Mining Super Tax

[artme]

How many people have been following this stoush?

More importantly, how many have done some "deep and meanigful reading and research" on the matter?

The more I read the more I am inclined to believe it is the right thing. I am no defender of Rudd, especially with regards to his spurious reasons for spending from gov. funds for advertising. However, I do think it is time to stop the hysteria and look at the facts. Then we might be able to make a better judgement.

[Waldo]

I've been following it closely on Lateline and cannot understand in any way that it is good for anything except to the detriment of...

I won't type anymore as it beggars belief and raises my blood pressure. :~ Except to write that as soon as the announcement was made and before anyone started any shouting a friends super instantly lost $20,000 due to the share price fall of mining stocks.

[BobL]

How many people have been following this stoush?

More importantly, how many have done some "deep and meanigful reading and research" on the matter?

The more I read the more I am inclined to believe it is the right thing. I am no defender of Rudd, especially with regards to his spurious reasons for spending from gov. funds for advertising. However, I do think it is time to stop the hysteria and look at the facts. Then we might be able to make a better judgement.

That's interesting because as the proposal stands I'm the opposite. I don't believe we should be be picking on individual types of economic activities and if anything I want to see ALL the big corporates paying more tax. Why should we only pick on mining companies and let bankers and money managers slip through the net and .

[m2c1Iw]

A well known Australian once said to a Senate Hearing "I can tell you you're not spending it that well that we should be donating extra". I think that sentiment applies to the resources tax.

I am against targeted taxation how it can be argued this tax will not put at risk future projects and hence jobs and development is beyond me.

The argument that the Australian people should receive a greater share of the returns from finite resources is weak and spurious. If the government was fair dinkum an adjustment to GST payments to the states thus forcing up royalties makes more sense maybe even easier to achieve :rolleyes::D

I am interested to hear what makes this a good tax that is fair.

[Sebastiaan56]

Wading through the bullshyte is the hardest bit. Here is a clearer explanation than most. Resource Super Profit Tax Everything Correctly Explained (R.S.P.T.E.C.E.) | Stubborn Mule (http://www.stubbornmule.net/2010/05/resource-super-profit-tax-everything-correctly-explained-r-s-p-t-e-c-e/) Im not a financial engineer so read the Blog but how I understand it is that the bigger guys will pay more tax and the smaller miners will find it easier to raise capital. Bear in mind that mining is as a pretty concentrated industry and hugely capital intensive.

A couple of salient points, Rudd wont get it through the Senate, St Steve will see to that. So at best its an exercise in seeing who has the best spin doctors. Secondly, our balance of payments is so intimately tied to resources that a hiccup in China will cause a massive recession. Remember when it used to be said that if America sneezes Australia catches a cold? But Australia only had a viable value add sector for a short while so its the way its gonna be for as long as I can tell. Its the economy we are going to have because of our geography. Its the customers not the suppliers who rule in this game. Thirdly, this proposed tax was engineered by Ken Henry and the Treasury. Im sure it has been a long time in the coming and is very well thought out, he is one of the best around Canberra. As usual Rudd and Swan (who couldnt sell beer in a pub) are implementing someone else's idea. I reckon its a bit like the GST, it will take 15 years to get something going but as the Australian pension burden increases governments of all flavours are going to be looking for money. Fourthly, it isnt going to be easy for these big miners to find other resource rich countries that have the political stability, mature financial systems, lots of open space where they dont encroach on big populations and sufficiently educated populations to move into. Australia is a relatively easy place to do business.

Personally, Im waiting for the backflip as the polls are coming and Rudd knows he is going down without a Senate majority. He will want to fight the opposition on safer ground like IR. The fact that so much is making into the press about opposition back room bickering must be heartening to him because his track record is woeful. He may save his skin but it will be because the opposition lost.

[artme]

Have to agree with you Bob. Targetted taxation smacks of the old pinko left and the get even mentality of some of the old diehard armchair communists. This is the sort of card that Rudd is playing to some extent by appealing to our patriotic emotions.

I think a number of points are worth bearing in mind.

Some years ago $1 in $3 from mining came into the coffers of governments. It is now about $1 in $7.

Miners get pretty reasonable concessions from government fro exploration and development. Should we not get some money back?

The same cries went up when Hawk did this with petroleum. Did exploration and invesment stop?

Mining companies are pretty good at favourably balancing their books. Maybe this needs examination.

What of the mishmash of royalties and taxes already in place? Maybe a rethink on this would dsolve a lot of problems.

[Sebastiaan56]

What of the mishmash of royalties and taxes already in place? Maybe a rethink on this would dsolve a lot of problems.

The whole point of Ken Henry's review. But the vast bulk of his recommendations were discarded presumably because they wouldnt go down too well with the electorate.

[kiwigeo]

I'm for any new tax....soon every school in this great country will have an $800,000 tuck shop.

Bring it on!!

[kiwigeo]

Some years ago $1 in $3 from mining came into the coffers of governments. It is now about $1 in $7.



That's a quote straight from the latest Govt ad compaign and I question it's accuracy. The 14% figure came from a paper done by a couple of US academics. The paper wasnt officially published and as such was never subject to peer review etc.

[Sebastiaan56]

That's a quote straight from the latest Govt ad compaign and I question it's accuracy. The 14% figure came from a paper done by a couple of US academics. The paper wasnt officially published and as such was never subject to peer review etc.

I heard an interview with the author. He drew his data from annual reports. And yes he was supervising a student who wrote it. But I must agree, spin, spin, spin. When both sides start with full page paper ads I get the sh!ts. Ive ditched both sides of the media on this one. A pox on all their advertising budgets!!

[kiwigeo]

Well at least the mining lobby is spending their own money on ads rather than taxpayers hard earned dollars. As far as Im concerned Rudd has lost the plot and nothing good can come out of a poorly thought out tax based on questionable data. If this tax was properly thought out and based on sound data it wouldnt need a $50m ad campaign to sell it to the voters.

If Rudd survives the election then watch him slap new taxes on super funds....just the thing to encourage people to rely less on the state in their retirement.

[artme]

Wasn't aware that the figures i quoted are from gov. ads. I haven't seen any!

I read them somewhere but don't remember where.

I think this gov is dead in the water. The trouble is that we need to ask if we really want TA as PM.This is especially so after his stupidity with Kerry O"Brien!!!

[kiwigeo]

Wasn't aware that the figures i quoted are from gov. ads. I haven't seen any!

I read them somewhere but don't remember where.



You can't miss the ads...full page spreads in The Australian.

[artme]

You can't miss the ads...full page spreads in The Australian.

Lost faith in newspapers years ago. Did all my fairytale reading as a kid.

As for any ads I do stumble on I rarely, if ever, read them.

[m2c1Iw]

I think this gov is dead in the water. The trouble is that we need to ask if we really want TA as PM.This is especially so after his stupidity with Kerry O"Brien!!!

Amen to that.....I know Neil for PM, leader of the WW party.:D:D:D

[Mike B]

The more I read, the more I am alarmed by Rudd's plan to centralize all the states assets. I just don't see how this will make anything simpler.

For those that have the time, <a href="http://www.businessday.com.au/business/fighting-the-tax-battle-theyve-lost-the-war-20100601-wrmm.html"> here is a good opinion piece by Michael Pascoe </a> on the situation and more importantly how badly the ad campaign by the Govt really is...

