The Mining Tax

[Blackee]

Take from the Business Spectator 06/05/2010

A mammoth capital strike looms
Robertt Gottliebsen

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.*

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.

*An earlier version of this story said that Rio Tinto had scrapped plans to spend $11 billion on expanding its Australian iron ore operations because of the country's new mining tax. The miner has since denied that this is the case.

[Anthony Violi]

Rudd wont see the election...hope he does cos he is dead in the water. Expect Gillard to roll him.

Couple of excerpts from some forums i post at.


Ivor Ries of EL & C Baillieu Stockbroking describes the folly of Kevin Rudd’s great $9 billion “super profits” tax:
The Resources Super Profits Tax will generate no new revenue for five years, and has stopped new projects dead.
There are 270 major resource projects in Australia undergoing feasibility studies and financing with a total capital value of $320 billion. These projects would have employed somewhere around about 120,000 people during the construction phase.
The Resources Super Profits Tax has stopped them dead in their tracks. All of those projects are now frozen. There are probably about 20,000 engineers working on these projects and by the end of the month half of them will be unemployed.
Over the past few days I’ve been struggling to come up with a couple of phrases that sum up the new Resource Super Profits Tax and after considering a great many options – most of them unprintable – I’ve settled on two: “sheer arrogance” and “vast stupidity"…
This tax will generate no new revenue (until 2015) because the forecasts in the RSPT document failed to take into account all the projects that are going to be put on ice as a result. The government’s forecast of an additional $9 billion in revenue from 2013-14 is rubbish and I bet there’s not a single Treasury official who will stand behind that number today.


Macquarie Private Wealth Premium Research warns its subscribers:

The truly scary aspect of this is the lack of understanding from Rudd and Swann towards equity risk premiums. The equity risk premium is the extra return an investor is paid in return for taking equity risk. The new tax is slated to apply if a business earns more than a 6% return (equal to the rate paid on “risk free” government bonds). Effectively they are saying we should not bother investing in industry that offers a better return than government bonds or they will double tax you.
Our strategist asked Treasurer Swann a question yesterday on this issue and asked why the tax kicked in when returns exceeded the bond rate rather than the bond rate + an equity risk premium of say 5% (otherwise known as a companies cost of capital). Swann did not understand the question no matter how it was re-phrased - in other words the treasurer of Australia does not know what the cost of capital is for Australian companies. This is economics 101!…
Capital will continue to flow from Australia until either Labor loses the election or this tax is dropped. This is the greatest sovereign event Australia has faced since 1974 when Gough Whitlam was ousted.
I will continue to direct my clients funds towards the US until we see clarity in this situation.

[Blackee]

Fortescue threatens to sell-out $17 billion projects to foreigners
From: AAP May 19, 2010 2:40PM

Fortsecue chief Andrew Forrest is leading the charge against the Rudd Government's proposed tax.

FORTESCUE Metals Group has threatened to sell down $17.5 billion in stalled projects to foreigers unless changes are made to the proposed profits tax.

Chief executive Andrew Forrest has said its $US9 billion ($A10.57 billion) Solomon Hub project and $US6 billion ($A7.03 billion) Western Hub project had been placed on hold due to the federal government's proposed Resources Super Profit Tax.

"I am a very experienced project financier and I cannot see a way - and my team and I believe we're the best project finance business in the country - can't find a way that we can maintain our equity, our Australian equity, in these projects and still develop them under this highly theoretical new tax,'' Mr Forrest said today.

"I do regret to say that any projects we can't get going before the tax cuts in will not continue.

"Those that cannot be developed in time are now facing very uncertain futures.

"It is true that we could sell these projects - they could still be developed - they could be developed by other countries, they could be developed by those who don't have their current revenue stream impacted in the quite horrific way that is being proposed by this new tax.''

He said talks needed to be held on "how we can keep our assets being developed, how we can keep our assets being Australian''.

Earlier in a statement the company confirmed it would put on hold the $US9 billion Solomons Hub project planned to employ 6000 people permanently and its $US6 billion Western Hub project.

That came as another mining chief, Queensland's Clive Palmer, attacked trade unions for supporting the tax.

Fotescue said earlier in a statement: "The uncertainty in the financial markets caused by the proposed tax and the cash impost that RSPT payments will place on future business revenues has necessitated an urgent review of the economics surrounding the development of Fortescue's major projects.

