# Mining Tax Grab - How will it pan out?



## Mofra (6 May 2010)

Given the 40% mining tax grab under the guise of supernnuation changes, Rudd seems to have been caught on the back foot somewhat judging by the response of the mining industry & the market in general:

http://www.news.com.au/rio-shelves-...eat-up-on-rudds-new-tax/story-0-1225862821246



> RIO Tinto has raised the stakes in the mining industry's fight with Kevin Rudd over his new super tax by shelving its $11 billion expansion plans in Western Australia.




http://www.theaustralian.com.au/bus...udd-faces-miners/story-fn5eo6td-1225862783300



> To start the evening, Mr Forrest, a friend of the Prime Minister, presented him with a pair of boxing gloves labelled "Fair suck of the sauce bottle mate" but that's where the humour ended.




Given the response of the mining industry, will Rudd hold his nerve or will there be changes to the plan given there are already miners dropping expansion plans?


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## Ageo (6 May 2010)

Krudd is an absolute idiot. Instead of encouraging more people to come to this country to work hard instead he taxes the hell out of the hard workers and lets the bludgers in who bleed our system dry..............

Is this guy seriously the biggest wanker ever?

I wonder if all the major companies moved offshore??? what would that mean to our economy?


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## Putty7 (6 May 2010)

New Political book coming out soon....

"How to lose an unlosable Election" by K Rudd


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## moXJO (6 May 2010)

I doubt it will get through. There are greater economic repercussions and trickle down effects that will make those involved in the industry go to arms. I also doubt government has the balls to take on the miners. Rudd will be firmly bent over by the end of the talks. Apparently this tax will increase electricity costs as well. It has 'lose the election' flavor written all over it, if the miners ran a campaign.


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## sammy84 (6 May 2010)

Agreed. Will never get through, or if it does it will be a severly watered down version.


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## drsmith (6 May 2010)

To what extent did the government or even Henry Liaise with the mining industry prior to the release of the government's position on this ?

When the Petroleum Resource Rent Tax (RRPT) was introduced, what was the impact on profitability of the companies concerned ? 
Also, with the RRPT, was it a staged introduction/transfer from royalty base taxes (if any) to avoid a sudden impact on profitability from one year to the next ?

At face value, these questions appear not to have been considered by the government.


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## matty77 (6 May 2010)

It will pan out with Krudd back peddeling just like he did with the ETS.

Lets hope the Kevin 07 people have seen the light?

How many more stuff ups does this guy have to make before people realise he has to go? Or how much more money does he have to waste before people realise he is just an idiot.


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## drsmith (6 May 2010)

http://www.theaustralian.com.au/new...-win-any-respect/story-e6frg6zo-1225862745190



> There is merit in this. But it relies on crucial assumptions. One is that having government as a silent partner, bearing a share of costs and risks, has no effect on the incentives for businesses to be efficient.
> 
> But this is incorrect, as every dollar of effort management invests in resisting union wage claims or increasing revenue now yields a smaller absolute return to the owners of the private equity.
> 
> The result: like cost-plus contracts in defence, Brown taxes can lead to slack management and slow productivity growth.



The government setting a higher benchmark rate of return before levying a RRT and not providing rebates in loss years may be an alternative that is no less volatile then the above as for the government it can't go into the red.

This though could also lead to slack management and slow productivity growth if overall tax above that higher benchmark rate of return is prohibitive.

On the basis that it is reasonable for a country with natural resources to get a greater tax return than from corporate tax alone, is foreign ownership restrictions a better alternative ?


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## trainspotter (6 May 2010)

*REVIEW OF AUSTRALIA’S TAXATION SYSTEM*

_Statement from Mitch Hooke, Chief Executive Officer, Minerals Council of Australia_


The Federal Government’s plan to introduce a 40 per cent national mining tax can only be described as a revenue grab not taxation reform. It is an unprecedented double-tax that will hit the industry’s workforce, the millions of Australians with shares in superannuation or minerals companies and the thousands of small businesses that service the industry. 

The real work on the proposed reforms will start tomorrow when the Government sits down with industry and gets a real-world understanding of the high-risk cyclical nature of the mining industry and the full impact of what they have announced. We will work with the Government to get the design and rate of a resource rent tax right.

If we don’t get the design and rate of this right, it will destroy value, slow investment and increase sovereign risk in the Australian minerals industry. Thousands of potential mining industry jobs will be lost – particularly in regional Australia - and millions of Australians with shares in superannuation and minerals companies will see the value of their investments decline.

It amounts to a new tax on the 500,000-plus workers employed directly and indirectly by the minerals sector, the small businesses that service mining and every Australian with investments in the industry.

In the rush to extract more than the $25 billion* already paid to Governments in taxes and royalties, the Commonwealth appears to have inadequately accounted for the stifling effects of this new tax on the minerals industry. These secondary impacts could well mean there will be less taxation revenue from mining for future generations of Australians.

With less rather than more taxation revenue from mining, the Government could well find itself unable to fund the broader taxation and superannuation commitments made today.

*The minerals industry is not under-taxed...* The Government has claimed today that the community is not getting a fair share from mining. It has focussed solely on royalties from mining and ignored the massive increases in company tax the minerals sector has paid over the last decade.

The total tax paid by minerals companies and workers in 2008/9 was about $25 billion. This has paid for schools, hospitals and roads across Australia. Australian Tax Office data shows the industry pays 13 per cent more tax than other sectors.

While making up about 8 per cent of the economy, mining companies contributed about 18 per cent of corporate income tax revenue during 2008-09. We are already punching above our weight in terms of tax take.

*Investment risk ...*  Australia’s hard-earned reputation as a stable investment environment will be dramatically undermined by today’s announcement. If the Government’s new tax proposal goes ahead, $108 billion worth of future investment in the minerals industry will be under a cloud.

*Under the plan announced today, Australia will have the highest taxed mining industry in the world.*

When coupled with the looming Carbon Pollution Reduction Scheme, the proposal revealed today dramatically increases sovereign risk in Australia. 

The world is awash with mineral resources and a taxation regime that puts Australia at an international disadvantage will drive investment dollars to other minerals rich economies – which defeats the purpose of today’s announcement. 

*Meaningful tax reform … *Today’s announcement does not represent meaningful tax reform. In fact, it runs counter to the understanding that the Henry Review of Australia's Taxation System would streamline resource taxes not simply add a brand new tax.

*The Government should not have locked in a rate for the new tax without extensive consultation with industry and other key stakeholders.*

Today’s announcement also fails a basic equity test. By the Government’s own definition, this new tax should also be applied to other profit-making sectors.

As Australia’s most globalised industry, the minerals sector has an abiding interest in ensuring that tax reform makes Australia an even more attractive investment destination. That means keeping our tax rates competitive.  It also means ensuring commercial decisions taken under existing tax arrangements are not compromised in a way that creates perceptions of sovereign risk.

For these reasons, the Minerals Council of Australia has said that the most important thing the Federal Government can do to promote certainty and confidence is make any reforms “prospective” – in other words, they should apply only to new investment. The Government has ignored this critical reform today.

As well as applying to new investment only, tax reform should also protect international competitiveness; be differentiated by resource commodities; levied on primary resource value and equitable and efficient.

Today’s announcement fails all these basic tests.


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## drsmith (6 May 2010)

> *REVIEW OF AUSTRALIA’S TAXATION SYSTEM*
> 
> _Statement from Mitch Hooke, Chief Executive Officer, Minerals Council of Australia_
> 
> ...



Whle it's overall an increase in tax, it's not double tax as miners will get rebates for state royalties paid.

As the government is not managing the distribution of the proposed RRT internally wrt its distribution to the states, he is correct in that it's not genuine tax reform.

The government should have negotiated design and rate beforehand before shooting first and asking questions later. 

Mitch Hooke: 2 out of 3.
Government: 0 out of 2.


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## Julia (6 May 2010)

drsmith said:


> To what extent did the government or even Henry Liaise with the mining industry prior to the release of the government's position on this ?



The industry was not consulted at all.  This, understandably, is one of their grievances and no doubt contributes to the hardening of their response.

The following article is from the Wall Street Journal:


> Australia is the only developed country that didn't have a technical recession after the global financial crisis, mostly because its mining sector kept feeding China's economic boom.  Now the Labor government has decided all that wealth creation was a bad thing, and it's time to levy a 40% "super profits" tax on these companies and redistribute the money.
> 
> The news was delivered by Kevin Rudd and Wayne Swan as the centrepiece of a proposed tax reform package two years in the making.  They argued that mining companies did so well that they sucked labour and capital out of other parts of the country creating a 'two-tier' economy.
> 
> ...



Says it all, really.


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## Whiskers (6 May 2010)

Julia said:


> The industry was not consulted at all.  This, understandably, is one of their grievances and no doubt contributes to the hardening of their response.
> 
> The following article is from the Wall Street Journal:
> 
> Says it all, really.




*This premise ain't necessairly so*, cos investment and job creation and ultimately the tax base, don't go hand in glove with tax cuts.



> ...cut Australia's sky high rates much more than the proposed trim to 28% from 30%. That would spur investment, create jobs and ultimately, a bigger tax base.
> 
> What politician wouldn't like that.




*Macro economic sustainable investment and job creation is ultimately created from the demand side of economics, not the expense side of the P/L statement or liability side of the balance sheet of business.*

One reason why I think the RBA may have raised rates a bit too fast here. All the stimulus only gave a short term shot to investment and job creation, which was already relatively strong on good demand. That stimulus effect may filter out soon and demand may wane a little as prices continue to rise, regardless of the henry tax in a year or two, if at all.

That, apart from the global problem of too much soverign debt, that people and gov's must address most likely by increasing tax, since nobody likes to go down in their living standards as seen in greece.

With the IMF demanding both increased taxes and lower expenses as in gov wages and programs for greece and likely others and the US likely heading the same way, from a MACRO economic longer term view, it may be inevetible and have just have the opposite effect to what most commentators are saying for Aus. 

If one considers that world wide demand will ultimately slow sooner or later depending on when those worst affected countries increase taxes or curb expenditure, then it may be wise to introduce Henry's recomendation in some form sooner and use up some of that soverign risk margain that miners weigh up in their business decisions, to put Aus in a stronger position in the global dynamic. In other words, if Aus sorts it out now it may be implimented in a couple of years time when some of these other countries will be facing crisis decisions and probably considering increased taxes. 

Remembering that if our customers have to increase taxes, demand will fall, similarly if our mineral competitors have to increase taxes, demand will also fall... hence the possible wisdom (in the long term reform view) of getting in early while the economy is still robust and get a bit of cream, rather than having to take the bitter pill, as the greeks feel they are, when their economy is broke.

Rembering... this is a foreward looking wider longer term MACRO view as I exect Henry was taking, albeit from a gov adviser perspective as distinct from wise politics... whereas most of the financial and economic comparisons are backward looking and assuming nothing else other than Henry in Aus will change.


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## IFocus (6 May 2010)

drsmith said:


> Whle it's overall an increase in tax, it's not double tax as miners will get rebates for state royalties paid.
> 
> As the government is not managing the distribution of the proposed RRT internally wrt its distribution to the states, he is correct in that it's not genuine tax reform.
> 
> ...




Bernie Fraser on ABC radio this morning commented that he thought it was long over due also commented on his disappointment other tax reforms were over looked.


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## pixel (6 May 2010)

drsmith said:


> To what extent did the government or even Henry Liaise with the mining industry prior to the release of the government's position on this ?
> 
> When the Petroleum Resource Rent Tax (RRPT) was introduced, what was the impact on profitability of the companies concerned ?
> Also, with the RRPT, was it a staged introduction/transfer from royalty base taxes (if any) to avoid a sudden impact on profitability from one year to the next ?
> ...




Please, correct me if I'm wrong; but I believe the petroleum rent tax was introduced in 1929. That was just about at the very beginning of oil exploration in this country, and the government of the day introduced it to assist exploration with a view of benefiting from production.

If the mining super tax had been introduced in, say, the 1950's or 60's, miners would also have had certainty about the parameters affecting the Feasibility of a move from exploration into production.

The problem with KRudd's grab at this stage lies in the timing:
Companies have stumped up $Billions to develop infrastructure, before earning a single cent. Just ask Twiggy, how hard it's been to get Fortescue to a stage where the first shipment of ore could be delivered to a paying customer. To now suddenly shift the goal posts and suggest all miners reduce their return on investment - that smells of Socialism: *Privatise the risk, then socialise the rewards.* "Sovereign Risk" is not only present in Third World countries

btw - has it yet occurred to anybody that a connection might exist between the - Liberal - Premier of WA refusing to give up a huge chunk of WA's GST entitlements in return for some vague reform promises to the Health system? And that the Premier also refused to transfer increased royalty payments into Canberra's coffers because additional mining activity requires substantial efforts in regional devlopment? 

Why am I reminded of kids throwing a tantrum because they can't have the toy that they want when they want it...


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## Mofra (7 May 2010)

http://au.ibtimes.com/articles/2266...cancels-two-multi-billion-mining-projects.htm



> The controversy regarding the proposed super profit tax by the federal government still looms as mining businessman and a major financial backer of the Liberal National Party in Queensland Clive Palmer revealed that he postponed two big projects, one of which would have generated 3000 jobs.



This is to be expected but is avoidable if the tax grab is changed. Given the lack of consultation with the industry, can we really be confident that the flow on effects have been porperly costed?


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## Whiskers (7 May 2010)

Mofra said:


> http://au.ibtimes.com/articles/2266...cancels-two-multi-billion-mining-projects.htm
> 
> 
> This is to be expected but is avoidable if the tax grab is changed. Given the lack of consultation with the industry, can we really be confident that the flow on effects have been porperly costed?




I saw Palmer on the ABC last night muttering a bit under cross-examination, that one of those 'BIG' projects was still an exploration permit in SA that they hadn't really done much work on anyway... but it had BIG potential. 

I'm afraid Palmer is far too closely aligned to the Nat's in Qld for me to take much notice of.

I used to support the local Nat member quite well... but with Palmer of late pronouncing himself as such a strong financial and vocal supporter of the Nats, it's a bit of a worry that the Nat's have (or the perception is at least) become more of a political arm of corporations, more so than anything in the past.


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## It's Snake Pliskin (7 May 2010)

Peter Costello has had something to say regarding the TAX:
http://www.theaustralian.com.au/bus...leading-costello/story-e6frg9dx-1225863580994


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## Whiskers (7 May 2010)

It's Snake Pliskin said:


> Peter Costello has had something to say regarding the TAX:
> http://www.theaustralian.com.au/bus...leading-costello/story-e6frg9dx-1225863580994




I suppose he was speaking in his position as a director of Future Fund board of guardians, but anyway, I respect his view a bit more than many of the others including Palmer... and I think even Costello is aware there's some water to flow under the bridge yet.

But I do wish someone would give the corrected figures on that historical tax/royalty to mining profits correlation. 

I wonder if the reason why no one has, or will, is because it really doesn't change the ratio a hell of a lot.


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## spooly74 (7 May 2010)

Whiskers said:


> I saw Palmer on the ABC last night muttering a bit under cross-examination, that one of those 'BIG' projects was still an exploration permit in SA that they hadn't really done much work on anyway... but it had BIG potential.




It's important to remember that even though some of the big miners have OS investment, most of the companies that supply support for mining services are Australian. 
Processing Equipment and Plant Machinery, Remote Camps, Engineers, Geologists, Catering Services, Trucks, Lawers, Accountants etc, the list is endless.

We've _already_ had two tenders suspended since this bull$hit grab came out, and these projects were well past PFS stages, something to consider.


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## Whiskers (7 May 2010)

spooly74 said:


> It's important to remember that even though some of the big miners have OS investment, 'ALL' of the companies that supply support for mining services are Australian.
> Processing Equipment and Plant Machinery, Remote Camps, Engineers, Geologists, Catering Services, Trucks, Lawers, Accountants etc, the list is endless.
> 
> We've _already_ had two tenders suspended since this bull$hit grab came out, and these projects were well past PFS stages, something to consider.




Yes that's true... but, with there already being a shortage of workers, reflected in regular delays especially with laboratory analysis services etc, the economic effect of delaying a couple extra projects would not be significant on these support services in the short term at least.

In taking a pragmatic view, it's logical to expect some social and economic reform sway a bit the opposite way with Labor in after a long stint of Libs.

While trying not to get ones b@lls in a knot over what I can't change, the next best thing is to estimate the most likely development re change and position myself better for what eventually transpires.

Realistically, little or no tax reform will eventuate if the Libs support in the polls continue, so this scare on top of international issues may be a good buying or takeover opportunity for well funded businesses.

*PS: I repeat, "But I do wish someone would give the corrected figures on that historical tax/royalty to mining profits correlation" since this is surely central to the facts of the issue.

I wonder if the reason why no one has, or will, is because it really doesn't change the ratio a hell of a lot.*


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## todster (7 May 2010)

Should pan out alright for Tony Sage and his team as there not actually making a profit,but still heading to Africa because of the tax,well on Monday they were anyway


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## It's Snake Pliskin (7 May 2010)

Whiskers said:


> In taking a pragmatic view, it's logical to expect some social and economic reform sway a bit the opposite way with Labor in after a long stint of Libs.
> 
> While trying not to get ones b@lls in a knot over what I can't change, the next best thing is to estimate the most likely development re change and position myself better for what eventually transpires.




In our acceptance of the TAX grab and destruction it causes what do we expect is next? Books? Internet providers? Fast food? Stopping this rot is in the nation's best interest.


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## Whiskers (7 May 2010)

It's Snake Pliskin said:


> In our acceptance of the TAX grab and destruction it causes what do we expect is next? Books? Internet providers? Fast food? Stopping this rot is in the nation's best interest.




Not accepting the tax grab will eventuate to anything like the current fear. 

*Simple reason is Labour doesn't controll the Senate *and almost certainly won't after the election, even assuming they win the House of Reps. So they will have to substantially water down any Tax Reform to get it past the Senate by winning over some of the minor parties.

They may be able to negotiate something re a national standard for mining royalties with the states at next COAG, but that's a big maybe too.

At the end of the day, I think Rudd is hanging it out there early in the campaign to gauge feelings before coming up with too much detail. It all could still go the way of the ETS for example.


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## It's Snake Pliskin (7 May 2010)

Whiskers said:


> Not accepting the tax grab will eventuate to anything like the current fear.
> 
> *Simple reason is Labour doesn't controll the Senate *and almost certainly won't after the election, even assuming they win the House of Reps. So they will have to substantially water down any Tax Reform to get it past the Senate by winning over some of the minor parties.
> 
> ...



Point taken, but we shouldn't have the line of thought that gets the senate to vote on ridiculous policies such as TAX GRABS.


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## So_Cynical (7 May 2010)

Whiskers said:


> Not accepting the tax grab will eventuate to anything like the current fear.
> 
> *Simple reason is Labour doesn't control the Senate *and almost certainly won't after the election, even assuming they win the House of Reps. So they will have to substantially water down any Tax Reform to get it past the Senate by winning over some of the minor parties.




Greens are on target to control the senate after the election as they should end up with at least 6 seats and the Coalition should loose 2 or 3 to Labor.


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## Julia (7 May 2010)

Whiskers said:


> Not accepting the tax grab will eventuate to anything like the current fear.



Whiskers, this sentence just doesn't make sense to me.  Can you express whatever you were trying to say more clearly?

Snake, I agree with your sentiments.  Australian voters are way too passive and allow politicians to get away with far too much.


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## Whiskers (8 May 2010)

Julia said:


> Whiskers, this sentence just doesn't make sense to me.  Can you express whatever you were trying to say more clearly?




I don't believe the proposed new tax will eventuate to anything like the amount or impact that is currently feared... mainly because Labor doesn't control the senate and will have to almost certainly negotiate it down or see it shelved like the ETS.

I'm also curious about the real net cost impact, ie after the increased exploration and development deductions/rebates, whether it's really as bad as some in the mining industry like Palmer are portraying. 

It would certainly cause delays from a project planning and budgeting perspective, cos it will certainly mean a substantial recalculation to easertain revised cash flows, profitability, tax deductions/rebates and liabilities, but not necessairly cancellation. 

I'm also real curious about that so called misleading historic tax/royalty to profit ratio that Rudd/Swan quoted and what the non-misleading number is.

Maybe the opposition will produce something when parliament sits next.

I hope so, cos that ratio will be a compelling arguement for many, that Labor will exploit in the election, especially unless it is soundly refuted economically before then.


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## drsmith (8 May 2010)

Some interesting commentary in the AFR on this today.

The Petroleum Resource Rent Tax (PRRT) while levied at 40% does not kick in until 5% above the 10 year bond rate. Henry thought this was too generous and so proposed no premium to the 10 year bond rate on the RRT. There was also mention of a compromise at the 10yr commercial rate (~8%). 

I would have thought that in all fairness, both should be the same and that's what the government (and Henry) should have be aiming for as a tax reform objective.


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## Julia (8 May 2010)

drsmith said:


> Some interesting commentary in the AFR on this today.
> 
> The Petroleum Resource Rent Tax (PRRT) while levied at 40% does not kick in until 5% above the 10 year bond rate. Henry thought this was too generous and so proposed no premium to the 10 year bond rate on the RRT. There was also mention of a compromise at the 10yr commercial rate (~8%).
> 
> I would have thought that in all fairness, both should be the same and that's what the government (and Henry) should have be aiming for as a tax reform objective.



This might be what Rudd is holding back for the negotiation process.
Remember with the COAG Health proposition, at first he presented what was supposed to be the finished offer.  Then out came another billion when the States demurred, then more argument, so out came a bit more etc etc.

No reason to think the mining supertax will be any different, and he'll find the miners a lot more troublesome to deal with than the pansy State leaders who all caved in with minimal resistance.

He's going to be walking a very fine line between getting some sort of deal done with the industry and being seen to be yet again backing down.
Should be fun to watch.


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## medicowallet (8 May 2010)

Julia said:


> No reason to think the mining supertax will be any different, and he'll find the miners a lot more troublesome to deal with than the pansy State leaders who all caved in with minimal resistance.




Exactly, the premiers needed the money for votes. Gutless wonders who need money handouts to buy votes for the next election. Exactly as Kevin Rudd finds $5 billion here, $8 billion there to fund popular vote buying politically driven "reforms"

The mining industry is liable to "spend" their efforts in taking Kevin Rudd down. There is no knowing what is happening behind closed doors.


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## pixel (8 May 2010)

Julia said:


> This might be what Rudd is holding back for the negotiation process.
> Remember with the COAG Health proposition, at first he presented what was supposed to be the finished offer.  Then out came another billion when the States demurred, then more argument, so out came a bit more etc etc.
> 
> No reason to think the mining supertax will be any different, and he'll find the miners a lot more troublesome to deal with than the pansy State leaders who all caved in with minimal resistance.
> ...




Good point, Julia;

...and by the time he plans to put it to a vote, he may have to try from the Opposition Benches.

On a lighter note, my alter ego penned a little fairy tale (or "ancient fable") a couple of nights ago, blogged on my website under the title: "The Prime Minister And The Guru"


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## todster (8 May 2010)

medicowallet said:


> Exactly, the premiers needed the money for votes. Gutless wonders who need money handouts to buy votes for the next election. Exactly as Kevin Rudd finds $5 billion here, $8 billion there to fund popular vote buying politically driven "reforms"
> 
> The mining industry is liable to "spend" their efforts in taking Kevin Rudd down. There is no knowing what is happening behind closed doors.




LOL John Howard had a very large pork barrel rolling around before the last federal election


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## drsmith (8 May 2010)

http://www.theaustralian.com.au/bus...uper-profits-tax/story-e6frg8zx-1225863823631

The miners obviously have their own barrow to push but it's still an interesting read. No one takes kindly to nasty suprises if that is indeed what happened as described in that article 

I suspect the rate of return at which the proposed RRT kicks in will be compromised before the 40% tax rate as it's not as obvious to the public.


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## drsmith (8 May 2010)

todster said:


> LOL John Howard had a very large pork barrel rolling around before the last federal election



The Howard Government at least managed to avoid rolling the pork barrel into the fire.


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## drsmith (9 May 2010)

Interesting interview on ABC's Inside Business program this morning with BHP's Marcus Kloppers.

He seemed more interested in different RRT rates depending on commodity than he did changing the return at which it kicks in. What would be his basis for this ?

He was also highly critical that the RRT would be levied on existing projects as the original investment decisions were based on the existing tax regime. When the PRRT was first introduced, did it only apply to now projects ?

In all, one is left with the impression that the government did not engage sufficiently with the minimg industry prior to it's announcement last Sunday and inparticular, did not consider "transitional arrangements" as suggested by Henry.


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## Julia (9 May 2010)

pixel said:


> On a lighter note, my alter ego penned a little fairy tale (or "ancient fable") a couple of nights ago, blogged on my website under the title: "The Prime Minister And The Guru"



Pixel, that's just gorgeous.  If you wrote it yourself, congratulations.



drsmith said:


> Interesting interview on ABC's Inside Business program this morning with BHP's Marcus Kloppers.
> 
> He seemed more interested in different RRT rates depending on commodity than he did changing the return at which it kicks in. What would be his basis for this ?
> 
> He was also highly critical that the RRT would be levied on existing projects as the original investment decisions were based on the existing tax regime.



That seems a perfectly valid objection.



> In all, one is left with the impression that the government did not engage sufficiently with the minimg industry prior to it's announcement last Sunday and inparticular, did not consider "transitional arrangements" as suggested by Henry.



But he did indicate that there had been 'general discussions' with the government for some time.  That's in contrast to someone from one of the other miners (sorry, forget who it was) saying there had been no consultation at all.
I thought Mr Kloppers was very mild mannered in this interview.  He gave the impression of being a pretty reasonable person, willing to negotiate.


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## Julia (9 May 2010)

Comment from Ian Huntley:


> News
> Why we all lose on mining Super Tax
> Ian Huntley   |  07 May 2010
> 
> ...


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## Whiskers (9 May 2010)

Julia said:


> Comment from Ian Huntley:




I'm curious about the following referred to calculation. Obviously, there would be a lead time of a year or two before any new major tax changes start... so for me to do the sums on last years operations is misleading to say the least and pretty useless, because certainly different operational and financial management decisions would apply to accomodate any future changes. It's also unclear how he has treated, if at all, any increased deductions/rebates.

He says:
_ the proposed Resource Super Profits Tax would cut BHP's fiscal 2009 dividend by 20 to 25 per cent based on Australian earnings -- 15 per cent allowing for lower taxed offshore earnings._​So, is Huntley saying he calcs the dividend would be cut by 15%? 

I'm wondering what the relevance of the "20 to 25 per cent based on Australian earnings" is, since BHP is a multinational company and the dividend applies regardless of where the earnings came from.

I'm just curious about his reporting, economic and financial accuracy. Is he recommending to short the big miners?



> On our calculations – see The Six Wives of Henry Special Report in this issue – the proposed Resource Super Profits Tax would cut BHP's fiscal 2009 dividend by 20 to 25 per cent based on Australian earnings -- 15 per cent allowing for lower taxed offshore earnings. The massive additional tax slashes profit, but DOES NOT generate offsetting franking credits, instead being treated as "rent." The diminished dividend would otherwise – if it was simply a corporate tax hike – be 100 per cent franked at a 57 per cent tax rate. So shareholders are doubly taxed.




Julia, could you post the calculations from his 'The Six Wives of Henry Special Report', please?



> No they're not mostly going overseas! Dividends are a very small slice of the pie. Most profit is re-invested generating well-paid Australian jobs.




I'm also curious about:
_Most profit is re-invested generating well-paid Australian job​_...whether he is saying most of the profit is re-invested in Australian jobs, or whether most of the profit is re-invested... and the Australian jobs are well paid.

I'm not a close follower of BHP, but from a cursory look at the 2009 brief report there seems to be a lot of exploration expenditure overseas in the last nine months, but so far I haven't found the detail about where the numbers of jobs and re-investment Dollars are by country.

PS: I'm just cautious of newsletters etc ramping for a self fulfilling prophecy.


----------



## todster (9 May 2010)

So will we have a skilled labour shortage or are the miners full of hot air


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## Julia (9 May 2010)

Whiskers said:


> Julia, could you post the calculations from his 'The Six Wives of Henry Special Report', please?



I've now deleted the email.  Will try to find this for you on their website.



> PS: I'm just cautious of newsletters etc ramping for a self fulfilling prophecy.



Fair enough.  Mr Huntley makes no secret of his dislike of the government.
I don't know whether this is an inbuilt antipathy of long duration toward Labor, or a reaction to their profligate spending since the Rudd government came to power.  (I've only been getting the newsletters for a couple of months.)

He does, however, make appropriate criticisms of Mr Abbott and the Liberal Party, so I'm reasonably inclined to view him as having some level of objectivity.


----------



## trainspotter (9 May 2010)

Has anyone considered the social impact of this 40% tax? Let's just for comedy purposes only think this through logically. Say I am a great big naughty mining company that employs thousands of skilled workers and making billions but yet still paying billions in tax. PM Rudd gets his way and imposes his socialist reforms to cover the black holes he has created by linking infrastructure programmes and SGC contributions to this new tax. I, as a good corporate citizen go along with this taxing reform but decide to change my strategy of investment in this country. I decide not to sponsor local community projects. I decide not to employ indigenous and disadvantaged personell. I decide not to negotiate directly with the traditional owners of the land for the mineral rights so I can buy their sovereignty and ask the government to fight this on my behalf instead. I decide not to invest billions of dollars in infrastructure to expand my operations in this country and instead diversify to other less taxing countries.

Yes I am still here and making and paying my tax dollars but the overall affect to the community will be withersome due to these harsh penalties I must put in place to make my venture commercially viable for its lifespan of production. What happens after this I hear you ask? Not my problem, I wont be here, Brazil for it's iron ore, Canada for it's phosphate, Papau New Guinea for it's copper, Sierra Leone ......... I will stop now as I am making too much white noise. 

Do you really think the Government thought this through? And if they did why did they not consult with the mining fraternity first and have a heads of agreement in place prior to the annoucement? Do you believe the billions wiped off in stock value makes the mining companies want to invest more in a country with a belligerent governement?

Mines do not spring up overnight. Years of planning go into these productions prior to commitment. I believe we have lost this commitment.


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## todster (9 May 2010)

trainspotter said:


> Has anyone considered the social impact of this 40% tax? Let's just for comedy purposes only think this through logically. Say I am a great big naughty mining company that employs thousands of skilled workers and making billions but yet still paying billions in tax. PM Rudd gets his way and imposes his socialist reforms to cover the black holes he has created by linking infrastructure programmes and SGC contributions to this new tax. I, as a good corporate citizen go along with this taxing reform but decide to change my strategy of investment in this country. I decide not to sponsor local community projects. I decide not to employ indigenous and disadvantaged personell. I decide not to negotiate directly with the traditional owners of the land for the mineral rights so I can buy their sovereignty and ask the government to fight this on my behalf instead. I decide not to invest billions of dollars in infrastructure to expand my operations in this country and instead diversify to other less taxing countries.
> 
> Yes I am still here and making and paying my tax dollars but the overall affect to the community will be withersome due to these harsh penalties I must put in place to make my venture commercially viable for its lifespan of production. What happens after this I hear you ask? Not my problem, I wont be here, Brazil for it's iron ore, Canada for it's phosphate, Papau New Guinea for it's copper, Sierra Leone ......... I will stop now as I am making too much white noise.
> 
> ...




All in one week?
Take a deep breath and think it through yourself
The government not the only one good at spin
If i was Rudd i would be more concerned as to the publics view at the moment not the miners
Its not very popular in WA


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## Whiskers (9 May 2010)

Julia said:


> I've now deleted the email.  Will try to find this for you on their website.




Thanks Julia, That would be good if you can.

Trainspotter, apparently there was a little discussion, but a new tax system is hardly the sort of thing that the Gov would make a heads of agreement prior to the annoucement.

I've never heard of a gov doing anything like this for tax issues. Project development or research etc, yes, but tax law issues, no. 

It wouldn't be a good look from the rest of the country. You would then have every industry lineing up to do a deal with the gov about new laws.


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## trainspotter (10 May 2010)

todster said:


> All in one week?
> Take a deep breath and think it through yourself
> The government not the only one good at spin
> If i was Rudd i would be more concerned as to the publics view at the moment not the miners
> Its not very popular in WA




LOL@todster .. have a look as to how much was wiped off the share price of BHP & Rio Tinto. Yeppers all in one week. The superannuants that own shares in these bastions will be letting Mr Rudd know all about it directly.

If you did some research todster you will already notice that what I have written "hypothetically for comedy purposes only" has alrady been reported in the media from several mining sources and in fact has started to take place. Watch this space comrade.

Thanks Whiskers. Maybe this is what governments in future need to do. Consult a little more with the respective parties prior to implementing measures to cripple the particular industry. But then again when they did get the advice (Insualtion & BER) they chose to ignore it. Ho hum. Bureaucracy at it's best.


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## todster (10 May 2010)

trainspotter said:


> LOL@todster .. have a look as to how much was wiped off the share price of BHP & Rio Tinto. Yeppers all in one week. The superannuants that own shares in these bastions will be letting Mr Rudd know all about it directly.
> 
> If you did some research todster you will already notice that what I have written "hypothetically for comedy purposes only" has alrady been reported in the media from several mining sources and in fact has started to take place. Watch this space comrade.
> 
> Thanks Whiskers. Maybe this is what governments in future need to do. Consult a little more with the respective parties prior to implementing measures to cripple the particular industry. But then again when they did get the advice (Insualtion & BER) they chose to ignore it. Ho hum. Bureaucracy at it's best.




Ican't seem to find the hyperthetical in your post old mate.
Can you point me in direction of the mining sources that have made these statements to the market as surely there price sensitive.
Comedy wow i bet your parties are a hoot lol


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## Mofra (10 May 2010)

Whiskers said:


> Trainspotter, apparently there was a little discussion, but a new tax system is hardly the sort of thing that the Gov would make a heads of agreement prior to the annoucement.
> 
> I've never heard of a gov doing anything like this for tax issues. Project development or research etc, yes, but tax law issues, no.



I do have some exposure to this Government and in particular the lack of process in planning initiatives, and given the track record so far and the reportred lack of consultation with industry prior to the announcement I can't be confident that appropriate planning measures have been taken.


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## Putty7 (10 May 2010)

I'm not a fan of Rudd so I am a little biased but I am lost as to how the man thinks. It has been said he likes to have things done his way so was this his idea to railroad the mining tax through against advice from others in the party. Getting the miners offside is political suicide, if it wasn't for the mining sector performing so well keeping our exports flowing Australia would be in a deeper hole than the one we are in now due to Rudds continual stuff ups. 

I agree seeing our money going offshore in profits isn't ideal but who is going to fund the expansion of the sector if the capital doesn't come from offshore ?? Who is going to pony up millions or billions of dollars to get mines off the ground only to get taxed to the hilt when other Countries have similar resources that need capital investment to develop and offer tax incentives.

I heard someone say "I would rather leave behind something for the next generation other than a hole in the ground". If it wasn't for that hole in the ground not much would be going out in exports keeping us afloat, we don't manufacture a lot here anymore because it is cheaper elsewhere to do so and more economically viable for companies to import finished products, so we are left with primary industry to carry the load.

How will it pan out, who knows,  Rudd will be creating more spin to baffle the sheeple before the election and the miners will be lining up in arms with a smear campaign to combat it, the average joe is probably more interested in ALF winning a logie.