[Sebastiaan56]

Good read, thx. Confirms my deepening cynicism and desire to fill parliment house with cement............. while its in session,

[corbs]

Heard reports earlier today that the ad campaign was planned since before the tax was announced. Hard for them to claim that its to counter the mining and coalitions campaign if the reports are true:rolleyes:

[cultana]

Well the headlines in the Whyalla news today has two words "Ghost Town".

Simple the local steel works will not be viable with this tax.

Not sure how this will also affect Pt Pirie and the smelter there not to mention the power station at Pt Augusta.

[DJ’s Timber]

Couldn't resist :roflmao:

Mines are Downsizing

138256

[Waldo]

Dj has upsized with a new beep beep. :U

[artme]

Yes, a great article by Mr. Pascoe! Thanx for the reference.

I actually listened to one of the gov. ads today and was struck by the tenor of it. A list of assertions ith no proof that they were even remotely true.

I still think the idea of a RRT is OK - just not this one.

As Pascoeand others have pointed out, the boat has been missed once again. True tax reform seems to be even further away, and the true interests of the country are left wallowing in the wake of massive egos, big business and inept politicians.

[artme]

Amen to that.....I know Neil for PM, leader of the WW party.:D:D:D

What a bloody good idea! Woodwould for PM!!

Anyone who can explain Irish politics so well would find this job a picnic.:wink::wink:

[Frank&Earnest]

Targeted taxation a pinko idea? That's really new. :D Tell that to the tobacco companies. Fiscal policy is a targeting exercise. The real issue, that nobody here has actually addressed yet because nobody, included myself, has had the time and inclination, let alone the expertise, to shift through the spin, is whether the country will be better or worse for it. GST anyone?

[Waldo]

The GST isn't discriminatory, the super tax on the miners is.

[johnc]

The last real tax reform in this country was started by Hawke Keating with Fringe Benefits Tax, Capital Gains and playing with the superannuation changes from 1983. It ended with the GST of Howard Costello. It was reform because it greatly broadened the tax base and spread taxation across more areas.

Rudd Swann trumpeted this as the greatest root and branch reform to the tax system since federation, when all they are doing is turning state royalties into this new tax. No broadening, greater complexity, and a real chance of us paying the miners next time resource prices take a nose dive.

The governments marketing is using questionable statistics in some cases and total lies in others, unlike the Hawke years no effort has been made at consensus or consultation. What we have is the destruction of any goodwill with the targeted miners and a loss of faith amongst many including I suspect those who will be charged with implementing it in the unlikely event it gets off the ground.

The real travesty in this is that it is a good idea done very badly. We should get more out of the coal, gas and minerals we export. Instead we get a repeat of the insulation fiasco, great idea, but designed to fail.

This has all the hallmarks of a marketing campaign designed by hollowmen, and no sign that either the Prime Minister or the Treasurer really know what they are doing. No wonder the Greens are doing well in the polls, everyone else is on the nose.

[cultana]

The GST was specifically left out of the tax review anyway.
Hence it is a dead point.

With reference to the current resource super profit tax (RSPT)/RRT this is a heavy but interesting article.

The new Australian resource rent tax | The Australian (http://www.theaustralian.com.au/business/the-new-australian-resource-rent-tax/story-e6frg8zx-1225869337321)

After reading several bit and articles I get the impression the Mining industry is not in principal against a RRT but more in the unconsulted manner the current proposal has been delivered and in a way fixed in cement by the govt.

There is within many articles and media reports, hints and comments a preferred model being along the lines of the Petroleum Resource Rent Tax (PRRT). Not necessarily a direct copy but as a model base.


Unfortunately this is going to be a long argument with lots of political heat with little forward progression.

The real big losers is going to the sucker that is trying to live off his/her retirement fund and watch the mineral section of the portfolio go for a bad swim.

[m2c1Iw]

Thanks for the link to the Garnaut article.

Makes for interesting reading and I find I now have more questions of the government than ever regarding the implementation of this policy.

I would ask Mr Garnaut to expand on his references to our government being able to implement policy in the public good that are contested by powerful private interests in the midst of dangerous time for our country.

Does this reference relate to giving our government the ability to implement taxation to return to a balanced budget after the questionable expenditure it committed to as a result of the GFC? I beleive that what he is saying.

In any event his call for constructive (or should that be rational and transparent) discussion clearly needs heeding by all parties.

[Frank&Earnest]

The GST isn't discriminatory, the super tax on the miners is.

The GST is discriminatory, it taxes people who do not have sufficient income to be taxed on personal income. It was well known by everybody, so much so that compensatory measures were taken by the Government to offset this disadvantage.

[cultana]

I would ask Mr Garnaut to expand on his references to our government being able to implement policy in the public good that are contested by powerful private interests in the midst of dangerous time for our country.

Does this reference relate to giving our government the ability to implement taxation to return to a balanced budget after the questionable expenditure it committed to as a result of the GFC? I beleive that what he is saying.


I do not believe his lecture here has anything directly relating to the expenditure the govt made due to the GFC and trying to get a balanced budget sheet ASAP.

He outlined it in a generalised manner near teh beginning as:
"This is a dangerous time for our country in a dangerous world. Europe is floundering, as Governments wake up to the consequences of socialising the losses of private financial institutions in response to the global financial crisis. In the United States, a clever and politically skilled President is battling with domestic problems on a daunting scale. The United States has fewer political and fiscal reserves than at any time since the 1930s, with which to come to the aid of a North Atlantic world in trouble. We will learn over the year ahead whether it has the political and fiscal reserves to help itself."

One of the biggest issues we will face for a period is the lack of creditable politicians on all sides of politics, includes the little parties as well. Unfortunately the old guard and their ability to spin with a level of quality and belief have now vanished. Many of these old guard also had a belief in this nation and country, which the current lot appear to have lost or never had.

[Frank&Earnest]

Ah, the inscrutable ways of fate! I had to wander again into the uncharted waters of this dark side of the forum to find the willpower to read again some economics. Thanks Cultana! :rolleyes:

If I'm still awake enough to tell, Professor Garnaut makes clear that there are good reasons for introducing the tax but plenty of research still needs to be done and, if the Government is intelligent enough to do what the highest authority on the matter, namely he, says, everything will be all right. The horse trading with the interested parties is accepted as a given. It is interesting to note that in other countries it is a basic principle of taxation law (how well applied is another matter) that it be enacted by decree, exactly to avoid this sort of crap, with constitutional mechanisms for reviewing the tax later if it proves inappropriate: in a way, the highest level of application of the solve et repete principle also applied here.

And he gives further evidence of the truth of my long held belief that this country will never be a nation until the States are stripped of sovereignty.

I am going to bed now.

[Waldo]

I've watched Garnaut on Lateline and I take what he says with a tiniest grain of salt, as many other international economists have countered ways and means that he has put forward with more plausible ideas.

Back on the GST for a moment, it affects everyone - hell, my income can be $0 for one week and $2,000 another and my point was that it taxes everyone, not just one group as the Super Tax does. But, I expect in the whole that Joe Public will love Dudd's grand plan as Australians have something called the Tall Poppy Syndrome.

[damian]

Lots of intelligent comments on this thread. Hopefully some of mine will be :)

1. The government has budgeted about 8 bill in extra revenues from this tax.

2. Some mining projects are no brainers, some are more marginal. This tax may cost some of the latter. Implications should be obvious.