"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.

Shares in Fortescue were down 23 cents, or 5.67 per cent, at $3.83 at 11.09am.

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.

The Solomon Hub project included the development of a proposed new port facility at Anketell Point near Wickham in Western Australia's Pilbara region.

Fortescue said it had planned to establish a debt funded capital platform for the project, using equity derived from the cash flow from the company's Chichester Hub operations, which comprises its first two mines, Cloudbreak and Christmas Creek.

"This financing plan will be severely impacted as a result of the new tax impost,'' Fortescue said.

"The only work to continue on the Solomon Hub will be the completion of existing studies,'' Fortescue said.

The Chichester Hub expansion would lift output from 55Mtpa to 95Mtpa, and could go ahead as it would be financed from internal cashflows over the next two years, prior to the proposed implementation of the new mining tax.

Meanwhile, billionaire miner Clive Palmer has renewed his attack on the tax by taking aim at unions that support the measure.

"Unions are supposed to have the best interest of their workers at heart, so it staggers me that they are supporting legislation that will lead to a massive number of their own members' jobs being taken offshore,'' Mr Palmer said in a statement today.

The Queensland mining magnate, one of Australia's richest men, has been a vocal critic since the government announced plans to introduce a 40 per cent tax on so-called super profits from mining companies.

Earlier this month, mining unions came out in support of the proposed new tax, saying it would increase job opportunities.

Australian Workers Union (AWU) national secretary Paul Howes named Mr Palmer as among those he said were playing with emotions about the resources super profits tax.

"The fact (the unions are) devoting time to condemning me rather than responding to flaws in the proposed legislation shows an inexcusable lack of foresight for the future of the industry and the Australian economy,'' Mr Palmer said today.

He predicted massive unemployment if the new tax legislation was passed and said it would damage growth severely.

Mr Palmer also attacked Prime Minister Kevin Rudd and Treasurer Wayne Swan.

"Clearly, the prime minister and federal treasurer are nothing more than union puppets with an agenda to demonise myself and others against mining industry employees,'' he said.

The federal opposition has said they will scrap the tax if elected.

[Blackee]

Robert Gottliebsen

The huge bear raid on Australia

Australian currency and share dealers are being hit by a wall of selling from European and Japanese investors as it becomes clear that the government’s horrendous mining tax mistake is affecting the sovereign risk of Australia.

Australia’s currency and shares would have been expected to decline in line with the drop in commodity prices, but we are seeing panic selling of considerable proportions.

At this point I must add that the Australian Treasurer Wayne Swan vigorously disagrees with my stance on the mining tax and last night personally took me to task – which is his right – and I describe that development in a separate article.

Unfortunately the situation facing Australia gets even worse than a bear raid on our currency and share markets. I have been talking with some of the most senior bankers in the country and they say that the European sovereign risk crisis is going to make it more expensive for banks to borrow the vast sums overseas that are required to service Australian home mortgages and business loans.

Perhaps unfairly, the irrationality of the mining tax has lumped Australia into the high sovereign risk basket in the eyes of those overseas institutions who lend to our banks. In particular, the Japanese banks who have been prepared to borrow yen at token rates and lend to Australian banks in Australian dollars, have taken a beating which they may take years to forgive.

At the beginning of this month the Australian dollar was trading around 92.65 US cents. It has fallen an incredible 9 per cent in just under three weeks. Losses in yen have been worse. Over the same period the much maligned euro has fallen just over 6 per cent against the American currency.

The Australian share market has fallen much more steeply than the US share market and our declines have been much more akin those experienced on European exchanges, confirming that were are seen as a crisis country.

The government clearly not only did not understand the effect of the tax on the mining industry but had no concept that when you take such an action at a time when the globe is extremely nervous, there is grave danger that it will trigger a bear raid on Australia shares and currency and endanger our bank borrowing. And that’s what has happened.

Bear raids can fade, especially when there is a degree of irrationality. We are not in the same position as the PIIGS. But once a bear raid gets under way it is multiplied by heavy shorting and panic selling and it can take shares and currency very low. In Australia’s case we are probably overdue for a swing back, but if that swing back does not hold and we start sliding again, then we will fall even further. Remember that unhedged overseas investors are not only being hammered by the fall shares, but the currency as well. Our share market is one of the worse performers in the world to unhedged overseas investors.

