaks - with the same preditable responses from the miners!
http://www.nytimes.com/gwire/2009/02/26/26greenwire-obama-seeks-repeal-of-industry-tax-breaks-subsi-9882.html

In talking about the way Norwegian government shared the bounty from its natural resources, a recent interviewee on ABC radio noted that the British government had not made any long term plans to share the North Sea oil bounty, and that the British people had precious little to show for the bonanza - it had all gone to the miners.

The Australian mining industry in its various advertisements and shareholder communiques appeals to shareholder greed, the very quality which lead to the global financial crisis. Many people would be prepared to forsake some short term benefit if it helped to secure long term benefits for future generations.

The way the government has handled the introduction of this tax is disappointing, but that does not negate its virtues.


Patricia Russell | 15 June 2010


I work as a consultant to industry and although initially positive about certain ideals espoused by the tax, I am now against it.

After working through the finer details of the proposal; and talking to mining financiers - investment bankers (debt), venture capitalists (equity) through to mining companies themselves, I am now against it in any form for the following reasons.

1. Resources can't move, but the capital required to develop and extract them is ALREADY being directed offshore to projects with lower risk profiles. Five major resource private equity funds I have spoken to have put Australian investments on ice. Nine resource investment bankers I have spoken to have Australia between 10 and 20 countries further down their investment priority list.

2. Chinese and Indian companies have potential to vertically integrate, and claim a reduced profit from their mining activities transferring the downstream profit to lower-tax regimes, thus shifting resource profits offshore.

3. Multiplier effect: for each mining job we lose, we lose 5 to 7 service industry jobs.

4. The resource tax undermines a basic Biblical stewardship principal - invest the most with those who will return the most (good social stewardship and money) - Read Matthew 25:14-30)
Richard | 15 June 2010


It's interesting to compare John Ralph's defence for the mining lobby and those who're not tainted by their propaganda. So far gullible retirees truly believe that the RSPT will render their funds 'in freefall". I'd certainly question the wisdom of my super fund if that's the case. As a self-funded retiree, the only dent in my super was effected by the GFC. And I'm forever grateful that Rudd & Co have prevented our economy from sliding down the proverbial black hole. Come to think of it, the miners were rescued by the same government's financial management.
It's clear that Ralph and the mining lobby never heard of Norway! Pity.

Alex Njoo | 15 June 2010


Thank you John Ralph for this excellent contribution. Rather than the accusations by some of self-interest, I think that someone with a lifetime experience of the issues in investment in mining has much to contribute.
Any tax will have issues re how it works and its rate. These are best addressed by full consultation with industry. This clearly did not happen and that is a major problem, as Peter Walsh has noted. So the mining industry has every right to protest - this is no circumventing of democracy.
To argue that there will be no impact on investment when $4b pa will be extracted defies reality, as does the risk free 6% bond rate as an adequate return for a risky investment. Then there is whether government will really refund losses (and that alone constitutes prospective sovereign risk).
Taxes should be as simple as practicable - this isn't. The industry has said it is not opposed to changing the royalty provisions to a profits basis. So the whole thing should start again - and should involve the States.
Bill Frilay | 15 June 2010


During the 1990s, BHP shares cost me between $7 and $18 each. In 2001, I received a bonus (free!) of 1.0651 shares for every 1 that I already held. Shareholders shouldn't complain.

Remember too that the number of employees per every million tons of ore sold is now less than it used to be. Yet the CEOs take obscene salaries.

I don't believe that the States negotiate strongly enough with the mining companies to get a fair share for the people/community/ State/country. The "royalties" have not kept up with the value of the ores.

(Incidentally, the miners show no respect for the land, the country. I expect the traditional owners are saddened, horrified and in despair.)

It would be good if more attention was given to balance sheets. Eg, was the selling of government assets to pay off debt a good idea? Particularly when the reduction in interest paid is less than the value of the asset to the community - leading to a lessening of the Net Assets figure at the bottom of the balance sheet.

(Incidentally, re another Government investment - it would be so much easier to move to new technology if the government on behalf of the people still controlled Telecom/Telstra.)

The proposed tax change should be seen as an attempt to obtain a fair price (not a tax but the cost of raw materials) for the people of Austalia.
Geoff | 16 June 2010


I question the decision ofr the editor to include an article from an apologist for the mining indutry. As former mining industry executive Mr.Ralph just repeats thje misinformation fropm the mining industry lobbyists and raises no ethical or social justice issues which are the core business of Eureka Street
Philip Lee | 16 June 2010


An interesting critique, but it provokes for me the bigger questions:
- When national and finite natural resources are being exploited for prodigious wealth, what fair and effective model should the national government use to deal with the windfall gains - equitably for the 'common wealth', and wisely as stewards of national resources?
- When so many citizens are beholden to corporations for a livelihood, or have been induced through compulsory superannuation to depend on dividends yielded by corporations, who is there to voice opposition when insatiable exploitation of the natural environment by these corporations jeopardises the future for all?
Lise L | 16 June 2010


The RSPT proposal [and thats all it is at this stage] reminds me yet again of how socialism fails in practise to deliver what it promises in theory. As a young person I supported the principle of taking from the rich and distributing to the needy which is what Mr Rudd's RSPT proposes.