3. I would suggest a seperation between the mechanism of tax collection and the totals. I also suggest seperating the issues of government service delivery (by which I mean regulation and all government activities, not just the obvious) and the mechanics of that delivery. If we are striving for efficient/effective government services should be delivered as efficiently as they can be (regardless of ideaology) and the community determines what and how much through their representatives. That then determines the total tax take. Then, and only then, should we discuss the way the taxes are raised. NZ did this in the 80's and it pulled their economy back from the brink of collapse. Extreme case but I firmly believe we would benifite from a similar excercise.

4. Tax rates: Some things are geographically sensitive, many aren't. The latter go straight overseas if you overtax.

4. Garnaut and Henry are both economists who have done nothing practical in their lives (I am aware of Garnaut's position in that gold company, I believe he is a figurehead, nothing more). They are also both labor party "friends". Garnaut was behind the dismembering of the australian auto industry in the 80's now he's beck to finish stuffing the economy. I wanted to punch Henry when he made his smug comments about profits based taxes in the inquiry the other day. What a f*wit.

5. Lots of things that look like good ideas are stuffed in the details. The GST and work for the dole come to mind. Australian federal governments have a poor track record in implementation.

Finally I am comming to the conclusion that Australia would be better off if the labor party ceased to exist and some other group stepped into the role of opposing the coalition. They are so utterly corrupt, hypocritical and incompetant they have become intolerable. I am sure the coalition are similarly disposed but at least they are less obvious about it.

2c

[Waldo]

I wanted to punch Henry when he made his smug comments about profits based taxes in the inquiry the other day. What a f*wit.

Damian, do you have a link to it maybe? I'd be interested to read what he said.

The one stuff-up no-one has highlighted yet is the total lack of responsibility of the commercial network news to cover any of this. But maybe that represents the public interest in itself, which leaves those who want to find out about it to watch Ch. 2 news and Lateline and SBS for coverage of this crock. (who thankfully understand what news is about)

[Waldo]

An interesting read

Miners head to Canberra for tax fight - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/stories/2010/06/02/2915629.htm)

[m2c1Iw]

Why is it that truth and politics don't mix?

[cultana]

Why is it that truth and politics don't mix?

Get Leon Byner to ask Ranny that question on his morning 5AA radio program. Could be entertaining.

[cultana]

The one stuff-up no-one has highlighted yet is the total lack of responsibility of the commercial network news to cover any of this. But maybe that represents the public interest in itself, which leaves those who want to find out about it to watch Ch. 2 news and Lateline and SBS for coverage of this crock. (who thankfully understand what news is about)

Actually it is not a stuff up it is just the standard of the modern journalistic reporting approach. The level of investigative reporting has diminished because most jurnos seem to lack that ability. Also throw in a heavy dash of it does not sell the commercials on the TV or in the paper if one was to actually do deep digging into political garbage like this tax and other matters, Roof batts, BER , Aboriginal Housing, and all the other enterprises this government started but stuffed up big time.

The Australian was/is running a segment re the BER on line and the govt got a bit nasty about it.

[Sebastiaan56]

Because politics is about power. That is why truth is usually the first casualty when a pollie opens their mouth.

[Frank&Earnest]

Back on the GST for a moment, it affects everyone - hell, my income can be $0 for one week and $2,000 another and my point was that it taxes everyone, not just one group as the Super Tax does.

Of course Waldo. But I am sure you agree that by taxing all the population, not only a section of it, the section not previously taxed is "one group" that cops a new tax. Semantics apart, the logic stands. And in that case as in this, there are compensating factors to try ironing the creases. I don't claim any knowledge of this matter and therefore can't comment, but if the end result is that all businesses end up paying 28% tax instead of <28% for the miners (whatever the real figure is) and 30% all the others, I can't see any reason to be unhappy with that.

[Waldo]

If the KPMG report found the miners paid an effective tax rate of 35 per cent, then I have no reason to doubt the integrity of the report and it only goes to show the lack of credibility of any claim by the government as to the rate of tax the miners are paying.

[m2c1Iw]

Hmmm......it's starting to get rough and the slaps have turned into punches.

Andrew Forrest comments here (http://www.news.com.au/business/breaking-news/mining-loss-guarantee-for-resources-super-profits-tax-valueless-says-fortescue-metals-group/story-e6frfkur-1225874542374)

[Frank&Earnest]

If the KPMG report found the miners paid an effective tax rate of 35 per cent, then I have no reason to doubt the integrity of the report and it only goes to show the lack of credibility of any claim by the government as to the rate of tax the miners are paying.

I agree with you that if the Treasury figure is substantially incorrect it indicates incompetence or dishonesty. If there are no precedents or ways to measure objectively some assumptions, however, it might be a matter of whom or what one believes, as the article quoting Forrest indicates. The problem is when one of the sides of an argument has the ability to influence future behaviour to lend credence to previous assumptions. And money talks louder than words, especially when the words are incomprehensible to all but a minuscule number of adepts.

BTW, I am not aware of slapping or punching anybody, I am happy to stand corrected if that is the case.

[m2c1Iw]

BTW, I am not aware of slapping or punching anybody, I am happy to stand corrected if that is the case.

Figure of speech only Frank but I think you know that.:D

I do find it extraordinary that such public people are seemingly quite prepared to call each other liars in the media.

[artme]

The one stuff-up no-one has highlighted yet is the total lack of responsibility of the commercial network news to cover any of this. But maybe that represents the public interest in itself, which leaves those who want to find out about it to watch Ch. 2 news and Lateline and SBS for coverage of this crock. (who thankfully understand what news is about)

Amen to that!!

An interesting read on the article you posted Waldo. Looks like the gov. is resorting to well known labour party tactics when it can't present decent, researched and cohesive arguments on its own part.

I listened to more of the balerdash from the ad campaign today. The poor barstewards are so confused thy really can't get anything across. We have them talking about a simpler and fairer tax system without any explanation of how the RRT will bring this about.

In relation to some quoted figures on taxes paid we here a lot of talk about aveagesTo talk about averages in this case is spurious. By the very nature of the beast ( mining industry) some companies will pay more tax and some less. Also there is the inclusion, I surmise, in all those averaged figures of mining activity such as quarrying and "small time" activities like lime extraction and sand mining. The figures given by the gov. are pobably as far removed from the real picture as it is possible to be.

[Frank&Earnest]

I do find it extraordinary that such public people are seemingly quite prepared to call each other liars in the media.

... maybe explainable by the fact that they know they are always correct? :D

[Sebastiaan56]

Being a BHP Billiton shareholder I looked up the annual report for the financial accounts for F'09. Here is the link http://www.bhpbilliton.com/bbContentRepository/docs/bhpBillitonLimitedSingleParentEntityFinancialStatements2009.pdf

BHP Billiton pays tax in Australia see P11 "BHP Billiton and its wholly owned Australian resident entities are taxed as a single entity." On page 3 of the same report are the income and taxation figures "Profit before taxation" US$ 7700 (M), "Profit after taxation" US$ 8130 (M) due to a tax credit of US$430 (M). In the notes accompanying the Financial report there is detail of deferred tax assets of US$ 454(M). Current tax payable is on Page 23, US$1413 (M).

Now, my simple maths says that the current tax payable / profit before taxation x 100 is the percentage tax payable. Therefore 1413 / 7700 x 100 = 18.35% Please shoot me down someone using BHP Billitons own numbers because these are the figures that I use to invest my hard earned super and I would hate to think that they are not correct. There are severe penalties for lying to ASIC about this stuff.