The cabinet needs urgently to drastically change the RSPT. Changing it will not repair the damage because confidence has been lost, but it will stop an all-out collapse. Superannuation savings in Australia have already been hit. Another big blow would be devastating.

[Blackee]

Taken from HeraldSun online

Chinese will love new mining tax: Forrest

THE Federal Government's super-profits tax will result in Chinese mining companies gobbling up Australian assets, Fortescue Metals boss Andrew Forrest says.

The mining boss's strong new line of attack in the tax debate was immediately endorsed by the coalition on Tuesday.

Mr Forrest says Labor's proposed resource rent tax will be good for Chinese investors.

"You will see a wholesale change in the resources sector ownership from the mums and dads of Australia to Chinese foreign governments or other foreign governments because they're the only ones with the money now," Mr Forrest told Sky News.

Australian miners were having their ability to compete for assets "taken away by one badly thought out, stupid tax''.

"It (the super-profits tax) opens up the door to foreign investors from all around the world to come in and buy Australian assets because Australians can no longer afford to.''

Senator Joyce said that, under the new regime, Chinese state-owned enterprises would try to transfer profits back to China.

"They wouldn't care about our super-profits tax because they'd be looking of all the ways to get out of having a profit in Australia," he told Sky News.

"They'd just sell it to themselves back in China."

Chinese companies looked for long-term returns, which could be "manipulated".

The Rudd Government's new tax would unfairly punish Australian mining companies that actually traded in the minerals they dug up, Senator Joyce said.

"I haven't seen anything as silly as this since Hugo Chavez nationalised the major oil companies in the Orinoco basin in Venezuela."

Earlier on Tuesday, Fortescue claimed its share price could fall due to the Government's proposed tax.

Chairman Herb Elliott also took a swipe at Labor for failing to consult the mining industry "on this poorly thought out proposal".

"It's now clear that this means they have dropped on the Australian people a socialist style funding and tax device where the government is now your silent partner," he said in a letter to investors.

[Blackee]

Economists back Government's mining tax

Taken from HeraldSun online

A GROUP of 20 leading academics and economists has backed the Rudd Government's proposed mining tax, saying the sector should fork over more of its profits.

The group, including the former chairman of the Australian Competition and Consumer Commission Allan Fels, issued a statement today supporting the proposal to claw back 40 per cent of mining's super profits.

They say the ongoing debate over the tax has been dominated by misinformation.

But they agree it is still appropriate for the big miners and Government to negotiate the finer details.

"Mining is different to other industries in that it uses and depletes natural resources," the group said.

"Some return on those resources should flow to the Australian public.

"The existing royalty system reflects the fact that it is desirable to levy a charge for access to publicly-owned mineral resources, in addition to normal corporate income tax."

The group said the move was consistent with effective economic strategy.

"They (the miners) are paying the wrong kind of tax," Dr Fels told ABC Radio. "Having royalties on production actually deters production."

The University of Queensland's John Quiggin was critical of the federal opposition's stance on the tax, especially claims it would lead to higher food costs.

"That's about the least defensible," he said. "There's no reason at all to think that the tax is going to affect the world price of these minerals, and therefore that that's going to feed in any way into Australian consumer prices.

"It certainly is depressing to see this kind of scare tactic put up, it really is just distorting the debate."

A bigger tax is acceptable - Minerals Council

The group won backing for a bigger tax on profits from the Minerals Council of Australia.

"The concept's fine, we agree with the economists that the concept's fine," chief executive Mitch Hooke told ABC Television, adding the council put a profits-based tax system on the table during the Henry tax review process.

The council's beef with the Government was with "the practical implementation" and design of the resources super profits tax.

Mr Hooke accused the Government of rejecting mining industry overtures for genuine consultation on the tax.

"It's a bit rich to be out there saying they want to consult with us now and then limiting the nature of those consultations."

The Government has ruled out giving ground on the 40 per cent level or rate at which it cuts in.

Mr Hooke said miners and the Government were a "fair way away unfortunately'' from reaching an agreement on the tax.

He took aim at Labor's approach, saying he had never seen any Government in his 20 years' experience in Canberra "pontificating from the mountain top" without consultation with industry.

Criticism of tax is nonsense - Government

Finance Minister Lindsay Tanner rejected Mr Hooke's criticism describing it as "total nonsense".