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## trainspotter (10 May 2010)

todster said:


> Ican't seem to find the hyperthetical in your post old mate.
> Can you point me in direction of the mining sources that have made these statements to the market as surely there price sensitive.
> Comedy wow i bet your parties are a hoot lol




Oh Deary deary me todster. Please read my original post again:

_"Let's just for comedy purposes only think this through logically. Say I am a great big naughty mining company that employs thousands of skilled workers and making billions but yet still paying billions in tax." _ You are right there old friend .. the word "hypothetical" is not written by my good self ANYWHERE ! I deeply and humbly apologise fore this massive erratum. I thought the "great big naughty mining company " may have been a giveaway but nevermind.

On the right of the screen home page of ASF you will see where links are available to click on to take you directly to the source. www.thebull.com.au is another outlet for this kind of information.

My soirÃ©es are reknowned for there comedic affect on the attendees. Laughing gas will do that to a person.


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## todster (10 May 2010)

Lets for comedy purposes think back to the 1990s and think how native title was going to do the same thing,we all know what happened after that


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## todster (10 May 2010)

trainspotter said:


> Oh Deary deary me todster. Please read my original post again:
> 
> _"Let's just for comedy purposes only think this through logically. Say I am a great big naughty mining company that employs thousands of skilled workers and making billions but yet still paying billions in tax." _ You are right there old friend .. the word "hypothetical" is not written by my good self ANYWHERE ! I deeply and humbly apologise fore this massive erratum. I thought the "great big naughty mining company " may have been a giveaway but nevermind.
> 
> ...




For some additional info try David Buckinghams little piece in Business Spectator and what the super industry has come out with this morning


----------



## trainspotter (10 May 2010)

todster said:


> Lets for comedy purposes think back to the 1990s and think how native title was going to do the same thing,we all know what happened after that




Ummmmmm Mabo was all about land rights and my understanding of this was the "ownership" of the land was the sticking point. Eddie Mabo was trying to get the government to understand that the land belonged to the aboriginals even though they did not have a title deed as such.

However, the crown continues to assert ownership of mineral rights in every other state, and this is not contradicted by any existing land rights legislation.

Under the NT Land Rights Act traditional Aboriginal landowners have the limited right (all major known mining deposits in the NT were excluded from the act when it was passed!) to refuse exploration for minerals ”” subject to the "national interest". So you can bet London to a brick that "national interest" will be forthcoming provided that the mining companies purchase the "sovereignty" of the indigenous population affected by mining. 

Hope this clears this up.


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## trainspotter (10 May 2010)

todster said:


> For some additional info try David Buckinghams little piece in Business Spectator and what the super industry has come out with this morning




Post a link so I can read it then. The word SUPER is starting to mean less and less these days. "Super profits", "Superannuation", "Superman" (disguises himself as a nerd with glasses just like Rudd).

All I know if the minerals that are in the ground are by rights every single Australians to own then why is Kevin doing his best to disenfranchise the very corporations that are digging it up for us?


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## Whiskers (10 May 2010)

todster said:


> Lets for comedy purposes think back to the 1990s and think how native title was going to do the same thing,we all know what happened after that




Similarly with the GST and saying "Sorry" to name a couple. There is always a degree of uncertainty and fear when the dynamic changes to unknown territory.



Mofra said:


> I do have some exposure to this Government and in particular the lack of process in planning initiatives, and given the track record so far and the reportred lack of consultation with industry prior to the announcement I can't be confident that appropriate planning measures have been taken.




Yeah, the track record isn't great so far, but I'm thinking with this issue in the hands of two seasoned players, Rudd and Swan, they are playing more of a drip feed, see what the reaction is, well before the election and fine tune a bit into the election campaign.



Putty7 said:


> I agree seeing our money going offshore in profits isn't ideal but who is going to fund the expansion of the sector if the capital doesn't come from offshore ?? Who is going to pony up millions or billions of dollars to get mines off the ground only to get taxed to the hilt when other Countries have similar resources that need capital investment to develop and offer tax incentives.




Just loosely on this issue, given the backflip on 'Land Banking' by non residents, and the sensitivity of foreign ownership of our resource companies, I'm wondering whether they see this policy as an attempt to do something similar to make the investment in Aus resource companies and payment of high dividends, as opposed to continued development and expansion, to the home country residents less attractive.

I don't know the numbers at present, but there has been plenty of companies setup for single project development which pay higher dividends as opposed to a company that has progressive exploration and development projects.

Even large companies recieve dividends from smaller subsidiarys that are often the project developers and managers. These project developers are often partly owned by foreign corporations who distribute their profits via dividends as well as often subsidised product to the foreign country. 

Without the final detail, while BHP et al appear to be affected heavily, I'm not sure the tax is aimed at them in particular... rather than the overseas conglomerates that own substantial shareholdings and often the operators in many of our oil and coal resources in particular.

It's along the same lines as 'Land Banking' only it's 'Resource Stripping'.  Foreign owned business including farms and meatworks are also producing product and sending it home to the parent, paying little or no tax in Aus... and in the case of some just close down when the resource has dried up or got cheaper to do the same in another country... particularly third world country like Papua New Guinea and Africa, where the wealth of resources has often not reflected into a better standard of living at all, rather the degredation of their enviornment and resources.


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## trainspotter (10 May 2010)

todster said:


> Ican't seem to find the hyperthetical in your post old mate.
> Can you point me in direction of the mining sources that have made these statements to the market as surely there price sensitive.
> Comedy wow i bet your parties are a hoot lol




Here is one mining company that isn't price sensitive?

*Xstrata halts copper exploration project over proposed superprofits mining tax *

SWISS mining giant Xstrata says it has suspended a $30 million copper exploration in central Queensland due to the impact of Australia's proposed resources super profits tax. 

The company said an exploration project in the Mt Isa and Cloncurry districts expected during the next three years had been put on hold.

"We have decided to suspend exploration activities in North Queensland until there is greater certainty on the fiscal regime for future mining developments,'' Xstrata Copper North Queensland chief operating officer Steve de Kruijff said.

http://www.news.com.au/business/bre...ofits-mining-tax/story-e6frfkur-1225864532340

Oooooooooooopsies ........ Ground control to Major Tom, your circuits dead there is something wrong, Can you hear me Major Tom?


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## Whiskers (10 May 2010)

trainspotter said:


> Here is one mining company that isn't price sensitive?
> 
> *Xstrata halts copper exploration project over proposed superprofits mining tax *
> 
> ...




Firstly, re the media hype and fear: the key words "exploration project" are often overlooked or not comprehended in context in the fear of loosing heaps of foreign investment. 

The words "*Halts Project*" seem to *gain extraordinary emphasis by some*. 

*Exploration project does not necessairly equal lots of money spent.*

Multinationals are famous for pegging huge areas of land  and abandoning exploration projects when they don't pan out to be huge, or at least substantiual enough to fit their corporate objectives, or at least tying up extra development that if in other hands would be competitive to their existing resources, by just doing minimal work to hold the permit.

Secondly, this may be a classic example of the previous post where I suggested the operator comes from a low tax regeime, is a wealthy conglomerate looking to get a monolopy or substantial control over their line of products, or a state owned corporation looking to source cheap product by 'unorthodox' accounting. Afterall that is the aim of business. 

There is a lot to figure out after one gets over the emotional fear of the superficial issues... not the least of which is the potential for mid cap and more private operators to get some of these projects going if a few less large tracts of land were not taken up by conglomerates.

I know of quite a few small profitable operations that multinationals would not develop... but just sit on until they had to relinquish them.


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## Whiskers (10 May 2010)

Further to above posts, I'm curious why the word 'Supertax' or 'Superprofits' is almost exclusively used lately as opposed to the earlier 'Windfall Tax'.

Could it be that it's more inflaminitary!? From the press and Newsletter writers point of view it certainly seves the purpose of attracting attention. 

It's worth trying to figure out who would be affected most by a Windfall Tax.

I recall some changes under Howard about 2005/06 that changed and generally tightened the rules for Capital Gains Tax for non residents. I think a company can transfer it's operations offshore without paying CGT. I think a non residents holding about 10% in a company can avoid paying CGT. Need to get more detail there.

Then there is the issue of tax avoidance... eg a non-resident selling shares in a non-Australian entity that holds part of or controls Australian assets that may have been pumped and dumped... a la the GFC.

*The full implications are still not clear, but since my main interest is in miners, I'm wondering if tighter restrictions on foreign ownership especially transferring money out of Aus as dividends or Capital gain, may not necessairly reflect in adverse conditions for Aus companies and economy.*


----------



## Whiskers (10 May 2010)

todster said:


> For some additional info try David Buckinghams little piece in Business Spectator and what the super industry has come out with this morning




Yeah good article. Much more informative without so much rethorical commentry.

http://www.businessspectator.com.au...ysteria-pd20100510-5ARLS?OpenDocument&src=sph



> Published 6:27 AM, 10 May 2010
> Last update 9:57 AM,  10 May 2010
> David Buckingham
> 
> ...




The Screen Capture shot below headed 'New tax rates' goes here.



> *Hysteria from the 1990s*
> 
> Finally, I turn to the question of what the way forward will be for the government and the industry.
> 
> ...


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## JimBob (10 May 2010)

Looking at that last table, i dont think any mining project would go ahead if the profit margin was 6-10%.  They would have to be more around 25-30%+ to account for all the unknowns encountered along the way.  I hope im ready it correctly.

It is hard to work through all the spin from both sides at the moment.


----------



## Whiskers (10 May 2010)

JimBob said:


> Looking at that last table, i dont think any mining project would go ahead if the profit margin was 6-10%.  They would have to be more around 25-30%+ to account for all the unknowns encountered along the way.  I hope im ready it correctly.
> 
> It is hard to work through all the spin from both sides at the moment.




Yes and Yes.

Assuming David Buckingham has got the maths right, it probably explains the difficulty or burden on smaller operators in Aus getting projects up as opposed to trying to compete with conglomerates with deep pockets.

I suppose it could even be called Aus discriminating against our own Small Business.


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## trainspotter (10 May 2010)

The PRRT did not have a state royalties tax attached to it. This is a double tax. Ken Henry report recommended the royalties be removed then the 40% tax placed overlay. Fair enough.

As for native title issues please refer to my previous post stating:-

_Mabo was all about land rights and my understanding of this was the "ownership" of the land was the sticking point. Eddie Mabo was trying to get the government to understand that the land belonged to the aboriginals even though they did not have a title deed as such.

However, the crown continues to assert ownership of mineral rights in every other state, and this is not contradicted by any existing land rights legislation._

Without the mining companies squawking this decision of the crown to assert ownership of minerals would not have happened without the necessary legislation.

Why not call it a MEGA tax and give it some street cred. This way the children who will inherit this penalty will understand the consequences earlier. Also does away with the supercilious word of "super".

Always two sides to the story.


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## todster (10 May 2010)

trainspotter said:


> LOL@todster .. have a look as to how much was wiped off the share price of BHP & Rio Tinto. Yeppers all in one week. The superannuants that own shares in these bastions will be letting Mr Rudd know all about it directly.
> 
> If you did some research todster you will already notice that what I have written "hypothetically for comedy purposes only" has alrady been reported in the media from several mining sources and in fact has started to take place. Watch this space comrade.
> 
> Thanks Whiskers. Maybe this is what governments in future need to do. Consult a little more with the respective parties prior to implementing measures to cripple the particular industry. But then again when they did get the advice (Insualtion & BER) they chose to ignore it. Ho hum. Bureaucracy at it's best.




Yeppers look how much RIO&BHP clawed back in one day
Funny old game innit


----------



## trainspotter (10 May 2010)

todster said:


> Yeppers look how much RIO&BHP clawed back in one day
> Funny old game innit




Still a loooooooong way to go my friend. Nowhere near their tops a week ago. Could be a dead cat bounce? A European rescue package from the IMF that the UK refuses to underwrite causes Rio up 5.8% and BHP 4% in one day is out there ! Bargains to be had when the blood runs in the street apaprently. 

Interesting to note the volume for Rio was steady with a mean average around the 6.5 million mark for the week? Meanwhile BHP went from 18 million to nearly 30 million for the same period.


----------



## todster (10 May 2010)

trainspotter said:


> Still a loooooooong way to go my friend. Nowhere near their tops a week ago. Could be a dead cat bounce? A European rescue package from the IMF that the UK refuses to underwrite causes Rio up 5.8% and BHP 4% in one day is out there ! Bargains to be had when the blood runs in the street apaprently.
> 
> Interesting to note the volume for Rio was steady with a mean average around the 6.5 million mark for the week? Meanwhile BHP went from 18 million to nearly 30 million for the same period.




No where near there tops a week ago?
A week being 7 days?


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## Whiskers (10 May 2010)

trainspotter said:


> Still a loooooooong way to go my friend. Nowhere near their tops a week ago. Could be a dead cat bounce?




Off topic a bit, BUT I don't know if you've noticed decent rises in base metals in the last few hours, about 4% rise in copper, not to mention the FTSE and Europe up 5%, US futures up and good, lower loan default news in the US etc. 

This'll be one hell of a dead cat bounce. 

Somehow I'm thinking our mining industry will purrrrr on nicely, without missing a beat. :


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## Julia (10 May 2010)

Whiskers, (with apologies to all for diverting the thread), Voltaire a pretty long time ago wrote a short novel called "Candide".

The protagonist is a Dr. Pangloss, a professor if I recall correctly.
Dr. Pangloss had the remarkable facility of always considering that everything was always for the best in the best of all possible worlds.

I'm just thinking you would have something in common with this famous literary figure.


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## Whiskers (10 May 2010)

Julia said:


> Whiskers, (with apologies to all for diverting the thread), Voltaire a pretty long time ago wrote a short novel called "Candide".
> 
> The protagonist is a Dr. Pangloss, a professor if I recall correctly.
> Dr. Pangloss had the remarkable facility of always considering that everything was always for the best in the best of all possible worlds.
> ...




Nah, not necessairly for the best... BUT, inescapably... Que Sera, Sera (Whatever Will Be Will Be)... so in that sense, it's best to be at least a bit pragmatic and just get on making the best you can with what you are dealt. 

Some wise old person taught me to pick your fights carefully, and... t'is wise to not waste your energy and time fighting to change what you cannot change.

Don't always get it right,   but I think I do more often than not.


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## trainspotter (11 May 2010)

Mining companies will sabre rattle about loss of jobs, exploration cancelled, overseas projects looking more attractive yadda yadda yadda. Government will demonise them and call them greedy and foreigners to gain popular opinion with the public. Government will get 40% through senate to fund budget black holes. Mining companies will continue on their merry way but will peel back peripheral exploration opportunities and shed staff and sponsorship. Government will come out and say I told you so. We continue to live in Utopia and be brainwashed. Case closed.


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## trainspotter (11 May 2010)

todster said:


> Yeppers look how much RIO&BHP clawed back in one day
> Funny old game innit




Look how much they lost today. Nope ... no bounce there ! Really purrrrrring along.

Funny old game innit !


----------



## satanoperca (11 May 2010)

trainspotter said:


> Government will get 40% through senate to fund budget black holes.




Why are you convinced that they will be able to get it through given the ETS failed and the Libs have already stated that they will not support the bill?

And why stop with resources, the banks make huge profits so why not tax them more? Actually might as well include any small/medium or large business that make more than govnuts bonds yield on the capital invested?

Most importantly why would anyone trust a govnut that cannot even roll out something as simple as home insulation? Are that right, the public don't anymore.

Cheers


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## trainspotter (11 May 2010)

satanoperca said:


> Why are you convinced that they will be able to get it through given the ETS failed and the Libs have already stated that they will not support the bill?
> 
> And why stop with resources, the banks make huge profits so why not tax them more? Actually might as well include any small/medium or large business that make more than govnuts bonds yield on the capital invested?
> 
> ...




I believe the Greens are confident of doing a deal with Ruddmeister to get the tax through as long as they get their way on a carbon tax. You scratch my back and I will scratch your green skin kinda thingy.

EXACTLY ! What is next? Why not increase tax to a 40% threshold on large corporations that make billions in profit like Telstra and Westpac and such like naughty big companies employing all those people and paying the tax required under the ATO law.

Trust this Government? I trust them to stuff it up and blame everyone else. Not our fault we don't have an ETS cause the Libs stopped it. blah blah bloody blah. We didn't stop the Child Care Centres it was due to lack of demand (a week before Gillard was on TV saying they were still proceeding) ....... aaaaaaaaaaahhh I give up. Utopia man ....... more spin to dumb down a Nation.


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## Aston (11 May 2010)

Just saw an interesting article stating that Mining companies will be effectively paying a tax rate of 57 per cent after the 28 per cent company tax rate is added less depreciation.  A tax on a tax.  Resource companies take on so much operational and financial risk to explore, develop and produce a mine that *may *one day be cash flow positive, so I think this seems a bit unfair.  I feel for the hard working Australian mining families who are faced with uncertainty because of such a proposed change.  I will be writing to Mr Swan objecting to the tax but I doubt he will listen to me.

http://www.smh.com.au/business/the-resource-super-profits-tax--what-is-it-20100511-usnu.html


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## lil smoochie (11 May 2010)

what we need is a realistic forecast and a realistic budget! 

they cut tax by a bit, they increase super, they want to get out of debt

solution? lets tax mining companies

then what happens?

mining companies move overseas, australia loses jobs and income. 
government wont be able to sustain super increase and tax increase. then we get into more debt.

They come up with so many solutions that depends on many other factors going well and when one factor doesnt do well the whole thing falls down

when they announced Australia was doing well compared to rest of world they forgot to mention cause of the HIGH TAX RATES! money for them to push around


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## drsmith (11 May 2010)

The worst thing about the RRT is that it's become a public negotiation between miners and the government.

The outcome will therefore be determined morey by public opinion than it otherwise should. Not a good way to reach a sound policy position given the complexities involved.


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## springhill (11 May 2010)

I don't have the financial education, knowledge or background to analyse this tax. In my humble opinion if you attack our miners you attack our ability to earn on the ASX (at our own risk of course), but you also  f**k with peoples' super, which is all that some people have. Not only that, miners are a part of our social fabric, not just our financial equation. Mining aka 'hard yakka' still has a place in our Aussie society, and employs the everyday man/woman.
You f**k with that and you f**k with Joe Public.
Rudd is a tosser IMO always has been, finally people are waking up, after preferences its split Liberal/Labour 50/50.
THIS IS THE ELECTION LOSING POLICY WE HAD TO HAVE! GAME OVER RUDD!


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## trainspotter (11 May 2010)

"You can't expect your best athelete to run the race with a ball and chain around their legs" ........ Joe Hockey in response to Kerry O'Brien on Lateline in regards to the 40% tax on mining. Hmmmmmmmm ... makes sense doesn't it? *knod head slowly*


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## brty (11 May 2010)

I am pretty sure that our treasurer attends meetings regularly with other finance ministers from around the world and I'm sure he talks with others while there. All governments like new taxes, especially those with budget deficits.

I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.

brty


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## Julia (11 May 2010)

trainspotter said:


> "You can't expect your best athelete to run the race with a ball and chain around their legs" ........ Joe Hockey in response to Kerry O'Brien on Lateline in regards to the 40% tax on mining. Hmmmmmmmm ... makes sense doesn't it? *knod head slowly*




I caught the latter part of the Hockey interview (and it was the 7.30 Report, TS, not Lateline) and was pleasantly surprised at the clarity and quality of his responses to K. O'Brien.  I wonder if the kick in the polls might be giving the Libs the push they need to really start performing?


----------



## So_Cynical (11 May 2010)

brty said:


> I am pretty sure that our treasurer attends meetings regularly with other finance ministers from around the world and I'm sure he talks with others while there. All governments like new taxes, especially those with budget deficits.
> 
> I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.
> 
> brty




Yep that's what im thinking, China, South Africa, Ghana, Brazil, Canada and the US to follow suit...they can all use the money and the resulting inflation.


----------



## Whiskers (11 May 2010)

Aston said:


> Just saw an interesting article stating that Mining companies will be effectively paying a tax rate of 57 per cent after the 28 per cent company tax rate is added less depreciation.  A tax on a tax.  Resource companies take on so much operational and financial risk to explore, develop and produce a mine that *may *one day be cash flow positive, so I think this seems a bit unfair.  I feel for the hard working Australian mining families who are faced with uncertainty because of such a proposed change.  I will be writing to Mr Swan objecting to the tax but I doubt he will listen to me.
> 
> http://www.smh.com.au/business/the-resource-super-profits-tax--what-is-it-20100511-usnu.html




Aston, have a look at post #57 and the article from David Buckingham who is a former head of the Minerals Council. The interesting thing about how he works the figures is that the tax rate will now start lower than before and increase as profitability increases, whereas previously it was the reverse. 

Note that conglomerates with deep pockets have a ROR advantage over smaller Aus operators because they can fund larger projects up front to get better economies of scale, arguably discrimination in the tax system.

Also note the mining industry gets very generous concessions compared to other industries.



brty said:


> I am pretty sure that our treasurer attends meetings regularly with other finance ministers from around the world and I'm sure he talks with others while there. All governments like new taxes, especially those with budget deficits.
> 
> *I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut*.
> 
> brty






So_Cynical said:


> Yep that's what im thinking, China, South Africa, Ghana, Brazil, Canada and the US to follow suit...they can all use the money and the resulting inflation.




I concur. This is a significant and important prediction, also because as I mentioned earlier, all our mineral competitors have much more debt than us. We can get away with being first because of the cost saving from being much closer to the main mineral markets.


----------



## Mofra (12 May 2010)

brty said:


> I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.



Not sure that is quite the case in the near future - plenty of "unprofitable" projects currently in mothballs will be started if there is a prolonged increase in resource prices (the simple concept of supply and demand still holding on strong if you will).



brty said:


> I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.



We can only hope so to protect the competitiveness of the Australian market. I dare say (following the South American experience) these nations would be more inclined to tax the foreign companies first before hitting the domestic companies, which is again bad news for BHP & RIO.


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## Putty7 (12 May 2010)

I'm not an expert on tax or the budget, but on the idiot box last night it was suggested that Swann and Rudd put the tax in the budget to show a surplus before the election knowing that it will be knocked back anyway and won't be included in final Budget figures, any thoughts on this from the more knowledgable political followers ....


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## Julia (12 May 2010)

Putty7 said:


> I'm not an expert on tax or the budget, but on the idiot box last night it was suggested that Swann and Rudd put the tax in the budget to show a surplus before the election knowing that it will be knocked back anyway and won't be included in final Budget figures, any thoughts on this from the more knowledgable political followers ....




That sounds quite feasible, Putty.  The other thing they did was not include the huge cost of the NBN, apparently because they can claim it is a "commercial" project (even though the government is going to build it!) and therefore doesn't come into the category of government expenses.

It will be interesting tomorrow night to see how Tony Abbott deals with the budget and what he manages to come up with for the Opposition.


----------



## drsmith (14 May 2010)

http://www.businessspectator.com.au...onceived-pd20100514-5ET5A?OpenDocument&src=mp



> Earlier this week Xstrata's Mick Davis gave a presentation in which he showed Australia's tax regime on resources relative to our major competitors. *We were at the higher end of the scale, although not that far out of kilter with similar economies.* The RSPT would put us out there in a space that no other major resource economy would inhabit – we would be the world leaders, by the length of the straight, maybe several straights, in our taxing of resource companies.



Is the above presentation available publically ?

It would make for an interesting read.


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## bunyip (14 May 2010)

Business spectator commentary Robert Gottliebsen -:
* A mammoth capital strike looms *

At this stage it's just private words to selected journalists and few decisions have been made, but Australia is on the brink of the greatest capital strike in its history and one of the largest ever seen in the world. 

 In the vicinity $100 billion of resource projects that were almost certain to go ahead are now headed for mothballing until the resources tax is either abandoned or severely modified. If the private words to me and other journalists are converted to action and a new mining project capital strike is launched, then almost certainly Kevin Rudd will not win the next election. The economies of Queensland, WA and South Australia would be decimated.  

 I have never seen an industry so angry. As we saw in the medical area, Rudd just put the proposal on the table and tried to bully his way through. But miners are much tougher than state premiers and the international majors have a raft of projects in other countries that will now take precedence over Australia. They can wait until sanity returns down under. The sufferers will be the myriad of contractors that have based their business on what appeared to be major mining investment programs. 

 Yesterday I had the chance to talk with a number of people who will play a key role in whether there is a capital strike or the miners roll-over. The people I spoke to have no doubt that there will be a strike. 

 Stephen Bartholomeusz pointed out yesterday the $60 billion worth of coal gas and LNG projects at Curtis Island and surrounds are now in grave danger of being mothballed. 

 Rio Tinto has $5 billion globally to spend on new projects and $12 billion on global project candidates – WA iron ore was close to the top of the list. It is now at the bottom and will be scrapped.  

 BHP is in no hurry to develop Olympic Dam further and the project that SA Premier Mike Rann staked so much on, is a prime candidate for mothballing, which would devastate South Australia. There are a raft of other smaller projects likely to be suspended. Like the Western Australians and Queenslanders, the South Australians only have Kevin Rudd to blame.  

 Just as the Rudd government had no idea about the chaos they were creating with the badly structured emissions trading scheme, the inexperienced Rudd team had not the slightest idea of what they are doing to resource projects when they drafted the new tax. 

 Less than a decade ago resource projects were struggling. They will struggle again some time in the future. The Rudd plan assumes a ridiculous 6 per cent return and then lumps a 40 per cent extra tax on earnings above that, which takes the tax rate to the vicinity of 58 per cent and in some cases it can be higher. If a miner is well into the construction of a new project they will have to keep going, but if they have not started, the rewards now do not match the risk. Even if a resource company was prepared to take a punt it is unlikely that a banker would back it. 

 Moreover, all the major resource groups have projects from all around the world competing for their capital spending dollar. By starting a new project in Australia big miners are declaring that a 58 per cent tax rate is acceptable. If any global company, including Australian-based global companies are prepared to be taxed at that rate in Australia, then they would face the danger of similar rates elsewhere. 

 Nevertheless it is always possible that Kevin Rudd may get one major resource company to break the strike, but for the most part it will remain for as long as it takes.  

 Already Canada is pleading for global resource companies to divert money from Australia to develop their projects. Africa will point out that they are more politically reliable than Australia and that past decisions in Australia have been made on a totally wrong tax premise.  

 But it gets worse for Australia. The flower of confidence has been trampled on by our Prime Minister and no one will want to go ahead with a major project unless there is an act of parliament setting the tax rate forever.  

 Kevin Rudd is now caught in a massive pincer. At the top, there is about to be a capital strike . At the bottom, assistant treasurer Nick Sherry wants to eliminate independent contracting as we now know it (One man can make Abbott PM, March 3). 

 And in the middle, we have a series of blunders led by insulation and education building and a botched emissions trading scheme. Oppositions don’t win elections, governments lose them.


----------



## bunyip (14 May 2010)

http://www.theaustralian.com.au/new...nal-about-mining/story-e6frg6zo-1225866340058


----------



## Julia (14 May 2010)

I liked this comment to "The Australian" today, made in the wake of Mr Rudd and apparently some members of the Reserve Bank suggesting it will not be a bad thing if the miners cancel some of their proposed projects, because we need to slow the economy (in part to make things easier for foreign students studying here!!!):



> Carl Chapman of Brisbane  Posted at 7:55 AM Today
> 
> If slowing the economy is so important, why does he persist with his stimulus spending?



So much inconsistent spin.


----------



## drsmith (14 May 2010)

brty said:


> I am pretty sure that our treasurer attends meetings regularly with other finance ministers from around the world and I'm sure he talks with others while there. All governments like new taxes, especially those with budget deficits.
> 
> I have a suspicion that other countries will follow with this type of tax on resources, and the mining giants know it. The world is heading towards 'peak resources', prices will rise, and governments want a larger cut.
> 
> brty



If the above is true, those finance ministers may have convinced the Australian government to "jump first" in an attempt to gain access to more mining investment capital themselves.



> Moreover, all the major resource groups have projects from all around the world competing for their capital spending dollar. By starting a new project in Australia big miners are declaring that a 58 per cent tax rate is acceptable. If any global company, including Australian-based global companies are prepared to be taxed at that rate in Australia, then they would face the danger of similar rates elsewhere.


----------



## drsmith (14 May 2010)

Julia said:


> I liked this comment to "The Australian" today, made in the wake of Mr Rudd and apparently some members of the Reserve Bank suggesting it will not be a bad thing if the miners cancel some of their proposed projects, because we need to slow the economy (in part to make things easier for foreign students studying here!!!):



I'd love to be a fly in the wall at RBA board meetings.

From the same economic growth, the government is forecasting lower underlying inflation than the RBA (Government: 2.5% to June 2011 and 2012, RBA: 2.75% to June 2011 and 3% to June 2012).


----------



## trainspotter (14 May 2010)

My favourite part was when Abbott told parliament "If the tobacco tax is supposed to stop people from smoking can the PM tell us why if taxing the mining companies it is supposed to stimulate their economy ?" 

An epiphany of clarity that should have been RAMMED home to take advantage rather than going on morning TV and radio going "Aaahh ahhh I am a wimp ... ahh aaah ... I can't answer that .. aah aaahh ... it might have been discussed but so were many other things in the party room ... AAAH AAH "WHERE are their handlers? Where are the advisors? Where are the spin Doctors to assist? HUH ? 

Or is it that Labor is the only political party that has the nous to polish their act to appeal to the voting public. Dare I say it ... GO JULIA !

OOOOOOOOOOPS .......wrong thread  !!


----------



## drsmith (15 May 2010)

What both sides of politics need to to consider is that the big mining companies might consider them both to be basket cases and take their future investment elsewhere anyway.


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## brty (15 May 2010)

> take their future investment elsewhere anyway.




This does assume a couple of things...

1 There are plenty of easy to get at minerals out there.

2 They don't lose the rights to a resource by not mining it.

brty


----------



## It's Snake Pliskin (15 May 2010)

drsmith said:


> What both sides of politics need to to consider is that the big mining companies might consider them both to be basket cases and take their future investment elsewhere anyway.



They might get involved in politics to counter both side sand their crap.


----------



## drsmith (16 May 2010)

https://www.aussiestockforums.com/forums/showpost.php?p=554955&postcount=83

According to Allan Kohler (Inside Business), the 57% total tax take is 13% higher than the next highest mining taxer and Canada taxes resources at 25%.

http://www.abc.net.au/insidebusiness/content/2010/s2900620.htm


----------



## cutz (16 May 2010)

Breaking News !!!

Opposition health spokesman purchased 50 BHP shares after super tax announcement ,

Woopee !!!


----------



## medicowallet (16 May 2010)

It is interesting to hear incompetent politicians talk about the economy, its condition and faults.

ie BHP is X% foreign owned.

Who cares?  Australians who have not been investing in the resources boom surely haven't. They have been borrowing up big to fund a housing boom so that they cannot invest in our resources.

Why would then the government, which is supposed to bee run by professionals, not see that a solution to the problem is not to tax the mining companies and their vast investments in Australia, but to offer incentive for Australians to purchase shares in the Super companies BHP, Rio etc.

They could scrap the first home owners grant, and instead subsidise shareholdings in RIO and BHP for superfunds. 

This would not cause the inflation that is being caused by the housing bubble, would allow people to retire on decent incomes, and also give our children the opportunity to purchase affordable housing.

But no. 

Keep the bubble going, and can the companies that actually contributed to Australia's stability during the GFC.


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## YELNATS (16 May 2010)

cutz said:


> Breaking News !!!
> 
> Opposition health spokesman purchased 50 BHP shares after super tax announcement ,
> 
> Woopee !!!




Maybe Peter Dutton believes that this hairbrained idea will be dropped/shelved/shafted, like most of us hope it will.

"Mr Swan said the revelation of Mr Dutton's BHP shares showed the opposition couldn't be trusted." A classic case of the pot calling the kettle black.

I was a Rudd/Swan supporter until this latest escapade, but they've now lost me entirely. 

Abbott also looks incompetent, particularly in the vital field of Economics which he admits he hates/doesn't understand, so it looks like an informal vote from me at the next election.


----------



## Julia (16 May 2010)

cutz said:


> Breaking News !!!
> 
> Opposition health spokesman purchased 50 BHP shares after super tax announcement ,
> 
> Woopee !!!



Mr Dutton did a poor job of defending his purchase.  He seems to have been all defensive and waffly about it, instead of simply saying something along the lines of the tax was so manifestly unfair that obviously it wouldn't ever be legislated.  Always a bad look to be defensive, rather than take the initiative.



YELNATS said:


> Abbott also looks incompetent, particularly in the vital field of Economics which he admits he hates/doesn't understand, so it looks like an informal vote from me at the next election.



Mr Abbott at least has a degree in economics, which is decidedly more than can be said about any of the key members of the government.

All of them, though, on both sides, are woefully lacking in any business experience which is why they so consistently stuff up what would be basic business decisions.
Malcolm Turnbull at least has experience in business, but he's equally woefully lacking in political nous.

Sigh.


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## drsmith (16 May 2010)

Julia said:


> Mr Dutton did a poor job of defending his purchase.  He seems to have been all defensive and waffly about it, instead of simply saying something along the lines of the tax was so manifestly unfair that obviously it wouldn't ever be legislated.  Always a bad look to be defensive, rather than take the initiative.



He could have just said his purchasing of them was as a vote of confidence in the coalition winning the next election.


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## Bushman (17 May 2010)

Here is the latest from Swan:

'The miners know in their heart of hearts that they are going to have to pay a bit more because the royalties regime has not kept pace with the value of this resource, which is 100% owned by the Australian people," he said.'

Is this the least impressive Treasurer in Australia's history? Listen to the way he speaks - it is so naive and it is not funny anymore. 

To pick it apart: 
1. the miners know in there 'heart of hearts'. No they don't Swanny. See recent releases from BHP and RIO. They know in their 'heart of hearts' that this will kill foreign investment in the resources industry. 
2. a 'bit more', no it is increasing from 43% to 57% (BHP numbers), hardly a bit more.
2. Royalties have not kept pace - err, what about a flat 30% company tax on profits. So if profit increases, the tax take increases.

blah blah blah. Craziness!


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## SmellyTerror (17 May 2010)

Whiskers said:


> Yeah good article. Much more informative without so much rethorical commentry.
> 
> http://www.businessspectator.com.au...ysteria-pd20100510-5ARLS?OpenDocument&src=sph
> 
> ...




A friend sent me that one, too. Here's my stupidly long answer:

---
Hey hey! Welcome to the output of my meal break… Food is for the weak!


I’m not saying it’ll be the death of mining, or even that "Tax is Bad" (personally, I think income tax needs to go back up a little - instead of bribing voters with money, bribe them with hospitals, I say) just that it’s a silly way to do what they say they’re trying to do. Look at it this way (3 points):

*1. Share price value goes down = super value goes down*

Company share prices are based on projected earnings. If projected earnings go down, the price goes down. Unless the tax disappears, the share price will be permanently effected because earnings will be permanently effected – this is a re-rating.

Australian super funds own shares. The value of those Australian-owned shares has just dropped by billions and billions of dollars.

This would be fine, if it wasn’t for the fact that the government has been selling this tax as “putting more into super”. They’ve just wiped out more super than they’re going to put back for years! *A new government could put billions of dollars into super, instantly, by scrapping the tax.*

This seems to be a pretty silly tax.

Consider the poor bastards who wanted to retire already, but got slammed by the GFC, and had to stay working longer until their super picked up. Well things were just getting back on track when – oops, we’re REDUCING your super now so we can INCREASE your super five to ten years down the track. Not really a vote winner, is it? Bit of a gift to the other side, really.