I have written to BHP Billiton for clarification as I dont know if the current tax liability includes tax from the 2010 trading year and I would expect the GST liability to be listed separately which it doesnt appear to be. It is also not clear whether the franking is accounted for here.

Someone please shoot me down with maths because the company tax rate is 30% and the tax credit of US$454M only brings the total to 24.25%. When my PAYE rate is 40% Im concerned that I am subsidising a big company.

[cultana]

On a simpler point you will find if you take that subsidy approach you also subsides a lot of workers who get special tax reductions because they work in certified locations. I worked in the NT for a while and got special tax breaks because of the location.

Now you may think that you are subsidising the Big Australian but if the tax rate is less than 30% you can but blame the government as that reduction is provided by them as special tax incentives for being in those locations and lots of other reasons all legal and government provided.

UNfortunately the whole tax argument is clouded by lots of complex pieces that for one the government will not outline because it weakens their argument. It becomes hard for a government to cry that these companies don't pay full tote because the government gives them the special tax incentives.

The companies will not say too much as it clouds the argument from their side.

[artme]

Sebastiaan, your figures lend support to my idea that aRRT is not necessarily a bad thing. I said earlier that the mining industry gets plenty of tax breaks from the gov.

we should get this back in one form or another over time.

True tax reform would look at all of this, and not try to bulldoze us with the RRT in its current form.

[Waldo]

But why oh why, should anyone pay more tax after having paid tax on their income? :? :? :?

[artme]

But why oh why, should anyone pay more tax after having paid tax on their income? :? :? :?

Beats me Waldo, but that is not my point.

the miners -and others- get tax breaks and other concessions. As I see it we are helping to prop up their profits. Some way or another this should come back to us.

Properly thought out, implemented and administered a RRT could do this.

Perhaps if we thought of the concessions, in whatever form they are give, as loans we might get to see this more clearly.

I don't know how to reform the tax system, but it has to be done. There was a proposal put forward by Doug ANthony some years back whereby he wanted a flat 20% tax rate. Maybe that would work.

Governments should alsolook at how much money they actually need and ways to spend it less wastefully. For instance, is there a NEED for stamp duty - of any sort on anything.

On this point, I have no objection to paying taxes. I just want to see the money used wisely.


Sorry or the rambling and jumping from point to point..:B

[Waldo]

But we all get tax breaks, we all get to right off capital expenditure, so we aren't propping up someone solely.

I have two major problems with Dudd's idea:

• Dudd has decided that because he can't balance the books and to produce a budget that he has to do it by two taxes, one on mines (and it's not just the big fellas it's also on lime for cement) and one on tobacco. Without which he has no budget, or very little at least; and

• the mines pay state royalties on top off all the other taxes they pay, so they aren't getting something for nothing, we don't own the stuff they mine the miners do. If the states thought they were being ripped off before they would have increased royalties. But Rudd wants his share. And it's not a case of they should share their wealth because Dudd thinks so. They've paid for their wealth, they have invested massive capital, they pay their taxes etc., they invest back into the country (hell, take away our only real export and see how good the economy will be after that), their share price (of which there are 6 major companies on our stock market) that puts $ in our superanuation (now play with that and see what money you have at 65 - a friend of mine has lost at least $20K already because of Dudd'd grand tax idea)

A third one:
• Dudd get's the super tax through - then there exists a precedent for s/taxes on other industries and it could well happen. How much do you fiddle with an economy before you really kill it?

:shrug:

[Frank&Earnest]

I respect your opinions, but there is an error of fact: "we don't own the stuff they mine the miners do". Minerals are the property of the Crown. The whole logic of the tax is predicated on getting a better price for the little bit of sovereignty we let them take away.

[Waldo]

And they pay $1 in $7 in royalties. That sounds fair.

Canada, South American companies are rubbing their hands with glee and some economists are stupefied.

From KPMG

Tax to drag on mining industry for '100 years' (http://www.theage.com.au/national/tax-to-drag-on-mining-industry-for-100-years-20100602-wzr5.html)

[Frank&Earnest]

Yep. They are haggling over the price. :D The question now is: is Australia greedy or the other sellers the mugs? Maybe you are too young to remember when the Arabs realised they were being screwed and doubled the price of oil overnight. :wink:

[Sebastiaan56]

the mines pay state royalties on top off all the other taxes they pay

Not according to BHP's report, ""BHP Billiton and its wholly owned Australian resident entities are taxed as a single entity."" but not the point really. I agree, Rudd is a loser. But I still think that whatever government gets in will have to increase the overall tax take to meet upcoming baby boomers as they retire. And anyone who is going to get taxed more is going to bitch about it. Me included. But with the way the economy is in NSW its all a bit arbitrary really. Our business is going to post its first loss since we acquired it and half of Silverwater will be the same by anecdote. Miners may be doing alright but we are suffering. The only consolation is the fact that those idiots who are our Govt's will have less of my money to spend. Sorry Waldo bit a of a hijack I know.

[q9]

a friend of mine has lost at least $20K already because of Dudd'd grand tax idea)

Nobody has lost any money because of RSPT.

Article (http://www.dailytelegraph.com.au/business/australian-share-market-suffers-mean-may/story-e6frez7r-1225873812184)

For those with limited time:

During May, the industrials index of the ASX 200 plunged by 11.2 per cent


The materials sector, which encompasses the major mining companies, was down 5.9 per cent

So that means...ta-da! In the worst performance in 26 years, the mining sector still managed to whether the storm in better shape than most other industrials.

[cultana]

If one does the background reading you will find that:
1. The mining companies want to get rid of royalties as they are different in each state and vary per mineral extracted per state. This is a complexity to the taxation process they have to work with and basically messy.

2. No where have the mining companies objected to paying a Resource Super Profit Tax (RSPT) or call it a Resource Rent Tax, (RRT) as such. In fact they are happy with just a single tax so long as it eliminates the current Royalties tax.

3. All companies pay a base level companies tax of 30% but some have more concessions than others and these concessions are defined by the Government. Simply the Government can not cry about this as it is their own doing noting to do with the specific companies paying less.

4. The mining companies object to the current RSPT for several reasons and in a way valid.

4.1. The new tax is retrospective. This means all existing project/mines will be hit. Note these mines were designed, financed and developed on the basis of the existing taxing system and did not profit wise provide foe an additional 40% slug over 6% of base profit.
From what I have gathered so far this super profit tax is going to come in on profit before interest on financial borrowing payments are met.
The end result is less capital to spend of future expansion. Note each expansion is a new project under this RSPT. Overall not conducive to expansion.
There are many on the financial edge mines at present either within big companies or just the little miner. Most of these mines will close.

4.2. The 40% coverage by the government for a failure of a project is not being happily accepted by the various financing sources the mines use. There are a few reasons, the most notable is the lack of guarantee a government will want to fund a billion dollar loss. It would be a political death hole.

4.3. The modelling used has not reflected real world financial approached that miners use to obtain finance or conduct their operations. This has lead to some poor evaluation of the overall approach to the tax design.

4.4 The base point of 6% or the long term bond rate is very low at present 6%, and this will have ramifications on end profit and hence finance payments, and how far a company is willing to expand with new projects. Reduce the profit and hence you reduce future operations capital.

