abc four corners hatchet job, page-255

"The biggest threat to soverign risk is that we sell the farm to foreigners""


"Selling the farm" is exactly what the RSPT will accelerate and an additional reason why it is potentially so damaging to Australia in the near future. You offer a patriotic post, however you are missing an extension of your thoughts.... Some thoughts that are real concerns of other strong patriots of Australia.

Companies who must justify use of capital to return maximum profits to shareholders will be forced to sell off undeveloped reserves and operations in order to allocate capital "more effectively" elsewhere (ie: to projects overseas where profits are not excessively scalped by Government RSPT schemes).

In the mining and investment game, the majority of companies (including Xstrada), invest to achieve and maintain profits in an operation and an "investment portfolio".

Even for the strongly patriotic companies trying to do their best for Australia, development capital is usually still required from overseas in order to develop large mines. This means solidly justifying development of a mine to potential investors, based on above average profit return. This automatically becomes a far harder sell to investors with a 40% RFPT in the framework when compared to other potential offers that investors already have.

As a result, many will be forced to sell leases and reserves, because profit based investors cannot justify development in a "post-RSPT profit" environment and will not offer their cash. Better deals are available elsewhere in the world by providing capital to projects where lower taxes are applied and investment dollars get better overall profits.

HOWEVER, specific countries (eg: China and it's Government owned companies) are largely investing in Australia for long term country growth, strategic reasons. A plan that is quite different intentions to other countries. Feeding their downstream processing and voracious urban development needs is viewed as the primary consideration for purchasing mines over and above profit considerations.

With profit based miners and investors suddenly walking away from mines and leases in droves, guess who then, predominantly ends up buying Australia ON THE CHEAP during the fire sale. Aussie miners will be forced to sell the farm under a high and poorly structured RSPT.

This is in fact the bigger picture of this tax and why the RSPT is bad for Australia!

(We can discuss the merits of international investment and ownership some other time as an entirely separate issue.)