*2. Slower growth = slower growth for super*

And all of that is working on the assumption that this will have absolutely no impact on future investment. Even though mining is the most infrastructure-dependant, capital-hungry industry around. Unlike oil (used as an example in the article), there is no cartel fixing prices with minerals – it’s bloody competitive. Unlike oil, you can’t pipe it into tankers – you need rail, trains, much bigger ports, much bigger investment. Unlike oil, demand for minerals swings wildly, so infrastructure you build today might stand idle in five years. More risky than oil, and a LOT more expensive. 

So we’ve got all these bottlenecks in the Australian industry. There were some big projects in the pipeline to build more rail, upgrade more ports, to increase capacity – but why, when every excess ton they produce from their current windfall will be taxed at – what? The top rate from the table in the article goes from 35.5% to 53.3%. Why not continue to produce at the current rate, and use that money and projected difference in profit to buy out a South-American producer, and upgrade THEIR infrastructure. Profit is profit – why spend the same money to make less of it?

There will still be investment in Australia, because, yeah, it’s profitable. But there is a finite amount of investment money. Of course, if something is less profitable, there will be less investment in it. It’s supply and demand. Right now there is X investment based on Y return. Reduce the return, and some of that investment goes somewhere else. It must. I could spend 5 billion on new rail to have the output of that rail taxed at 50%, or I could spend 5 billion to buy / expand output in another country and be taxed at 40%. Which is the better use of my money?

So in addition to a permanent re-rating of mining (ie loss of super right now) there will be a permanent – however small – drag on growth over time, to reflect the reduction in competitiveness of Australian mining. And that means a reduction in the growth of super down the line.

*3. Less money from foreigners = less money for super*

And finally, there’s the effect on international investors of uncertainty. As the rest of the world recovers (whenever they do) and people consider where their money needs to be, Australia is now less attractive – too many people have woken up to see their industry / shares hit by new legislation. Again, there will still be foreign investment, but continual goal-post shifting by the government makes people less likely to put their money here, and less likely to keep it here. It’s as much *the way *it was done, as *what *was done – little consultation, seemingly populist. Everyone wonders - who’s next? Should I get out now, at least partially? Should I reconsider getting those shares? Because the day they announce a bank super-tax it’ll be too late, I’ll have already lost 10% on the open. Maybe better to look elsewhere…

So that’s going to mean a re-rating of the Australian economy in general (again, hitting super funds over the next year) and discouraging investment in the long term (putting another drag on ecomonic growth).  We’ve already seen this, with currency-adjusted impacts from Greece etc being worse for us than even the US, despite our economy supposedly being in a more solid position and theoretically far less at risk from Euro-troubles. That’s a measurable change in how foreign investment sees us. They’d rather repatriate their money or keep it in the US than gamble on this government not shifting the goal-posts again. Not ALL of them are doing that, of course. Not even most of them. But enough of them to mean a decline over the next year as better /safer opportunities come along and money is pulled out to take them, and a longer-term drag as people are more willing to take other options.

All of this might only change things by fractions of a percent, and honestly if it was just standing alone then I wouldn’t be so derisive. But *it’s the fact that they say this tax is to put more into super!* ...when it’s actually doing significant damage to super – and it’s quite possible that the extra money they’re going to put in will never catch up to the damage they’re doing to get the money in the first place. So we’ve slowed our economy (however slightly) – for what?


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## Whiskers (17 May 2010)

SmellyTerror said:


> A friend sent me that one, too. Here's my stupidly long answer:
> 
> ---
> Hey hey! Welcome to the output of my meal break… Food is for the weak!
> ...




Yeah, it's all still a little murky, and looking at it all on a lineal view (assuming the miners and state gov's continue the same management decisions) that may be the case.

But, the reality is they are lateral thinkers and will change their management decision making according to new rules (dynamics) that happen from time to time. In total, I expect the big multinational conglomerates who have an enormous economies of scale will be affected most.

But I'm thinking with the added deductions/rebates smaller producers may find it easier to get into profitability faster from the effective tax take being a decending scale which favors the conglomerates, changing to an ascending scale where the tax take starts from a lower base and increases as profitability increases.

*However, Mr Barnett has shot himself in the foot opposing the fed tax by now acknowledging that:*



> At the moment *BHP and Rio pay a concessional royalty rate *of 3.75 per cent on the value of their smaller-particle "fines", but Mr Barnett wants this rate raised to the industry standard of 5.625 per cent by July. More than 70 per cent of Rio and BHP's Pilbara iron ore output in Western Australia is fines, increasingly preferred on the global market.
> http://www.perthnow.com.au/business...mining-royalties/story-e6frg2qu-1225865897334




*All confirms my earlier point about corruption and or special favors, especially in WA and Qld, for some Miners.*

Certainly not a level playing field and certinly not for smaller companies, whom I expect will be the big winners if the new tax gets through.

Depending how the it all pans out it may go some way to standardising mineral royalties across Australia.

The other aspect is that while states make special cheap deals to woo miners and subsequent development and population growth to their states, they then try to claw back those cheap deals by arguing a bigger tax take from the commonwealth at COAG for the increased population. 

The states are using low royalties against each other as well as the commonwealth, trying to rort the revenue pool.


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## SmellyTerror (17 May 2010)

> But I'm thinking with the added deductions/rebates smaller producers may find it easier to get into profitability faster from the effective tax take being a decending scale which favors the conglomerates, changing to an ascending scale where the tax take starts from a lower base and increases as profitability increases.




True that it's not clear cut - though from where I'm sitting it seems more likely bad than good, and in any case a pretty half-arsed way to achieve an objective. Happy to be wrong.

But re: small miners / explorers: aren't they kinda famous for falling on their faces anyway? I mean, if they get to profit and actually get to pay tax, well, they're in the minority and hurray for them. But any tax on profit, high or low, means that most - the failures - won't be effected at all. Instead, there's less incentive to take a punt on smaller operations, less return on risk for exploration, because people aren't looking for a piddling 10% from exploration. They're all huntng for a "windfall". Small profits are, essentially, failures by another name. Taxing them less is a consolation prize.

Who the hell puts money into something in the hopes of a consolation prize?

So maybe the failures will fail slower. Doesn't seem worth making the successes less attractive to investment.


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## Sir Osisofliver (18 May 2010)

tee hee

http://qanda.abc.net.au/_Robin-Rudd/VIDEO/1048099/30560.html

Cheers

Sir O


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## drsmith (18 May 2010)

What is Henry on about here ?



> The Treasury department said it will set the capital allowance rate, above which the super tax will kick in, at the 10-year government bond yield.
> 
> Mr Henry said offering companies a rate above this, as some opponents of the tax have suggested, would over-compensate them.
> 
> ...




http://www.theaustralian.com.au/bus...uper-profits-tax/story-e6frg9df-1225868256595

On what basis does Henry regard a RRT kicking in above the 10 year government bond rate a subsidy ? 
This is after all an additional tax over and above company tax to start off with.


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## Whiskers (18 May 2010)

drsmith said:


> What is Henry on about here ?
> 
> 
> 
> ...




What he is saying there is... a higher *(uplift)* rate would generate "a significant subsidy for investment in the mining sector"

The emphasis on 'uplift', in other words, losses carried forward will be compensated with an uplift allowance at the 10 year bond rate to compensate for the delay in accessing these tax credits.

Essentially what Henry is saying is that if the 'uplift rate' is higher than the bond rate, the gov would be paying extra as uplift and some miners may delay projects to earn the bond rate plus the extra on their carried foreward losses.

The super tax would only kick in on assessable profits (revenue minus deductible expenses including capital allowance and state royalties) above the bond rate, at 40%. 

So if the bond rate was 6% the first six percent of net profit would not be taxed, but all profit above that would be taxed at 40%.


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## GumbyLearner (18 May 2010)

Don't you just love it that the Government gets a risk-free reward ratio of 40% to fund a whole bunch of public servant government-employed "social engineers" to tell you how to live your life with the taxation proceeds?
As an Australian taxpayer-owner of such natural resources, you should realize they have your best interests at heart? :holysheep:   

 say no more say no more


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## drsmith (18 May 2010)

Whiskers said:


> Essentially what Henry is saying is that if the 'uplift rate' is higher than the bond rate, the gov would be paying extra as uplift and some miners may delay projects to earn the bond rate plus the extra on their carried foreward losses.




The following article sheds more light including comparison with the RRPT.

http://www.smh.com.au/business/fede...ds-mining-super-profit-tax-20100518-vbwo.html



> Dr Henry said that despite comparisons to the long-established petroleum resources rent tax (PRRT), the proposed super profits tax on miners would give investors a better deal.
> 
> Under the RSPT, the investors are entitled to a government guaranteed tax credit with a present value of 40 per cent of the initial investment.
> 
> ...



Two broad questions come to mind.

1) With existing mines, would their be an allowance for expenditure previously used to build the mine ?
If not, is this what miners are screaming about in relation to the application of the RRT to existing mines ?

2) Would no allowance for carrying expenditure and a higher profit threshold for the RRT be a better alternative ?


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## Whiskers (18 May 2010)

drsmith said:


> The following article sheds more light including comparison with the RRPT.
> 
> http://www.smh.com.au/business/fede...ds-mining-super-profit-tax-20100518-vbwo.html
> 
> ...




It's all a bit complicated, but I think any carried forward losses and capital allowances on the books would be merged into the new scheme... but no allowance for expenses already claimed. 

I think some mines that have used up there carry forward losses and no have low carrying expenses are going to be caught badly with the new tax, unless they do some urgent new resource expansion exploration or development.

Also the RSPT will be calculated separately for each project interest and I think the criteria for this tax is a bit different to what is allowable for company tax, so it's not as simple as adding 40 to the 28% company tax rate. The effective rate as illustrated in the earlier table is less, especially for smaller operators with a considerable amount of carried forward losses. 



> 2) Would no allowance for carrying expenditure and a higher profit threshold for the RRT be a better alternative ?




Probably, but I think the higher carrying expense provisions is what Henry suggests is effectively a bit extra subsidy to boost more exploration and new project development.


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## drsmith (18 May 2010)

Whiskers said:


> Also the RSPT will be calculated separately for each project interest and I think the criteria for this tax is a bit different to what is allowable for company tax, so it's not as simple as adding 40 to the 28% company tax rate. The effective rate as illustrated in the earlier table is less, especially for smaller operators with a considerable amount of carried forward losses.



In terms of the total tax take but the marginal rate is still effectively 57% for profit above the threshold.

With a marginal tax rate that high, one wonders how that might impact on investment decisions (urgent new resource expansion exploration or development). Could this lead to investment decisions being based more on tax than on investment merit in the same way that higher income earners negatively gear to reduce tax ?

Perhaps the simplest solution is to apply a flat rate RRT on profit after tax. In therms of total tax as a percentage of profit, this would fit between the current royalty structure and the current proposed RRT structure as per that table. It would also be simple.

If the government wants to target a net tax take of, say, 45% from resource company profits then a 23.6% RRT would apply with 28% company tax and 26.7% RRT with 25% company tax.


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## Bushman (19 May 2010)

Fortescue's take on the RSPT:

'Fortescue said the planned development of its 160 million tonnes per annum (Mtpa) Solomon Hub project was one of the projects to be placed on hold.

This is estimated to be a $US9 billion ($A10.57 billion) investment, employing 6,000 people in operations and 15,000 through construction.' 

Uncertainty kills investment, always will. Those WA marginal seats must be worrying the Cynic-in-Chief. Also how long now the budget surplus? 

http://www.theage.com.au/business/fortescue-puts-projects-on-hold-over-tax-20100519-vdgv.html

PS: i should add that at least this will kill inflation/interest rates/AUD rises dead by 'solving' the skills shortage and wage pressures. Go rust-belt manufacturing in the Eastern States (automobiles, clothing etc).


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## Mofra (19 May 2010)

From:  http://www.news.com.au/business/bre...-hold-blames-tax/story-e6frfkur-1225868590011



> Fortescue said this tax guarantee had "no lending value by project financiers".
> 
> "Therefore the financial modeling of any future development must account for the 40 per cent cash flow leakage without any compensatory benefit under the RSPT," the miner said.



Interesting there has been no comment by Henry/Government on the finance (credit) issue. This is another concern which may be abated in time but in the short term looks problematic.


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## trainspotter (19 May 2010)

Whiskers said:


> Off topic a bit, BUT I don't know if you've noticed decent rises in base metals in the last few hours, about 4% rise in copper, not to mention the FTSE and Europe up 5%, US futures up and good, lower loan default news in the US etc.
> 
> This'll be one hell of a dead cat bounce.
> 
> Somehow I'm thinking our mining industry will purrrrr on nicely, without missing a beat. :




OOOHHHHHHHHHHHH the irony of it all !


----------



## newbie trader (19 May 2010)

Not sure about it all but Henry I saw on the news last night said the smaller miners would be better of and that the large ones wouldnt be harmed at all (be in the same position?).


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## JimBob (19 May 2010)

newbie trader said:


> Not sure about it all but Henry I saw on the news last night said the smaller miners would be better of and that the large ones wouldnt be harmed at all (be in the same position?).




The big miners will be paying billions of dollars in extra taxes, surely that means they will be worse off?


----------



## Whiskers (19 May 2010)

drsmith said:


> In terms of the total tax take but the marginal rate is still effectively 57% for profit above the threshold.
> 
> With a marginal tax rate that high, one wonders how that might impact on investment decisions (urgent new resource expansion exploration or development). Could this lead to investment decisions being based more on tax than on investment merit in the same way that higher income earners negatively gear to reduce tax ?




I wouldn't say it was comparable to negative gearing in the sense that these losses, as I understand it, can't be set off against other profit. The carry forward losses and capital allowance, have to be set off against profit from the same project. 




> Perhaps the simplest solution is to apply a flat rate RRT on profit after tax. In therms of total tax as a percentage of profit, this would fit between the current royalty structure and the current proposed RRT structure as per that table. It would also be simple.




The problem with that idea is that you cannot use the tax profit figure to calculate the RSPT, because the RSPT profit calc does not include among other things finance costs.

If the resource tax was set on the same criteria as the tax profit, it could lead to unhealthy borrowing  levels to minimise tax, which  leads to Fortescue's problem.





Mofra said:


> From:  http://www.news.com.au/business/bre...-hold-blames-tax/story-e6frfkur-1225868590011
> 
> 
> Interesting there has been no comment by Henry/Government on the finance (credit) issue. This is another concern which may be abated in time but in the short term looks problematic.




Reading the full article the following section seems telling.

_"A key focus within the review process is the funding implications of a proposed retrospective imposition of a cash drain on projects that were financed prior to the RSPT.

Also, the implications for financing new projects within Fortescue's project pipeline will be reviewed and in particular clarification sought as to the Government's tax guarantee for 40 per cent of project *losses in the event of bankruptcy*."

Fortescue said this tax guarantee had "no lending value by project financiers".

"Therefore the financial modeling of any future development must account for the 40 per cent cash flow leakage without any compensatory benefit under the RSPT," the miner said._​
I'm not sure how he will have a cash drain on projects funded previously, unless he has an unhealthy level of debt to service. Those debt costs won't be able to be carried forward with the uplift like exploration and development costs under the new proposal.

I'm thinking Twiggy may have a high debt problem, or maybe a higher debt ratio than most, with interest rates rising.

This is further evidenced by 'clarification sought as to the Government's tax guarantee for 40 per cent of project losses in the event of bankruptcy'.

What does he want, the tax and royalty office to refund his money if he goes belly up?


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## Whiskers (19 May 2010)

JimBob said:


> The big miners will be paying billions of dollars in extra taxes, surely that means they will be worse off?




Yes, I expect the international conglomerates will probably pay a bit more tax/royalty in total at least for a short period until they adjust to the new criteria. 

I can see the total tax take increasing, but not all out of the profit of existing operations. The proposal gives a good incentive to get new projects up sooner, so I think there will be a bigger tax take from more production.

PS: *Further to Twiggy's Fortescue debt problem* with the effective net tax scale reversed he will be staring down the face of increased tax as the project becomes more profitable, whereas under the old system it was biased to pay less net tax as profitably increased... hence, (I think) his future cash flow problem.


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## newbie trader (19 May 2010)

Whiskers said:


> Yes, I expect the international conglomerates will probably pay a bit more tax/royalty in total at least for a short period until they adjust to the new criteria.
> 
> I can see the total tax take increasing, but not all out of the profit of existing operations. The proposal gives a good incentive to get new projects up sooner, so I think there will be a bigger tax take from more production.
> 
> PS: *Further to Twiggy's Fortescue debt problem* with the effective net tax scale reversed he will be staring down the face of increased tax as the project becomes more profitable, whereas under the old system it was biased to pay less net tax as profitably increased... hence, (I think) his future cash flow problem.




What's Henrys reasoning behind saying that the smaller miners will be better off and the bigger miners will be in the same position then?


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## Whiskers (19 May 2010)

newbie trader said:


> What's Henrys reasoning behind saying that the smaller miners will be better off and the bigger miners will be in the same position then?




I didn't see the interview, so I can only speculate. 

I think generally smaller miners are Aus owned and based, whereas many of the bigger ones are based overseas or have substantial overseas operations and there are some tax consession rules that relate to things like 'Foreign Income Tax Offset' and 'Exempt Foreign Investment Income' etc.

It can get pretty complicated for small fry like me to work it all through, but I have a rough idea of the sort of things that apply. So depending on how big the company is, it's stage of operations, level of debt and profitability, it could get concessions for tax already paid on profit in another country and vice-versa.


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## Bushman (20 May 2010)

Whiskers said:


> I didn't see the interview, so I can only speculate.
> 
> I think generally smaller miners are Aus owned and based, whereas many of the bigger ones are based overseas or have substantial overseas operations and there are some tax consession rules that relate to things like 'Foreign Income Tax Offset' and 'Exempt Foreign Investment Income' etc.
> 
> It can get pretty complicated for small fry like me to work it all through, but I have a rough idea of the sort of things that apply. So depending on how big the company is, it's stage of operations, level of debt and profitability, it could get concessions for tax already paid on profit in another country and vice-versa.




Also small miner of marginal projects will be better off under the RSPT as they will pay tax later than under a price/volume roylaties system.


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## pacestick (20 May 2010)

Under the proposed tax  the smaller miners will pay less as per the below schedule

Just how cleverly was shown in a table produced in a note by the Treasurer recently (and reproduced below) showing estimates of the effective tax rates applying to projects. What it shows is the very deliberate design of an RSPT to lighten the tax burden on less profitable projects, encouraging investment in the projects that might otherwise have stayed on the drawing board. Higher return projects face a higher effective tax rate under profits taxation compared to royalties.


rate of return%   tax rate royalties & 30%company tax    tax rate rspt @28% 



  6                      45.4                                                28
10                       40.9                                                39
15                       38.7                                                45.3
20                       37.6                                                48.2
25                       36.9                                                49.9
50                       35.5                                                53.3


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## Whiskers (20 May 2010)

pacestick said:


> Under the proposed tax  the smaller miners will pay less as per the below schedule
> 
> Just how cleverly was shown in a table produced in a note by the Treasurer recently (and reproduced below) showing estimates of the effective tax rates applying to projects. What it shows is the very deliberate design of an RSPT to lighten the tax burden on less profitable projects, encouraging investment in the projects that might otherwise have stayed on the drawing board. Higher return projects face a higher effective tax rate under profits taxation compared to royalties.
> 
> ...




Yeah, that's true to a large degree, but there is two large distinctions between the old and the proposed new system.

The old/current system effectively taxes new projects at a higher rate of their profits initially, then reduces as profitability increases. That is an illogical anomonoly that has crept into the system corrupted by decades of uncordinated regulation between the states and fed gov and makes it harder to get new projects up and running profitably.

Secondly, the proposed new system turns that net tax rate around, but doesn't allow financing costs to be used in carry costs that get an uplift at the bond rate. That is a deterent to taking on excessive debt to get a project up while effectively getting a bit of a subsidy (uplift) from the gov to expedite development to profitability starting with lower net tax rates, that increase as profitability increases.

So, as far as it helps some projects that were less profitable previously because of the inverted effective tax rate, thats true, but I can't see that it helps intrinsically unprofitable projects or heavily debt laden projects as indicated by Twiggy Forrest's problem. Twiggy's project may well be profitable, but I suggest he has probably tried to develop too big of a project too fast with too much debt than equity investment.


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## Bushman (20 May 2010)

Whiskers said:


> Twiggy's project may well be profitable, but I suggest he has probably tried to develop too big of a project too fast with too much debt than equity investment.




That is why the miners are mad, changing the rules of the game to existing projects that have already been fully funded. But the government needs to apply it retrospectively to catch the high grade mines that can deliver super profits. This is the definition of regulatory risk, and investors hate this. But this is not a tax designed to win the 'hearts and minds' of sophisticated investors.

Interesting to hear Crean describe the tax as price neutral to China due to the prospect if increasing supply by making marginal projects viable. 

The thing that annoys me is that Henry, Garnaut, Krudd et al keep banging on about how this resources are owned by all Australians. However, without equity investors taking on the substantial risk of exploration, the Crown land remains unimproved dirt with no value. That is why the 6% hurdle rate is ludicrous. 

Also why is there not a RSPT on farming, and in particular the massive pastoral leases on Crown land in the NT and Qld? Surely we also 'own' that land and should get paid some rentals for it? 

It is inconsistently applied, does not take the risk/return ratio into mind and harms Australia's reputation as an investment destination because of its retrospectivity. Ironically, it will also provides miners an incentive to invest in marginal projects?  

Having said all that, I do support the replacement of the inefficient State-based royalty regime.


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## pacestick (20 May 2010)

I should have added to my post that while these are the figures the treasurer has given and are probbaly accurate I dont believe that any start up miner will be encouraged to leap in because  they in the end all want to maximise their profits . I offered the figures in response to someone who asked why it was seen as an encouragement to small miners.


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## trainspotter (20 May 2010)

Read post #112 ....... it's a CRACKER ! 

Soon there will be nothing left to tax at this rate of decline. FMG wiped 8% off the news they are not going with the 9 billion exploration due to the 40% SUPER TAX. YAY ...... If Rudd had done nothing and this "correction" we are going through would have slowed the economy enough.


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## drsmith (20 May 2010)

IIRC, FMG fell to around $1 when stock markets crashed in late 2008. 8% is just a minor speed bump for this company.

-------------------------------------------------------------------

Someone raised the prospect of this recently in one of the RRT discussion threads,

http://www.smh.com.au/business/mining-tax-contagion-set-to-spread-globally-20100520-vgdw.html

Another take on this is that if introduced globally it would obviously induce inflation if it does not stifle demand. This would be to the benefit of countries with net debt as it would reduce the real value of that debt. 

How happy would China be with that ?


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## trainspotter (20 May 2010)

drsmith said:


> IIRC, FMG fell to around $1 when stock markets crashed in late 2008. 8% is just a minor speed bump for this company.
> 
> -------------------------------------------------------------------
> 
> ...




That is like comparing a cygnet to a swan .... speed bump? More like a Crusty Demons HELL JUMP !! 

Still a major player with contracts to fill with China. Has a 30 year minesite still producing 25mt per annum. Was looking at expansion until you know what happened (Thank you Kev and your 40% tax) 

True. But globally we are fragile in our needs market. We need China to pay buy our Iron Ore to help us pay our debt. Remember we are less than 0.00003% of the population. 6.3billion people in the world and we are 22 million?? Fiesty lot arent we !!


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## doctorj (20 May 2010)

trainspotter said:


> Read post #112 ....... it's a CRACKER !
> 
> Soon there will be nothing left to tax at this rate of decline. FMG wiped 8% off the news they are not going with the 9 billion exploration due to the 40% SUPER TAX. YAY ...... If Rudd had done nothing and this "correction" we are going through would have slowed the economy enough.



I don't like the idea of the tax, but lets not get too carried away.  FMG is a mining company, they may jump around a lot, but they will mine.  What else can they possibly do?

Lets not forget that there is an election coming up, so its unlikely the mining companies will quiten down before then.  Afterall, if Australia introduces higher tax levels, many other countries are likely to follow.


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## nunthewiser (20 May 2010)

trainspotter said:


> . Was looking at expansion until you know what happened (Thank you Kev and your 40% tax)
> 
> !




Personally think the whole " we not expanding because of the tax " story is a whole crock of crap personally ......... The tax is on PROFITS .. as a business one would think that expansion and taxable write offs would be a number 1 priority now and this new tax actually provides more incentive to create expansion and exploration opportunities by reinvesting the profits within themselves rather than having it taxed.

Just a bully boy story created by the miners to try and scare the guv into line again.

But hey im no accountant .


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## Whiskers (20 May 2010)

Bushman said:


> That is why the miners are mad, changing the rules of the game to existing projects that have already been fully funded.




Yeah, I reckon that's the main reason, cos there is nothing worse than having the rules changed after you've done all the forcasts and budgets for a project and have to do it all again to an unfamiliar system.

But as you also said, something needs to be done to improve the system and make it more equitable. 



> Also why is there not a RSPT on farming, and in particular the massive pastoral leases on Crown land in the NT and Qld? Surely we also 'own' that land and should get paid some rentals for it?




Hey, steady on the farmers there Bushman.  But I agree the pastoral leases are mostly a gift to graziers. They were often for as little as $1 for many years with minimal maintaince requirements for the grazier. 

The other side of the coin, that I was only thinking about again today, is the plight of farmers on the Darling Downs in Sth Qld where coal seam gas development threatens to destroy their land and livelyhood. 

The antiquated laws in favor of mineral development need to be revisited to either make the miner pay restitution for lost income and guarantee the proper rehabilitation of the site, or buy the freehold.




pacestick said:


> I should have added to my post that while these are the figures the treasurer has given and are probbaly accurate *I dont believe that any start up miner will be encouraged to leap in, because  they in the end all want to maximise their profits* . I offered the figures in response to someone who asked why it was seen as an encouragement to small miners.




pacestick, I'm not sure what you meant here in blue, unless you meant to put a comma in there (in red), then it sounds good for me.



trainspotter said:


> Read post #112 ....... it's a CRACKER !
> 
> Soon there will be nothing left to tax at this rate of decline. FMG wiped 8% off the news they are not going with the 9 billion exploration due to the 40% SUPER TAX. YAY ...... If Rudd had done nothing and this "correction" we are going through would have slowed the economy enough.




trainspotter, I think you will find FMG's main problem is their high debt level/requirements to get what they want done, quickly.

Secondly, there is already a skills, supporting industry and equipment shortage, which is styfling many projects, such as delays for drilling rigs and testing laboratory services.

So if the proposed "SUPER TAX" wiped 8% off FMG's price how much did the volilatility in the world markets and metal prices wipe off... none?

The market action has been all fairly predictable, as you would see, if you would get onto more of the market threads... and realistically, precious little to do with the proposed super tax. I recall, along with a few others,  pointing out the likelyhood of this correction in the share, precious metal and base metal prices and so far is behaving fairly predictabily... certainly not a disasterous market decline... hence the picture of the smileing cat, sleeping on it's back. 

Oh, OK, just so you get it... nothing to disturb a nap over... or colloquially, nothing to get your nickers in a knot over. :

Trainspotter mate, I'll bet you London to a Brick, that our mining industry will not be ruined or shut up doors and go away as some alarmists (no names mentioned suggest, and will continue on regardles if this new tax is implemented as Rudd wants it, because there will still be profits to be had, maybe just not as big profits.


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## Whiskers (21 May 2010)

drsmith said:


> IIRC, FMG fell to around $1 when stock markets crashed in late 2008. 8% is just a minor speed bump for this company.
> 
> -------------------------------------------------------------------
> 
> ...




Yeah, that's a good point. I reckon Germany is screwing the Euro bailout of Greece controversy to help their trade position and economy a bit a-la the so called US PPT.

I wouldn't be surprised, assuming Rudd does get some form of this tax through the senate, that it may work well for Aus down the track to be amongst the first to increase taxes... cos a lot of people don't seem to comprehend the seriousness of the debt problems of our competitors and the only real option they have is to increase taxes and cut services.

Also, most mineral prices are back up to levels comperable to pre GFC levels and are historically quite high, so t'is obviously better to do it now than at the bottom of the cycle.



> How happy would China be with that ?




I think they have been spreading their state owned corporate wings all around the world to source and secure long term contracts for vital commodities for some time now and may be protected from price rises to a large extent.

But I wonder what the average cost is of all their USD reserves? Are they using cheaply acquired USD's to pay for a lot of their commodities?


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## Mofra (21 May 2010)

nunthewiser said:


> Personally think the whole " we not expanding because of the tax " story is a whole crock of crap personally ......... The tax is on PROFITS .. as a business one would think that expansion and taxable write offs would be a number 1 priority now and this new tax actually provides more incentive to create expansion and exploration opportunities by reinvesting the profits within themselves rather than having it taxed.
> 
> Just a bully boy story created by the miners to try and scare the guv into line again.
> 
> But hey im no accountant .



Nunno, I'm sure they would... if they could finance the project.

With the change in rules it appears the finance industry haven't responded positively, nor should they until the bill passes. Especially in the commercial sector, the most conservative lending path is the most likely path to be followed.

One does wonder if it is the RSPT itself which is the biggest problem, or merely the uncertainty it currently represents. I'm against it personally, but history may judge the latter factor to hold the greater impact in the short term.


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## trainspotter (21 May 2010)

Whiskers said:


> trainspotter, I think you will find FMG's main problem is their high debt level/requirements to get what they want done, quickly.
> 
> Secondly, there is already a skills, supporting industry and equipment shortage, which is styfling many projects, such as delays for drilling rigs and testing laboratory services.
> 
> ...




Read POST #112 ..... It's a CRACKER !! Gee you really are not as clever as I gave you credit for Whiskers. You may use big words and post a lot of fluff but not much is substance now is it. Insted of directing me onto other market threads .. I choose to go and talk to the people who actually know what is going on in the real world. Keep up the cyber bullsh!it mate ... you are real good at it.

If you read my OTHER post you would have acknowledged this _"Still a major player with contracts to fill with China. Has a 30 year minesite still producing 25mt per annum. True. But globally we are fragile in our needs market. We need China to pay buy our Iron Ore to help us pay our debt. Remember we are less than 0.00003% of the population. 6.3billion people in the world and we are 22 million?? Fiesty lot arent we !!"_ In relation to FMG and other iron ore mining companies. DOH ! What the hell would I know ?

AND furthermore I agree that the mining companies are using the 40% SUPER TAX as a threat to the Guvmnt. It is called an ambit claim. AND yes they are using it as an excuse to wind back exploration etc. 

If you could take the time and understand what I am writing you might learn something. If you recall many vox pops claimed the 40% SUPER TAX on the mining companies was introduced by Rudd to slow the boom cycle of the mining industries. We now find ourselves GLOBALLY correcting and guess what ....... (insert your answer here) 

Goodbye.


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## trainspotter (21 May 2010)

However Deputy Prime Minster Julia Gillard rejected suggestions the proposed super mining profits tax was driving the dollar lower.

"We are seeing a flight to the US currency,'' Deputy Prime Minister Julia Gillard told the Nine Network.

"The euro is falling dramatically, we are seeing instability in Greece and what we know from the global financial crisis is when you get instability somewhere it feeds around the world.''

In one of the biggest five-day slides in its history, the dollar's slump is causing headaches for importers and travellers heading overseas.

For consumers, the drop will push up the prices of imported electrical goods and cars.

*The Aussie dollar is considered by the global investment community as a risky option in times of economic uncertainty due to the nation's leverage to the commodity prices and and concerns about the mining super profits tax.  The US dollar is seen as a safe haven.*

http://www.news.com.au/business/eur...ollar-plummeting/story-e6frfm1i-1225869409039


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## Bushman (21 May 2010)

Ramping it up. Voelte saying that a RSPT would've killed Pluto. Lol. 


http://www.theaustralian.com.au/bus...-says-don-voelte/story-e6frg9ef-1225869700946


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## ROE (23 May 2010)

The principles of this tax is just wrong, I don't have a lot in mining stocks but I oppose it and will vote against it.

mining is high risk, high capital requirement business and I reckon who ever put their capital at risk should get all the profit and they pay their fair share of tax like any other business.

You want people stop smoking put on the great big tax.
You want people stop investing in mining put on great big tax.

you cant have a great big tax on an industry and said she be right mate
and spread the wealth  sound like something a socialist and a communist would do..

another policy on the run  and Rudd is playing John Howard card assuming everyone is stupid that
they take their word for it....we tax mining and we give it to everyone...everyone will be better off...hmmm


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## It's Snake Pliskin (23 May 2010)

This article gives more light to the issue, for me at least. 
http://www.dailytelegraph.com.au/ne...political-debate/story-e6frezz0-1225869963851


> Even if we put aside for one moment the absurdity of a Government by-law being required to take a 40 per cent stake in the financial risks attached to new mining ventures it has no control over, no knowledge about, and no right to be selective about, the Government sharing in the losses of mining companies as public policy won't survive beyond the first time it happens.


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## drsmith (23 May 2010)

Below is the transcript of Ross Garnaut's 21/5/10 speech on the proposed RRT.

It's quiet a long read and I have not had a chance to read it all but it does appear to offer a broad perspective.

http://www.theaustralian.com.au/bus...esource-rent-tax/story-e6frg8zx-1225869337321


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## Putty7 (23 May 2010)

ROE said:


> The principles of this tax is just wrong, I don't have a lot in mining stocks but I oppose it and will vote against it.
> 
> mining is high risk, high capital requirement business and I reckon who ever put their capital at risk should get all the profit and they pay their fair share of tax like any other business.
> 
> ...




The trouble is a lot of people are that stupid and will feed off whatever the media decides is fit for public consumpsion.


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## Bushman (24 May 2010)

It's Snake Pliskin said:


> This article gives more light to the issue, for me at least.
> http://www.dailytelegraph.com.au/ne...political-debate/story-e6frezz0-1225869963851




It really is nuts that the Government is willing to take a 40% stake in risky mineral exploration, indexed to the government bond rate. 

Why would they do this? The obvious answer is that this is what makes the tax neutral to the mining companies. 

Fine in an economic model, not so fine in the real world. My reasons:
1. It is inherently unfair to existing projects. This is because it is being applied retrospectively on long-term mining projects without allowing miners to recoup past capital losses. For a BHP or a RIO with a stable of existing 'super' profitable long life mines, they will not get the 40% rebate (plus retrospective indexation to the bond rate) on fully depreciated assets or past balance sheet write-offs (like Ravensthorpe). This is the bit that sounds like a tax grab to me;
2. it will not be politically viable to write out big cheques to failed mining ventures. It will be a massive storm when, as the author alludes to, the administrators for a Pasminco come knocking on Treasuries door for a big tax refund due to poor zinc price forecasting; and
3. This is why financiers will not accept the 40% 'government bond' in their modelling - they do not trust the political will to open up the coffers for mining losses racked up. 

Also imagine the impact on the budget when China has its correction and commodity prices crash or the gold 'bubble' pops? There could be a bill well into the billions which will have to be funded by tax payers! 

This will just not sell electorally IMO. 

My tip is that the RSPT will be watered down to become like the petroleum profits tax - thus a flat 40% rate will kick in after a project return of the bond rate + 500-600 basis points with a tax write-off allowed for royalties but no government refund for capital losses. This can then easily and fairly be transferred on existing assets, with an allowance made for written-off depreciation. The tax will then not apply to low margin operations like quarrying etc because the return on those projects will be below or on the 11% margin. 

My 2c - lets see how it plays out. Without a doubt, though, some variant of the super profits tax will exist going forward.