4.5 The real lack of consultation with the industry by hennery in his report that developed the concept of the tax. The lack of consultation by the government with the mining sector when drawing up the tax model.

5. The mining sector would be happy with a RSPT based along the lines of the PRRT. Note this tax has a 40% profit loading and also has no retrospective provisions. It also has a base profit line at Long term bond rate plus 5 odd percent making it at roughly 11-12 % before the super profit cuts in.
Notice the off shore petroleum industry does not pay royalties as these are in federal zones not state ones.

Of topic here:
With company tax being reduced from 30 to 28 odd % as the base rate will only affect those companies which are incorporated etc. So little ones which are say family run business, partnerships etc will not get this reduction. Now throw in a compulsory super from 9 to 12 % that these little guys will have to pay and they will get hit badly.
Bye-bye little guy.

Back to topic:
If Rudrless and his kitchen cabinet has bothered to sit down with the mining industry by now he would have had his RSPT, his 40 % and his budget balanced. At present he has a whacking hole in his budget through gross arrogance.


Though some may not realise it such mines as the cement mine at Ardrossan, the iron mine at Whyalla will possible due to the current version of the RSPT go bottom up. This is because the mines sell the mineral form one department to another at production cost. If it was at market cost they would not be able to operate.
A similar concept could be applied to the Pt Augusta power station and its Leigh Creek coal field.
That is 3 industries within SA at possible closure risk.

Sorry went on a bit..

[cultana]

Nobody has lost any money because of RSPT.

Article (http://www.dailytelegraph.com.au/business/australian-share-market-suffers-mean-may/story-e6frez7r-1225873812184)

For those with limited time:




So that means...ta-da! In the worst performance in 26 years, the mining sector still managed to whether the storm in better shape than most other industrials.

That means stuff all if you are relying on some form of managed retirement fund as you only source of income. Share value dictates you available $ worth.
If that value goes down you have lost that much. It can only be regain if the share value goes back.

[artme]

Well done Cultana!:2tsup:

Those are the sort of facts we need to consider.

If anything this RRT proposal has simply shown up the incompetence of the gov. and its boundless arrogance.

What is needed, apart from decent tax reform, is for the Krudd government to be given its Swan song at the next election.

[Frank&Earnest]

Nice summary, at a glance you appear to broadly agree with the Professor. I have a philosophically different attitude to the "consultation" process but all the rest is the sort of things where values will vary differently depending on perspective, especially the already mentioned 4.2. If indeed the tax is retrospective, blame a legal system that allows this to happen. More civilised countries respect the principle nulla poena sine lege.

I am not really sure about your assessment of the impact of the 30 to 28% reduction and the 9 to 12% increase on small businesses, IMHO it is way overstated. Incidentally, inc. does not mean big. Ask your dentist, chances are the practice is incorporated even if it is a one man band.

[Frank&Earnest]

What is needed, apart from decent tax reform, is for the Krudd government to be given its Swan song at the next election.

Ahem... isn't this the kind of blatant partisan propaganda that should be frowned upon by the moderators? :D

I would agree with you if we had a decent alternative, like Turnbull for example. But I would never vote for a rabid bigot like TA. Malcolm Frazer is my current hero, I pray that he would found a party I could be happy to vote for.

[cultana]

Frank,

I only agree with the Prof by accident not from reading his paper and then agreeing to his point of view.
I could say he agrees with my views:D

Perspective is an odd one. Yes if I was looking at some general business the 40% covering a flop venture would be a good backing. Unfortunately in mining the concept of a flop is huge. Also since it is legislation there is no guarantee it would not be removed buy successive governments anyway. That is one of the uncertainties with it. Since it involves $billions not $thousands the chance of it being withdrawn is on the cards so it is not a sound basis to go look for finance.

The use of retrospective is an odd one and nicely banded about. All this actually means, and its clarity also seems to have vanished in the mumbo jumbo, is that existing projects will be included. The PRRT excludes preexisting projects.

As for the inc matter with the company tax all that I hoped to point out was that unless a business was actually inc'ed it would not see this reduction. That was pointed about very early in the budget/tax reform debate. Since then it has dropped off the horizon.
Yes doctors, dentist and similar practices are usually inc anyway. But the local deli, the small sub contractor running his truck and bobcat and the like may not be.

[Frank&Earnest]

Sorry Cultana, I meant "coincide". Blame my imperfect English. :D

If that is what "retrospective" means in this context, I have no problem with it, but I do not accept it as a correct use of the word. Blame my presumption of knowing what good English is. :D

[artme]

Ahem... isn't this the kind of blatant partisan propaganda that should be frowned upon by the moderators? :D

I would agree with you if we had a decent alternative, like Turnbull for example. But I would never vote for a rabid bigot like TA. Malcolm Frazer is my current hero, I pray that he would found a party I could be happy to vote for.

Not really blatant or partisan Frank, althought I understand your humour. I was fed up with Howard towards the end.It hasn't taken as long for me to be fed up with these incompetent nongs.

Agree with you on the leadership issue. It seems as if we are caught on the horns of a dilema. Painful!!

While I think Turnbul may be more acceptable I wonder about him also. Look at the performance with Godwin Gretch. I also don't like his approach to becoming a republic. I'm in favour of a republic, just not his model.

[damian]

Damian, do you have a link to it maybe? I'd be interested to read what he said.



Boy this thread got a lot longer in a day didn't it ? Good that your all remaining so civil to one another. I may have missed something but most of you seem to be trying to get your heads around the problem rather than having an idealogical debate.

Sorry Waldo, I don't have a link. Bascially he was asked about the mining company claims and said something like "I learned in high school economics that a profits based tax can not impact prices so I don't think I need comment further on that". Utter BS. Just what you'd expect from a do nothing go nowhere public service academic. I'd love to see that SOB kicked out into a private business where he has to make a living.

Also seb' I think mentioned that we should consider how much money the government needs in any discussion about how they raise it. I think I was trying to make that point. Labor governments are tax, spend, waste governments. Even Hawke did his fair share of that. They bleed us dry then pass the $ off to their mates via cushy jobs (Mike Keiser anyone ?) and overpriced contracts (school halls etc). They are little more than a conduit from your wallet to their mate's swiss bank accounts.

Sigh. Mr Cranky needs a lie down....:)

[Vernonv]

Labor governments are tax, spend, waste governments.Damian, you certainly have a slant against labor, but seem happy to ignore those same traits within the coalition. Personally I don't particularly like any of the political options we currently have, but to even consider the current coalition as a viable option is almost laughable.

[RETIRED]

Don't digress folks.

[Sebastiaan56]

Also seb' I think mentioned that we should consider how much money the government needs in any discussion about how they raise it. I think I was trying to make that point. Labor governments are tax, spend, waste governments. Even Hawke did his fair share of that. They bleed us dry then pass the $ off to their mates via cushy jobs (Mike Keiser anyone ?) and overpriced contracts (school halls etc). They are little more than a conduit from your wallet to their mate's swiss bank accounts.

They need as much money as it takes to get reelected :D What we call government in Australia is basically a set of policies decided by opinion polling. That goes for both L's, I make no distinction. Rudd buys school halls and insulation, Howard gave it away as middle class welfare and advertising the GST, no difference at all IMO. When Howard got kicked out he left a massive budget surplus, IMO this is where everyone of us was over taxed. The GST was a giant tax grab, probably the biggest in the history of the federation. To claim either party as a paragon of virtue and the other as the very evilist naughty baby eating barstools seems simplistic and propaganda to me.