"Mitchell would say that, wouldn't he?" he told ABC Television.

Mr Tanner said the Government was unlikely to reach agreement with the entire mining sector on any point.

"There's lots of different kinds of companies, some of them actually benefit from our proposals.

"I don't think we're going to get the whole sector to sign up ... no matter what."

Mr Tanner said the consultation process was not like a negotiation between an employer and a union.

"This is the Government of Australia, and the parliament of Australia making decisions about Australia's tax system.

"We are negotiating about detail, but this is not about some kind of deal behind closed doors with the resources sector."

Tax needs to be tweaked - Xenophon

Independent senator Nick Xenophon said the tax needs a lot more tweaking before it benefits all Australians, especially the interests of small miners.

"The Government should be listening to those small emerging miners as much as, if not more than, the big miners," he told reporters in Canberra.

"But the industry should pay more, without killing the goose that lays the golden eggs."

Nationals Senate leader Barnaby Joyce openly dismissed the open letter.

"It wouldn't be surprising in a globe of about six billion people that you could find a few people to support the mining tax," he said.

The Government was "mad'' to impose a greater levy on the industry in a time of on-going global financial concerns.

"The biggest issues coming before us is the global sovereign crisis - which is something by the way I was mocked for talking about earlier on - but it's here now," he said.

He told Prime Minister Kevin Rudd to take a "sanity pill" and reconsider the tax.

[Blackee]

Xstrata freezes $686m projects due to super profits tax
Taken from Heraldsun - 3 Jun 2010

SWISS mining giant Xstrata has suspended $586 million on Queensland projects involving 3200 potential jobs due to the Resources Super Profits Tax.

"The RSPT has created significant uncertainty for the future of mining investment into Australia and would impair the value of previously approved projects and exploration to the point that continued investment can no longer be justified,'' Xstrata chief executive Mick Davis said in a statement today.

The expenditure cuts relate to the $6 billion Wandoan thermal coal project in the Surat Basin and a $600 million extension of the Ernest Henry copper mine at Cloncurry.

Xstrata said it would suspend $400 million of expenditure on a shaft underground mine project at the Ernest Henry site, and $91 million in early works and design of the Wandoan project.

Another $82 million in exploration and $13 million of drilling and expansion projects for the Wandoan project is also suspended.

Approximately 60 contractor jobs would be immediately cut at the Ernest Henry copper mine, Xstrata said.

It said the decision to suspend these actions, following Xstrata's review of planned investment since the RSPT's announcement early last month, placed the potential creation of 3,250 jobs at risk.

The RSPT would significantly impact the value and cashflows of both the Wandoan and Ernest Henry projects, Mr Davis said.

"The impact of the tax eliminates the net present value of the Wandoan coal project almost entirely and substantially reduces the value of the Ernest Henry underground shaft project,'' he said.

"The two projects involve significant risks and total capital investment of over $6.4 billion.

"Neither will be viable if the RSPT is imposed.''

The suspension of these investments makes the two projects less likely to proceed, and compromises Australia's ability to benefit from future commodity price rises, he said.

Xstrata continued to seek "meaningful consultation'' with the federal government on its key concerns with the RSPT, Mr Davis added.

In the meantime, Xstrata had an obligation to make business decisions in response to changing conditions, he said.

``I knew this was coming,'' independent MP Bob Katter said.

``I have been desperately afraid and now the evil day has come.''

Mr Katter said 3200 potential jobs would vanish as a result of Xstrata's decision.

"Unfortunately for me a significant proportion is in my home town of Cloncurry," he said.

The expenditure cuts relate to the $6 billion Wandoan thermal coal project in the Surat Basin and a $600 million extension of the Ernest Henry copper mine at Cloncurry.

Xstrata said it would suspend $400 million of expenditure on a shaft underground mine project at the Ernest Henry site, and $91 million in early works and design of the Wandoan project.

Another $82 million in exploration and $13 million of drilling and expansion projects for the Wandoan project is also suspended.

About 60 contractor jobs would be immediately cut at the Ernest Henry copper mine, Xstrata said.

It said the decision to suspend these actions, following Xstrata's review of planned investment since the RSPT's announcement early in May, placed the potential creation of 3250 jobs at risk.

Mr Katter said the Ernest Henry mine was always a very marginal prospect but mine managers had been able to convince Xstrata to proceed.