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## moses (24 May 2010)

Kevin's SPT; snatching defeat out of the jaws of victory.


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## Aston (24 May 2010)

Mr Swann is saying that "multinationals such as BHP Billiton and Rio Tinto pay just 13 to 17 per cent tax". BHP and the opposition are stating that this is a misrepresentation. The following link points out that "BHP Billiton clearly stated that in the 2009 financial year it paid total taxes to Australian governments of A$6.3 billion, resulting in an effective tax rate of around 43 per cent.”   Given the Corporations Act has a number of provisions relating to a company officer making false and misleading statements, then can we conclude that the BHP CFO is making an accurate statement.  
So who is telling the truth and can the government reconcile the discrepancy?  

http://preview.bloomberg.com/news/2...entation-of-level-of-australian-tax-paid.html


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## Julia (24 May 2010)

Bushman said:


> It really is nuts that the Government is willing to take a 40% stake in risky mineral exploration, indexed to the government bond rate.
> 
> 2. it will not be politically viable to write out big cheques to failed mining ventures. It will be a massive storm when, as the author alludes to, the administrators for a Pasminco come knocking on Treasuries door for a big tax refund due to poor zinc price forecasting; and
> 3. This is why financiers will not accept the 40% 'government bond' in their modelling - they do not trust the political will to open up the coffers for mining losses racked up.
> ...



Exactly.  I'm amazed that more focus has not been attached to this utter nonsense (Tom Albanese described as 'bizarre') by the Opposition, and the Minerals Council, for that matter.
As a taxpayer, I'm damned if I want to be funding any portion of failed mining ventures!.



> This will just not sell electorally IMO.



So far, I rather doubt this has actually registered with the electorate at large.



> My tip is that the RSPT will be watered down to become like the petroleum profits tax - thus a flat 40% rate will kick in after a project return of the bond rate + 500-600 basis points with a tax write-off allowed for royalties but no government refund for capital losses. This can then easily and fairly be transferred on existing assets, with an allowance made for written-off depreciation. The tax will then not apply to low margin operations like quarrying etc because the return on those projects will be below or on the 11% margin.



Agree, and I reckon the miners would probably accept that, as long as the deal stays which sees them reimbursed for the royalties paid to the States.





Aston said:


> Mr Swann is saying that "multinationals such as BHP Billiton and Rio Tinto pay just 13 to 17 per cent tax". BHP and the opposition are stating that this is a misrepresentation. The following link points out that "BHP Billiton clearly stated that in the 2009 financial year it paid total taxes to Australian governments of A$6.3 billion, resulting in an effective tax rate of around 43 per cent.”   Given the Corporations Act has a number of provisions relating to a company officer making false and misleading statements, then can we conclude that the BHP CFO is making an accurate statement.
> So who is telling the truth and can the government reconcile the discrepancy?
> 
> http://preview.bloomberg.com/news/2...entation-of-level-of-australian-tax-paid.html



Given the paper alleging the 13 to 17 % tax rate was written by a student who this evening was alleged to still not have graduated, granted with supervision by his Professor of Taxation, I wouldn't have to think too hard to put my money on the veracity of the BHP Company statement.

Andrew Robb has quoted one part of the student's paper where he says the student didn't know where to put the figures from New Zealand, so he just tacked them on to those for Australia!.
I have no idea whether that's true.  No reason to think Mr Robb places any more value on truth than does Mr Swan.


----------



## trainspotter (24 May 2010)

moses said:


> Kevin's SPT; snatching defeat out of the jaws of victory.




Hear Hear ! Just when we were getting somewhere as a country of true "worth" globally. Now we will be seen as the idiot savante that picked the wrong answer on "Who wants to be a millionaire?"


----------



## Whiskers (24 May 2010)

Bushman said:


> My 2c - lets see how it plays out. Without a doubt, though, some variant of the super profits tax will exist going forward.




Yes, I think there's a better chance of getting some variation of this through than the ETS.

I also agree that the gov cannot be held liable for refunding money for failed projects. It will have to always be that losses can be carried forward against future income, maybe not as strictly as the same project, but within the same company.

Re the current effective net tax (including royalties) paid at present, it's damn hard to know because of all the variable royalty rates, including the significantly reduced royalties that BHP and RIO have paid in WA since the 60's to allow for their infrastructure development in the Pilbara.

Many of the junior explorers/miners who now have projects in the area are at a competative loss to BHP and RIO because of those outdated royalty concessions and have had to go to court to win the right to use that infrastructure albeit on BHP and RIO's terms.

There's a lot of criss cross, argy bargy going on between the fed and states, the miners and states, the miners and fed and miner against miner.

It's all a hell of a mess that is beyound the comprehension of most, hence I think Rudds simplistic headline arguement that the people should have a better share.

Just touching on the justification of higher taxes especially for mineral resources... the BP oil spill in the US, Santos in New Guinea a few years ago and even BHP among others causing serious degradation of the local enviornment from accidents, deliberate concealed toxic waste desposal and often poor rehabilitation of mined areas, is a powerful public arguement to make them pay higher taxes, despite the high risk nature of the exploration and development of these resources.


----------



## Bushman (25 May 2010)

Julia said:


> Given the paper alleging the 13 to 17 % tax rate was written by a student who this evening was alleged to still not have graduated, granted with supervision by his Professor of Taxation, I wouldn't have to think too hard to put my money on the veracity of the BHP Company statement.
> 
> Andrew Robb has quoted one part of the student's paper where he says the student didn't know where to put the figures from New Zealand, so he just tacked them on to those for Australia!.
> I have no idea whether that's true.  No reason to think Mr Robb places any more value on truth than does Mr Swan.




Can you believe that Swan tried to use these shonky figures? The man has some gumption. ATO figures released today contradict this, saying the tax rate is more like 27%, with royalties taking this up to 40%. 

Someone should re-instate the 'guilty party' slogan with this mob!


----------



## trainspotter (25 May 2010)

Bushman said:


> Can you believe that Swan tried to use these shonky figures? The man has some gumption. ATO figures released today contradict this, saying the tax rate is more like 27%, with royalties taking this up to 40%.
> 
> Someone should re-instate the 'guilty party' slogan with this mob!




41.3% effective tax rate in fact direct from the ATO. 

Massive faux pas from the Guvt on this one especially from Swan who has once again been caught lying to the sheeple. YAY !


----------



## -Bevo- (25 May 2010)

http://www.2gb.com/index2.php?option=com_podcasting&task=playaudio&id=2&f=1&Itemid=41

Tell it like it is Alan, Krudd government incompetence pilled on incompetence.


----------



## trainspotter (25 May 2010)

BHP, Rio, FMG have just ordered their new fleet of dump trucks. Industry insiders claim that if Rudd wants a small business then he will get one.


----------



## Julia (25 May 2010)

Julia said:


> Given the paper alleging the 13 to 17 % tax rate was written by a student who this evening was alleged to still not have graduated, granted with supervision by his Professor of Taxation, I wouldn't have to think too hard to put my money on the veracity of the BHP Company statement.
> 
> Andrew Robb has quoted one part of the student's paper where he says the student didn't know where to put the figures from New Zealand, so he just tacked them on to those for Australia!.
> .



It has further emerged that the paper from which the government quoted the 13 to 17% tax paid by the miners was *not even a final draft.*
Had they bothered to obtain the final draft, it's alleged today, they would have seen that the above figures have been eliminated.!!
Their incompetence and duplicity is nothing short of farcical.


----------



## Julia (25 May 2010)

John Ralph has now reluctantly entered the debate:

http://www.theaustralian.com.au/bus...-mine-loans-hike/story-e6frg96f-1225870757474

Extract:



> Ralph warns of mine loans hike
> 
> THE man who oversaw business tax reform for the Howard government, John Ralph, has attacked the proposed resource super-profits tax, saying it will cut industry investment at all levels and harm the national interest by jacking up sovereign borrowing costs.
> 
> ...


----------



## glenn_r (25 May 2010)

There is a new technical pattern, it's called the " Rudd Waterfall " , currently being seen on the AUD daily chart....

Stupidity 101 in how to wipe US$278,000,000,000 off the market cap of the ASX200, who let the lunatics drive the bus....


----------



## brty (25 May 2010)

$Aus down 13%,   Rudd's fault.

XAO down 14%,   Rudd's fault.

CAC (France) down 21%  Rudd's fault.

Nikkei (Japan) down 15% Rudd's fault.

Swiss Franc down 10% and 14% since November, Rudd's fault.

All the above over the last month.

Gee, that Rudd is an influential Bloke..

brty


----------



## trainspotter (25 May 2010)

Don't forget ear wax eater ...... who's that guy with Kruddy .... he looks kinda important ?

The Aussie dollar is considered by the global investment community as a risky option in times of economic uncertainty due to the nation's leverage to the commodity prices and and concerns about the mining super profits tax. The US dollar is seen as a safe haven.

http://www.news.com.au/business/euro...-1225869409039


----------



## glenn_r (25 May 2010)

I only mentioned the AUD and the ASX, with which both are underpinned by our resources, both are doing a Swan dive, pun intended.

Every market commentator is shaking their head about the stupidity of the RSPT and the timing of the announcement by the numb nutted PM.

The current retracement was not caused by the RSPT but it sure as hell it has made the depth much deeper.

We all know Kevin is grooming himself for a future job as a statesman with the UN and really couldn't give two hoots about the Aussie battlers super.


----------



## brty (25 May 2010)

> The current retracement was not caused by the RSPT but it sure as hell it has made the depth much deeper.




Deeper than what?? The Japanese market has fallen further than ours. The chinese market has fallen 20%.

Why should our market not have those types of falls irrespective of the RSPT??

brty


----------



## trainspotter (25 May 2010)

What fails me is the CEO's of these super taxable companies are shooting themselves in the foot by talking down their resilience to these obtuse suggestions by the Government. The constant bleating about going off shore and retrenching workers and stopping development etc ad infinitum is having a WHAT effect on their share price? Effectively they are talking it down.  Would they have not been better off saying that it is just a PROPOSAL and it has to get passed the senate blah blah blah instead of it turning it into a political grenade waiting to go off? Makes the punters nervous all this kind of brouhaha you know. Not to mention the good old AUD taking a plunge as the global investors sell us off over something that has not happened yet? Hmmmmmmm .... true glenn_r the timing was exceptionally fortuitous for the Opposition to make a bit of ground in the 2 horse race. Madness takes it's toll.


----------



## Whiskers (25 May 2010)

trainspotter said:


> Don't forget ear wax eater ...... who's that guy with Kruddy .... he looks kinda important ?
> 
> The Aussie dollar is considered by the global investment community as a risky option in times of economic uncertainty due to the nation's leverage to the commodity prices and and concerns about the mining super profits tax. The US dollar is seen as a safe haven.
> 
> http://www.news.com.au/business/euro...-1225869409039






The AUD started trending lower from last Nov and many of us were predicting a lower AUD and stronger USD, long before the super tax issue came out. 

The reason is simply that a large proportion of international financial transactions are made in USD and the USD has always been the currency of choice when large liquidation of positions occur around the world as has happened lately.

Aus is a spec in the ocean in terms of financial transactions. My opinion is that the AUD ran too high as a result of our higher growth and interest rates after the GFC. This fall is simply a reflection of a rather hurried return of those funds to whence they came, or better yielding or safe position.

Precious little to do with any new tax proposal, in other words the other international events was going to cause the AUD to fall anyway.



> What fails me is the CEO's of these super taxable companies are shooting themselves in the foot by talking down their resilience to these obtuse suggestions by the Government.




Talking about shooting... It's the sort of hysterical nonsense like in a lot of your half cocked and completely inaccurate comments, that finds it's way into the media, that drives uncertainty and liquidation of assets like is occurring now.

PS:... and a lower AUD is better for Aus export profits.


----------



## trainspotter (25 May 2010)

Whiskers said:


> The AUD started trending lower from last Nov and many of us were predicting a lower AUD and stronger USD, long before the super tax issue came out.
> 
> The reason is simply that a large proportion of international financial transactions are made in USD and the USD has always been the currency of choice when large liquidation of positions occur around the world as has happened lately.
> 
> ...




Excellent post Whiskers ! I liked the part best when you agreed with me that the funds are going whence they came to a better yielding or safe position due to the RSPT causing these global investors to dump the AUD due to our leverage this country has with our mineral wealth and head to the USD instead. Click on the link provided for more info. Aaaaaah the media.

Especially liked the other part where my hysterical nonsense can influence the media. Pure genius.

P.S. Agreed on this matter of fact.


----------



## trainspotter (25 May 2010)

Not just me saying it either:

*Dr Ron Woods of www.roneconomics.com.au,* independent funds manager: Whatever the merits or demerits of RSPT the timing of it is wrong. Whether real or imagined, the announcement has drawn undue negative attention onto Australia at a time when markets are especially skittish about any change in the sovereign risk of various countries. Thus this is likely to cause some negative assessments of the economy’s prospects and as these tend to become self-fulfilling it is likely to be a drag on the economy.

*Stephen Walters, chief economist, JP Morgan: *The debate over the RSPT already is having an impact on the Australian economy and financial markets, *including the value of the Australian dollar*. The extent of the “damage” is hard to quantify, with the truth somewhere between the two extreme positions currently being debated ”” the government’s assertion that the new tax will boost investment, and the mining industry’s position that the tax will destroy Australia’s golden goose.

What the heck would these guys know anyways?? Just log onto ASF and the truth is out there.


----------



## Whiskers (25 May 2010)

Trainspotter mate, you've got more twists than a coil of rope. :


----------



## trainspotter (25 May 2010)

Whiskers said:


> Trainspotter mate, you've got more twists than a coil of rope. :




I will take that compliment Whiskers ! Well done you ! Always two sides to a story.


----------



## glenn_r (25 May 2010)

In USD the ASX has dropped over 22% but as you say it's good for the exporters, hang on the resource sector is our biggest exporter, oops...

Personally the volatility is great, doing a lot of short term trades on SPI and AUD .


----------



## moXJO (25 May 2010)

Whiskers said:


> The AUD started trending lower from last Nov and many of us were predicting a lower AUD and stronger USD, long before the super tax issue came out.
> 
> .




Maybe comparing our falls to other mining driven nation’s currency (rand or the looney). I think it has affected our dollar to a degree. Mainly bad timing from our esteemed numbnut of a leader.


----------



## brty (25 May 2010)

Considering that Canada exports close to 2mil barrels of oil a day (and growing) to the US and has reserves in the tar sands of 250-400 Gb, it is a little difficult to assume anything about the ~9% decline of the Looney compared to the $Aus decline.

brty


----------



## JimBob (25 May 2010)

I have read a few articles stating that Constitutional challenges are likely if this tax gets implemented.  On shore minerals are owned by the states, not by the federal government so the states have the power to decide what royalties are paid by mining companies.  This differs from off-shore minerals - and the Petroleum Rent Tax - which the commonwealth has ownership over.

http://www.theaustralian.com.au/new...for-resource-tax/story-e6frg6nf-1225869370753

Will have to do some more reading on this.


----------



## Julia (25 May 2010)

Jimbob, that's interesting.  Could you post up anything further you find about this?

Given that WA and Qld have both registered their unwillingness to back the tax as it stands, the government could be in for an even bigger fight than they had anticipated.

The following is a further commentary on state of play from Business Spectator:

http://www.businessspectator.com.au...lliton--pd20100524-5RALD?OpenDocument&src=kgb


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## JimBob (25 May 2010)

This article in The Australian explains some of the potential problems:

http://www.theaustralian.com.au/bus...pen-to-challenge/story-e6frg97x-1225869371347

Section 114 of the Constitution prevents the commonwealth and the states from imposing "any tax" on their respective "property of any kind". By law, onshore mineral resources are owned by the states -- not the commonwealth.  Unless the legislation imposing the tax differs significantly from the government's public statements, Mr Blakiston and several senior lawyers believe it could come extremely close to being an impermissible federal tax on state-owned property.

Section 55 of the Constitution could also present the commonwealth with some drafting challenges. This section says laws that impose taxes can be used to achieve only one purpose -- taxation. But the super-profits tax would also commit the government to taking on a proportion of the losses of resources projects.  Because of this, some lawyers believe a case could be made that at least part of the scheme is not really a tax and therefore falls outside the federal government's extremely wide constitutional power to impose taxes.

It will all depend on the wording of the legislation, but it looks like they will need to put careful thought into it or else it could be ruled invalid.


----------



## ROE (25 May 2010)

Good the better this thing end and the tax is thrown out the better Australia will be ...


----------



## -Bevo- (25 May 2010)

ROE said:


> Good the better this thing end and the tax is thrown out the better Australia will be ...




I'll go one step further and say the sooner the inept Krudd Government is thrown out the better Australia will be.


----------



## Mofra (27 May 2010)

Haven't even started with senate negotiations and we are getting fairly substantial amendments:

http://www.news.com.au/business/pri...-mining-tax-rate/story-e6frfm1i-1225871830341


----------



## Whiskers (27 May 2010)

Mofra said:


> Haven't even started with senate negotiations and we are getting fairly substantial amendments:
> 
> 
> http://www.news.com.au/business/pri...-mining-tax-rate/story-e6frfm1i-1225871830341




All for the better imo. A sensible move, if it goes ahead.



> It was now expected to increase the threshold at which its proposed super-profits levy kicks in from 6 per cent to 11 or 12 per cent.
> 
> The backdown comes only three weeks after the Government unveiled the new resource super-profits tax and comes after a ferocious campaign by the mining companies,
> 
> ...




I agree with Henry that the soverign risk issue is a very minimal amount, but with the above ammendment, it's effectively non existant.

And I agree there will likely be more tinkering, cos at the end of the day it all needs to be simpler. There really needs to be a COAG type state agreement to standardise royalty rates also.


----------



## ROE (27 May 2010)

They need to get rid of retrospective on the existing projects...
only apply to new projects, this is communist style of law rather than free and
open country.

Imagine you make your property investment based on the existing laws
ten year down the road ..oh property gone up so much let tax these guys 40% 
on all their capital gains, no concession nothing 

and while you at its tell some lies like you leech off all the renters all these years
Australian people demand their fair shares of this capital gain 

you be up in arms as well

that the sort of government you want in this country?


----------



## It's Snake Pliskin (28 May 2010)

ROE said:


> They need to get rid of retrospective on the existing projects...
> only apply to new projects, this is communist style of law rather than free and
> open country.
> 
> ...



I like Abbott's assessment that the government has disqualified itself from being worthy of running the country.


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## trainspotter (28 May 2010)

Read post 112 ... It's a CRACKER ! Well done Whiskers ........ purrrrrring along just nicely aren't we !! Tell me again how this tax has not effected the AUD ??

Sorry Joe Blow .... I could not resist ........ infraction away.


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## JimBob (28 May 2010)

Mofra said:


> Haven't even started with senate negotiations and we are getting fairly substantial amendments:
> 
> http://www.news.com.au/business/pri...-mining-tax-rate/story-e6frfm1i-1225871830341





A few weeks after the budget is released and it looks like Labor's surplus is gone already.

As ROE mentioned, they need to get rid of the retrospective aspect of the tax and only apply it to new projects as this aspect is damaging Australia's reputation for low sovereign risk IMO.  You cant change the goalposts mid game.


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## Bushman (28 May 2010)

This whole process is officially a FARCE!  

The RSPT is now a national emergency according to brother number 1. 


http://www.theage.com.au/opinion/po...ackslide-on-government-ads-20100528-wja5.html


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## It's Snake Pliskin (28 May 2010)

There's more in the Australian regarding the TAX PAYER funded ads.  When will the nonsense stop?
http://www.theaustralian.com.au/pol...uper-profits-tax/story-e6frgczf-1225872477179


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## -Bevo- (28 May 2010)

Bushman said:


> This whole process is officially a FARCE!
> 
> The RSPT is now a national emergency according to brother number 1.
> 
> ...






Wonder if they will use the Standard Emergency Warning Signal (SEWS) just before they show the TV ads


----------



## sails (28 May 2010)

It's Snake Pliskin said:


> There's more in the Australian regarding the TAX PAYER funded ads.  When will the nonsense stop?
> http://www.theaustralian.com.au/pol...uper-profits-tax/story-e6frgczf-1225872477179




Rudd is obviously a master of slick marketing to get what he wants.  Remember the massive marketing that got him voted on 07?  The sheeple (whose money he spends so freely) are very easily manipulated with a little know how and funds for extensive advertising.  And, IMO, that is one thing Rudd does know how to do.  Might be all he knows, but dangerous if it gets him and Swan back into the Aussie purse - or whatever is left of it.


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## Julia (30 May 2010)

As a little light relief from all the angst the following are purported to be from Wikileaks, and are quoted in the "Weekend Australian" by James Valentine.



> _Personal email from Jan Du Plessis, chairman, Rio Tinto   To Jacques Nasser, chairman, BHP Billiton.
> Subject:  Bloody Kevin Rudd's Bloody Super Tax.
> 
> _If the resources belong to the Australian people, maybe they'e like to head west and dig the bloody stuff up.  Perhaps they'd like to negotiate with the Chinese government and risk a few years in a Bejing Prison when they get it wrong.  Perhaps the Australian people would like to live in the Pilbara in a small tin hut and stand behind a bloody great drill for 12 hours at a time.  Are the Australian people free for a working bee next Sunday?
> ...






> _Email from Jacques Nasser to Jan Du Plessis_
> Don't think that's quite the tone we should take, but LOL.
> Make sure yo delete it.
> See you at the World Cup.


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## dutchie (1 June 2010)

This mining tax has absolutely nothing to do with Australians getting their fair share of the minerals buried in this land (if it did then surely the bulk of the share should go to our indigenous brothers who "owned" the land before all migrants arrived). What it really is is a desperate grab for cash to pay for this governments *obscene* waste of public funds.

Why we let this waste continue in the face of one of the potentially worst economic climates Australia has faced is beyond me. Just when we should be saving every cent we can (or at least spending it very very wisely and frugally), we have a government wasting as much money as it can!

In one example we have the situation where the government is going to waste (and I can't help but emphasise the use of this word) $38.5 million (yes million) on a ad compaign which I am sure the public don't want and more importantly will not influence the debate one way or the other (just as the mining ads will not influence the public). In fact I am sure the majority of the public will not even read any of the propoganda from both sides.

It is obscene that past governments and the current government use huge amounts of *our* money to foster their own parties. As for the excuse that this government is using to justify this waste - "we are not wasting as much as the Howard government" (my quotations) and to get around Kevin Rudds backflip on government advertising spending is a joke of the highest order.

Unfortunately this joke (and the other jokes) that this current government has foisted on us is costing us big bucks.

The Rudd governments claim that it has saved Australia from the GFC (which I personally doubt and despite Mr Henry's claims) is at least debatable.

Unfortunately Australia will not only suffer to some unknown extent from the GFC (which is still hovering over the world) but it certainly will not survive the KRFC , which is much worse.

This KRFC will hit the lower socioeconomic levels of our society in a hard way. It will not affect Mr Rudds standard of living but it is a great impost on our society for him to continue, period.


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## Aston (1 June 2010)

Interesting article from Terry McCrann, highlighting Ken Henry’s view that a tax rate of “70 or 80” percent "would have no different economic impact". 

http://www.heraldsun.com.au/busines...t-out-of-the-bag/story-e6frfig6-1225873774975


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## Bushman (1 June 2010)

Hear, hear Dutchie. 

It is a tax grab because the tax is retrospective. Also, the retrospectivity means that 40% of these existing long-life mines will be nationalised. That, more than anything else, is preposterous! If they are fair dinkum about this tax, then they would value all retropsective mines at current market value and issue an upfront government bond (indexed at the long-term bond rate) at 40% of this value. 

The bit about 'all Australians own the minerals' is galling because without the expensive capital provided by investors (equity and debt), the land is essentially worthless dirt with no economic value. It is the investment (and risk of this) that provides value to Australian public, not the worthless unimproved land. Investors deserve the lion share of this profit as they have taken the most risk. This is capitalism! 

As for the government taking a 40% stake in all speccie minerals projects, this is an inefficient allocation of scarce capital into marginal projects. Also, this committment is hollow unless the government issues a redeemable government bond to the shareholders of these companies, that is indexed to the government bond rate, on an annual basis. This will then need to be fully-funded out of Treasuries budget forecasts. Otherwise there is no guarantee that a Pasminco will be paid out and therefore financiers will not use the credit in their credit analysis. 

Sure, looks great in an economic model (a la EMH et al).


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## trainspotter (1 June 2010)

I read somewhere that Krudd had requested the 38.5 million aussie pesos for the advertising blitz on April 10th or 11th and NOT May 10th as previously stated and at least 2 weeks prior to the Henry Tax Review being released on May 3rd ?? This can't be right can it? Is this what he meant when he was sitting on the couch with Swanny tapping away at a piece of paper saying "Hmmmm ..... this one will be hard to sell?" with the media throng lapping it up? So therefore he KNEW that there would be a backlash and needed the extra funds to brainwash us into submission.

Oh dear ! Me thinks things are starting to unravel over there in CANTberra. The proletariat are starting to wake up to this shyster.


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## IFocus (1 June 2010)

End of democracy in Australia

Mining company's will soon rule via Abbott and co

Received a flier in the mail post card size with blatant propaganda crap complete with miss information. It is completely overt political.

No identification of who put it out there but the whole thing is slickly produced so I guess it comes from mining company money.

Completely disgusting political interference from an mining industry led campaign.

Presenting an argument based on facts is one thing but clearly they don't have any and resort to propaganda


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## So_Cynical (1 June 2010)

dutchie said:


> In one example we have the situation where the government is going to waste (and I can't help but emphasise the use of this word) $38.5 million (yes million) on a ad compaign which I am sure the public don't want and more importantly will not influence the debate one way or the other




If that waste of 39 million is *obscene* what do you call the 500+ million the Howard Govt spent on advertising "work no choices" and the "help keep Aust safe" ads.


----------



## The Muffin Man (1 June 2010)

IFocus said:


> End of democracy in Australia
> 
> Mining company's will soon rule via Abbott and co
> 
> ...




That's funny, I could say the same about what I'm hearing from Government advertising.


----------



## The Muffin Man (1 June 2010)

So_Cynical said:


> If that waste of 39 million is *obscene* what do you call the 500+ million the Howard Govt spent on advertising "work no choices" and the "help keep Aust safe" ads.




Ah yes, the "Howard did it too" argument. Rudd went to the electorate on the back of being different to Howard, describing Government advertising as a "cancer." By taking this line, he can't use the "Howard did it too so it's OK if I do" line without people laughing in his face at the absolute hypocracy and lack of spine to stick to his supposed beliefs.


----------



## dutchie (1 June 2010)

So_Cynical said:


> If that waste of 39 million is *obscene* what do you call the 500+ million the Howard Govt spent on advertising "work no choices" and the "help keep Aust safe" ads.




They are both obscene. An obscenity only one tenth of a obscenity does not make it any less so.

Both governments have/are obscenely wasting our money when it could be put to much better use.


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## IFocus (1 June 2010)

The Muffin Man said:


> That's funny, I could say the same about what I'm hearing from Government advertising.




Political Parties Bul$hiting is way different to big money propaganda.


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## Julia (1 June 2010)

IFocus said:


> Political Parties Bul$hiting is way different to big money propaganda.



Why?
If anything the 'big money' is more honest.  They are supposed to be in business to make money, and should rightly be able to defend their means of doing so when the government is attempting to land them with a totally unreasonable, retrospective tax.
They have not said they are opposed to a change in the taxation arrangements, but why should they be expected to just wear the ridiculous figures being quoted by the government in terms of how much tax they routinely pay, e.g. 17%!!!

For the government to try to persuade the electorate that their advertising is in the national interest, as distinct from the interest of the Labor Party, is disingenuous at best, and something it seems most voters are quickly seeing through.  Fine for the government to advertise, but let the Labor Party pay for it, not the taxpayer.

And yes, of course Howard did it too.  But the main point at the moment is Rudd's hand on heart avowal that such advertising was a 'cancer on democracy" and it would never, ever happen on his watch.
What a joke.


----------



## So_Cynical (1 June 2010)

Julia said:


> And yes, of course Howard did it too.  But the main point at the moment is Rudd's hand on heart avowal that such advertising was a 'cancer on democracy" and it would never, ever happen on his watch.
> What a joke.




What did John ever promise with his hand on his heart? just pointing out he never really stood for anything...wouldn't even stand up against that Hanson abomination, John was against some things but never really for anything, except work no choices.

The Coalition spent more than half a billion dollars on advertising there policy's, Rudds 40 odd mill backflip is almost nothing in comparison...40 million is somewhat obscene for sure and im disappointed in there decision, but the coalitions half a billion is totally offensive and deserving of absolute disgust and total contempt.


----------



## trainspotter (1 June 2010)

So_Cynical said:


> What did John ever promise with his hand on his heart? just pointing out he never really stood for anything...wouldn't even stand up against that Hanson abomination, John was against some things but never really for anything, except work no choices.
> 
> The Coalition spent more than half a billion dollars on advertising there policy's, Rudds 40 odd mill backflip is almost nothing in comparison...40 million is somewhat obscene for sure and im disappointed in there decision, but the coalitions half a billion is totally offensive and deserving of absolute disgust and total contempt.




Not sure if this is quite correct. SOME of the money was spent on advertising work choices (individual workplace agreements) which by the way stopped the Union rorting of "no ticket no start" policy but that is by the by. A lot of it was spent in regards to the "security" of the Nation about dobbing in illegal and unwarranted activities (Steve Liebman was the spokesman) after 911. Another proprtion was spent on Road Safety awareness as well ..... I could go on but I will not bore you with facts and figures. 

The thrust of the argument is that our PM Kevin Rudd in 2007 said he would cure this cancerous growth on the taxpayers wallet. It has not happened. FORGET THE MONETARY VALUE.  Look at the MORAL values of what has been said. 

_Late yesterday, Senator Ludwig released cabinet documents showing that Wayne Swan first sought his approval for an exemption of normal rules for the RSPT commercials on May 10 - after the Minerals Council of Australia had begun funding anti-RSPT ads.

But despite Mr Swan asking Senator Ludwig to act urgently, it took him two weeks to respond.

However, the documents also revealed that Mr Rudd's kitchen cabinet - the strategic priorities and budget committee - approved the money for the campaign on *April 20, *well before the new mining tax had been announced._

http://www.theaustralian.com.au/pol...rd-to-excuse-ads/story-e6frgczf-1225873777161

Now let's all grow up and start looking at the big picture here and stop saying "John Howard did it so we can too !" Alice through the looking glass style. If John Howard told you to put your hand in the fire would you?? Is that like saying "Gough Whitlam was allowed to bankrupt the country so we should too?" 

GET A GRIP !!!! Look beyond what is laid bare before you. Have a motion of discovery of a modicum of truth and SEE the lies that you are absorbing.


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## trainspotter (1 June 2010)

Qualification and nuance discounts affirmations of all kinds, particularly when you are trying to sell somebody something.

So that's probably the reason the federal government has opted to omit the grey area when it comes to the *advertising campaign currently on air at your expense *- the one that intones reassuringly that the Australian Government ''will deliver better health and better hospitals''.

Like the fact that Western Australia has not yet agreed to the Commonwealth's health and hospital reforms.

Or that the Senate is yet to consider any legislation that might be required to give effect to that agreement.

Best keep it simple.

Eventually the degree of taxpayer-funded self-congratulation going on under the Howard government drove us all stark raving mad.

*This particular Rudd government actually had an accountability agenda.*

It promised to be different than its predecessor. And there is evidence to show that on several fundamentals it is different from its predecessor on the issue of taxpayer funded advertising.

But there is troubling evidence too of back-sliding.

In March the government dumped the Commonwealth Auditor-General, Ian McPhee, a man it had appointed (consistent with a 2007 election promise) to the important task of policing government campaigns. McPhee (who sets his own agenda and reports to the parliament) has been replaced with a committee of retired public servants (appointed on shorter contracts and answerable to the government).

That happened in March.

In May, despite the Herculean effort to get the budget back into surplus earlier than forecast, the government found *more than $100 million over the forward estimates to fund advertising campaigns. These campaigns are already in the pipeline.*
*
Health is already on the air. *Quite apart from its lack of disclosure, this campaign cannot be compared with an eminently justifiable information exercise: get a breast screen, check your prostate, slip slop slap.

It is simply an exercise in informing all of us that the government is doing something, lest you conclude that all that’s happening in Canberra is rave parties or book clubs.

http://www.brisbanetimes.com.au/opi...nore-the-facts-20100526-wcx2.html?comments=16

NOOOOOOOOOOOOOOOOO ........ Kevin Rudd is not spending anywhere NEAR as much as Howard !

Get some facts next time peoples .... the MORAL issue is out there for all to see.


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## satanoperca (1 June 2010)

trainspotter said:


> It is simply an exercise in informing all of us that the government is doing something, lest you conclude that all that’s happening in Canberra is rave parties or book clubs.




Yes they are doing a great job of spending (putting Australia further in debt) in tough times and making a right royal **** of things.

They should have learnt, do first, brag later. 

Wish I could run my business like they run the country.

But in response to this thread, get it through Parliament first, then tell the sheepies how it is going to work.

If I am correct, none of us can vote in the senate.

Ah, politics, damned if they do and damned if they dont.

Cheers

PS. Clients are a pain in the ****, but the pay the bills


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## medicowallet (1 June 2010)

The Muffin Man said:


> Ah yes, the "Howard did it too" argument. Rudd went to the electorate on the back of being different to Howard, describing Government advertising as a "cancer." By taking this line, he can't use the "Howard did it too so it's OK if I do" line without people laughing in his face at the absolute hypocracy and lack of spine to stick to his supposed beliefs.




Yes, and the "howard did it too" argument is about as applicable as using anything previous leaders, with different front benches did against Kevin Rudd.

It is a last resort tactic to save face by Rudd, I wonder if the electorate will be gullible enough to buy his codswallop, but then again, they have so far.


----------



## brty (2 June 2010)

Julia,



> a totally unreasonable, retrospective tax.




A retrospective tax would have the companies paying the tax on last years profits. I do not believe this to be the case. If it is because the miners developed the mines thinking one regime of tax was going to stay forever, then they were/are dreaming. Governments change the tax arrangements of all types of industries all the time that affect the companies involved.

It is not called a retrospective tax unless it taxes previous arrangements (ie last years income)

brty


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## satanoperca (2 June 2010)

:fan



> KEVIN Rudd is preparing to deal directly with senior mining bosses over the proposed resource super-profits tax to head off a damaging public brawl between the industry and the government and reach a genuine compromise on tax reform.




Backlip Kevin at it again. Seems he has no choice but to do a back flip than take on giants larger than him with bigger purses.

What a joke!

He should have first consulted with industry, then compiled a decent assessment and action plan before going public.

Old Kevin I think ya boots are a little big.

Cheers


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## The Muffin Man (2 June 2010)

So_Cynical said:


> What did John ever promise with his hand on his heart? just pointing out he never really stood for anything...wouldn't even stand up against that Hanson abomination, John was against some things but never really for anything, except work no choices.
> 
> The Coalition spent more than half a billion dollars on advertising there policy's, Rudds 40 odd mill backflip is almost nothing in comparison...40 million is somewhat obscene for sure and im disappointed in there decision, but the coalitions half a billion is totally offensive and deserving of absolute disgust and total contempt.