Your question is valid. What is the role of Govt? Its a bit like a comment I heard once that a human is basically a transport mechanism for an alimentary canal. The country has become a fund raising mechanism so that two parties can play politics in Canberra. Neither seems particularly interested in what we really think or what the country needs now, in ten years time or in one hundred years time. The horizon and purpose of the L's is the next election and dragging the other through the mud.

The L's are like two sides of a coin. The Lib's fundraising base is big business. Its cohering value is hatred of Labour. Lab's fundraising base is the Unions.Its cohering value is getting one back on the bosses. Remove either big business or the unions and the other loses its ideological reason for existence. And yet they need each other, better the enemy you know.... I read Miranda Devine's spray in the Telegraph the other day (a very conservative commentator) and the lady was at her hysterical best about the rising threat of the Greens. At least the Labs/Libs can be attacked in the usual way and the Labs/Labs attacks can be defended in the usual way but there may be a new voice in the national debate and that will be a big threat to both of them. Im not advocating the Greens, Im attempting to point out a state of affairs.

[artme]

Maybe it's the influence of some red I had tonight but I don't know whether to treat your comments as cynical Seb., or regard them as truth.

I think it is fairly clear that both sides of politics have forgotten why they are where they are, or maybe they never knew.

[hughie]

Well my two bobs worth on the matter as a swinging voter is this.

Basically Rudd has screwed up so many times before this and now he has to go with it come hell or high water.

I fear him and his two consorts Swann and Gilliard are of little use to the country as well.

As for Ken Henry. I see that he reckons there would no difference if the tax was 40 or 50% in fact he went to agree that even if it was 75% it would still be no difference on its out come. So I will add him to the list above as way to expensive to be any near my tax dollars for any reason.

[Big Shed]

The highlight, for me anyway, of this "debate" in parliament came yesterday when Bronwyn Bishop (not my favourite politician) addressed Julia Gillard (dressed in a hideous hounds tooth coat) as "the member for David Jones".

If looks could kill Ms Bishop would be heading for a state funeral:D

[hughie]

[he highlight, for me anyway, of this "debate" in parliament came yesterday when Bronwyn Bishop (not my favourite poltician) addressed Julia Gillard (dressed in a hideous houndstooth coat) as "the member for David Jones".




:2tsup::2tsup:

[q9]

Bascially he was asked about the mining company claims and said something like "I learned in high school economics that a profits based tax can not impact prices so I don't think I need comment further on that". Utter BS.

I'm pretty sure the context of what he was saying was related to the price of the commodities being sold on the open market, in which case he has a point. If they threw a tax on some inputs, then the commodities would become more expensive ie it would artificially inflate the price of those commodities.

[m2c1Iw]

I'm pretty sure the context of what he was saying was related to the price of the commodities being sold on the open market, in which case he has a point. If they threw a tax on some inputs, then the commodities would become more expensive ie it would artificially inflate the price of those commodities.

Thus the commodity achieves a smaller return for the investor, exactly the point the miners are making and it follows the capital will be moved elsewhere.

Correct me if I'm wrong but I don't believe Australia has the only deposits of the many mineral/elements we mine.

As a side note what happened to the 5.5billion from the bank deposit guarantee fees? see this (http://www.abc.net.au/news/stories/2010/02/07/2812465.htm) article

[Frank&Earnest]

Yes Damian, Ken Henry might have been flippantly arrogant (I can't cast the first stone :D ) but you can't say he was wrong. On what do you base your assessment?

m2c1, I do not think anybody is denying that, the point is what level of taxation gets more eggs without killing the goose. The argument that other countries would tax less is rather spurious IMO: would you like to live in a South American country where miners are taxed less because the local potentates get huge kickbacks and the populace goes hungry?

To lighten the matter, do you remember the joke about the pub dare where big blokes were trying to squeeze the most out of a lemon? A bespectacled weakling got the most out and revealed being a tax auditor. Then an even smaller man came forward, took the sqeezed lemon and wringed a last drop out of it. Gasps of astonishment. "And what are you?" "A divorce lawyer'. :D

[m2c1Iw]

m2c1, I do not think anybody is denying that, the point is what level of taxation gets more eggs without killing the goose. The argument that other countries would tax less is rather spurious IMO: would you like to live in a South American country where miners are taxed less because the local potentates get huge kickbacks and the populace goes hungry?


Well a Canadian pollie (OK conservative :rolleyes:)was quick to announce (http://www.smh.com.au/business/canada-ready-to-snap-up-dumped-resource-projects-20100506-ubfe.html) that they would "cash in Australia's blunder".

What level of taxation? Well Ken Henry says the rate matters little (he can't be serious) according to this (http://www.heraldsun.com.au/business/terry-mccranns-column/how-henry-lets-the-cat-out-of-the-bag/story-e6frfig6-1225873774975) column by Terry McCrann and no I would not like to live in South America and I don't see the relevance unless adding weight to the argument that investment will go overseas (kickbacks cheaper than Super Profits Tax:U).

Mr. Rudd is quoted as saying this tax is to enable the government to reduce company tax (sometime in the future maybe) and assist small business (under $2m turnover, that is small) offsetting the increase in the super guarantee payments made for their employees. All very noble and vote winning.

IMO it was hastily plucked out of the Henry review to plug a hole in a very leaky budget.

[Sebastiaan56]

As a side note what happened to the 5.5billion from the bank deposit guarantee fees? see this (http://www.abc.net.au/news/stories/2010/02/07/2812465.htm) article

A terrific question, BTW has anyone actually every seen a balance sheet or consolidated P&L for the Fed's? Should be published every year for all Govt's I reckon. It took me about 20 mins of work to get and digest the BHP document the other day. Why cant we do the same for the Govt's?

[artme]

As a side note what happened to the 5.5billion from the bank deposit guarantee fees? see this (http://www.abc.net.au/news/stories/2010/02/07/2812465.htm) article

Went into a black hole????

Funded some of Seb's cynical conclusions.???

Helped to repay the advertising bill supporting the RRT???

[johnc]

Thus the commodity achieves a smaller return for the investor, exactly the point the miners are making and it follows the capital will be moved elsewhere.

Correct me if I'm wrong but I don't believe Australia has the only deposits of the many mineral/elements we mine.

As a side note what happened to the 5.5billion from the bank deposit guarantee fees? see this (http://www.abc.net.au/news/stories/2010/02/07/2812465.htm) article

Both south and north America, Africa, eastern Europe and Asia, particularly around Mongolia have large mineral reserves. We are well placed because we have good infrastructure, stable government, no civilan unrest and developed mines. This is what sovereign risk is about, miners just don't go to countries that have a habit of nationalisation of mines or for that matter restrospective taxation habits. They want some certainty that Government has the integrity to stick to the rules and not shift the goal posts to far. The complaints aren't really about paying a price for the minerals as they already pay royalties, or even about more of a tax take. The complaint is that mines have been developed on the expectation that in this country we do not tax retrospectively and that not only is this tax retrospective as it taxes existing mines, but also the facts the government has used to support its argument are false, it has not consulted and the details it has released are very incomplete.