"It was a brilliant win for them and a great achievement for Australia,'' he said.

"Now those announcements have been knocked on the head and I am not the slightest bit surprised.''

Mr Katter said the super profits tax had removed the small margin that allowed some mines to be viable.

"Suddenly the opportunity for profit in the good years has been removed,'' he said.

"If the opportunity for good profits in the good years is removed, they are most certainly not going to hang in on something that is going to make very big losses in the bad years.''

Mr Katter said the government would have to compromise on the tax.

[Blackee]

PM Kevin Rudd holds out olive branch to mining companies over tax
Terry McCrann From: Herald Sun June 11, 2010 12:00AM

THE Rudd Government will announce major changes to its proposed resources super profits tax today or tomorrow.
The changes will go some way to meeting the general objections of the mining industry.
They are specifically aimed at helping coal seam gas projects in the key battlefield state of Queensland, where the coming federal election will be won or lost.
The changes might be aimed at splitting the industry, so the Government gets sufficient support to enable it to go to an early election in August.
The core change will be to make the proposed tax more like the existing Petroleum Resource Rent Tax.
The Government is going to dump the 40 per cent underwriting of losses and lift the threshold profit rate at which the tax kicks in from the long-term bond rate of around 6 per cent to something above 10 per cent.

Crucially, it is going to put coal seam gas projects into the PRRT - theoretically allowing them to compete not only with normal natural gas, but with oil and gas tax regimes internationally.
And it is going to take quarries and gravel out of the tax, to meet fears the tax would force up the price of building and so actually feed into the cost of ordinary houses.
These changes will blunt some of the attacks - one of the strongest critics, Andrew "Twiggy" Forrest, was surprisingly positive and conciliatory after his meeting with Prime Minister Kevin Rudd yesterday.
But they do not address some of the biggest worries of resource groups.
BHP Billiton CEO Marius Kloppers said a mining version of the PRRT would be "only slightly less flawed" than the original proposal.
It would still not address the two over-riding problems with the proposed tax.
The first was sovereign risk - that suddenly Australia had become a riskier place in which to investment.
The second was simple competitiveness - companies would switch exploration efforts and spending to countries with lower tax rates.
A key issue was the way the proposed tax acted retrospectively on existing projects, where much of the cost of developing them had been written off, so the tax would impact even more punitively.
Any proposal that failed to address this would leave the tax still unacceptable, Mr Kloppers said.
A one-size-fits-all tax also failed to understand how different minerals operated under different tax regimes around the world.

[Blackee]

A disgraceful attempt of politicising the Congo air crash by Wilson Tuckey.
Blamed the Mining Tax on the deaths of the Sundance Resource board of directors. Stated that if the Government had not increased the tax, the directors wouldn't have been flying around Congo.

Very poor form!!

[Karl Lijnders]

Typical Wilson Tuckey!

What a sick freak.

I think this whole scheme is what is going to cost the government power in the next election and Kevin Rudd is just atrocious, in hiding, not facing the media or doing any interviews to answer the hard questions. Only comes out when there is good news.

Over it.

[Blackee]

BHP Billiton suspends mining tax ads after Gillard comments
From: AAP June 24, 2010 1:28PM

BHP Billiton says it is encouraged by new Prime Minister Julia Gillard's commitment to open the doors to miners, and will immediately suspend its advertising campaign against a controversial tax proposal.

"We are encouraged by the comments of new Prime Minister Julia Gillard, that her government will open the doors for negotiation with the objective of achieving consensus,'' the world's biggest resources company said.

"The industry has consistently been calling for the Government to take the time to properly engage on all aspects of the tax, and we welcome the opportunity to do so.

"In response to the new prime minister's request, we have immediately asked our agencies to suspend all advertising as a sign of good faith,'' the company said.

"We look forward to working with the Government in this new way to find a solution that is in the national interest,'' it said.

[Onetahuti]

Wonder how long Gillard will go on with the facade of wanting to negotiate over the RSPT before her true colours come out. If it is scrapped or significantly modifed it will destroy the future budget numbers where the government has already spent (promised) the $12B or whatever the figure is or push out returning to a budget surplus by years. It will also make Swan out to be completely wrong in magically pulling this tax out of the Henry review while rejecting most of the other 138 recommendations. Why was it pulled out in preference to the others? IMO the 'kitchen cabinet' thought the big bad miners were a easy political target the the muggins voter would agree were just that and the impact on the economy was less relevant, ie political survival.
Till now the facts have been patchy in coming out from both sides and that will probably remain the case. Gillard will not be wanting them to as she fights to save every seat the government holds, once again political expediency will be the victor.