Again with comparing Rudd and Labor to Howard and the previous Liberal Government. *Rudd told us, the voters, that he was to hold himself to a higher standard. He described Government advertising as a "cancer" on our society. All we are doing is holding Rudd to his word, it essentially has nothing to do with a previous Government.*

And if you want to include all of Howard's half a billion on advertising, you need to include all of Rudd's advertising, not just his $40m in one area. As others have noted, there will be advertising campaigns regarding the budget, as well as the health reforms advertising that is already hitting our airwaves.


----------



## Bushman (2 June 2010)

brty said:


> Julia,
> 
> 
> 
> ...




It is retrospective in the sense that it picks up exisiting long-life mines which are unable to benefit from the 40% capital rebate. So this tax is in no way neutral as it would be if it was only applied to future projects. There is no way that it could add $9b to the budget if it truely was simpy tax reform as opposed to a tax grab.  

The central tenent of tax architecture is that it should be neutral. This tax is not neutral in its current form so therefore it is a failure.   

There are strong incentives for governments not to change tax regimes for upfront capital intensive industries and it is called a sovereign risk premium in our cost of capital. 

Something that has not been highlighted in the debate is that fact that BHP/RIO recycle 75-80% of their retained earnings into capital expenditure for exploration and mine expansion. There is very little chance that the government will do the same. 

On the bright side, the permanently lower AUD and removal of inflationary pressures caused by full employment will be eased which is good for rust-belt state dwellers like me.


----------



## todster (2 June 2010)

It's easy enough to know what your against but much harder to know what your for.


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## Julia (2 June 2010)

trainspotter said:


> However, the documents also revealed that Mr Rudd's kitchen cabinet - the strategic priorities and budget committee - approved the money for the campaign on *April 20, *well before the new mining tax had been announced.[/I]



This is the aspect that gives the lie to the government's line of "we had to do this advertising to counter the misinformation being propagated by the mining companies".  Clearly they had the advertising well and truly planned before the mining companies were even told about it, let alone got an advertising campaign into the market!




trainspotter said:


> Like the fact that Western Australia has not yet agreed to the Commonwealth's health and hospital reforms.
> 
> Or that the Senate is yet to consider any legislation that might be required to give effect to that agreement.



And likewise the fact that the mining tax hasn't been legislated yet.
Given the opposition's avowal they will not pass it, and similar sounding noises from a couple of the Independants, they are going to have to significantly modify it to get it through.






brty said:


> Julia,
> A retrospective tax would have the companies paying the tax on last years profits. I do not believe this to be the case. If it is because the miners developed the mines thinking one regime of tax was going to stay forever, then they were/are dreaming. Governments change the tax arrangements of all types of industries all the time that affect the companies involved.
> 
> It is not called a retrospective tax unless it taxes previous arrangements (ie last years income)
> ...



OK, thanks for the correction, brty.  What I meant was that it applied to projects already costed and up and running, which is unreasonable imo.
Bushman has below put it clearly, and as I should have.



Bushman said:


> It is retrospective in the sense that it picks up exisiting long-life mines which are unable to benefit from the 40% capital rebate. So this tax is in no way neutral as it would be if it was only applied to future projects. There is no way that it could add $9b to the budget if it truely was simpy tax reform as opposed to a tax grab.


----------



## trainspotter (2 June 2010)

*Now the Unions want more reform !*

*The ACTU is expected to use a community forum today to call for more reform,* while also pointing to a new analysis which it says shows the super profits tax will boost the economy and create jobs.

ACTU president Jeff Lawrence said modelling demonstrated reforms including the resource super profits tax (RSPT) would boost the economy by 0.7 per cent a year and investment by 2.1 per cent. (??????? HOW ????)

But the unions also wanted the Government to do more in terms of supporting key recommendations that came out of the Henry review.

"We want to see action on our other proposals including for more consistent tax treatment of investment income," Mr Lawrence said.

*"The regressive effect of a proposed flattened personal income tax scale, and an absence of firm proposals to stem tax avoidance through private trusts and companies are areas of weakness."*

*Legislation setting up the 40 per cent tax on mining company profits is not expected to be introduced until after the election and the levy itself is not scheduled to come into force until 2012.*

http://www.news.com.au/business/bre...nt-go-far-enough/story-e6frfkur-1225874276739   for the full article.


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## brty (2 June 2010)

Julia, Bushman,

What I was trying to point out is that governments of both persuasions do this type of thing all the time. Think of changes to MIS schemes that helped bankrupt several companies.

Think of large wineries that have spent vast sums then get a change to the alcohol taxes plus new 'investment allowances', they are/have been affected in the past.

It is just that the mining industry is a bigger industry with a large voice and they are using it.

brty


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## Bushman (2 June 2010)

brty said:


> Julia, Bushman,
> 
> What I was trying to point out is that governments of both persuasions do this type of thing all the time. Think of changes to MIS schemes that helped bankrupt several companies.
> 
> ...




Fair enough. The recent changes to land taxes in NSW is a case in point.


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## Kryzz (2 June 2010)

Hmmm Paul Howes seemed to have one up on Clive in the debate, most interesting thing i heard was that Clive said that investment banks were banking on that the tax bill won't even make it through the parliament


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## So_Cynical (2 June 2010)

The Muffin Man said:


> Again with comparing Rudd and Labor to Howard and the previous Liberal Government. *Rudd told us, the voters, that he was to hold himself to a higher standard. He described Government advertising as a "cancer" on our society. All we are doing is holding Rudd to his word, it essentially has nothing to do with a previous Government.*
> 
> And if you want to include all of Howard's half a billion on advertising, you need to include all of Rudd's advertising, not just his $40m in one area. As others have noted, there will be advertising campaigns regarding the budget, as well as the health reforms advertising that is already hitting our airwaves.




You guys just wont let go...defending the indefensible, Howard spends more than HALF A BILLION selling policy and somehow in your combined twisted right wing minds...Rudd spending less than 9% of that amount is worse because he publicly said he wouldn't.

Govt's wasting money selling policy has everything to do with the previous govt because they perfected the art, and took self promotion and policy selling to a new level wasting over half a BILLION  and thus fuelling there self destruction and political defeat, as it now appears Labor is doing.

Lets all be very clear here...if its wrong for 1 Govt to spend money selling policy...its wrong for all Govts.


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## Julia (2 June 2010)

With apologies for somewhat hijacking the mining thread, has anyone else received their pretty, glossy colour brochure with the smiling faces of a doctor9 we know he's a doctor because he has the obligatory stethoscope round his neck) and a nurse with the Dear Leader at a patient bedside?

Throughout, it talks about the wonderful *targets* the government has to provide more nurses, doctors, beds, aged care funding etc.
Also the 'target' of no one needing to wait more than four hours in an emergency department.
Sounds all so promising, until you realise that 'targets' are not even near being promises, and the government can't even keep promises and 'guarantees'.


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## The Muffin Man (3 June 2010)

So_Cynical said:


> You guys just wont let go...defending the indefensible, Howard spends more than HALF A BILLION selling policy and somehow in your combined twisted right wing minds...Rudd spending less than 9% of that amount is worse because he publicly said he wouldn't.
> 
> Govt's wasting money selling policy has everything to do with the previous govt because they perfected the art, and took self promotion and policy selling to a new level wasting over half a BILLION  and thus fuelling there self destruction and political defeat, as it now appears Labor is doing.
> 
> *Lets all be very clear here...if its wrong for 1 Govt to spend money selling policy...its wrong for all Govts.*




Absolutely agreed, 100%. That is not the argument here, and I think you are missing that point completely.

Rudd went to the voters on the fact that he was different, outlining things like Government advetising as a "cancer," that he would put an end to. He is now engaging in the exact same behaviour. You don't see a problem here? It goes to the very heart of why people are falling out of love with Rudd, because as with the ETS and "our greatest moral challenge," he is going against what he supposedly believed in by side stepping his own rules relating to Government advertising. These actions have nothing to do with Howard. Howard's spending was disgraceful too, but Rudd said he would fix all that. Instead, he does the exact same thing.

You keep throwing around the $500m figure of the previous Liberal Government and comparing it to the $39m figure of the present Labor Government. You must have gone to the same school of deceit that Swan went to judging by how he is presenting the RSPT "facts" and "figures." That figure of the Liberal Party was for numerous ad campaigns and numerous topics. *If you are going to aggregate all Liberal advertising expenditure, you need to aggregate all Labor advertising expenditure. Otherwise, your comparison is fundamentally flawed because you aren't comparing like items.* I feel you realise this, but for some reason are prepared to look like a clown by comparing two very different items to try and push some anti-Howard / anti-Liberal agenda.


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## trainspotter (3 June 2010)

So_Cynical said:


> You guys just wont let go...defending the indefensible, Howard spends more than HALF A BILLION selling policy and somehow in your combined twisted right wing minds...Rudd spending less than 9% of that amount is worse because he publicly said he wouldn't.
> 
> Govt's wasting money selling policy has everything to do with the previous govt because they perfected the art, and took self promotion and policy selling to a new level wasting over half a BILLION  and thus fuelling there self destruction and political defeat, as it now appears Labor is doing.
> 
> Lets all be very clear here...if its wrong for 1 Govt to spend money selling policy...its wrong for all Govts.




Zzzzzzzzzzzzzzz Go and read posts 193 and 194 for some FACTS in regards to the current Labor advertising spending blitz. Just my right wing twisted mind trying to be rational.

Agreed that any Govt should have a CAP on the amount they are allowed to spend on self promotion/propoganda/grandstanding. 

I believe it was Keating who taught Little Johnny this fine art by the way.

Expenditures on government advertising placed through the CAS rose fairly steadily over the years of the Keating Government (1991–96). *The exception was the 1992–93 financial year when there was a sharp increase in outlays. *Government advertising expenditure over the first eight years of the Howard Government (see Table 1, shaded) is marked by a *major increase* in 1999–2000. Expenditures for that year increased by 265 per cent on the previous financial year. _This reflected expenditure on the goods and services tax advertising campaign_. *Still, the level of government advertising expenditure in the past two financial years is similar (in real terms) to outlays in the last two years of the Keating administration.*

http://www.aph.gov.au/library/pubs/rn/2003-04/04rn62.htm

We are splitting hairs now and name calling belongs in the playground.

Mining tax grab and how will it pan out? NFI ?


----------



## Mofra (3 June 2010)

Julia said:


> Throughout, it talks about the wonderful *targets* the government has to provide more nurses, doctors, beds, aged care funding etc.
> Also the 'target' of no one needing to wait more than four hours in an emergency department.
> Sounds all so promising, until you realise that 'targets' are not even near being promises, and the government can't even keep promises and 'guarantees'.



I don't have the brochure - tell me Julia, are they core or non-core targets? :


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## Calliope (3 June 2010)

So_Cynical said:


> Lets all be very clear here...if its wrong for 1 Govt to spend money selling policy...its wrong for all Govts.




It's even more wrong to make a solemn promise not to do it and then to cynically break that promise.


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## Julia (3 June 2010)

Mofra said:


> I don't have the brochure - tell me Julia, are they core or non-core targets? :



Gee whiz, Mofra, I stupidly neglected to note this.  Unfortunately, I used the brochure to put my dog's paws on when cutting her toenails, so am unable to clarify this for you.  Shame on me.


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## medicowallet (3 June 2010)

Julia said:


> Throughout, it talks about the wonderful *targets* the government has to provide more nurses, doctors, beds, aged care funding etc.
> Also the 'target' of no one needing to wait more than four hours in an emergency department.
> Sounds all so promising, until you realise that 'targets' are not even near being promises, and the government can't even keep promises and 'guarantees'.




Yes, I for not one minute believe Rudd and his electioneering (take over hospitals anyone??)

However,

Doctor training and nurse training is, and already was, in the pipeline, so there will be many more trained, irrespective of Kevin Rudd's claiming them for his fame.


----------



## nunthewiser (3 June 2010)

The Mining tax already having an effect i see.....


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## badger41 (3 June 2010)

Just watched Kevin commenting on his meeting with "a bunch of miners" last night.

Hope the bunch of miners were wearing hard hats and flouro vests - could have been useful. Also maybe they should have brought some picks and shovels along - handy for destruction and burial.

Wonder if our Prime Minister would enjoy being decribed as a member of "a bunch of pollies" at the next function he attends. PM, try some common courtesy: "I met with a number of senior mining company executives" might have been appropriate.

It occurs to me that "bunches" are often used to descibe bananas - the old one "go in green, turn yellow, come out bent". And I've never heard this applied to productive enterprises, it seems to have been reserved for politicions in the past.  Perhaps understandably.


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## Bushman (3 June 2010)

Access Economics do not agree with Krudd, Swan and Henry.

http://www.theaustralian.com.au/bus...modelling-faulty/story-e6frg926-1225874749243

Xstrata agree with Access. 

http://www.theaustralian.com.au/bus...66bn-in-projects/story-e6frg9df-1225875067008

Kruddy and Swan look to retrospectively install Peter Garrett as the Treasurer so that he can take the wrap for stuffing up the modelling.  

Abbott, errr , what Xstrata and Access said.


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## Julia (3 June 2010)

badger41 said:


> Just watched Kevin commenting on his meeting with "a bunch of miners" last night.
> 
> Hope the bunch of miners were wearing hard hats and flouro vests - could have been useful. Also maybe they should have brought some picks and shovels along - handy for destruction and burial.
> 
> Wonder if our Prime Minister would enjoy being decribed as a member of "a bunch of pollies" at the next function he attends. PM, try some common courtesy: "I met with a number of senior mining company executives" might have been appropriate.



That's a really good point, badger, and he indulges in this disparaging language frequently.  And it's not just his pejorative language but also his scornful and derisive tone.  Maybe he can use this on the Opposition but to treat a group of successful businessmen whom you are trying to persuade to your point of view in this way is not just rude and ignorant, but counter-productive.



Bushman said:


> Access Economics do not agree with Krudd, Swan and Henry.



Thanks for that link, Bushman.  There would be few who do not respect Chris Richardson's views.

To be fair to Ken Henry, I understand the government have not adopted his RPST in its entirety, but picked out the bits they want.  I don't know, but perhaps his full suggestion made more sense.
Or maybe he had his mind on wombats when he was working it all out.
There's no doubt he is well and truly in the government's pocket:  no sense of Treasury being impartial these days.


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## Whiskers (4 June 2010)

If I may get this thread back on topic, who has heard of a mining project cancelled or delayed for anything other than 'The new Super Tax' in the last month or so?

It seems all of a sudden that mining projects don't get delayed or cancelled because they were fundamentally unviable or some other extenuating circumstance.

The Xstrata example smells quite a bit of political oppertunism in a similar vein to Clive Palmers now political art form. Isn't the canned extension of their near depleted open cut copper project, to underground operations, with what I've heard one analyst say is about lower production rates and about double the overheads of open cut, much more about the fundamental viability of the project than anything else?

After all... at the risk of repeating the obvious... the new tax proposal, if it even gets to law in about two years, if at all, is only on profits and then only on those profits above 6% or maybe 10% depending how much ground is given. 

This post is just bait for the habitual emotional ranters who never study the detail or read the fine print, but just love to whinge and make a lot of noise about whatever is the flavor of the month. :


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## Sir Osisofliver (4 June 2010)

Whiskers said:


> This post is just bait for the habitual emotional ranters who never study the detail or read the fine print, but just love to whinge and make a lot of noise about whatever is the flavor of the month. :




Nice... so if I make any comment that doesn't agree with your view I'm an emotional whinger?  Muppet.

Cheers

Sir O


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## Trembling Hand (4 June 2010)

Whiskers said:


> This post is just bait for the habitual emotional ranters who never study the detail or read the fine print, but just love to whinge and make a lot of noise about whatever is the flavor of the month. :




If that was the case then you would of course know that the board had already signed off on the project recently. Just in December.


----------



## Bushman (4 June 2010)

Whiskers said:


> The Xstrata example smells quite a bit of political oppertunism in a similar vein to Clive Palmers now political art form. Isn't the canned extension of their near depleted open cut copper project, to underground operations, with what I've heard one analyst say is about lower production rates and about double the overheads of open cut, much more about the fundamental viability of the project than anything else?




Disagree about the political opportunism bit. Xstrata is a global investor looking for projects with the lowest after tax IRR. Decision is as simple as that. As TH noted, the copper project had been board approved pre RSPT. 

Agree that Clive Palmer has not added much to the debate. 

The RSPT will get up at some stage (much like the GST). It just wont be in its 'pure' form mainly because the government has bastardised this pure economic model by: 
1. expecting the mining companies to raise the finance for their 40% ownership stake @ the government bond rate rather than stumping up the cash themselves; and
2. applying it retrospectively to depreciated assets. 

Also, mate, it is good to be passionate and emotional about things in life. Otherwise it is all a bit Gordon Gekko is it not?


----------



## Bushman (4 June 2010)

How those greedy foreign investors view the tax. Still leaving some cards on the tables though. Rudd's assertion that he is going to drag negotiations on the RSPT out for some time is going to kill confidence. 

Nothing emotive about the flow of capital. Lol. 


From DJ News Wire: 


LONDON (Dow Jones)--*J.P. Morgan Chase & Co.'s (JPM) Ian Henderson, manager of $7 billion in natural-resource assets, has reduced his exposure to Australian mining assets, including Rio Tinto PLC (RTP) and BHP Billiton Ltd (BHP), due to concerns about Australia's proposed Resources Super Profits tax. *  Given the uncertainty created by the Australian tax proposal and subsequent suspension of mining projects by some miners, it was prudent for fund managers to also take precautions, Henderson said on the sidelines of a conference in London. "It's a reflection of an adverse situation," he added. 

 Henderson said he has reduced his holdings in Australian mining assets by $150 million and cut his investment in his largest shareholding, Rio Tinto, by a quarter, or $60 million to $70 million, as a result of the proposed tax. 

 Henderson said that Rio Tinto is "quite clearly" more affected by the
proposed tax than BHP Billiton. Rio Tinto is likely to be more adversely affected by the tax than BHP Billiton because about 72% Rio Tinto's earnings before interest and taxes, or EBIT, are exposed to the new tax as opposed to 67% for BHP, analysts at Canaccord Adams previously said a note.


----------



## Whiskers (4 June 2010)

Trembling Hand said:


> If that was the case then you would of course know that the board had already signed off on the project recently. Just in December.




Yes that's true, but what has happened to the copper price since.

Copper was in a fairly steady uptrend until December, then it's had a pretty rough ride  with the sharpest correction since the GFC, an unsustained spike to new highs, followed by a another sharp correction below 3.00. 

There is also a question mark over demand with the Euro zone uncertainty and probably the most concerning point that the price has come off as stockpiles also appear to be depleating... a lack of demand concern.



Bushman said:


> Disagree about the political opportunism bit. *Xstrata is a global investor looking for projects with the lowest after tax IRR.* Decision is as simple as that. As TH noted, the copper project had been board approved pre RSPT.




That's true, but given the changing fundamentals governing the demand, stockpiles and price for copper, which has gone very erattically sideways since their initial decision to progress the project in December, to lower production higher cost underground development, it's interesting that those issues apparently had nothing to do with their decision to suspend further development. 

I'm not saying the new tax wasn't in their thinking, but my point is given the changed world economic developments and the future of the copper price,  the maths, suggest the fundamental project economics took a battering since December and probably have much more of an impact on the viability of going underground than the prospest of a bit extra tax a couple of years down the track.




> Agree that Clive Palmer has not added much to the debate.
> 
> The RSPT will get up at some stage (much like the GST). It just wont be in its 'pure' form mainly because the government has bastardised this pure economic model by:
> 1. expecting the mining companies to raise the finance for their 40% ownership stake @ the government bond rate rather than stumping up the cash themselves; and
> 2. applying it retrospectively to depreciated assets.




Yeah, I don't dissagree here.



> Also, mate, it is good to be passionate and emotional about things in life. Otherwise it is all a bit Gordon Gekko is it not?




True, but the gist of my provocative stir, is that we should stay unemotional about important fact finding and decision making... but certainly get passionate about enjoying your footy, family, mates etc.


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## Trembling Hand (4 June 2010)

Whisker you have to be kidding  

You think the board of the Xstrata looks at the chart of the last 3 month of copper and pulls a 6 bil project? Just LOFrigginL


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## Whiskers (4 June 2010)

Trembling Hand said:


> Whisker you have to be kidding
> 
> You think the board of the Xstrata looks at the chart of the last 3 month of copper and pulls a 6 bil project? Just LOFrigginL




More like 6 mnths TH, and yes all the CEO's, directors and project managers I've spoke to do watch price, supply and stockpile trends for the commodities they produce. They have to. It's their business to make forcasts and judgements about the future prospects for their goods.

*Are you suggesting they would ignore commodity price and supply trends and charge headlong into the development of lower production, higher cost underground mining as the open cut comes to a close irrispective of the likely future price of copper?*

The significant point that you seem to have missed, I repeat, is that copper has risen steadily back to near historic highs, but for the six months since the board decision to progress the project, the very distinct steady uptrend has changed to a very erattic sideways price movement coupled with falling stockpiles which would normally put upwards pressure on prices... but is not at present, suggesting concern about world economic growth.


----------



## Trembling Hand (4 June 2010)

Whiskers you are lost....... again! prices are about the same. full stop.

Either your trying to push BS or you're just an idiot.


----------



## Whiskers (4 June 2010)

Trembling Hand said:


> Whiskers you are lost....... again! prices are about the same. full stop.
> 
> Either your trying to push BS or you're just an idiot.




Nah, you tried to tell me the AUD was not in a down trend, rather was quite bullish because it had spiked up to near record highs, not long ago. But I was proved right again.  :

Just because the price (in isolation) is at a certain level means precious little. The issue here is the increased volatility, as I said at near record highs and the declining stockpiles which ordinariarly would be showing signs of upward price pressure, but currently is not and there is little evidence of near term future global demand to maintain prices even at current levels.

To get back to your original comment...



> You think the board of the Xstrata looks at the chart of the last 3 month of copper and pulls a 6 bil project?




If they feared this GFC relapse (which has kicked in again since their decision last Dec to progress to underground development) could kill demand and the price again... they certainly would put that decision from last Dec on hold... just like many projects were scaled back or put on hold before.


----------



## Trembling Hand (4 June 2010)

Whiskers said:


> Nah, you tried to tell me the AUD was not in a down trend, rather was quite bullish because it had spiked up to near record highs, not long ago. But I was proved right again.  :



You're full of it. you said the AUD was going to fall and the shares would go up.

hahahahh how did that work out for you 

I said risk currencies , commods, & equities are correlated. I was right your, again, so wrong.


----------



## trainspotter (4 June 2010)

Trembling Hand said:


> You're full of it. you said the AUD was going to fall and the shares would go up.
> 
> hahahahh how did that work out for you
> 
> I said risk currencies , commods, & equities are correlated. I was right your, again, so wrong.




50% is a break even point?


----------



## Julia (4 June 2010)

David Murray, head of the government's own Future Fund has given the RSPT the thumbs down:



> Mining tax has 'significant flaws': Future Fund chief
> June 4, 2010 - 4:38PM
> 
> Australia's sovereign wealth fund called for the government's planned resources tax to be amended or scrapped, saying it risks eroding the country's appeal to investors.
> ...


----------



## Whiskers (4 June 2010)

Trembling Hand said:


> you said the AUD was going to fall and the shares would go up.




Yes, Aus shares are still in an uptrend from the bottom of the GFC, imo. More on that in the XAO thread a bit later.

The currency shakeout around the world of late and possible reversal is another substantial impact and consideration on the return of miners pre tax earnings.

The point is there is a whole lot more impacting the current earnings of miners and future decision making atm than just the proposed super tax.



> I said risk currencies , commods, & equities are correlated.




But not a direct correlation as my charts of the XAO and AUD in the XAO thread showed. There are periods of substantial and prolonged divergance.


----------



## Trembling Hand (4 June 2010)

Whiskers said:


> But not a direct correlation as my charts of the XAO and AUD in the XAO thread showed. There are periods of substantial and prolonged divergance.




lol whiskers you are a first class peanut. Please go and learn what a correlation is. Untill then you are a waste of bits & bytes.

Over and out.


----------



## Julia (5 June 2010)

Julia said:


> Why?
> If anything the 'big money' is more honest.  They are supposed to be in business to make money, and should rightly be able to defend their means of doing so when the government is attempting to land them with a totally unreasonable, retrospective tax.






Bushman said:


> It is a tax grab because the tax is retrospective. Also, the retrospectivity means that 40% of these existing long-life mines will be nationalised. That, more than anything else, is preposterous! If they are fair dinkum about this tax, then they would value all retropsective mines at current market value and issue an upfront government bond (indexed at the long-term bond rate) at 40% of this value.






brty said:


> Julia,
> A retrospective tax would have the companies paying the tax on last years profits. I do not believe this to be the case. If it is because the miners developed the mines thinking one regime of tax was going to stay forever, then they were/are dreaming. Governments change the tax arrangements of all types of industries all the time that affect the companies involved.
> 
> It is not called a retrospective tax unless it taxes previous arrangements (ie last years income)
> ...






Bushman said:


> It is retrospective in the sense that it picks up exisiting long-life mines which are unable to benefit from the 40% capital rebate.







Bushman said:


> The RSPT will get up at some stage (much like the GST). It just wont be in its 'pure' form mainly because the government has bastardised this pure economic model by:
> 1. expecting the mining companies to raise the finance for their 40% ownership stake @ the government bond rate rather than stumping up the cash themselves; and
> 2. applying it retrospectively to depreciated assets.




Brty, David Murray's remarks yesterday also referred to the tax as retrospective, so perhaps the term now has a different meaning from that which you suggested?



> Mr Murray agreed with the miners' claims that applying the tax to existing projects would deter investment, and that it would be better to put some of the revenue into a wealth fund.
> 
> "My view is that the tax has to be changed or abandoned," Mr Murray said.
> 
> ...


----------



## Whiskers (6 June 2010)

Trembling Hand said:


> lol whiskers you are a first class peanut. Please go and learn what a correlation is. Untill then you are a waste of bits & bytes.
> 
> Over and out.




Gees, it looks like ole Grumpy is back again. 

Well I know what the normal meaning of a correlation is... maybe you can produce a definition or even an example for you meaning, relevant to the point in discussion!

C'mon 'Grumpy', put up an example, or shut up (your child like personal insults). 

*correlation* [ˌkɒrɪˈleɪʃən]
n
1. a mutual or reciprocal relationship between two or more things
2. the act or process of correlating or the state of being correlated
3. (Mathematics & Measurements / Statistics) Statistics the extent of correspondence between the ordering of two variables. Correlation is positive or direct when two variables move in the same direction and negative or inverse when they move in opposite directions​


----------



## Whiskers (6 June 2010)

Julia said:


> Brty, David Murray's remarks yesterday also referred to the tax as retrospective, so perhaps the term now has a different meaning from that which you suggested?




Julia, from what I understand the 'retrospectivity' aspect that some don't like is that the proposed new tax will apply to existing projects. Some only want it to apply to new projects. The new system isn't proposed to recalculate the tax of past years as Murray tends to carelessly imply.

If old projects were excluded it will tend to allow miners to milk every last dollar they can out of current projects under existing laws and turn the profit into a new project to get the max benifits of the new system.

Essentially a project like the Xstrata open cut copper project which is almost complete and planned to continue development os undergroung operations, could can the underground and milk out the opencut then call the underground a new and different project to get the max benifits including uplift from the new tax proposal.

In other words, it's a cynical attempt by the highly profitable miners to rort the tax system to get the best of both systems... low tax under the current system to finish current projects which would generate good profits which could then be invested in new projects where they get more deductions/rebates including the uplift on the extra profit they keep from the 'old' projects. 

They want to double dip by excluding existing projects from the new tax so they have more cash to claim the uplift in the new scheme.

I reckon this is what all these project delays are more about than anything else. They like the idea of the higher deductions/rebates and especially the uplift for new projects, but are simply trying to quarantine as much profit as they can from existing profits to get an exponentional boost when converting to the new scheme.

Now having said that, I'm not necessairly advocating for the new tax, but given the rising levels of debt in the world, I'm just accepting that these types of new taxes are inevetable as one of three things WILL happen... 

People will have to accept lower standards of living and lower gov expenditure, higher taxes to pay off debt or go bust individually and as a country. I just see the higher tax at the 11th hour as being the most likely course.


----------



## stv (6 June 2010)

I think the new resources tax is a good idea and it is good to see that the miners' will be paying us the aust people for the use of our resources.

Its alright for them to make $$s from mining, but maybe they have not been paying the aust people enough up until now is regards to mining our finite resources.

I also like Kevin, and am thankful that he is PM and not speedo Tony or honest John.

steve


----------



## wayneL (6 June 2010)

stv said:


> I think the new resources tax is a good idea and it is good to see that the miners' will be paying us the aust people for the use of our resources.
> 
> Its alright for them to make $$s from mining, but maybe they have not been paying the aust people enough up until now is regards to mining our finite resources.
> 
> ...




Ahhhh Australia.

Beautiful one day,

Socialist the next.


----------



## -Bevo- (6 June 2010)

stv said:


> I think the new resources tax is a good idea and it is good to see that the miners' will be paying us the aust people for the use of our resources.
> 
> Its alright for them to make $$s from mining, but maybe they have not been paying the aust people enough up until now is regards to mining our finite resources.
> 
> ...




Steve

State Governments sell lease to Miners on behalf of the people for the rights to mine a area in effect they are already paying the people for the use of that land they don't get it for free, then the investors take a risk on capital to develop projects plus pay a company tax and employees are taxed just as everyone else is, also think about the flow on effects to other people / businesses who benefit indirectly who also pay tax, now people like you  because of Rudd think they own the minerals and want the profits too.


----------



## dutchie (6 June 2010)

The bottom line is that the money (profits) will be either spent by the mining companies (admittedly some will go overseas but profits of mining companies from other countries also comes to Australia)  back into the Australian economy (new projects etc) or the profits will go to the government to spend in the economy.

I know who I would prefer to spend the money!


----------



## Whiskers (6 June 2010)

wayneL said:


> Ahhhh Australia.
> 
> Beautiful one day,
> 
> Socialist the next.




lol, yeah quite true. 

But maybe not so funny... swinging, or maybe over-swinging from one extreme to another. 



-Bevo- said:


> Steve
> 
> *State Governments sell lease to Miners on behalf of the people for the rights to mine* a area in effect they are already paying the people for the use of that land they don't get it for free, then *the investors take a risk on capital to develop projects plus pay a company tax *and employees are taxed just as everyone else is, also think about the flow on effects to other people / businesses who benefit indirectly who also pay tax, now*  people like you  *because of Rudd *think they own the minerals and want the profits too*.




That (blue highlight) is true.

Investor risk is not really applicable to the tax rate issue, because that risk also has a lot more to do with management decisions. In the GFC for example probably more banks went bust than any other type of business... and they're arguably supposed to be the safest business and experts at risk management.

The problem atm is the rather ad hoc way royalties are set and lack of correlation between the states. In earlier posts I highlighted an example where BHP & RIO pay substantially less royalties than there competitors based on a 1960's and now outdated agreement to develop infrastructure. WA's premier is under pressure from recent court decisions giving new players access to that infrastructure, to level the playing field for new players .

*I think the current new tax proposal is in no small part a product of the states refusing to unify and standardise the royalty rates across Australia at reasonable levels *and instead competing with each other (states) to keep royalties minimal to attract investment and development to their state which in turn pumps up the state population, employment and economic activity data that determines their share of the Commonwealth handouts at COAG each year.

So, in summary, whichever way you look at it miners have got to keep quite a bit more proportionally from the substantial rise in mineral prices over the last decade. We have an adulterated tax/royalty system atm. My hope is that it will all be less adulterated when all this 'reform' is finished.


----------



## -Bevo- (6 June 2010)

dutchie said:


> The bottom line is that the money (profits) will be either spent by the mining companies (admittedly some will go overseas but profits of mining companies from other countries also comes to Australia)  back into the Australian economy (new projects etc) or the profits will go to the government to spend in the economy.
> 
> I know who I would prefer to spend the money!




Yep good example of that here

*Canadian goldminer decries 'horrible' tax* 

_IT HAS been a bitter-sweet week for Canada's Crocodile Gold Corp. It has just declared the first commercial production from its revival of a suite of gold projects in the Northern Territory that it acquired last year from the liquidator of GBS Gold Australia, spending $120 million and creating 300 jobs in the process._

http://www.smh.com.au/business/canadian-goldminer-decries-horrible-tax-20100604-xktg.html

If Rudd stuffs this country, might have too take a look at the TSX.


----------



## todster (6 June 2010)

dutchie said:


> The bottom line is that the money (profits) will be either spent by the mining companies (admittedly some will go overseas but profits of mining companies from other countries also comes to Australia)  back into the Australian economy (new projects etc) or the profits will go to the government to spend in the economy.
> 
> I know who I would prefer to spend the money!




Like BHP rapid growth 5 in Port Hedland port expansion,structual steel made in Thailand on the cheap and bolted together 
by aussie and kiwi muppets
Dig big holes in the ground put it on ships to china/japan to make steel who sell it to Thailand  to make beams so we can dig more holes
Do we make anything beyond big holes?
We do make a nice hole though


----------



## Julia (6 June 2010)

Whiskers said:


> Julia, from what I understand the 'retrospectivity' aspect that some don't like is that the proposed new tax will apply to existing projects.



Um, Whiskers, I had actually managed to figure that out, believe it or not 
My mention of it again was with regard to brty saying a few pages ago that it wasn't retrospective because it didn't apply to previous years' tax paid.



> Some only want it to apply to new projects. The new system isn't proposed to recalculate the tax of past years as Murray tends to carelessly imply.



I don't think he implied any such thing, and I'd not regard Mr Murray as 'careless' in any sense.  On the contrary, his remarks are usually cautious and well considered.



> People will have to accept lower standards of living and lower gov expenditure, higher taxes to pay off debt or go bust individually and as a country. I just see the higher tax at the 11th hour as being the most likely course.



Hmm, or perhaps we could have a government that doesn't waste billions on dodgy schemes and spurious advertising.



-Bevo- said:


> Steve
> 
> State Governments sell lease to Miners on behalf of the people for the rights to mine a area in effect they are already paying the people for the use of that land they don't get it for free, then the investors take a risk on capital to develop projects plus pay a company tax and employees are taxed just as everyone else is, also think about the flow on effects to other people / businesses who benefit indirectly who also pay tax, now people like you  because of Rudd think they own the minerals and want the profits too.



Exactly.  
I don't suppose the government would do such a thing as send its disciples out into stockmarket forumland to promote its message?  
Probably I should wash my mouth out for such an unkind utterance.



dutchie said:


> The bottom line is that the money (profits) will be either spent by the mining companies (admittedly some will go overseas but profits of mining companies from other countries also comes to Australia)  back into the Australian economy (new projects etc) or the profits will go to the government to spend in the economy.
> 
> I know who I would prefer to spend the money!



Yep, me too.


----------



## Whiskers (6 June 2010)

dutchie said:


> The bottom line is that the money (profits) will be either spent by the mining companies (admittedly some will go overseas but profits of mining companies from other countries also comes to Australia)  back into the Australian economy (new projects etc) or the profits will go to the government to spend in the economy.
> 
> I know who I would prefer to spend the money!




Yeah dutchie, I agree... but the reality is that governments will need more income (tax & royalties) to defray generally rising debt and ageing population issues.

There are some worrying aspects of the original proposal, but when Henry was dealing with the fact that the states were adulterating the overall tax/royalty revenue system this sort of formula of a profit based tax with deductions/rebates for royalties already paid to states with a 2% income tax cut is about the only way around collecting a proportional share of the mineral wealth as mineral prices go higher, because state royalties are a flat rate on production that has hardly changed for the reasons I mentioned in post above.