The miners want to talk with the government and be heard, its about consultation, its about policy made on real facts in which everything is considered and a balanced judgement made. This mining tax clearly has been hastily put together, and both Rudd and Swan are not interested in listening to anything but the sound of there own voices, and that is not the way we expect politicians to act in this country.

When Fraser brought in the high petroleum taxes it only applied to new fields not existing ones. There was a recognition that to do so was not in the countries interests if it wanted continued exploration. This view is lacking in the current debate, as is any attempt by either Rudd or Swan to actually listen to grievences about this tax, high handed behaviour only gets peoples backs up as does the use of false data and lies even if the lies are simply because you don't know what you are talking about.

I actually think an approach more like the Hawke years would actually see the country picking up a greater share of mining revenue than it is, without the vitriol. I expect our leaders to conduct themselves in a more contrite manner and not use spurious figures or purile sound bites in matters of national importance, this isn't a minor issue it could have a major impact on the country if we get it wrong. It has the potential to kill the one industry that has actually brought our balance of trade back into the black for the first time in a couple of decades and it's importance should not be under estimated nor the need to do more to correct our trade balance problems.

[m2c1Iw]

Eloquent indeed JohnC your observations are spot on.

[Frank&Earnest]

I agree with the logic, but not with the interpretation of retrospective. As I understand it, based on what Cultana said because I have not looked into it, and based on your description, the tax affects future income, not past means of production. Think about a change in the rate your personal income is taxed at: you might want to change the way you invest your money in the future, but you would not call it restrospective because it changes the profitability of your current investments.

[Big Shed]

Found this article relevant and interesting

Shallow discourse (http://www.theage.com.au/opinion/politics/shallow-discourse-20100604-xkni.html)

[artme]

:goodpost:JohnC.


Just another little bit, perhaps not a big issue, but the miners are allowed to tap their water requirements at no cost. Others have to pay a licence fee.

[johnc]

I agree with the logic, but not with the interpretation of retrospective. As I understand it, based on what Cultana said because I have not looked into it, and based on your description, the tax affects future income, not past means of production. Think about a change in the rate your personal income is taxed at: you might want to change the way you invest your money in the future, but you would not call it restrospective because it changes the profitability of your current investments.

When a company looks at developing a mine it takes into account the development and exploration/proving costs of getting to the point of production. It calculates the amount of resource available estimated margins and the amount of production required to break even. Part of that analysis will include royalty and income taxes and their impact on cash flow. By greatly increasing the amount of tax to be paid on existing mines you extend out the time taken to recover cost and produce an acceptable rate of return. In some cases this will mean if companies had known what the tax was going to increase to the mine may well of been deemed uneconomic and never commenced. There may be some mines now that will not have sufficient recoverable reserves to make a profit. Don't forget current mineral prices will not stay at these levels, they will at some point turn down that is the nature of commodities.

This is retrospective taxation, because of the nature of mining and the fact that mines only have so much ore, its not like manufacturing where decisions are made on the life of machines and market factors including cost of materials. Mining is based on the life of the mine plus rehabilitation costs at the end, life of machinery and market instead of primary are almost secondary in the decision. This was acknowledged in Frasers time, but it is something that is being conveniently overlooked with this tax.

[artme]

An interesting read Fred and it goes part way to explaining some of my reluctance to go in to bat for the miners.

I remember John Elliot lobbing a similar threat some years ago. He said he was willing to take operations off shore where he would get a better deal. Should have locked him up and thrown the key away.

We should not bow to such pressure from any group!

It was interesting to hear what Clive Palmer had to say on a promo for Four Corners about this whole episode not being democratic. I must make sure to watch Four Corners.

I think one of the problems we have with governments of both persuasions in this country is the number of "gotchas' they land on us. While some things have to be done on the run - or as circumstances dictate - Major decisions like this are likely to lead to the sort of angst we are seeing now if the processes are not thought through properly and we have no prior warning of them.

This sort of decision making is unsound, unhelpful, divisive and even carries an element of danger.

Let's see some more intelligent articles and some better informed and reasoned debate than we are getting from most sources at the moment.

[m2c1Iw]

OK different tack the government needs $9bill PA to balance the books.

Commentators and academics alike are hand wringing about the need for government to be able to implement policy without influence/interference (I thought that was freedom of speech oh well)

So why did the gov ignore the Henry recommendations on negative gearing and capital gains tax. If both NG and CGT concessions were abolished the $9bill would be more than covered and I think the pain would be evenly spread across middle and upper income earners in Australia. Maybe your average working family with an investment property Mr Rudd drones on about would be none to pleased. Rather touch up those miners and their overseas investors after all the working families are bound to support higher super in the run up to the election and what working family would argue against getting a bigger share of the resource wealth.

The proposition that parties with self interest should not be allowed to voice their displeasure and influence government policy is bunk especially in the light of the monotonous populist policy both sides are dishing up lately.

Our democratic process certainly does dampen reform, look how long it took to get the GST up. I happen to think that is a good thing as it protects us from lunatic policy.

[Frank&Earnest]

When a company looks at developing a mine it takes into account the development and exploration/proving costs of getting to the point of production. It calculates the amount of resource available estimated margins and the amount of production required to break even. Part of that analysis will include royalty and income taxes and their impact on cash flow. By greatly increasing the amount of tax to be paid on existing mines you extend out the time taken to recover cost and produce an acceptable rate of return. In some cases this will mean if companies had known what the tax was going to increase to the mine may well of been deemed uneconomic and never commenced. There may be some mines now that will not have sufficient recoverable reserves to make a profit.

OK

Don't forget current mineral prices will not stay at these levels, they will at some point turn down that is the nature of commodities.

? they could also turn up, why not? Irrelevant for this discussion.

This is retrospective taxation, because of the nature of mining and the fact that mines only have so much ore, its not like manufacturing where decisions are made on the life of machines and market factors including cost of materials. Mining is based on the life of the mine plus rehabilitation costs at the end, life of machinery and market instead of primary are almost secondary in the decision. This was acknowledged in Frasers time, but it is something that is being conveniently overlooked with this tax.

And how is this different from changing the amortisation rate allowed for an asset?

[johnc]

And how is this different from changing the amortisation rate allowed for an asset?

It has nothing to do with it, amortisation is simply the rate you write your establishment and asset costs over time for book and tax purposes. It has nothing to do with return on investment which is a cash based calculation as opposed to a mere book entry. When assessing viability you eliminate amortisation from any calculations.

You also miss the point on a turn down in commodity prices. If they turn down enough we may well end up subsidising the mining industry out of our hard gouged tax dollars, something that doesn't appeal to me. Don't forget the Government is porposing cash rebates for certain mining expenditure.

[Frank&Earnest]

It has nothing to do with it, amortisation is simply the rate you write your establishment and asset costs over time for book and tax purposes. It has nothing to do with return on investment which is a cash based calculation as opposed to a mere book entry. When assessing viability you eliminate amortisation from any calculations.

OK, one liners are not enough. It seemed simple enough to me, the point was not what one or the other is, it was an example of something that works the same way and can not be deemed "retrospective". As for your understanding of financial analysis, it would be too long to discuss here, you might wish to refresh your knowledge. Simple ROI is a very crude measure, all the companies we are talking about would certainly consider compound interest variables in their analysis.

You also miss the point on a turn down in commodity prices. If they turn down enough we may well end up subsidising the mining industry out of our hard gouged tax dollars, something that doesn't appeal to me. Don't forget the Government is porposing cash rebates for certain mining expenditure.