[Blackee]

Mining tax rate slashed from 40% to 30% as Gillard strike deal
HeraldSun online - 2 July 2010

PM Julia Gillard has announced a revamped resources tax, saying "we've been stuck on this question as a nation for too long".

The Gillard Government has slashed the controversial mining tax from 40 to 30 per cent to resolve a bitter deadlock with the sector.

The government has also renamed the tax that was one of the key factors behind Labor MPs' move to topple Kevin Rudd.

It will be called the Minerals Resources Rent Tax, rather than the Resource Super Profits Tax.

But promised company tax cuts have been scaled back to pay for the deal.

Instead of dropping from 30 to 28 per cent, company tax will now only fall to 29 per cent.

Announcing the plans in Canberra this morning, Ms Gillard said the nation could now move on, with Australians getting a fairer share of mining wealth.

"We have been stuck on this question as a nation for too long,'' she told a press conference.

"Today we are moving forward together.''

The arrangements would deliver better returns for the resources that all Australians owned, and that could only be dug up once, Ms Gillard said.

It will end uncertainty and division, strengthen the economy and deliver sustained investment in infrastructure in mining communities, "maintaining Australia's standing as a competitive and attractive destination for investment," she said.

The "competitive tax rates'' would allow business to grow, she said

"We have a positive basis for trust and I believe we have established that this week.''

Former BHP Billiton chairman Don Argus will chair a policy transition group, Ms Gillard said.

The deal will also cut the number of affected companies from 2500 to 320, but focusing only on the iron ore and coal industries.

The oil and gas industries will be covered by the existing Petroleum Resources Rent Tax.

Miners will also be able earn profits of about 12 per cent before the tax kicks in.

The changes will cut revenue by $1.5 billion over four years.

The critical breakthrough came last weekend when Ms Gillard telephoned BHP Billiton chairman Jac Nasser and told him she was prepared to put every aspect of the controversial resources super profits tax on the table.

Previously, Mr Rudd had ruled key parts of the package to be non-negotiable, leading to a heated advertising war.

After attending the funeral of commando Benjamin Chuck in Cairns yesterday, Ms Gillard returned to Canberra about 8pm to approve the deal crafted by Resources Minister Martin Ferguson and Treasurer Wayne Swan.

The two ministers held three days of intensive talks with the heads of the three biggest mining companies, Rio Tinto, BHP Billiton and Xstrata.

Mr Swan said talks had been "comprehensive'' as he confirmed all aspects were being negotiated.

"I don't intend to put any boundaries around those discussions,'' he said.

The mining tax row was one of the reasons cited by Labor MPs for taking the extraordinary step last week of overthrowing Mr Rudd in just his first term as prime minister.

The deal will further revive the Government's prospects as a federal election aproaches.

On her first day as Prime Minister, Ms Gillard offered an olive branch to the miners by announcing the Government would pull its RSPT advertising.

Mr Swan said Ms Gillard's entry into the debate had been cricial.

"I think it's fair to say that her intervention changed the tone of this debate and has led to this breakthrough," he said.

The deal comes after repeated statements by Mr Swan and other senior Government figures that the 40 per cent tax rate was not negotiable.

But Ms Gillard said the deal was a breakthrough rather than a backdown.

"I've learned across my life is that you can work best if you get people around a table and get people around a table and have open, frank discussions," she said.

"At the end of the day, you will never please everybody. And we are not suggesting that this package will please everybody.

"But I think what this has proven is the benefit of respectful conversation and frank talking."

The deal does not affect the Government's ability commitment to bringing the Budget back into surplus within three years, she said.

When it announced the tax as the centrepiece of its response to the Henry Tax Review on May 2, the Government said it would start in July 2012 and raise $12 billion in its first two years.

The money would be used to pay for a company tax cut, give small business a $5000 instant tax write-off, boost superannuation, pay for a standard $500 tax deduction to be introduced and fund a 50 per cent tax discount on interest from bank accounts.

Mr Swan warned those promises would only be funded from the mining tax and if the revenue was cut promises would be scaled back.