I suggest that if the states were to correlate and standardise their royalties to rises in something like average metal prices, profits or some sort of mix, then this fed tax proposal would be killed off quicker than you could say Jack Johnson.


----------



## -Bevo- (6 June 2010)

Whiskers said:


> Investor risk is not really applicable to the tax rate issue, because that risk also has a lot more to do with management decisions. In the GFC for example probably more banks went bust than any other type of business... and they're arguably supposed to be the safest business and experts at risk management.




I was refering to risk taken from investor to fund a project yes I see your point with management decisions, but for the risk taken I don't see a problem with the investor / company receiving higher returns unlike Steve who wants some of the profits without the risk, although as I understand it the government will refund 40% of losses under this tax so taxpayer's could see some big bills coming its way if a major project fails.

I don't agree with the banks supposed to be safest business, although I don't have any figures to back this up but if you went back over the past 100 years and had a look at failures I think banks would be high on the list.


----------



## medicowallet (6 June 2010)

Whiskers said:


> Yeah dutchie, I agree... but the reality is that governments will need more income (tax & royalties) to defray generally rising debt and ageing population issues.




And trust them to take the easy, inefficient option. There are other options available to them which do not destroy people's investments/super, discourage billions of dollars of investment, and actually increase productivity.

Unfortunately our PM is too much of a coward to do what is right, and is only worried about elections.


----------



## Whiskers (6 June 2010)

Julia said:


> Um, Whiskers, I had actually managed to figure that out, believe it or not
> My mention of it again was with regard to brty saying a few pages ago that it wasn't retrospective because it didn't apply to previous years' tax paid.




Well then I'm not sure what you meant...



> I don't think he implied any such thing, and I'd not regard Mr Murray as 'careless' in any sense.  On the contrary, his remarks are usually cautious and well considered.




Well to a cursory reading of his comment by an uninformed person it could easily imply that tax (calculation) was retrospective

"You've got to have a sensible collection of taxes and royalties when returns are strong, but you can't apply these retrospectively because you won't get investment."​


> Hmm, or perhaps we could have a government that doesn't waste billions on dodgy schemes and spurious advertising.




Yes quite true, but this gov is not unique in that regard either... but rather than crying or getting resentful over spilt milk, I prefer to do my best to properly inform people about what this new proposal means in an effeot to try to get it's application much better than previous 'reform' attempts.



> Exactly.
> I don't suppose the government would do such a thing as send its disciples out into stockmarket forumland to promote its message?
> Probably *I should wash my mouth out for such an unkind utterance*.




You certainly should, : even if I was a gov disciple, why can't we keep the discussion on the issue rather than distorting your perceptions with personality issues. Rule number one of conflict resolution. 



-Bevo- said:


> I was refering to risk taken from investor to fund a project yes I see your point with management decisions, but for the risk taken I don't see a problem with the investor / company receiving higher returns unlike Steve who wants some of the profits without the risk, although as I understand it the government will refund 40% of losses under this tax so taxpayer's could see some big bills coming its way if a major project fails.
> 
> I don't agree with the banks supposed to be safest business, although I don't have any figures to back this up but if you went back over the past 100 years and had a look at failures I think banks would be high on the list.




Yes I see your point there. 

My point is the general belief (public perception) that banks are the safest place to put your money/investment.

Cartainly agree the risk reward issue is still a problem and I do think that refund of losses will be scrapped. The gov needs the support of the greens and independants to get this into law, and unless the gov wins more seats this election, which is highly unlikely, the greens who are tipped to gain some, will demand this aspect is cut.


----------



## Whiskers (6 June 2010)

medicowallet said:


> And trust them to take the easy, inefficient option. There are other options available to them which do not destroy people's investments/super, discourage billions of dollars of investment, and actually increase productivity.
> 
> Unfortunately our PM is too much of a coward to do what is right, and is only worried about elections.




Yes medicowallet, but from a psychological perspective I think Rudd is about determined as they come and has got this issue firmy in his psyche and I suspect will not let it go until it either gets through in some heavily ammended form a la hospital funding reform, or he looses power.

It is clearly something he is very passionate about. The issue remains to be seen whether his passion will give way to more pragmatism or conceed (defeat).


----------



## Trembling Hand (6 June 2010)

The retrospective nature of the tax that people complain about is that existing mines/companies will not be able take advantage of the 40% loss provision on old projects because the failed ones that have been invested in have now gone. All thats left are the winners which the Gov wants there slice of.

The other retrospective part is the capital depreciations cost have for a lot of existing mines gone so the Gov is jumping in after cost.

No one disagrees with a rent tax in theory. In fact I think the miners have had the idea out there for some time. What is a disgrace is the implementation and lack of consolation. Just another disgusting example of our Ministerial Parliamentary system putting far too much power into 1 or two Muppets hands, Internet filter, 'Pacific Solution', NBN, for example now this god almighty mess.


----------



## trainspotter (6 June 2010)

Just so we are all clear on this spelling ...... there is no such thing as "looses" ... it is LOSES. Something can be let "LOOSE" .. like my temper. Or I can LOSE it .... Like my temper.

Some light reading for you here Whiskers. http://www.cpa.org.au/guardian/2010/1457/09-mining-companies.html .. The truth is out there !

It appears your somewhat narrow view on reality has distorted your thinking. Are you a university student? A self made philanthropist? A retired business banker? I am curious as to what it is you actually do for someone so opinionated in the misguided sense.


----------



## Julia (6 June 2010)

stv said:


> I think the new resources tax is a good idea and it is good to see that the miners' will be paying us the aust people for the use of our resources.
> 
> Its alright for them to make $$s from mining, but maybe they have not been paying the aust people enough up until now is regards to mining our finite resources.
> 
> ...





> Posted by Julia:I don't suppose the government would do such a thing as send its disciples out into stockmarket forumland to promote its message?
> Probably I should wash my mouth out for such an unkind utterance.






Whiskers said:


> You certainly should, : even if I was a gov disciple, why can't we keep the discussion on the issue rather than distorting your perceptions with personality issues. Rule number one of conflict resolution.
> .



Oh dear, Whiskers, I wasn't referring to you.  I should have quoted the above post from steve with my comment.
Suddenly we have steve, with three posts, coming onto this thread to tell us how great our Kev is.  Doesn't tell us anything but parrots off a version of the government line about how 'working bloody families' (I will scream if I hear that expression again) haven't been getting a fair share from the greedy miners.


----------



## medicowallet (6 June 2010)

OK people stop using the term 'working bloody families'


----------



## Julia (6 June 2010)

medicowallet said:


> OK people stop using the term 'working bloody families'




Sorry, I shouldn't have included the curse.
I doubt that I'm the only one who is well and truly sick of this phrase, though.


----------



## starwars_guy456 (6 June 2010)

Julia said:


> Sorry, I shouldn't have included the curse.
> I doubt that I'm the only one who is well and truly sick of this phrase, though.




I haven't heard this phrase much lately though... perhaps they don't want to remind those unemployed of the state of the economy?


----------



## Bushman (7 June 2010)

-Bevo- said:


> although as I understand it the government will refund 40% of losses under this tax so taxpayer's could see some big bills coming its way if a major project fails.




That's the thing Bevo, there is no way in hell that a sitting government will stump up the cash for a failed mining venture. 

That is why financiers will not accept it.


----------



## trainspotter (7 June 2010)

Whiskers said:


> Off topic a bit, BUT I don't know if you've noticed decent rises in base metals in the last few hours, about 4% rise in copper, not to mention the FTSE and Europe up 5%, US futures up and good, lower loan default news in the US etc.
> 
> This'll be one hell of a dead cat bounce.
> 
> Somehow I'm thinking our mining industry will purrrrr on nicely, without missing a beat. :




Hows the mining companies going now Whiskers? Puuuurrrring along nicely aren't they? How did the dead cat bounce work out for you as well? 

LMFAO ....... I can't possibly take anything you write in here seriously anymore. Go and put your asshat back on. It suits you.

I am out of here !


----------



## Whiskers (7 June 2010)

Julia said:


> *Oh dear, Whiskers, I wasn't referring to you*.  I should have quoted the above post from steve with my comment.
> Suddenly we have steve, with three posts, coming onto this thread to tell us how great our Kev is.  Doesn't tell us anything but parrots off a version of the government line about how 'working bloody families' (I will scream if I hear that expression again) haven't been getting a fair share from the greedy miners.




Whew... that good!


----------



## Whiskers (7 June 2010)

trainspotter said:


> *Hows the mining companies going now Whiskers?* Puuuurrrring along nicely aren't they? How did the dead cat bounce work out for you as well?
> 
> LMFAO ....... I can't possibly take anything you write in here seriously anymore. Go and put your asshat back on. It suits you.
> 
> I am out of here !




Yes trainspotter, purring on nicely in the context of everything that is happening in the markets around the world.

Have a look at the Aus market since the Henry review was released. 

The Metals & Miners (XMM) are performing at least as well as the overall market (XAO) and certainly better than the Industrials (XNJ) which are generally pulling our market down.


----------



## Whiskers (7 June 2010)

Trembling Hand said:


> The retrospective nature of the tax that people complain about is that existing mines/companies will not be able take advantage of the 40% loss provision on old projects because the failed ones that have been invested in have now gone. All thats left are the winners which the Gov wants there slice of.
> 
> The other retrospective part is the capital depreciations cost have for a lot of existing mines gone so the Gov is jumping in after cost.
> 
> No one disagrees with a rent tax in theory. In fact I think the miners have had the idea out there for some time. What is a disgrace is the implementation and lack of consolation. Just another disgusting example of our Ministerial Parliamentary system putting far too much power into 1 or two Muppets hands, Internet filter, 'Pacific Solution', NBN, for example now this god almighty mess.




That's a brilliantly intellectual post TH. I'm proud of you.


----------



## Whiskers (8 June 2010)

Whiskers said:


> Yes trainspotter, purring on nicely in the context of everything that is happening in the markets around the world.
> 
> Have a look at the Aus market since the Henry review was released.
> 
> The Metals & Miners (XMM) are performing at least as well as the overall market (XAO) and certainly better than the Industrials (XNJ) which are generally pulling our market down.




...and on the bounce today, atm, XAO up 1.1% XNJ up 1.2% and wait for it, XMM up 1.5%.

Metals and miners still holding our market UP, trainspotter.


----------



## gav (9 June 2010)

Anyone else watch Twiggy on Lateline tonight?  Tomorrows meeting with Krudd should be interesting...


----------



## Calliope (10 June 2010)

I don't think Rudd can sell his tax grab by continually focusing on the class warfare angle. The idea that the miners are getting rich at the expense of working families doesn't work when most people know that the resources industries are the lifeblood of this country.


----------



## trainspotter (10 June 2010)

My understanding of the 40% RSPT was to fund the increase of SGC to 12% and to reduce comapny tax to 28%? The amount forecast was 9 billion worth of revenue. It now appears it can be used to provide infrastructure to WA & QLD to the tune of 6 billion? Does not leave much for the SGC contribution and company tax reduction.

http://www.businessspectator.com.au...pany-tax-pd20100502-537BJ!OpenDocument&Click=

http://www.couriermail.com.au/busin...n-roads-and-rail/story-e6freqmx-1225877564873 Queenslands "lions share"

http://www.news.com.au/business/kev...profit-tax-in-wa/story-e6frfm1i-1225877493525 WA's "lions share" 

Oh well ...... as long as those naughty, big, non tax paying their fair share mining companies are propping up the stockmarket ...... who cares?


----------



## Whiskers (11 June 2010)

gav said:


> Anyone else watch Twiggy on Lateline tonight?  Tomorrows meeting with Krudd should be interesting...




Yeah, I saw some of it. I think Twiggy and Gina calling for the tax to be completely scrapped is probably the wrong tactic from a PR perspective... although his turning up in mining work clothes was a good touch to relate to 'working Families'. They tend to portray in image of those 'greedy wealthy miners'... whereas the concensus among many other mining execs seems to be 'we acknowledge a change is due, but let's talk more about the best way to do it'.

Nonetheless it'll be an interesting few weeks as the details get thrashed out with the industry. Probably a good move sending Julia Gillard ahead to WA to try to find some common ground before Rudd gets stirring the pot too much.

I just hope they can rejig it all to get rid of the tax loss rebate and increase the threshold a bit.


----------



## gav (15 June 2010)

*Super tax a chance to take investment from Australia*

"CHILE, the world's biggest copper producer, has joined Canada in describing the Rudd government's planned resource super-profits tax as a chance to strip global market share from Australia.

But rather than focusing on the level of the tax making Chile more competitive, Chile Mines Minister Laurence Golborne said it was the unstable nature of Australia's tax regime that could send investment dollars to Chile."

More here:
http://www.theaustralian.com.au/bus...t-from-australia/story-e6frg8zx-1225879642027


----------



## Mofra (15 June 2010)

Interesting article gav. From the link:



> "We went through a version of that (a tax increase) in Alberta when a new resource royalty regime was put in and there was a big backlash. Billions of dollars of investments were cancelled."




So we had little/no consultation with industry and a precedent set overseas. Wonderful.


----------



## bandicoot76 (15 June 2010)

what really gets me is how ANYONE thinks that a tax is going to be better for the we 'the people'.... share the wealth? are you kidding me?!? 

since when did the fed govt share anything with the people? it will go into making bigger beauracracies, pork barrelling at election time and possibly to pay off the massive debt created by an incompetent government... you and i wont see a cent of it!

to really 'share the wealth' in a way that benefits ALL australians (and not just big government) the proceeds of the RSPT should be put into a national fund with the govt only getting the interest off it for infrastructure investment...

and then every 12months half of the total amount in the fund should be divided EQUALLY between every citizen over the age of 18 and deposited directly into THEIR bank account!...
and NO-MATTER what income level or personal cicumstance EVERYONE gets an equal share.

 (i believe this is done in alaska with oil royalties and the everyone gets about $2500 per year... not 100% sure on that though)

the remaining half of the yearly total should stay in the fund to accumulate for future prosperity.... or even to establish an independant "honest" peoples bank to cut out the international scumbag moneymen who have proved themselves corrupt dishonest and untrustworthy!

sound fair?


----------



## dutchie (15 June 2010)

bandicoot76 said:


> what really gets me is how ANYONE thinks that a tax is going to be better for the we 'the people'.... share the wealth? are you kidding me?!?
> 
> since when did the fed govt share anything with the people? it will go into making bigger beauracracies, pork barrelling at election time and possibly to pay off the massive debt created by an incompetent government... you and i wont see a cent of it!
> 
> ...




Yes and if you live in Qld or WA your going to get an even "fairer" share of the wealth.


----------



## gav (16 June 2010)

dutchie said:


> Yes and if you live in Qld or WA your going to get an even "fairer" share of the wealth.




Sounds a bit like the book "Atlas Shrugged"


----------



## trainspotter (16 June 2010)

This Guvmnt is turning out to a right pack of socialistic commies under the guise of a "reformist government". Eat your swill comrades for soon the revolution will be upon us all. Chairman Ming Pong Kluddy has told parliament that the Paid Parental Scheme is now dependent on the RSPT being passed. OMFG ! How much more of this excrement are we prepared to chow down on?  

The RSPT was sold to us the voting public that it was to be used to drop company tax from 30% to 28% and to increase the SGC from 9% to 12%. Apparently now it can be used to give WA and QLD 6 billion for infrastructure as well as deny parents the paid leave they deserve. WAKE UP !


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## Trembling Hand (16 June 2010)

How is the Resource Super Stupid Tax going to pay for the GC from 9% to 12%?? Since its employers who pay it out of their wage expenses. Or are they talking about it funding the govs extra public services pension cost


----------



## inrodwetrust (16 June 2010)

> what really gets me is how ANYONE thinks that a tax is going to be better for the we 'the people'.... share the wealth? are you kidding me?!?




The primary purpose of the "tax" is to payoff the budget deficit( they created ), so Swann can produce a measly $1m surplus in 3 years. Then both he & Krudd can gloat how good they are at managing the economy & they can be voted back in forever more. 

It's all for there own glory.... 'working familes' .... give me a break


----------



## trainspotter (16 June 2010)

Trembling Hand said:


> How is the Resource Super Stupid Tax going to pay for the GC from 9% to 12%?? Since its employers who pay it out of their wage expenses. Or are they talking about it funding the govs extra public services pension cost




Partly to the public servants but also for the co -contribution scheme etc.

Here is the link    http://www.smartcompany.com.au/tax/...ng-population-with-superannuation-reform.html

The main thrust of it is "The superannuation reforms will be some of the Government’s most costly. Increasing the guarantee will cost $250 million, the low income contribution will cost $830 million and the concessional contribution cap increase will cost $830 million. However, increasing the age limit on employment contributions will net $15 million by 2013-14"


----------



## todster (16 June 2010)

inrodwetrust said:


> The primary purpose of the "tax" is to payoff the budget deficit( they created ), so Swann can produce a measly $1m surplus in 3 years. Then both he & Krudd can gloat how good they are at managing the economy & they can be voted back in forever more.
> 
> It's all for there own glory.... 'working familes' .... give me a break




What about we bang 10% on top of everything,sorry Howard beat you to it


----------



## Julia (16 June 2010)

todster said:


> What about we bang 10% on top of everything,sorry Howard beat you to it



Actually, increasing the GST to 15% would probably be the simplest solution, giving people on low incomes some compensation as happened when the GST was introduced.

I'd bet the government considered this, then rejected it as politically unpalatable, thinking the mining tax would instead be a real winner on the basis of class warfare.

Seems they have badly miscalculated and have dug themselves into a hole from which there is no face-saving escape.
Excellent


----------



## todster (16 June 2010)

Julia said:


> Actually, increasing the GST to 15% would probably be the simplest solution, giving people on low incomes some compensation as happened when the GST was introduced.
> 
> I'd bet the government considered this, then rejected it as politically unpalatable, thinking the mining tax would instead be a real winner on the basis of class warfare.
> 
> ...




Really not sure on this Julia,at first seems a lot of chest beating but in the west a pretty mixed view a lot of people blame the miners here for over inflated housing prices,Victorian refugees flooding the labour market,lack of trade services, it will be very interesting i think if we go to the polls on it,wheres Tony anyway


----------



## Colonel Klink (16 June 2010)

Perhaps the answer is to just simply reduce an aging Australian population's sense of entitlement to basic services. I am sure that we can all pull together, do with less, pay a little more tax and be more grateful for living in a peaceful country. 

In this way we can provide the continuing placid certainty that BHP, RIO etc require to do business here. Mining companies  have our best interests at heart, unlike the government who is only interested in staying in power. This of course, is a remarkable turn of events and flies in the face of all government behaviour that has gone before.

If government had not been in the business of coercion of mining activity, children would still be in mines.

It is because of the incremental hand of government on their activity over a century or more that mining heads can now adopt the moral high ground of model corporate citizens and lecture us about what is fair for them, and therefore us.

Is what is being proposed in the RSPT too much? I don't know. But  I do think it is worth the argument that is occurring behind closed doors. We'll see, we will learn more and we'll vote.
Full page ads and sound bites are just the dogs barking.

Cheers Klink


----------



## drsmith (16 June 2010)

That username sreriously needs an avatar.

http://www.google.com.au/imgres?img...l=en&sa=X&rlz=1T4SUNC_enAU365AU365&tbs=isch:1

If the GST is raised, where does it stop, 15%, 20%, 25%, ??% ?

That would just be a road map to increased government waste. 

It's base should be broadened as part of overall tax reform but the rate should never be raised in the absence of highly compelling broad based economic argument.


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## trainspotter (18 June 2010)

Look out! BHP & Rio Tinto will now be heading there real soon !

Afghanistan is gearing up to award contracts to mine one the world's largest iron ore deposits buried in a peaceful province of the nation that has at least $US3 trillion ($A3.48 trillion) in untapped minerals, the country's top mining official said Thursday.

Geologists have known for decades about Afghanistan's vast deposits of iron, copper, cobalt, gold and other prized minerals, but a US Department of Defense briefing earlier this week put a startling, nearly $US1 trillion ($A1.16 trillion) price tag on the reserves.

http://www.thebull.com.au/articles/a/12171-afghan-mining-contracts-up-for-grabs.html

Thank you Mr Rudd !


----------



## Bigukraine (18 June 2010)

Not sure how to link it but DJ report just in looks like the gov,t wants to keep it at 40% but with concession's , look's like KRUDD and co starting to buckle.........:hide::hide:


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## Mofra (18 June 2010)

todster said:


> What about we bang 10% on top of everything,sorry Howard beat you to it



The GST replaced a myriad of unequal sales taxes though - the Resources Helping-Swan tax is trully an extra tax with a small amount of credit given for State royalties, that has the potential to make the Australian mining industry a less attractive place to invest, therefore diverting millions in potential income offshore.


----------



## todster (18 June 2010)

Mofra said:


> The GST replaced a myriad of unequal sales taxes though - the Resources Helping-Swan tax is trully an extra tax with a small amount of credit given for State royalties, that has the potential to make the Australian mining industry a less attractive place to invest, therefore diverting millions in potential income offshore.




But what about the "S" part dont ever remember writing an invoice to a customer and bangin 10% 0n for the trully extra tax,might have added a bit for cartons for the boys though.


----------



## todster (18 June 2010)

And stamp duty


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## todster (18 June 2010)

Bigukraine said:


> Not sure how to link it but DJ report just in looks like the gov,t wants to keep it at 40% but with concession's , look's like KRUDD and co starting to buckle.........:hide::hide:




Buckle,this is all part of the master plan.
Go out with a big stick,stir the honey pot.
Then get them to pay the tax but on there terms
Still a new tax and they cant get out of it


----------



## Bigukraine (18 June 2010)

todster said:


> Buckle,this is all part of the master plan.
> Go out with a big stick,stir the honey pot.
> Then get them to pay the tax but on there terms
> Still a new tax and they cant get out of it




yeah ? i think a liberal gov't being voted in might have a say about that


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## Julia (18 June 2010)

todster said:


> Still a new tax and they cant get out of it






Bigukraine said:


> yeah ? i think a liberal gov't being voted in might have a say about that



Even if a Liberal government is not voted in, they can still refuse to pass it in the Senate.  The Greens will vote for it, but I think to get the numbers they also need the votes of at least some of the Independents.


----------



## Trembling Hand (18 June 2010)

Julia said:


> Even if a Liberal government is not voted in, they can still refuse to pass it in the Senate.  The Greens will vote for it, but I think to get the numbers they also need the votes of at least some of the Independents.




That of course assumes no big change at the election.


----------



## Julia (18 June 2010)

Trembling Hand said:


> That of course assumes no big change at the election.



Quite true, and it's very likely the Greens could increase their members in the Senate at least.


----------



## skc (18 June 2010)

Trembling Hand said:


> That of course assumes no big change at the election.




I am sure there is a trade to be had... something like long on BHP/RIO and bet long on Labours winning the election.

Must do some numbers on how this "pair trade" might play out.


----------



## trainspotter (18 June 2010)

What startles me the most is that the Unions are backing the RSPT. Granted they are following their master and must be obedient as these great big naughty mining companies have not being paying their fair share ! Pfffffffftttt ! 

For the industry as a whole in 2007-2008, ATO statistics show mining
companies paid *27.8% effective corporate tax rate, which rises to
41.3% when royalties are included.*

BHP Billiton had an effective tax rate inclusive of royalties of *43% *for
financial year ended June 2009, and an average of 42% for financial years
2004 – 2009 inclusive

Between 2004 and 2009 inclusive, BHP Billiton’s Australian operations
paid total taxes of over *$24 billion* ! Not much really is it ??

If I was a Union man I would be jumping up and down telling BIG KEV to back off as the mining companies are using this RSPT as an excuse to wind back exploration and also employment opportunities for their comrades in arms.

Xstrata said it was suspending $586m worth of investment in two projects, at the Wandoan thermal coal project and the Ernest Henry copper mine.

Xstrata denied suggestions from Mr Rudd that problems with rail access and the supply of power were key factors behind its decision to suspend the projects.

“We have to make investment decisions and if there's a tax regime that is either uncertain or not clear, or is onerous and doesn't allow us to invest, we'll invest in areas where we can get sensible returns," Xstrata Coal's chief executive Peter Freyberg told ABC Radio last night.

He said the company had already spent $200m developing the Wandoan project and was planning to spend another $186m over the next 12 months to get it to the final design stage.

“This is a very large project of global significance and would've *employed 3000 people* in the construction and operation phase,” Mr Freyberg said.

Who would you believe? A mining company trying to employ people and make a profit from natural resources or Kevin Rudd the backflip King trying to plug the leaky budget dyke?


----------



## drsmith (18 June 2010)

http://www.theaustralian.com.au/bus...for-a-fair-share/story-e6frg8zx-1225881089017



> YESTERDAY we observed, like many others, that the PM has a jaw of crystal when it comes to criticism, after he dubbed unspecified Australian miners as "ugly". Our words were prescient, because in the wee hours before The Australian hit the streets the PM had again stunned his fellow Australians gathered at the Canberra Press Gallery's Midwinter Ball with an acerbic aside that carried with it a bleak threat to the mining industry.
> 
> "The mining industry are here tonight," Rudd said in a prime ministerial speech that, in more normal times, would have been protected by Chatham House rules but was circulating widely yesterday.
> 
> ...



Any truth to this ?


----------



## Bushman (18 June 2010)

"I extend my greeting to each and every one of them. I notice there's a small fire which has been erected down the back. I understand that myself and Wayne Swan and Martin Ferguson will soon be erected above that fire. Can I say, guys, we've got a very long memory."

WTF is wrong with this guy? The miners (except for Clive Palmer) are simply stating their commercial case that projects will not stack up under a RSPT. 

Kruddy is starting to get a bit paranoid. 

His off-colour jokes about his anger management issues and, err, rat fornication at the pollies ball were cringe worthy. 

He really is the Ricky Gervais of the Australian political scene. 

PS: the majority of unions will benefit under the RSPT due to lower AUD, lower SME company tax rate etc.


----------



## trainspotter (18 June 2010)

Remember Bill Kelty at the Union/Labor Rally when he stated "Today we will seek to initiate a course of action against CRA and CRA-associated companies of a magnitude and level that this country has never before seen."

"We can't afford to lose this battle; it's a battle that we have fought for close on 200 years. To be beaten on this issue is to be beaten as a trade union movement." "If it's a war they want, then it is a war they will get"  

These statements happened when the ACTU declared all-out war on the world's largest miner, CRA in 1995 over the collective bargaining dispute ......... You get the picture.

Contrary to some of the rhetoric senior Labor ministers have been espousing of late, the petroleum rent tax *excluded *most of the northwest shelf from the tax and that region has been the highest growth area of offshore mining over the past 25 years. Australia has not exported any LNG under PRRT to date either so the claim by the Guvmnt of "The PRRT has worked for Australia’s oil and gas industry, so the super tax will work for Australia’s mineral resources". 

Just telling it like it is fellow free thinking homosapiens. (read anti RSPT)


----------



## todster (18 June 2010)

trainspotter said:


> Look out! BHP & Rio Tinto will now be heading there real soon !
> 
> Afghanistan is gearing up to award contracts to mine one the world's largest iron ore deposits buried in a peaceful province of the nation that has at least $US3 trillion ($A3.48 trillion) in untapped minerals, the country's top mining official said Thursday.
> 
> ...




Peaceful until you put something worth a few bucks there


----------



## trainspotter (18 June 2010)

todster said:


> Peaceful until you put something worth a few bucks there




Just like Australia and its 20% stake in world yellowcake? Or what about the iron ore we have? Nup? Gold perhaps? Naaaaahhhh ... anyone for LNG? No good to you ? Ok what about coal in QLD then? Ummmmmm mineral sands in SA then?

Total unrest here isn't there ! I get what you mean Todster. The political climate in the countries around the potential site leaves a lot to be desired in the way of security. Still ..... they mine diamonds in Africa and that aint real stable.


----------



## todster (18 June 2010)

trainspotter said:


> Just like Australia and its 20% stake in world yellowcake? Or what about the iron ore we have? Nup? Gold perhaps? Naaaaahhhh ... anyone for LNG? No good to you ? Ok what about coal in QLD then? Ummmmmm mineral sands in SA then?
> 
> Total unrest here isn't there ! I get what you mean Todster. The political climate in the countries around the potential site leaves a lot to be desired in the way of security. Still ..... they mine diamonds in Africa and that aint real stable.




Stable enough to hold the World cup


----------



## trainspotter (18 June 2010)

todster said:


> Stable enough to hold the World cup




LOL ... Australia is only bidding on the 2022 World Cup !

DURBAN, SOUTH AFRICA (WIREUPDATE) ”” Breaking News from Durban – the site of one of the World Cup stadiums – this early Monday, where riots have broken out and sent the area into utter chaos.

According to reports, riot police have dispersed HUNDREDS of protesters outside Durban Stadium, hours after Germany vs. Australia which ended in 4 – 0. According to unconfirmed reports,hundreds of stewards at Durban Stadium are protesting, saying they were getting not enough payment for their work from stadium owners.

Police have fired back with stun grenades and media has been forced to stay in their media center. The stun grenade explosions rocked the area, making people fear it could be a terrorist attack. However, it is not. 

Bwahahahahahhaaaaaaaaaaaaaaaaaaa !


----------



## Macquack (18 June 2010)

trainspotter said:


> For the industry as a whole in 2007-2008, ATO statistics show mining
> companies paid *27.8% effective corporate tax rate, which rises to
> 41.3% when royalties are included.*




Royalties are not a tax. 

Royalties are the price paid for the minerals (stock in trade) that mining companies dig out of the ground.

Personally, I would prefer an increase in the royalties rate rather than the super profits tax. It would be fairer and much simpler.

How should get the royalties is another question.


----------



## todster (18 June 2010)

trainspotter said:


> LOL ... Australia is only bidding on the 2022 World Cup !
> 
> DURBAN, SOUTH AFRICA (WIREUPDATE) ”” Breaking News from Durban – the site of one of the World Cup stadiums – this early Monday, where riots have broken out and sent the area into utter chaos.
> 
> ...




Is that work choices in action


----------



## trainspotter (18 June 2010)

Macquack said:


> Royalties are not a tax.
> 
> Royalties are the price paid for the minerals (stock in trade) that mining companies dig out of the ground.
> 
> ...




Royalties are not a tax? However, it is doubtful whether we can rely solely in OECD definitions to conclude that mining royalty payments do not constitute duties of excise under the Australian interpretation of the term. This is for two reasons: firstly the long established principle by the High Court that a tax on a step of production is a duty of excise; secondly that the structure of mineral royalties taxes most minerals - though not all - at a step of production beyond that of extraction of the resource. 

The Henry Tax revue suggested the "royalties" be removed and a flat tax placed on the mining companies. Not this double dipping we have now to plug the blackhole budget of Kruddy & Swanny.


----------



## moXJO (18 June 2010)

todster said:


> Is that work choices in action




No, unions upset about the lack of different flavors of icecream


----------



## todster (18 June 2010)

Iron ore in WA for RIO and BHP 3.75% royalty for fines in a deal struck in the 60s apparently.
They must sit in the boardroom and pi$$ themselves laughing at the deal they get from us dumb aussies


----------



## trainspotter (20 June 2010)

1) With a loss to the Labor Government at the next Federal election. Best case scenario
2) Change of leader for the Labor Party due to negative polls. Second best case scenario
3) Greens have balance of power in Senate. Bottle of gin, warm bath and a packet of razor blades scenario
4) Who cares that billions of dollars of exploration and mining have been shelved or abandoned?


----------



## DB008 (20 June 2010)

So, looking at it, the present Gov is saying that anything above the bond rate (between 5%-6%), will be subject to the super profits resource rent tax in the resource industry.
What about the banks and how much money they are making. The big 4 made a combined total of more than $13billion. Shouldn't that also be subjected to a super profit tax?


----------



## Macquack (20 June 2010)

trainspotter said:


> 4) Who cares that billions of dollars of exploration and mining have been shelved or abandoned?




Does not bother me.

The resources can stay in the ground for future generations.

Trainspotter, I thought you were a pearl farmer, not a pearl miner.


----------



## Julia (20 June 2010)

Macquack said:


> Trainspotter, I thought you were a pearl farmer, not a pearl miner.



Not being a pearl miner doesn't disqualify TS from having a valid opinion.


----------



## trainspotter (21 June 2010)

Macquack said:


> Does not bother me.
> 
> The resources can stay in the ground for future generations.
> 
> Trainspotter, I thought you were a pearl farmer, not a pearl miner.




LOL Macquack ...... primary industry man. I care that the great big naughty mining companies are making huge profits and employing lotsa skilled people. These are the CUBs that buy my pearls. They also buy motor cars, houses, clothing and generally keep the economy afloat in WA. Without them we would be stuffed as it was pretty much the great big naughty mining companies that saved our bacon during the GFC and had FLICKALL to do with Kevin Rudd and his economic stimulus. The Chinese kept buying our iron ore and natural gas at vast quantities at a PRIMARY level. Forget the Plasma TV's from Hardly Normal and the BER and the Insulation Debacle. Only a select few made any money out of the so called stimulus !!


----------



## todster (21 June 2010)

trainspotter said:


> LOL Macquack ...... primary industry man. I care that the great big naughty mining companies are making huge profits and employing lotsa skilled people. These are the CUBs that buy my pearls. They also buy motor cars, houses, clothing and generally keep the economy afloat in WA. Without them we would be stuffed as it was pretty much the great big naughty mining companies that saved our bacon during the GFC and had FLICKALL to do with Kevin Rudd and his economic stimulus. The Chinese kept buying our iron ore and natural gas at vast quantities at a PRIMARY level. Forget the Plasma TV's from Hardly Normal and the BER and the Insulation Debacle. Only a select few made any money out of the so called stimulus !!



If you think that mining alone saved this country from the economic drama,
you better lay off that $70 a bottle woobler you have been snoggin


----------



## trainspotter (21 June 2010)

todster said:


> If you think that mining alone saved this country from the economic drama,
> you better lay off that $70 a bottle woobler you have been snoggin




Firstly there was the GFC – a deep freeze in global interbank lending as housing markets collapsed across the western world. Australia avoided this almost entirely by deploying the government balance sheet in support of our bank/housing complex, which owed roughly $400 billion in overseas debts. These loans were going to be called in until the government guaranteed them. 

The banks' lending was kept within sensible limits by the Australian Prudential Regulation Authority and their own management teams.

The second phase, as the bank crisis morphed into a credit crunch, was the collapse of global trade as what had been thought to be stable external imbalances corrected. Western current account deficits contracted and surplus production in eastern nations shrivelled. The mining boom generates most of its employment impact in other industries by lifting national income and spending ... even at its weakest point in May last year, mining employed 16 per cent more workers than two years earlier and nearly double the number six years before.

Mining in the meantime just kept on chugging away in the background employing people and selling our iron ore and LNG offshore. 

YES the government "guaranteed" the big 4 (and others) debt which IMO was totally unnecessary for many and various reasons which I have stated previously on many threads in ASF.

More woobler please.


----------



## trainspotter (21 June 2010)

Not really into conspiracy theories but isn't it convenient that 6 mining company executives have had a plane crash? Wonder if Kevin Rudd will get the blame for this? Afterall he gets the blame for everything else.


----------



## todster (21 June 2010)

trainspotter said:


> Not really into conspiracy theories but isn't it convenient that 6 mining company executives have had a plane crash? Wonder if Kevin Rudd will get the blame for this? Afterall he gets the blame for everything else.