Which should then be considered a reduction of risk to be valued positively in assessing viability. That's their purpose.

[Frank&Earnest]

An interesting read Fred and it goes part way to explaining some of my reluctance to go in to bat for the miners.

I remember John Elliot lobbing a similar threat some years ago. He said he was willing to take operations off shore where he would get a better deal. Should have locked him up and thrown the key away.

We should not bow to such pressure from any group!

It was interesting to hear wat Clive Palmer had to say on a promo for Four Corners about this whole episode not being democratic. I must make sure to watch Four Corners.

I think one of the problems we have with governments of both persuasions in this country is the number of "gotchas' they land on us. While some things have to be done on the run - or as circumstances dictate - Major decisions like this are likely to lead to the sort of angst we are seeing now if the processes are not thought through properly and we have no prior warning of them.

This sort of decision making is unsound, unhelpful, divisive and even carries an element of danger.

Let's see some more intelligent articles and some better informed and reasoned debate than we are getting from most sources at the moment.

My sentiments entirely. And then our vote does not count. Frustrating, isn't it?

[Sebastiaan56]

My sentiments entirely. And then our vote does not count. Frustrating, isn't it?

I think our votes count for a lot. Apart from our comments and dialogues it is the only voice we have in our "duocracy". The point is to be able to use our vote to send the messages we want to send. That the buggers dont listen is of course another point.

Thanks for the links, seems like Im not the only one who thinks like this. I really take Shaun's point that the future of our democracy is at risk from this simplistic populism. hmmm

[Gingermick]

. By greatly increasing the amount of tax to be paid on existing mines you extend out the time taken to recover cost and produce an acceptable rate of return.

Don't profits only come about when the mine has paid for itself? Isn't all revenue up to that point spent on expenses until the balance sheet balances?
Having said that I think to cherry pick a major taxation reform document is woeful management. I'm a labor voter and although I liked getting the stimulus cash, I haven't been impressed but K Rudd at all.


Ken Henry, the man Peter Costello and John Howard appointed the head of Treasury
Seems henry had the backing of everyone

[Gingermick]

Found this article relevant and interesting

Shallow discourse (http://www.theage.com.au/opinion/politics/shallow-discourse-20100604-xkni.html)

That is scary

[artme]

Having said that I think to cherry pick a major taxation reform document is woeful management.

Exactly!!

We have focussed too much on the mining tax at the expense of the big picture and perhaps our concern- anger for some - should turned in that direction.

But is this not typical of the present gov. approach to policy?? Throw mud - er , money - and hope some sticks.

[johnc]

I'd agree with Mick and Artme the problem really is the cherry picking not the make up of this particular tax. Even then what was picked is not the same as the recommendation in some aspects. It is not acceptable that after sitting on the Henry review since December that this is all we get. It should also be noted that the tax was sold not on its merits but what it could be spent on. It has all the hallmarks of lack of thought wrapped up in a sugar coating and we do deserve better than this. It would have been far better to release the document and get some debate and consultation going before announcing what could have been a more comprehensive response.

In answer to Mick, you could say that a mine doesn't really turn a profit to its owner until it covers it costs of development which agrees with your comment. On the other hand if you expect that the mine might have a 20 year life then you may spread that cost over the twenty year period and in each year possibly make an operating profit that repays its development costs over the entire period, you would be taxed on that operating cost. In a simplified answer the company is taxed on the latter approach, paying royalties up front and company tax on the basis or operating profit less allowances.

It is all a moot point, and up to the miners to work out, however I would expect that as most of our majors have overseas interests nothing will change in the short term. They will continue to mine in the countries that give them the best rate of return, we have to be prepared to accept that may not be here in every case. However is that a bad thing, we may well be exploiting our mineral reserves at too fast a rate considering we are doing very little to boost our terms of trade in any other sector.

[Big Shed]

Definite signs of softening attitude here

Swan accepts miners' concerns are legitimate - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/stories/2010/06/07/2919687.htm)

Could have something to with today's Newspoll?:rolleyes:

[damian]

Damian, you certainly have a slant against labor, but seem happy to ignore those same traits within the coalition. Personally I don't particularly like any of the political options we currently have, but to even consider the current coalition as a viable option is almost laughable.

It is possible I haven't made myself clear. First some housekeeping:

, I appreciate your concern but while this thread is "vigorous" I think everyone is showing appropriate respect for one another's views.

When you read my posts remember I have an overactive sense of humour balancing my passionate cynicism and dislike for government. It _might_ be a joke and it would pay to ask before you flail me :) (not that anyone has ...yet..)

Johnc: Some very good posts, well done.

Now to labor.

I accept completely that the coalition are a lousy bunch. As I mentioned previously I have no doubt they are corrupt and incompetant, and I am sure I could make a strong case for same. I protested against Howard's gun laws and railed against many other things they did (tiered hex anyone?).

I am scarred by Labor. First in the early 80's when I was younger and poorer and I saw what Hawke did to "working class" people with his economic rationalism. No percieved national benifit could offset the damage he did to the lives of some of societies most vulnerable people. I was out of work for some time during the "recession we had to have". I was plenty hard up, but there were many people around me who suffered worse. Here in Queensland I watched as Beatie systematically destroyed this state. He stripped money out of both the taxpayer and the state government and syphoned it into the pockets of his labor mates at astronomical rates. In 12 years we have gone from being the lowest taxed state in Australia to the highest. Despite a mining boom we are supposedly broke and our infrastructure is shot.

I truely hate both sides of politics, but reluctantly over time I have come to the conclusion that the coalition inflicts a bareable level of pain while labor just slits you open and keeps on cutting until your drive them back into their holes. I accept I am anti labor, please don't imagine I'm pro coalition :)

Back on topic.

As has been said miners cost projects on a whole of life basis and those lives are decades not years. The capital upfront is enormous. If the government changes the rules mid stream they won't shut existing mines but if mine A is now less profitable it impacts on developing mine B. Jobs will be lost, I garantee it.

We all benifit far more than we suffer from our market economy. You can argue the balance for that market being global, but that is the reality we face. If a miner can spend X and get more return in Canada than here we lose. End of story.

Henry being technically right or wrong is irrelevant. It is part of his job to properly answer questions from government hearings. He didn't, and showed himself an arrogant and egotistical individual worthy of the parliment.

Mining companies don't vote, people do. You guess why new taxes are aimed at companies not individuals. It's a balancing act though because as I said previously many companies are not tied here and can simply move overseas if it gets too expensive. James Hardy anyone ? It's a cheap shot to attack the "big bad multinational". I've said previously I believe the company is the single most evil creation of man, but this harms people it does not defend them against the evil these institutions do.

Am I against changing the way mining companies are taxed ? No. I am against blundering into tax changes without thinking them through properly.

Anyway, interesting reading everyone's comments.

[Waldo]

One thing I don't think has been touched on yet, and I haven't heard it in the public arena except Ch 2, and that is that this won't just effect the big end of mining (as Dudd has been only to willing to point out) but the little fellas too.

If it comes out of the ground it will be hit by the Mining Super Tax. And that will include quarries, lime etc., so we aren't just talking about big business but SME too.

And when that gets out, which it may well do tonight on 4 Corners, then I think there will be a bigger public swing against the whole thing.

(edit to phrase for Fred :U )

[Big Shed]

Could I, once again, remind people that the subject of this thread is Mining Super Tax?