Now in retirement and with a lifetime of experience I can see the need for incentive and diversity to create wealth. The rewards will eventually flow to benefit all.

We must adequately reward risk taking or we will kill investment. Our rate of growth is such that we cannot finance our own capital requirements and we therefore need foreign investors.

The debate should be about how we make sure that overseas companies leave the land, its indigenous peoples, and its infrastructure in better shape than they found it. Not holes in the ground and air pollution created by the fly in and fly out mentality.

It would appear that not enough is being charged for royalties which have not kept up with the pace of price rises. This will only get worse as minerals become scarcer. I suggest that state governments substantially increase royalties and spend it on development for our childrens future and that Canberra keep their noses out.
Why do people living in air condition comfort in city suburbs beleive that miners should only receive a 6% return on their money?

If we all received the minimum wage for whatever we did, as in an idealistic socialist world, nobody would work in remote locations. Mining workers are paid huge salaries to put up with extreme conditions which have an impact on all members of their family.
Surely it is the same for capital. The greater the risk and length of time required to see a return then the greater the return must be when it eventually arrives.

The current debate panders to the jealousy and envy of the people who expect something for nothing.

More of the pioneering spirit please
and more sustainable investment in remote communities.

Finally taxation should be uniform and simplified. It should be equal for all and not different rates for different businesses. It appears our government is trying to please city voters for short term survival. Luckily it appears the public are not easily conned.
Mike Elliott | 17 June 2010


So you've had Ralph comment on Kev's mining tax proposal. Next will I be seeing you run Bush's comments on the wars he started in the Middle East? Talk about stating the bleeding obvious (to him)!
Michael Vaughan | 18 June 2010


As Luke and Mike point out or allude to, this RSPT is a quasi royalty - royalties being the charge for extracting the minerals. The basis for the royalty is that minerals belong to the Crown. Onshore, the Crown is the State Government. Therefore, while it may be appropriate to renegotiate structures and levels of royalties from time to time, this is a matter for the States.

The Commonwealth seems to seek to circumvent this by calling it a tax, which I suspect will raise major legal issues because this is really a royalty and one for the States.

If we were to accept that it is a legitimate Commonwealth business income tax, it is departing from the principle that businesses should all be taxed at the same rate, ie miners will be taxed at higher income tax rates than other business activities. To do this is I think a backward step for both equity and efficiency reasons.

If there are to be changes here they should be negotiated by the States and revenue should go direct to them.
Bill Frilay | 18 June 2010


At least an unbiased article based on facts and not Marxist ideology dressed as Christian theology.
Beat Odermatt | 19 June 2010


People would understand the surplusprofit tax on taking out our mineral wealth if we knew three things
1. How much is the profit related to costs? Profit as seen in dividends and executives pay, costs as in the balance sheet. Exploration costs and other taxes are included in this.

People do not realise the amount of profit that is being made.

People might think dividends over 12% could well be taxed at 40%.

2. What we dig up now, we have not got later. What we don’t dig up now, we can dig up later. So the bluster of the big companies does not hurt Australia.

3. What is in the ground belongs to the people of Australia. They deserve to have some profit from it being taken out.

The government and its advocates arent doing very well telling the people of Australia.
valerie yule | 20 June 2010


I would be interested to hear John Ralph's views on the so-called Robin Hood tax on banking institutions, that has recently been flagged again, by Oxfam.
Pia Boutsakis | 20 June 2010


Can anyone name an industry which can have 9 billion bucks per annum taken out of it without it affecting investment and jobs. I mean really, have a think about it. fat cats aside and slogans like sharing the wealth with working families also aside, every action has consequences. Pull 9 billion a year out and see the same employment? Pure gibberish. Whether these miners are good blokes or overpaid shysters is a whole different issue. Instructing a consultant to work on the basis that investment levels don't change when tax rates change is like expecting a person to run as fast uphill as it is downhill. It can happen on a spreadsheet but not in reality.
Andrew Coorey | 20 June 2010


Seems to me that mining companies take care of their shareholders! So we should expect our Government to provide 40% of the investment capital for new mines, become a shareholder for the common good of all Australians...
Bruce Hodgen | 21 June 2010


There appears to be an lopsided bias for the RSPT in the comments. Is this an indication of the Govt's $38 million pro advertising budget in action.
Ken Musicka | 21 June 2010


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