I think Wilson Tuckey already linked the two


----------



## BrightGreenGlow (21 June 2010)

Krudd wouldn't be that smart for such a conspiracy, but Bush on the other hand with the WTCs.......


----------



## bellenuit (21 June 2010)

Interesting comments from Twiggy today....

*BHP, Rio agree to higher WA royalties*

extract....

_Meantime, mining magnate Andrew Forrest has proclaimed that the federal government's proposed resources super-profits tax is "officially dead''. 

The "heap of garbage'' should never have been taken out of the can, he said. 

The head of Fortescue Metals Group has been one of the loudest critics of the proposed 40 per cent tax on mining companies. 

"The RSPT is now officially dead,'' Mr Forrest told reporters in Parliament House after attending a business forum lunch for Chinese Vice President Xi Jinping today. 

"If it proceeds forward it will look nothing like that dreadful economy-smashing tax.'' 

Mr Forest said concerns about the tax had been expressed around the globe. 

"Capital that was to come to Australia, is now not coming, and capital that is here has either left or is considering leaving,'' he said, adding the tax was "theoretical hogwash''._

http://www.theaustralian.com.au/bus...her-wa-royalties/story-e6frg9df-1225882359047


----------



## todster (21 June 2010)

4) Who cares that billions of dollars of exploration and mining have been shelved or abandoned?[/QUOTE]

China to invest $10 billion in aussie resources in a deal signed today


----------



## satanoperca (21 June 2010)

Most of those DEALS where MoU's. Note signed seal and delivered.

Beware of chinese whispers.

Cheers


----------



## newbie trader (21 June 2010)

http://www.smh.com.au/national/tuck...ofits-tax-plan-20100621-yq1o.html?autostart=1


----------



## satanoperca (22 June 2010)

By applying the same rules to all business it would seem. Super tax profit for all companies and why stop there, how about individuals as well.

http://www.theaustralian.com.au/news/nation/henry-urges-wider-profits-tax/story-e6frg6nf-1225882484014

Cheers

All quite laughable, this legislation will never get through Parliament without heavy modifications.


----------



## trainspotter (22 June 2010)

*China to invest $10 billion in aussie resources in a deal signed today - todster wrote*

China had already committed to the PURCHASE of these base materials a loooooooooooong time ago. Has nothing to do with exploration of mining or the increase of output of existing mines. Just means they gonna take more of the output from the existing mines over the next 25 to 50 years (expected mine life). 

*EXAMPLE:*

Project Location :  Western Australia 
Project Manager :  Karara Mining Ltd 
Project Owner :  50:50 JV Gindalbie Ltd and AnSteel.  
Constructor :   
Construction Period :  2008 - 2010  
Project Value :  A$1.8 Billion 
Project Status :  Committed 

*PROJECT SCOPE *

The Karara Iron Ore Project consists of the development of Port, Rail and Mine site facilities for the export of iron ore products mined from the iron ore deposits located at the Karara mine site, approximately 320 kilometres north-north-east of Perth. 

The area is located in the vicinity of existing roads, rail, port and power infrastructure.

The Karara deposit has a current magnetite JORC resource of 1.43 billion tonnes at 36.3% Fe and initial reserve of 497 million tonnes, supporting a 40 – 50 year mine life at a production rate of 8 million tonnes per annum. 

Concentration process at the Karara mine site is to produce an initial 8 Mtpa (dry) of 68% Fe. concentrate. 

The magnetite concentrate is to be transported by rail to the Port of Geraldton, where it will be stockpiled prior to loading for shipment to AnSteels’ Bayuquan steel mill, which is located adjacent to the port of Yingkou in northern China.  

Gindalbie sealed a $US65 billion ($A70.01 billion) iron ore sales contract with Ansteel in March 2010.

The contract is for *life-of-mine production *from the Karara magnetite project in Western Australia's midwest region.


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## todster (22 June 2010)

trainspotter said:


> *China to invest $10 billion in aussie resources in a deal signed today - todster wrote*
> 
> China had already committed to the PURCHASE of these base materials a loooooooooooong time ago. Has nothing to do with exploration of mining or the increase of output of existing mines. Just means they gonna take more of the output from the existing mines over the next 25 to 50 years (expected mine life).
> 
> ...




No the 9 billion for coal mine rail and load out facility near Bowen in QLD


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## drsmith (22 June 2010)

If Ken Henry had his way, a resources super profits tax would just be the beginning.

http://www.theaustralian.com.au/new...ider-profits-tax/story-e6frg6nf-1225882484014


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## trainspotter (22 June 2010)

todster said:


> No the 9 billion for coal mine rail and load out facility near Bowen in QLD




LOLOL .... so Clive Palmer had not been working on this deal previously? Hahahahahhaaaaaa ...... Coal has been mined at Alpha since 1908.

One of the deals relates to mining magnate Clive Palmer's plan for a $6.5 billion coal mining project.

This includes:

$2.1 billion for a 490km train line between Alpha and Bowen;

$3.18 billion for mine equipment and infrastructure construction;

$1.27 billion in port construction at Abbot Point near Bowen.

Chinese Vice-President Xi Jinpeng inked the deals in meetings with Prime Minister Kevin Rudd. 

*China is Australia's largest trading partner, and its thirst for iron ore and natural gas helped keep Australia out of the global recession. *

http://www.townsvillebulletin.com.au/article/2010/06/22/148235_news.html

So the Chinese just woke up one morning and said "Gee ... we should go and buy a coal mine today in QLD". So going on your thought process these mines just spring up overnight with no planning or EXPLORATION first?

Also please note on my post the word EXAMPLE in bold and sized font for clarity.


----------



## trainspotter (22 June 2010)

drsmith said:


> If Ken Henry had his way, a resources super profits tax would just be the beginning.
> 
> http://www.theaustralian.com.au/new...ider-profits-tax/story-e6frg6nf-1225882484014




Loved this part of the article - "Dr Henry said variants on this system had been trialled in Croatia, Brazil, Italy, Austria, Belgium and Latvia, and offered the "least-resistance path of reform". *However, an IMF study said most of these countries had since abandoned that tax system."*

Beautiful ....... just beautiful.


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## IFocus (22 June 2010)

trainspotter said:


> Mining in the meantime just kept on chugging away in the background employing people and selling our iron ore and LNG offshore.




Actually if the rest of the economy had shed jobs like mining during the GFC the unemployment rate would have been around 19%.

We were lucky this time around but don't count on it again as Europe slides deeper, China exports far more to Europe than USA and a double dip 2011 is really on the cards for the US economy, Europe is pretty much a given for a serious down turn.

The idea that mining billionaires try to dictate how this country is run to a sovereign government is sheer arrogance.

As for Twiggy I know his past very well enough said.


----------



## IFocus (22 June 2010)

trainspotter said:


> Loved this part of the article - "Dr Henry said variants on this system had been trialled in Croatia, Brazil, Italy, Austria, Belgium and Latvia, and offered the "least-resistance path of reform". *However, an IMF study said most of these countries had since abandoned that tax system."*
> 
> Beautiful ....... just beautiful.




Contrary view but thinks the rate is set to high

"In Canada there's a very similar regime for the oil sands for example, as well as the BC [British Columbia] mining tax is a similar one as well," he said.

http://www.abc.net.au/news/stories/2010/06/22/2934004.htm


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## todster (22 June 2010)

todster said:


> 4) Who cares that billions of dollars of exploration and mining have been shelved or abandoned?




China to invest $10 billion in aussie resources in a deal signed today[/QUOTE]

SHELVED or ABANDONED


----------



## todster (22 June 2010)

I thought you might of got excited with new choo choo trains and all


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## Julia (22 June 2010)

Todster, where actually is the 10 billion going to be spent?


----------



## trainspotter (22 June 2010)

IFocus said:


> Actually if the rest of the economy had shed jobs like mining during the GFC the unemployment rate would have been around 19%.
> 
> We were lucky this time around but don't count on it again as Europe slides deeper, China exports far more to Europe than USA and a double dip 2011 is really on the cards for the US economy, Europe is pretty much a given for a serious down turn.
> 
> ...




WTF? Pretty big IF attached to the statement of mining companies shedding jobs during the GFC. Just goes to show how fragile they are to things like "credit crunch" and and GFC and oh oh ... RSPT and such like things. IF the credit crunch did not happen then no jobs would have been lost "IF"

You forgot to add to the middle statement "In your opinion". What has luck got to do with it? Firstly there was the GFC – a deep freeze in global interbank lending as housing markets collapsed across the western world. Australia avoided this almost entirely by deploying the government balance sheet in support of our bank/housing complex, which owed roughly $400 billion in overseas debts. These loans were going to be called in until the government guaranteed them. The banks' lending was kept within sensible limits by the Australian Prudential Regulation Authority and their own management teams. (cut and pasted from one of my previous posts)

Arrogant mining billionaires dictating to a Government? No seriously ...... is this how you see this playing out before your very eyes iFocus? You have got to be kidding me ?? I thought this kind of attitude was left with the canary and the pit pony down the mines back in the early 1900's. Are you some kind of union boss or something? They are not trying to tell the in situ Government how to run the country? Do you not see it as a company protecting their rights to earn money in the existing framework that has been provided by the very Govt that is trying to tax them more than what they are willing to withstand? Do you think that jobs will be lost and mining exploration will be wound back? Is it possible the very same companies may invest more overseas and less here? Or how about this for a very quirky idea. Instead of making "SUPER PROFITS" (above the govt bond rate of 6%) why don't they get really creative with their accounting so the mines they operate actually never run at this SUPER level. 

As for Twiggy and his past if you have some dirty laundry to air or a skeleton in his closet that you know of or even better yet some photos of him performing unnatural acts you had better lay them on the table. Enough said !! EVERYONE knows Twiggys past for CHRISSAKE. It is on public record.


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## trainspotter (22 June 2010)

todster said:


> China to invest $10 billion in aussie resources in a deal signed today




SHELVED or ABANDONED[/QUOTE]

LOL todster .... you are a piece of work my fellow ASFer. Missed the point completely that I was attempting to make very clear. Oh well ... better luck next time.

For Julias sake the 10 billion is actually 9 billion and it is the Clive Palmer deal that has been going for about 2 years now that China has finally committed to spend the money on the infrastructure so they can get the coal out of QLD.

*FEBRUARY 6th 2010 *- Queensland billionaire Clive Palmer has signed a deal to sell millions of tonnes of coal to China in what's believed to be Australia's largest export contract.

Mr Palmer says the $69 billion, 20-year offtake deal was signed last Friday with China Power International.

*Another $8.6 billion agreement *was signed with the Metallurgical Corporation of China to build the project in central Queensland.

http://www.abc.net.au/news/stories/2010/02/06/2812195.htm here is the link.

Mr Palmer's Resourcehouse wants to develop a 40 million-tonne-a-year thermal coal mine in the Galilee Basin, near Alpha, west of Emerald.


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## trainspotter (22 June 2010)

IFocus said:


> Contrary view but thinks the rate is set to high
> 
> "In Canada there's a very similar regime for the oil sands for example, as well as the BC [British Columbia] mining tax is a similar one as well," he said.
> 
> http://www.abc.net.au/news/stories/2010/06/22/2934004.htm




BC has a very low tax threshold and no royalties to states in their model. *yawn*


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## drsmith (22 June 2010)

IFocus said:


> Contrary view but thinks the rate is set to high
> 
> "In Canada there's a very similar regime for the oil sands for example, as well as the BC [British Columbia] mining tax is a similar one as well," he said.
> 
> http://www.abc.net.au/news/stories/2010/06/22/2934004.htm



If the underlying philosophy of Henry is to apply a super profits tax to all corporate profits above a pre-defined rate of return (10-yr govt bond) and underwrite losses at the same tax rate, then the broader question is whether this is too socialist relative to the global economy as a whole ?


----------



## trainspotter (22 June 2010)

I concur drsmith. Reformist government is beginning to sound and smell like socialist government IMO.


----------



## Calliope (23 June 2010)

trainspotter said:


> I concur drsmith. Reformist government is beginning to sound and smell like socialist government IMO.




Rudd and his gang keep harping on the theme that reform is hard. Under no circumstances can the attempt to part socialise the resources industry be considered as reform.

Rudd squibbed the Henry concept of tax reform and selected mining as his victim as it offered the best opportunity to fund his other handouts to woo voters. He assumed that the tax would be popular if he used the concept of robbing the rich to give to the poor.

He misread the electorate.


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## ROE (23 June 2010)

Rudd is finished ... Next leader will abandon the tax and blame it on him
for making such a silly decision  

http://www.abc.net.au/news/stories/2010/06/23/2935224.htm


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## RamonR (23 June 2010)

ROE said:


> Rudd is finished ... Next leader will abandon the tax and blame it on him
> for making such a silly decision




I certainly hope so.


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## Julia (23 June 2010)

ROE said:


> Rudd is finished ... Next leader will abandon the tax and blame it on him
> for making such a silly decision
> 
> http://www.abc.net.au/news/stories/2010/06/23/2935224.htm



Is that possible, given the tax was cooked up by the so called gang of four, including Julia Gillard herself?



RamonR said:


> I certainly hope so.



What do you think will be better if Ms Gillard takes the leadership, Ramon?
How do you think the Opposition's chances of winning the election will be affected if Rudd is swapped for Gillard?


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## ROE (23 June 2010)

Julia said:


> Is that possible, given the tax was cooked up by the so called gang of four, including Julia Gillard herself?
> 
> 
> What do you think will be better if Ms Gillard takes the leadership, Ramon?
> How do you think the Opposition's chances of winning the election will be affected if Rudd is swapped for Gillard?




Anything is possible in politics when you poll so badly...
even Jonhny can pull off they throw the kids overboard, are these human ?

Without Rudd and Mining Tax gone labor win easy  and throw Ken Henry out wins my votes
cant stand the guy. Look at me I know it all, he need to do a tour of duty over WA, put on hard Yakka shirt dig a few holes under 40 degree heat instead of sitting in an air conditioning office and
dream up these super profit tax 

and I have not one mining shares in my portfolio except FGE which is a mining service company which operate mostly out of Africa


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## RamonR (24 June 2010)

Julia said:


> What do you think will be better if Ms Gillard takes the leadership, Ramon?
> How do you think the Opposition's chances of winning the election will be affected if Rudd is swapped for Gillard?



She can immediately announce the death of the RSPT.
I think the chances are better for labor if she is the leader instead of Rudd.

I honestly was a life long labor voter and would have voted for liberals instead of Rudd.

I expect that labor might revive RSPT but ensure it is done right, no retrospectivity to it.


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## trainspotter (24 June 2010)

Hmmmmmm ..... Twiggy Forrest gave her a very warm welcome when she was in WA in the form of a very robust hug and a smooch on the cheek. Is this an arrogant billionaire miner manipulating the Government IFocus? Afterall she will be the new PM very soon. *DING DONG the witch is dead* RSPT will be wound up quicker than a rat up a drain pipe.


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## -Bevo- (24 June 2010)

RSPT will remain Australians deserve a fairer share says Gillard, sounds like Rudd in a skirt, was hoping they would can the tax altogether nope can't see Labour party doing any better it will be all the same crap recycled 

Bring on the election need to vote them all out.


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## Mofra (24 June 2010)

With the death of the ETS, Rudd politically had to make the RSPT stick - he had painted himself into a corner.
Gillard does not have the same problem - there are no littany of backflips shadowing her every decision (although she does take responsibility for being part of Labour decisions).

It will be very interesting to see how this plays out now. I am convinced that whatever form it takes there will be major structural changes to appease the sitting Labour WA & Qld ministers - she gained the caucus numbers far too easiliy for deals to have not been done on key policy issues.


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## vincent191 (24 June 2010)

My guess will be, the mining tax will stay but in a modified format. One of Gillard's supporters is the mining unions and they are not in favour of the tax. The Govt needs the money so it will be some sort of compromise, me think.


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## drsmith (24 June 2010)

The underlying principal of a national resources rent tax to replace state royalties is sound.

Now, hopefully, minds will be a little more open as to the detail.


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## J.B.Nimble (24 June 2010)

Loved this quote in todays Australian.... 


> Mike Young, managing director of emerging Pilbara miner BC Iron, said Ms Gillard needed to distance herself from Mr Rudd’s strategy and start consulting with the sector.
> 
> "The industry has always said we are happy to consult on the tax but the lack of consultation really got the sector offside," he said.
> 
> ...




Politics and veracity in the same sentence - unthinkable


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## trainspotter (25 June 2010)

Can anyone see the irony in this picture? Is that Twiggy in the background?


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## IFocus (25 June 2010)

drsmith said:


> The underlying principal of a national resources rent tax to replace state royalties is sound.
> 
> Now, hopefully, minds will be a little more open as to the detail.




Yes this is the reality hopefully Gillard will not be dim witted in the implementation and listen to the likes of Peter Walsh


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## wynsum (25 June 2010)

*Re: Mining Tax good idea*

australia is one of the richest countries in the world with minerals and all other aspects of the minning trade.
Yes maybe Mr Rudd should have been a bit more diplomatic in his negotiations and talks but I liked his plans, now who's gonna pay more tax? 
It wasn't us that pushed him out it's all inside caucus and a few others,what a joke and guess what the elections are up soon......
To make this plan and simple as soon as the government says raise your taxes to these big minning companies they use every tactic in the book such as their adverts "or loose your jobs", what a load of crap!
They have been on such a good wicket for so many years go have a look at their opualence living castles and money they send in o/s accounts and out of Australia at the same time using all our water when we go on rations and so on.


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## -Bevo- (25 June 2010)

*Re: Mining Tax good idea*



wynsum said:


> australia is one of the richest countries in the world with minerals and all other aspects of the minning trade.
> Yes maybe Mr Rudd should have been a bit more diplomatic in his negotiations and talks but I liked his plans, now who's gonna pay more tax?
> It wasn't us that pushed him out it's all inside caucus and a few others,what a joke and guess what the elections are up soon......
> To make this plan and simple as soon as the government says raise your taxes to these big minning companies they use every tactic in the book such as their adverts "or loose your jobs", what a load of crap!
> They have been on such a good wicket for so many years go have a look at their opualence living castles and money they send in o/s accounts and out of Australia at the same time using all our water when we go on rations and so on.






Wynsum you really should read alittle more, most miners are open to talks on tax even Andrew Forrest who runs Fortescue Metals today mention a profit based tax would be fine by him rather than royalties, all miners are paying company tax anyhow as there profits increase so does the return to the taxpayer, Miners such as Mr Forest are super wealthy because he is a major shareholder in FMG, if you would have brought that stock when it was trading at 1cent you to would have made alot of money.
The problem with Rudd was his my way or the highway approach do you believe the country would benefit if international investors ran for the exit how would that benefit Australia? You going to cough up the money to build mines? Many dont make super profits and alot go broke in which case you kiss your money goodbye.


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## todster (25 June 2010)

*Re: Mining Tax good idea*



-Bevo- said:


> Wynsum you really should read alittle more, most miners are open to talks on tax even Andrew Forrest who runs Fortescue Metals today mention a profit based tax would be fine by him rather than royalties, all miners are paying company tax anyhow as there profits increase so does the return to the taxpayer, Miners such as Mr Forest are super wealthy because he is a major shareholder in FMG, if you would have brought that stock when it was trading at 1cent you to would have made alot of money.
> The problem with Rudd was his my way or the highway approach do you believe the country would benefit if international investors ran for the exit how would that benefit Australia? You going to cough up the money to build mines? Many dont make super profits and alot go broke in which case you kiss your money goodbye.




Mate companies pay company tax what about what Forrest is digging up and paying pittance for it,why do you think he is worth so much,it's a very basic form of mining,they get the raw product for nicks.
Sooner or later we are going to need more money with an ageing growing population rather the fat cats pay it than me.
Fines price just doubled to about $120 US and we about 5% royalty,$6 woohoo
FMG are iron ore producers they cant hide like Rio and Bhp


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## Tanaka (26 June 2010)

Conspiracy theory - One of the big 4 miners is behind the removal of Rudd in order to get a fairer deal on the RSPT. 

but seriously I think the labor government will meet the miners half way.


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## AUcomm (26 June 2010)

Hello all,

Australia is seen as such a great place to mine because of the vast data base of drilling, massive exploration, pro-mining history, plus formerly stable political & legal systems for miners.  There are vast areas of the earths crust not properly explored, we are not as unique as people think _in mineral endowment terms_.  Australia was unique in some respects because of a _combination_ of all of the above - particularly the low sovereign risk factor being even above Canada.

Investment in mining is high risk so the rewards should be high.  Risk / reward must be in balance or no investment, income, jobs, royalties, company tax, GST or massive knock on effect in economy.  Weak mining industry in total = weak Australian economy (forget about the few that make it to the top because they are the minority).

Due to the massive scale of some projects, only a few, the big operators can get rich taking just a tiny part of the unit cost.  Lots of units - maybe 50c per tonne x 10B tonnes = $5B.  This is why Mr Forest is wealthy now.  Probably 100 times his cut goes to other parts of the overall equation including investors, taxes, wages, contractors etc.  My figures are indicative not actual - for example only.

For every "Twiggy" there are thousands of smaller operators that make up this industry that are still hit by the tax whenever they have a good year or two. They live in the hot and the dry dust risking all and not many ever get rich however if they happen to get lucky the government is standing there to take 57% - wow how fair is that?  What about all the non profitable times for this industry when commodities were not in a boom time - did the Government assist them then - NO.  

Now things are finally good and *investment* is booming creating; jobs, company tax, GST receipts, contractors, related businesses of all descriptions supplying engineering, tyres, shop keepers, consultants, investors, finance and you name it - the Government seeks to make it uncompetitive.  Blunders in and ruins the risk / reward balance stalling all of the above via investment in new projects right in its tracks.

The cost is so large and widespread that those without a significant  understanding of commercial reality and macro-economics cannot possibly imagine how much damage has been done.  *The government that governs best governs least. * 

Government needs to provide a stable safe environment for all of us to make a living, pay off our mortgages (= having a job), create businesses, bring up our children, breathe, eat etc.  Imagine if they did this RSPT to the farming industry in good years, after all look at their wealth controlling vast area of our country - the big guys - similar argument?  Imagine if food got disrupted?  Well look at how we all live, metal in computers, houses, cars etc - just as essential to modern lifestyles when you want to drive, eat, turn the light on etc.

The economy has benefited massively from this once in a generation mining boom at a very difficult time in the worlds economy - a time when the biggest debt bubble in history threatens to burst.  Ideological fools have just decreased the future benefit to all of us threatening the welfare budget, taxation revenues, in short our way of life and affluence.  

Wake up Austalia your future depends on a strong mining sector at this point in history and this government, led by Gillard and Swan (formally Rudd) have been at the helm overseeing massive wastage, incompetent interference, mismanagement and some excellent social reforms.  Overall I liked Rudd on a personal basis and am not a Liberal supporter as such I just want the best for Australia - my kids etc - and a fair go to get on with business.

Don't listen to or believe in corporate or government spin they do it to cover their mistakes, lack of checks and balances etc but never do it for us the real Aussies.  This tax hurts all of us so a government with no commercial experience can cover excessive spending (will keep going is the nature of this beast).   When mining goes flat we will all have to pay the balance off via higher taxes - this is truth.  Due to the way the RSPT hurts and weakens the whole industry we will be paying more sooner rather than later.  I cannot stress the knock on effect any stronger - we lose!

Very best to all I am enjoying your stimulating posts and ideas,
AUcomm
www.goldoz.com.au


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## Wysiwyg (27 June 2010)

> Australia is seen as such a great place to mine because of the vast data base of drilling, massive exploration, pro-mining history, plus formerly stable political & legal systems for miners. There are vast areas of the earths crust not properly explored, we are not as unique as people think in mineral endowment terms. *Australia was unique in some respects because of a* *combination of all of the above - particularly the low sovereign risk* factor being even above Canada.




Africa would have multiple times more mineral wealth than Australia and fortunately for Australia (competition wise) there isn't the political/social stability in many African countries to allow greater exposure of their mineral wealth. Unfortunately it is also the home of precious free range animals and rare wild Earth.


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## Mofra (28 June 2010)

Wysiwyg said:


> Africa would have multiple times more mineral wealth than Australia and fortunately for Australia (competition wise) there isn't the political/social stability in many African countries to allow greater exposure of their mineral wealth. Unfortunately it is also the home of precious free range animals and rare wild Earth.



... and a continent that is attracting billions of $$$ in Chinese investment.

I hope Australia's long term future isn't consigned solely to digging up minerals from the ground. One or two stable African governments could change the international minerals landscape markedly.


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## Julia (28 June 2010)

http://www.abc.net.au/sundayprofile/

This is two interviews by Monica Attard, one with George Jones of Sundance, and the other with Martin Ferguson which are worth a listen.


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## nioka (28 June 2010)

I've just made calculations that capital gains tax will tax me at the same rate as I would be taxed as a miner. As investors we have had to accept the capital gains tax. Eventually miners will have to accept some form of increased taxation that will return more of Australia's natural wealth to all Australians.


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## GumbyLearner (28 June 2010)

In the words of Kenny Rogers

"You've gotta' know when to hold 'em.
Know when to fold 'em
Know when to walk away..."



http://www.heraldsun.com.au/news/br...ld-mining-shares/story-e6frf7jx-1225885384061

PRIME Minister Julia Gillard is set to face her first political hurdle following revelations a Labor senator sold mining shares a day after the resources super profits tax was unveiled.

South Australian senator Annette Hurley sold shares in home state-based Penrice Soda in early May, ABC Radio's PM program says.

The transaction occurred a day after the Federal Government unveiled its proposed 40 per cent resources super profits tax.

Senator Hurley declined to do an on-air interview with ABC Radio.


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## Wysiwyg (28 June 2010)

nioka said:


> I've just made calculations that capital gains tax will tax me at the same rate as I would be taxed as a miner. As investors we have had to accept the capital gains tax. *Eventually miners will have to accept some form of increased taxation that will return more of Australia's natural wealth to** all Australians*.




There is one sure fix I know and that is for all the Australians who lay claim to the natural wealth to go extract it thy self. Seed capital, expertise, exploration, more capital, feasibility studies, environmental impact studies, more capital, mining, production, shipping. Yeah no worries we will do all that for you .... Like hell.

Massive employment on the periphery of the mining industry so Australians do benefit.


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## medicowallet (29 June 2010)

nioka said:


> Eventually miners will have to accept some form of increased taxation that will return more of Australia's natural wealth to all Australians.




We have a choice where we put our money.

If people choose to put in housing, which stagnates money, and does not produce anything, then why should we overly tax an industry the same people could have invested in??

I think we should tax property 55%.  
Housing has been generating "super profits" over the past 10 years, and I think that ALL Australians deserve their "fair share"

Would that win any votes?


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## electronicmaster (29 June 2010)

medicowallet said:


> We have a choice where we put our money.
> 
> If people choose to put in housing, which stagnates money, and does not produce anything, then why should we overly tax an industry the same people could have invested in??
> 
> ...




Housing already is supper taxed.  Excessive stamp duty and CGT.


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## trainspotter (30 June 2010)

*Miners call on Gillard to revisit 'deal' *
Dennis Shanahan and Andrew Burrell From: The Australian June 30, 2010

http://www.perthnow.com.au/news/miners-call-on-gillard-to-revisit-deal/story-e6frg12c-1225886008746

Mr Forrest said Ms Gillard would need to improve on the key aspects of the negotiations with Mr Rudd to achieve any progress.

"It would be a great shame if the finalised outcome of any negotiations between the Gillard government and the mining industry were anything less than what was achieved while Mr Rudd was PM, *otherwise his departure will be recognised as futile," *he said.

Oh dear ?


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## medicowallet (30 June 2010)

electronicmaster said:


> Housing already is supper taxed.  Excessive stamp duty and CGT.




CGT?? not on the family home and on almost all (if not all) alternative investments.

Stamp duty.  Offset by FHBG, or waivers in the light of builders "doing it tough" (for once)

I would prefer 55% tax on profits made, that would be fair for all.


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## IFocus (30 June 2010)

Interesting Forrest negotiated a deal with Rudd pity it shafted the smaller miners hang on Forrest is true blue........ha ha ha 


http://www.theaustralian.com.au/business/mining-energy


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## Mofra (1 July 2010)

Sounds like a deal in principle has been forged The devil will be in the detail:



> *Mining tax breakthrough*
> 
> The Gillard government and Australia's big three miners have made significant progress in talks about a resources tax compromise and are now on the brink of an agreement that would end one of the biggest government-private sector brawls in history.
> 
> It's understood that BHP Billiton, Rio Tinto and Xstrata have agreed with the government now on the key elements of a new resources tax structure, including the creation of a new trigger point for the imposition of the tax, set at the 10-year Commonwealth bond yield plus 7 per cent.




http://www.theage.com.au/business/mining-tax-breakthrough-20100701-zp5z.html


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## Bushman (1 July 2010)

Sense, it would seem, has prevailed. 

1. the hurdle rate will be the bond rate + 7%. 
2. existing long-life assets will be 'marked-to-market' with depreciation allowances deducted from this point. 

Nothing yet on the 40% rate and different hurdle rates for different minerals.

http://www.theage.com.au/business/mining-tax-breakthrough-20100701-zp5z.html?autostart=1

Abbot is going to be stranded on the issue.


----------



## drsmith (1 July 2010)

Bushman said:


> Nothing yet on the 40% rate and different hurdle rates for different minerals.



It would seem that ground has been given there too. 

http://www.theaustralian.com.au/pol...fits-tax-impasse/story-e6frgczf-1225886776957


----------



## trainspotter (1 July 2010)

I notice that the words "agreement on key elements" were used in the paraphrasing of the announcements. It will be interesting to see the devil in the detail. I am glad it has finally sorted itself out. Twiggy Forrest nowhere to be seen or heard from? Exisiting assets to be taxed at market value makes sense as well.

Three cheers for PM Julia Gillard on getting rid of that wretched previous PM ... good old Whassisname? You know ... that guy who is going to get 600k a year for the rest of his life. Name escapes me already.


----------



## JimBob (1 July 2010)

Im keen to see how any proposed changes will affect the small-mid cap miners.  All the talk has been on a deal with BHP, Rio and Fortescue but I hope any deal is in the interests of the whole industry and not just those 3.


----------



## trainspotter (1 July 2010)

Where for art thou Whiskers?

Thank The Bull for this one ! http://www.thebull.com.au/articles/a/12493-juniors-could-miss-out-on-rspt-deals.html

Miners in Canada - Australia's main competitor in the global mining market - were delighted the RSPT had given them a free kick as it had increased Australia's sovereign risk, making investment in Canada more attractive.

"They've been quite smart to get rid of Rudd," Mr Young said.

"Julia Gillard is on a bit of a honeymoon, but she was there making the same decisions - this is what frustrates me - she was part of that (RSPT) process.


----------



## drsmith (1 July 2010)

JimBob said:


> Im keen to see how any proposed changes will affect the small-mid cap miners.  All the talk has been on a deal with BHP, Rio and Fortescue but I hope any deal is in the interests of the whole industry and not just those 3.



With any tax reform there are always winners and losers to some extent but it's hard to imagine an outcome where threshold, rate or retrospectivity are company specific.


----------



## sammy84 (1 July 2010)

Press conference called for 8 30 tomorrow morning. Looks like deal done...for now. A ridiculous article on the ASF sidebar where it was stated that the junior miners could miss out. Tax law, like any law, is bound by our constitutional laws. Laws cannot be used to unfairly discriminate others, which is exactly what would happen if the laws were only to apply to the three bargaining parties.


----------



## hmmm (2 July 2010)

RSPT finalized by this weekend... election called next week - IMO 

Surely Gillard has to get this nightmare done and dusted, she definitely doesn't want it hanging over her head.


----------



## Bushman (2 July 2010)

JimBob said:


> Im keen to see how any proposed changes will affect the small-mid cap miners.  All the talk has been on a deal with BHP, Rio and Fortescue but I hope any deal is in the interests of the whole industry and not just those 3.




Yes heard a small cap. mining representative on the radio this morning state that they were not even included in the negotiations. 

So the changes are: 
1. tax rate down to 30%; 
2. hurdle rate (on book value) 10-yr bond rate + 700 basis points; 
3. 'mark-to-market' for existing assets; 
4. only applies to coal and iron ore projects. All oil and gas captured by the existing petroleum tax (including the north-west shelf); 
5. Small caps with profits >$50m excluded. 
6. exploration tax write-off excluded. 

Drop in budget revenue to be made up by company tax rate decreasing only to 29%.

Presumably royalites will  still be written-off. There is also an upfront write-off allowed for capex but i will need to see the details to confirm. 

Initial thoughts are this is great unless you are a mid-cap iron ore or coal company.


----------



## Aussiejeff (2 July 2010)

> *Julia Gillard renames mining tax, drops rate as new resources regime announced *
> From: AAP July 02, 2010 8:35AM
> 
> THE Federal Government will limit its new resources tax to just 320 companies mining iron ore, coal, oil and gas.
> ...



http://www.heraldsun.com.au/news/br...regime-announced/story-e6frf7ko-1225886959938

Hmmm.

I wonder how that lifting to 40% will impact on all those land-based oil & gas producers? Now they might start kicking up a publicity stink?

If nothing else, such a move would surely push up gas prices in particular for all commercial & home consumers??


----------



## UMike (2 July 2010)

Bushman said:


> Yes heard a small cap. mining representative on the radio this morning state that they were not even included in the negotiations.
> 
> So the changes are:
> 1. tax rate down to 30%;
> ...



So are mine.


I also  heard that small cap. mining representative on the radio this morning state that they were not even included in the negotiations.

Maybe that because they were not going to be affected?????


----------



## JimBob (2 July 2010)

The previous mining tax was set to generate $12 billion in revenue per year from 2011 to 2014.  With the tax rate now cut from 40% to 30% (a 25% drop), they are only forecasting a $1.5 billion drop in revenue.  Are these figures correct?  With the changes, i would have thought revenue would drop by $3 billion or more.


----------



## Wysiwyg (2 July 2010)

Aussiejeff said:


> I wonder how that lifting to 40% will impact on all those land-based oil & gas producers? Now they might start kicking up a publicity stink?
> 
> If nothing else, such a move would surely push up gas prices in particular for all commercial & home consumers??



One could safely assume any profit grab will be recouped through higher costs for the consumer.  

Can anyone see the industries that will attract investors now? Bit short on foresight this morning but maybe Consumer discretionary/staples, Financials,  Telecommunications or Health Care???

Genuine thoughts AussieJ?


----------



## UMike (2 July 2010)

Jim Bob,

All those figures have always been "pie in the sky" "airy fairy stuff "anyway.


----------



## Macquack (2 July 2010)

JimBob said:


> The previous mining tax was set to generate $12 billion in revenue per year from 2011 to 2014.  With the tax rate now cut from *40% to 30% (a 25% drop), *they are only forecasting a $1.5 billion drop in revenue.  Are these figures correct?  With the changes, i would have thought revenue would drop by $3 billion or more.




You need to brush up on your maths Jimbo.

A reduction in a tax rate from 40% to 30% is an effective 10% drop in revenue, not 25%.


----------



## trainspotter (2 July 2010)

JimBob said:


> The previous mining tax was set to generate $12 billion in revenue per year from 2011 to 2014.  With the tax rate now cut from 40% to 30% (a 25% drop), they are only forecasting a $1.5 billion drop in revenue.  Are these figures correct?  With the changes, i would have thought revenue would drop by $3 billion or more.




Apparently justified by Swann this morning with "savings" ... no detail yet on WHAT was saved other than the Labor Partys skin on being re-elected.

Will wait for the dossier to come across my floating desk prior to any further comment.


----------



## Mofra (2 July 2010)

UMike said:


> All those figures have always been "pie in the sky" "airy fairy stuff "anyway.



True - how often are budget/treasury forecasts accurate 3 years out anyway?


----------



## trainspotter (2 July 2010)

Macquack said:


> You need to brush up on your maths Jimbo.
> 
> A reduction in a tax rate from 40% to 30% is an effective 10% drop in revenue, not 25%.




LOLOL ... good one Macquack. If 12 billion is generated by 40% tax how much will 30% tax generate? 

Turnover of 30 billion taxed at 40% = 12 billion revenue

Turnover if 30 bilion taxed at 30% = (Insert answer here) revenue

So therefore Jimbob 25% statement is correct.


----------



## Macquack (2 July 2010)

trainspotter said:


> LOLOL ... good one Macquack. If 12 billion is generated by 40% tax how much will 30% tax generate?
> 
> Turnover of 30 billion taxed at 40% = 12 billion revenue
> 
> ...




Yes you are right, it is me who needs to brush up on my maths, apologies to Jimbob.


----------



## Calliope (2 July 2010)

A big win for Gillard.


----------



## miaad (2 July 2010)

The Gillard Labor government has replaced the troubled Resource Super Profits Tax (RSPT) proposal with a new Minerals Resource Rent Tax (MRRT). 
This looks to be the win-win outcome we said we were looking for in recent updates.
The new proposal appears to amply address key minerals industry concerns over retrospectivity, competitiveness and resource differentiation. In BHP's more tempered words, "We are encouraged."
It's amazing what can be achieved via genuine consultation and negotiation!
Here are some key points:
1. The new tax will apply only to iron ore and coal. All other minerals are exempt though that alone captures the lion's share of the extractive industries value. With respect to oil and gas, the offshore Petroleum Resources Rent Tax (PRRT) regime will be extended to capture onshore projects.
2. The headline rate of MRRT is 30 per cent of mine-gate profit. The value of the commodity is deemed its first saleable form. An extraction allowance equal to 25 per cent of the otherwise taxable profit will be deductible to recognise the profit attributable to the extraction process. Why they didn't just say the headline rate is 22.5 per cent we don't know. Probably because it sounds better!
3. There is no MRRT payable for companies with annual profit below $50 million.
4. Carried forward MRRT losses are indexed at the long-term bond rate (LTBR) plus 7 per cent (the allowance).
5. The starting base for project assets at the election of the company is either book value or market value at 1 May 2010. Book values are uplifted at the allowance rate and are depreciated over an accelerated five-year period. Market values attract no allowance indexing and depreciation is over a less favourable effective asset life to a maximum 25 years. This way the government still gets some of the up-front income it needs to fill that budget hole.
6.  New projects can deduct 100 per cent of capital costs immediately.
7.  Where state royalties exceed MRRT, companies can elect for an immediate refund or book as an asset and uplift at the allowance rate.
8.  MMRT applies from 1 July 2012.
9.  A more modestly reduced corporate income tax rate of 29 per cent kicks in from fiscal 2013, or one year earlier for small businesses.
This seems a very solid outcome indeed. Expect resource company share prices to rise in response. We will conduct a more in-depth analysis of the impact to company valuations and earnings and bring it to subscribers as soon as possible.

From Huntleys' Special Bulletin


----------



## drsmith (2 July 2010)

Tax reform was never a priority with the original RSPT proposal in the first place, but this abandons any element of tax reform alltogether, even tn the context of Henry. It is now purely a political quick fix and a tax increase.

MINERAL RESOURCE RENT TAX HEADS OF AGREEMENT (Rio Tinto announcement - my comments in blue)



> The Design of the Minerals Resource Rent Tax
> 
> The new resource tax will apply from 1 July 2012 only to mined iron ore and coal. All other minerals are excluded.
> 
> ...



I don't know how the government arrived at their revised revenue calculations, but the baseline is now purely what state based royalties would have collected.

Exactly how much of a tax increase it ends up being remains to be seen (assuming the ALP are re-elected).


----------



## Apollo (2 July 2010)

Calliope said:


> A big win for Gillard.




Wasn't that the Rudd deal ?

Still bad for the country with another global financial crisis on the way.

Our government is taking a huge gamble especially when in Afganistan they've found one of the richest iron ore deposits in the world estimated at $1 trillion US dollars. That is only a few hundred KM from China.

If we don't watch out we'll end up losing all our revenue to Afganistan which is easier to get out of the ground and much faster into China and no huge shipping bills to contend with.

Here is a copy and paste from another site explaning this bad tax deal better. Source:
http://www.supertaxforum.com.au/viewtopic.php?f=3&t=38

The deal effectively is a copy of the Petroleum resource rent tax
--Minerals resource rent tax to be 30% -down from 40%
--Effects just 320 companies in 
-iron ore,coal,oil and gas

--Rate at which RRT comes in will be longterm bond rate plus 7%- so with long term bond rate at 6%,then there is a 13% return before the tax begins

--The petroleum resource rent tax will be extended to both onsure and offsure and will be at the 40% rate beginning at the current formula

--Small miners below $50,000,000 exempt

-- Cost to budget with changes is $1.5 billion .To assist,the comany tax rate reduction will be defferred to 2013-2014.

-- Smaller companies to receive reduction in company tax rate in 2012-2013

--- still confuson as increase in superannuation contribution rate to 12 % hasnt changed but this is not related to super tax profits going into super-that is only the $500 for low income earners.Refer other postings.

There is still a super profits tax at a time when World Financial markets are heading for another downturn


----------



## Apollo (2 July 2010)

drsmith said:


> Tax reform was never a priority with the original RSPT proposal in the first place, but this abandons any element of tax reform alltogether, even tn the context of Henry. It is now purely a political quick fix and a tax increase.
> 
> MINERAL RESOURCE RENT TAX HEADS OF AGREEMENT (Rio Tinto announcement - my comments in blue)
> 
> ...




Its obvious what will happen, there is a tax deuction rate under $50million, so BHP and co will split up into many smaller companies to get the tax rate down. Its all utter stupidity from this government.

The petrollium tax the federal government keeps on going on about was only bringing it into line with other countries at the time. This new tax makes us the most taxed country for mining. Why on earth would you want to tax this industry. After the election what is stopping the Labor government from going back to it anyway. I'm sure it will still be blocked in the senate as it shoud be.

Its clear to me, what ever you do, don't be too successful otherwise the government will take your hard earned money away from you. 

Its such a stupid tax, it really does beg belief why they even did it in the first place.

And its likely to fail in the high court anyway. The mineralsare owned by each state. Its in the constitution. Thefederal government can only tax off shore. On land the ore belongs to each state government and the federal government can not tax it. Its why it is likely fail in any high court battle.

Bring on the election. The sooner this government is thrown out of office, the bettr we will all be.


----------



## Julia (2 July 2010)

A couple of questions:

Is the taxpayer still going to foot the bill for 40% (maybe now 30%) of failed projects?

Where does this agreement leave the Liberal Party with their avowed intention to scrap the tax?


----------



## Bushman (2 July 2010)

Julia said:


> A couple of questions:
> 
> Is the taxpayer still going to foot the bill for 40% (maybe now 30%) of failed projects?
> 
> Where does this agreement leave the Liberal Party with their avowed intention to scrap the tax?




1. No. 

2. Abbott is in trouble I reckon. Consensus is for sensible tax reform and a profit-based resources tax that is price-based. H/e, as Rudd found out, not at the expense of our sovereign risk.


----------



## drsmith (2 July 2010)

Apollo said:


> Its such a stupid tax, it really does beg belief why they even did it in the first place.



What has been stupid beyond belief is the way they have tried to implement it. 

Now it's just a case of managing the political damage and going to the polls as quickly as possible under the glow of a new leader.

My guess is an election announcement within the next two weeks and an election by the end of August. 

The big mining companies while publically happy about the outcome would, I imagine still be privately concerned about the way this government derives policy.


----------



## JimBob (2 July 2010)

miaad said:


> 2. The headline rate of MRRT is 30 per cent of mine-gate profit. The value of the commodity is deemed its first saleable form.




For Iron Ore miners extracting low grade ore then processing it to convert into higher grade concentrate, does this mean that they will get taxed on the potential sale price of the low grade ore extracted and not on the sale price of the final higher grade concentrate?


----------



## Julia (2 July 2010)

Bushman said:


> .
> 
> 2. Abbott is in trouble I reckon. Consensus is for sensible tax reform and a profit-based resources tax that is price-based. H/e, as Rudd found out, not at the expense of our sovereign risk.



Agree.   I can't understand why Abbott isn't just accepting what has happened.  He just looks silly saying he's going to oppose what the government and the miners have agreed.


----------



## Apollo (2 July 2010)

Julia said:


> Agree.   I can't understand why Abbott isn't just accepting what has happened.  He just looks silly saying he's going to oppose what the government and the miners have agreed.




Because it will destroy Australia.

You may not be aware of it but in Afganistan close to the India border they have found the richest deposit of iron ore worth over $1 trillion US dollars. This is only a few hundred KM from China.

Why would China even need to ever buy iron ore from Australia again, when they can get it for a much cheaper rate because they are not paying for sea freight costing hundreds of millions every year.

And why would China invest in this country again with its higher tax rates.
India and China will end up buying their iron ore and other metals from Afganistan.

We'll have to drop our tax rate if we want to compete against Afganistan for sales of iron ore in India and China in the future years.

I don't think many of you realize how bad this tax would be. Even if it was only 5% increase.

Why would you invest here now!!!!!!!!!!!!


----------



## Apollo (2 July 2010)

Bushman said:


> 1. No.
> 
> 2. Abbott is in trouble I reckon. Consensus is for sensible tax reform and a profit-based resources tax that is price-based. H/e, as Rudd found out, not at the expense of our sovereign risk.




The Gillard government is the one in real diabolical trouble now.

The coal seam case comes under 40% new tax. Their goes the Qld vote.
In any case the federal government is not allowed to do rent taxes 
on-shore. They can only do that off shore. It will certainly lose in the high court.

I don't think this government knows what they are doing. Makng it up as they go and don't even know the laws of the land.


----------



## Bushman (2 July 2010)

Apollo said:


> Because it will destroy Australia.
> 
> You may not be aware of it but in Afganistan close to the India border they have found the richest deposit of iron ore worth over $1 trillion US dollars. This is only a few hundred KM from China.
> 
> ...




Err, i take it you are assuming that the small matter of the war raging in that region will be settled soon?


----------



## trainspotter (2 July 2010)

Julia said:


> Agree.   I can't understand why Abbott isn't just accepting what has happened.  He just looks silly saying he's going to oppose what the government and the miners have agreed.




Aaaaaaaah but Julia there is the constitution to think of. Technically the rights to TAX the mineral wealth is only allowed by the States. The Feds are allowed to tax the PROFIT. The other bizarre thing is that Julia Gillard has struck a deal with the INTERNATIONAL mining companies (only three of them) and not the local boys (read FMG and others)

Many, many more things are required to be tickboxed prior to sign off. Like I said in my earlier post ... the devil is in the detail of which we have seen very little thus far. There will be a veritable plethora of terminology that is going to be required to be thrashed out.


----------



## Knobby22 (2 July 2010)

trainspotter said:


> Aaaaaaaah but Julia there is the constitution to think of. Technically the rights to TAX the mineral wealth is only allowed by the States. The Feds are allowed to tax the PROFIT. The other bizarre thing is that Julia Gillard has struck a deal with the INTERNATIONAL mining companies (only three of them) and not the local boys (read FMG and others)
> 
> Many, many more things are required to be tickboxed prior to sign off. Like I said in my earlier post ... the devil is in the detail of which we have seen very little thus far. There will be a veritable plethora of terminology that is going to be required to be thrashed out.




True, also I would add that Abbott is looking forward to the many millions in election donations he can now expect from the mining companies.


----------



## Buckfont (2 July 2010)

Bushman said:


> Err, i take it you are assuming that the small matter of the war raging in that region will be settled soon?




Couldn`t agree more Bushman. How long were the Russians there and now coalition forces. It will be a long time before the political and especially religious differences will make it easy for any western mining co. to venture in there, to feel safe for all their employees. 

http://www.sananews.net/english/2010/06/30/afghan-taliban-threatens-mining-companies/


----------



## drsmith (2 July 2010)

Knobby22 said:


> True, also I would add that Abbott is looking forward to the many millions in election donations he can now expect from the mining companies.



Deal or no deal, the process itself must have left a sour taste in the mouths of the big 3 miners.

Trust between them and the current government has to have been seriously compromised.


----------



## Knobby22 (2 July 2010)

Bushman said:


> 1. No.
> 
> 2. Abbott is in trouble I reckon. Consensus is for sensible tax reform and a profit-based resources tax that is price-based. H/e, as Rudd found out, not at the expense of our sovereign risk.




Not to mention the awful terrain, lack of access to a port, no infrastructure.


----------



## Apollo (2 July 2010)

Bushman said:


> Err, i take it you are assuming that the small matter of the war raging in that region will be settled soon?




Look at Iraq. At war with itself and they have no trouble getting oil out of the country. Sure ther is the odd oil explosion but they wouldn't doit if they weren't making money out of it.

The US will secure it as best they can like they've done with the oil in Iraq.

US senators are saying maybe Afganistan can pay for the war in Afganistan now.


----------



## Calliope (2 July 2010)

Knobby22 said:


> True, also I would add that Abbott is looking forward to the many millions in election donations he can now expect from the mining companies.




Why? They don't need Abbott any more. They've got Gillard in their corner.


----------



## drsmith (2 July 2010)

Calliope said:


> They've got Gillard in their corner.



More like over a barrel full of ballott papers.


----------



## blackjack (2 July 2010)

any new tax is a bad tax

All this has to get past the greens in the senate

should be making it cheaper as theres plenty of competition out there to take OZ's place

Plus the big International Miners can start up shop in any other country as is happening now

Africa comes to mind. Cheaper costs more profit 

Wake up Australia and use the Mc Donalds principle of keep em cheap and keep em coming

Who cares if they make you fatter


----------



## Julia (2 July 2010)

Apollo said:


> The Gillard government is the one in real diabolical trouble now.
> 
> The coal seam case comes under 40% new tax. Their goes the Qld vote.



Really?  I wonder why Anna Bligh was sounding so delighted today then?



Bushman said:


> Err, i take it you are assuming that the small matter of the war raging in that region will be settled soon?



Yep, what I was thinking too.



drsmith said:


> Deal or no deal, the process itself must have left a sour taste in the mouths of the big 3 miners.
> .



Perhaps, but I'd guess it's nothing like as sour as the taste in the collective mouths of the government considering their huge backdown.



drsmith said:


> More like over a barrel full of ballott papers.





Listening to Bob Brown on Radio National this morning, he's not a happy fellow and is threatening to "scrutinise it very carefully in the Senate".

So do some of you think it's still worthwhile Tony Abbott sticking to his "we will rescind it" theme?  Are the big miners going to go for that after what they have now negotiated with the government?


----------



## JTLP (2 July 2010)

Does this mean that the plans shelved by Xstrata, Rio Tinto, CFE etc etc will be reopened and everything will be roses?


----------



## drsmith (3 July 2010)

Julia said:


> Perhaps, but I'd guess it's nothing like as sour as the taste in the collective mouths of the government considering their huge backdown.



It's clear nothing tastes sour in their mouths after they put Kevin Rudd's prime ministership and their RSPT to the sword. Not even hair, flesh or blood.

They'll just be hoping the backflip is not too sour in the electorates mouth.



Julia said:


> Listening to Bob Brown on Radio National this morning, he's not a happy fellow and is threatening to "scrutinise it very carefully in the Senate".



Sometimes I wonder if Bob Brown has fantasies about being Prime Minister.



Julia said:


> So do some of you think it's still worthwhile Tony Abbott sticking to his "we will rescind it" theme?  Are the big miners going to go for that after what they have now negotiated with the government?



For better or for worse, Tony Abbott is locked in now. As for the miners, no mineral resource rent tax is the best option of all.


----------



## Apollo (3 July 2010)

drsmith said:


> It's clear nothing tastes sour in their mouths after they put Kevin Rudd's prime ministership and their RSPT to the sword. Not even hair, flesh or blood.
> 
> They'll just be hoping the backflip is not too sour in the electorates mouth.
> 
> ...




WA government are threatning to take it to the high court.
The reason being is that the federal government can't do a rent type tax on minerals on shore. The federal government can only do rent type taxes off shore(eg 5km or more off the coast of Australia). Its in the constitution.
The states of Australia own the minerals not the federal government.

FMG also looking at challenging the tax in the courts.

What I can't believe is that the federal government seems unaware of the constitution which staggers me.

From reading info on the tax is that it effectively makes the super tax from 58% down to 40%. Wouldn't it make more sense to change the company tax to 40% for the miners. Then so pending court cases over rent taxes.

The smaller miners are not happy at all. They now have to pay all infrastucture costs.

This has been ill thought through all the way through.


----------



## GumbyLearner (3 July 2010)

Apollo said:


> WA government are threatning to take it to the high court.
> The reason being is that the federal government can't do a rent type tax on minerals on shore. The federal government can only do rent type taxes off shore(eg 5km or more off the coast of Australia). Its in the constitution.
> The states of Australia own the minerals not the federal government.
> 
> ...




This proposed law will be challenged no doubt!


----------



## medicowallet (3 July 2010)

Apollo said:


> From reading info on the tax is that it effectively makes the super tax from 58% down to 40%. Wouldn't it make more sense to change the company tax to 40% for the miners. Then so pending court cases over rent taxes.




But this would make it easy to administer, tie up loopholes, and would be fair.

NOT going to happen!


----------



## Apollo (3 July 2010)

medicowallet said:


> But this would make it easy to administer, tie up loopholes, and would be fair.
> 
> NOT going to happen!




Why is it fair to tax a group 10% more than other companies.
The banks make billions of dollars and with government guantees and they are not forced to pay more tax. What about the mobile phone industry making billions or any other industry.

If they want to go after people for daring to take a risk and make bucket loads of money then why not tax their incomes of over $10 million a year.
Why hurt the little investors which have seen their share prices drop by quite a bit since this silly tax was announced.

Swan and co keep on saying the minerals belong to all Australians, when they clearly don't. They belong to each state. Swan and co simply don't understand the actual laws of the land.

By taxing the mining companies, many will fall. Many are in debt to the tune of many billions of dollars to the banks. They have to pay it back at a certain rate. This dumb tax effectively means that some will go broke. Its like putting up the interest rate by 10%. Not to many businesses can survive if that was to happen to them.

FMG for example has debts of over $3 billion dollars. Atlas Iron yet to even make a profit 5 years in. Many others like this. They go out and get finance to invest in their mining operations. Now they can't get that finance.

I really can't understand why the ALP are persisting with this tax.
They need to drop it ASAP.

The so called cosulting part was with 3 big companies mainly owned by companies in other countries while Aussie run mining companies were ignored. That won't go down well at all.

I can see a new round of anti super tax ads coming our way next week.


----------



## sails (4 July 2010)

Below are a few excerpts from an article in yesterday's Australian (the bold is mine).  
Looks like the Labor govt had very little idea of how the mining tax actually worked.



> …What we were especially amazed at was the level of sheer naivete and incompetence. The grasp of fundamental economics -- more specifically commercial reality -- *was barely past what you learn in year 12 at high school*.…






> ...The chief executives arrived at that day's negotiations with their finance teams, each two and three-strong. They expected to be shown Treasury's modelling, and arrived with their own internal numbers to demonstrate the impacts on the tax on a range of commodities. But Treasury "refused" the opportunity of show and tell. "*It was an absolute farce*...






> …In the end the miners were not provided with Treasury's modelling until last Wednesday. *These were the numbers that, according one insider, had come from "planet Mars*"…






> …”They had made it up and had no idea how to back it up. It was like sitting university professors down to lecture *primary school students*," one of the miners' advisers claimed yesterday…




Full article here: Treasury tarnished by turn of events over mining super tax

Yes,  it takes a bit more than vibe to run a country  - lol


----------



## Julia (4 July 2010)

Hello Sails, yes, I read that article which was pretty horrifying.

Not sure if it was that item or elsewhere in "The Weekend Australian" where Ken Henry comes in for a large whack of criticism.  His position has, imo, been compromised for some time.  It could well be time for a change in the position of Treasury Secretary.


----------



## drsmith (4 July 2010)

Julia said:


> I read that article which was pretty horrifying.



And the clown that is wayne Swan has been made deputy PM.



> A source present at the talks said Kloppers "took the lead" for the big three miners in telling Swan the "threshold issue" for a resolution was dealing with the tax's retrospectivity (that is, it applied to existing producing mines).
> 
> "He was taking the Treasury through the issues. And when he finished Swan looked up stoney-faced and said something like well, we have a real issue then," the insider says.
> 
> "At that point Marius indicated that the companies might be wasting their time and indicated they were prepared to leave the meeting. Ferguson led Swan out of the meeting. When they returned, Ferguson ran the rest of the meeting. If we had left at that point we would have gone public on the miserable quality of what had been a hostile discussion."



What did he think he was doing? Lecturing to children ?


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## Julia (5 July 2010)

Tony Abbott has been demanding the government release the modelling for both the RSPT and the new tax, claiming the figures are shonky.
Certainly the government has given away a lot in the negotiations and the suggestion that there is only 1.5 billion less coming to the government does sound unreasonable.

Further credence is given to his claim by Alan Kohler in "Business Spectator" today.  The following is an extract:



> Apparently we can cut the resource rent tax rate from 40 to 22.5 per cent, more than double the profit threshold above which it cuts in and reduce the number of companies being taxed from 2,500 to 320, and only lose one-eighth of the money.
> 
> Julia Gillard really is a prime minister who Gets Things Done – the Mary Poppins of tax policy, and the deal is supercalifragilisticexpialidocious. Just don’t ask too many questions.
> 
> ...


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## Calliope (5 July 2010)

drsmith said:


> And the clown that is wayne Swan has been made deputy PM.
> What did he think he was doing? Lecturing to children ?




Swan never had much credibility. Now he has none. If Gillard is smart she will replace him if she is re-elected. 

The problem is with whom? Tanner is going and I don't think Craig Emerson is Treasurer material. He was in the Rudd camp until the end, mainly because he wasn't told which way the wind was blowing, and I don't think that the fact that he used to shack up with Gillard will cut any ice with her.


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## Calliope (6 July 2010)

Anyone who believes that the hard-nosed mining bosses, who had Gillard on her knees, would settle for a tax that only reduced the grab by 20%, would be away with the fairies. 

Swan, who knows the truth, is a liar. Gillard has no concept of the way that business operates. She is an economic ignoramus. Her management of the BER revealed her shortcomings. The building contractors took her for a ride ripping off billions 0f taxpayers dollars.


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## Mofra (6 July 2010)

JTLP said:


> Does this mean that the plans shelved by Xstrata, Rio Tinto, CFE etc etc will be reopened and everything will be roses?



XStrata have already stated they will proceed with the previous expansion plans that were "put on hold". 

The 40% level did in fact effect the lending parameters of some of the bigger projects.


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## Mofra (7 July 2010)

More on the Projects:

http://www.news.com.au/business/wit...-a-rosier-future/story-e6frfm1i-1225888736064



> *With super-profits tax dead, miners turn their eyes to a rosier future *
> 
> A WAVE of optimism is sweeping the mining sector after the axing of the resource super-profits tax.
> 
> ...


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## blackjack (8 July 2010)

everything was humming along nicely then the GOV needs money and commissions some idiot to make a report on where to screw the extra from.
We know the story.

The miners effectively got rid of Rudd - more fool him for not even negotiating the report with them. I can sell it he said. Yes Kev !!

Now maybe the GOV realises that you leave the big machine alone. Its linked to banks, shares, dividends, super funds, salaries, and it works and has supported Australia through tough times.

Some idiot accountant says Oh if we pull the wings off here then it still should be OK. NOT.

Its not over. If the Gov is hell bent on raising taxes then make it a few percent across the board Banks, phone co, mining, casino's so it doesnt upset the status quo.

Better still dont raise the taxes and live within your means like all the rest of us do.

Otherwise we shall all be investing in China and India too. Keep the dollars offshore


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## Mofra (9 July 2010)

Looks like China still wont throw away their Kevin 07 badges

http://www.theage.com.au/business/w...-impose-resource-rent-tax-20100708-102c2.html



> *China moves to impose resource rent tax*
> 
> CHINA is set to impose a resource tax that will shift revenue from companies to local governments and raise the price of energy.
> 
> The tax has been billed as a way of curbing environmental destruction and retaining value from the resource boom in impoverished but minerals-rich western China. ''The central government has already decided to start a trial program in Xinjiang and the scheme will be promoted nationwide based upon those experiences,'' National Development and Reform Commission vice-chairman Du Ying said yesterday.


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## drsmith (9 July 2010)

Martin Ferguson in an interview on Business Spectator has advised there will be no refundability of royalties with the MRRT and that this was in part how the $1.5bn difference between the RSPT and the MRRT was arrived at.



> Alan Kohler: Well Martin, is it fair to say that if you hadn’t had the upgrade to your commodity price forecasts from Treasury last week, you wouldn’t have been able to do a deal?
> 
> Martin Ferguson: I think it’s a combination of factors. Firstly there was the upgrade by Treasury, which I must say is built on the back of partly the ABARE revised commodity price figures of about a fortnight ago, but also people shouldn’t forget we actually changed the basis of the proposed tax. *For example, we took away refundability of royalties* and also took away the guarantee in terms of forty per cent of the total, with respect to the proposed government participation,...........



http://www.businessspectator.com.au...erguson-pd20100709-76VW3?OpenDocument&src=kgb (registration required)

This is inconsistent with the heads of agreement made with the three big miners last week.



> All state and Territory royalties will be creditable against the resources tax liability but not transferable or refundable.



http://www.asx.com.au/asxpdf/20100702/pdf/31r44kprptssxf.pdf


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## bellenuit (9 July 2010)

drsmith said:


> Martin Ferguson in an interview on Business Spectator has advised there will be no refundability of royalties with the MRRT and that this was in part how the $1.5bn difference between the RSPT and the MRRT was arrived at.
> 
> 
> http://www.businessspectator.com.au...erguson-pd20100709-76VW3?OpenDocument&src=kgb (registration required)
> ...




There isn't an inconsistency between the two quotes. State royalties will be creditable, but not refundable.

What it is saying is that a credit will be given for state royalties paid but only against resource rent tax payable and not more than the resource rent tax payable. So the credit cannot exceed the resource rent tax assessed. Refunding would imply that the state royalties would be refunded irrespective of the amount of resource rent tax assessed.

However, the agreement document you quoted goes on to say that any royalties not credited against the rent tax can be carried forward and will be uplifted by the LTBR plus 7%.

So the end effect when taken over a longer period would appear on face value to be little different to a complete refund, at least for those companies that consistently make the higher profits that bring them under the MRRT.

The interesting question in my mind is that if they have taken away refundability, then it implies that refundability of royalties was in the previous agreement. So does that mean that previously if a company had paid $x in royalties, but profits just met the previous threshold for super tax (government bond rate) so that the supertax payable was negligeable, they would have been refunded in full the $x in royalties?


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## drsmith (9 July 2010)

bellenuit said:


> The interesting question in my mind is that if they have taken away refundability, then it implies that refundability of royalties was in the previous agreement. So does that mean that previously if a company had paid $x in royalties, but profits just met the previous threshold for super tax (government bond rate) so that the supertax payable was negligeable, they would have been refunded in full the $x in royalties?



Wayne Swan's initial media release on the RSPT mentioned the rebating of state royalties, so to make any difference with the MRRT, that must have been the case with the RSPT.

http://ministers.treasury.gov.au/Di...010/028.htm&pageID=003&min=wms&Year=&DocType=

Ie: rebate = credit + refund.


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## Julia (12 July 2010)

This article by Ross Gittins endorses Tony Abbott's claim that the government's figures on the re-negotiated mining tax are indeed shonky:

http://www.smh.com.au/business/how-...goalpostshifting-business-20100711-105kh.html


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## JimBob (21 July 2010)

The Greens - with their expected balance of power from the upcoming federal election - would demand a higher mine tax.  

I think there will be many twists and turns in this tax before/if it gets to legislation stage.  Further major changes would bring back the sovereign risk argument IMO. 


http://www.news.com.au/breaking-news/greens-with-balance-of-power-would-demand-higher-mine-tax/story-e6frfku0-1225895148562#ixzz0uIRzR05r


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## drsmith (21 July 2010)

The Greens policy on mining profits is a RRT levied at 50%.

Their other ideas on tax reform are increasing the top marginal income tax rate to 50% on incomes over $1 million, removing the fringe benefits tax concession, remove the diesel fuel rebate (except for farmers and fishers), and replace the luxury car tax with a tax based on fuel consumption. 

http://greensmps.org.au/content/media-release/greens-priorities-henry-tax-review

Beyond that it's just sniping from the sidelines. A somewhat more substantive tax policy position from them would be nice.


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## trainspotter (22 October 2010)

Strange that no one has resurrested this thread now that BHP is threatening to walk away from the agreement with the Guvmint on the RSPT ... no wait ... it is not called that anymore now is it?? 

*The government's mining tax is under threat of unravelling with the big miners demanding they be compensated for existing state royalties as well as for all future increases.*
Despite agreeing to refund ''all'' royalties to the miners when the deal was crunched before the election, the Prime Minister, Julia Gillard, said yesterday the refund should apply only to existing royalties and increases that had been flagged when the deal was done.

http://www.smh.com.au/national/miners-challenge-gillard-over-tax-20101020-16uct.html

Hahahhahhhah hahaha ahha hahaha ....... another Labor policy FAIL !!!!!!!!!!

OOOOOOOOOOOOPSSSIEESSSSS !! Didn't they need all that money to fund their RIDICULOUS promises of more hospitals and tax breaks and road funding and education and, and, and great big lollipops for everyone to lick?


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## -Bevo- (23 October 2010)

trainspotter said:


> OOOOOOOOOOOOPSSSIEESSSSS !! Didn't they need all that money to fund their RIDICULOUS promises of more hospitals and tax breaks and road funding and education and, and, and great big lollipops for everyone to lick?




LOL yeah they were relying on that money to keep the spendathon going, no worries Carbon Tax should help cover it and we can all feel warm and fuzzy knowing we are preventing the end of the world due to climate change


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## trainspotter (23 October 2010)

Yesssssss ...... funny isn't it how only 23 million people in Australia can pollute more than 1.5 billion Chinese or 310 million in USA (the worlds biggest polluter) and we need a carbon tax ?????? ROFL ..... Mining Tax?? What mining tax? More about constitutional rights and State Royalties apparently.

The West Australian Government says it will fight any Federal Government moves to block it from increasing its state mining royalties once the new tax agreement is finalised.

http://www.abc.net.au/news/stories/2010/10/22/3045961.htm?section=business

http://www.abc.net.au/news/stories/2010/10/20/3043016.htm

What a joke ! And we actually voted these thickheads into Govt??? 
Shame Australia ....... Shame.


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## Julia (23 October 2010)

trainspotter said:


> What a joke ! And we actually voted these thickheads into Govt???
> Shame Australia ....... Shame.



Well, we didn't really.
The Independents put them there amongst their personal vendettas against the National Party.


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## trainspotter (24 October 2010)

Julia said:


> Well, we didn't really.
> The Independents put them there amongst their personal vendettas against the National Party.




Sorry ... should have explained my POV better. Swinging voters flocked to the Greens thinking they would be a viable alternative. Some voters voted on personality (I don't like Abbott mentality) and yet others voted for Labor because they ran a scare campaign based on "Work Choices". These are the thickheads I was referring to. 

Hope that clears it up for all and sundry.

Click on this link to get some facts on the mining tax. It is a PDF file and can run as a Power Point as well. A bit of truth in regards to the RSPT (even though it is not called that anymore) different leg action, same dog IMO.

http://www.minerals.org.au/__data/a...truth about the super tax-myths and facts.pdf


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## drsmith (24 October 2010)

Colin Barnett's decision to jack up mining royalties during the heat of the RSPT debate is looking like a stroke of political genius for the conservative side.

It's a pity Tony Abbott was not similarly adept in reaching an agreement with mining companies prior to the election. At that time it was all ready clear they were prepared to accept a higher overall tax take as demonstrated by the revised RRT.


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## Julia (24 October 2010)

drsmith said:


> Colin Barnett's decision to jack up mining royalties during the heat of the RSPT debate is looking like a stroke of political genius for the conservative side.
> 
> It's a pity Tony Abbott was not similarly adept in reaching an agreement with mining companies prior to the election. At that time it was all ready clear they were prepared to accept a higher overall tax take as demonstrated by the revised RRT.



Mr Abbott was too busy trying to win them over with his declaration that the Coalition would not apply *any additional tax.*


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## Dona Ferentes (27 May 2022)

*2022* has arrived. Many things have changed but some have not.

With a new Labor government, and a rather turbulent set of economic challenges (Post Covid/ War / inflation/ high debts/ pain at the checkout & bowser), we're in a place where I think the first shots have been fired for a new Resources Super Tax. This discussion was precipitated by the Conservatives in UK hitting the populist panic button   


Sean K said:


> All coal companies are going to be reporting some significant profits over the next two quarters. Is it too late?



To which the reply was: is it too good to be true?



> _The British government said it would use a *windfall profits *tax on oil and gas companies to help raise funds for direct payments to households, totaling about £15 billion ($27 billion), to ease the country’s cost-of-living crisis._



and now the _Trojan Syndrome by Proxy_ has been unleashed

Australia needs super profits tax on oil, gas: (Ken) Henry​


> _The architect of Australia’s scrapped super profits tax says Britain’s decision to tax fossil fuel companies helps households deal with the energy shock._




Of course, @Sean K  made a very valid point about early days /electoral promises


> _Labor were obviously not going to announce any new taxes during the election but I guess they could increase the MRRT going forward with the support of Teal/Green in the Senate. But, the Greens would probably want to take it a step further and get a guaranteed phase out or prohibition by XX date I imagine. It will take a while for any thoughts of increased taxes to be voiced though as it was such a key point of difference that Liberal were trying to push. So, coal companies probably have some time before their bumper profits start to get confiscated. Maybe that's all factored into their SPs already though_.




It will be interesting. My suspicion is we're being buttered up and such a tax is quite likely.


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## Garpal Gumnut (27 May 2022)

Dona Ferentes said:


> *2022* has arrived. Many things have changed but some have not.
> 
> With a new Labor government, and a rather turbulent set of economic challenges (Post Covid/ War / inflation/ high debts/ pain at the checkout & bowser), we're in a place where I think the first shots have been fired for a new Resources Super Tax. This discussion was precipitated by the Conservatives in UK hitting the populist panic button
> 
> ...



Well unfortunately for Australian investors including myself I must say that if I were Treasurer it would be a measure that I would be putting to Cabinet. 

Particularly as a Tory government in the UK seems to have gotten away with it. And there it is a yearly supertax on windfall profits not to be reviewed until 2025, i.e. 3 years of tax already set in stone. 

The Coal companies can certainly afford it here, I'm not too sure about Oil and Gas with the exploration costs and volatility of O and G prices. 

gg


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## Telamelo (27 May 2022)

From today's Australian Financial Review:

Albanese flags additional cost of living measures

Prime Minister Anthony Albanese has ruled out adopting a so-called super profits tax on Oil & Gas producers to cover power price hikes as he flags additional measures to help ease cost of living pain.

Albanese has told ABC AM he’s not tempted to follow the UK and adopt a similar measure in Australia.


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