gillard's rent tax treasure

I took particular note of the following sentence from the below article : ""and is confined to iron ore and coal means that most small miners will be fine.""

Maybe HEM management need to sure this up. ie bring out an amn that tells shareholders where it leaves them considering these changes?


http://www.businessspectator.com.au/bs.nsf/Article/RSPT-rent-tax-MRRT-BHP-mining-resources-pd20100702-6Y29R?OpenDocument&src=kgb

Robert Gottliebsen
Published 10:33 AM, 2 Jul 2010

If only former Prime Minister Kevin Rudd and Treasurer Wayne Swan had sat down with BHP chief executive Marius Kloppers when they received the crazy Ken Henry mining tax recommendation this whole issue could have been sorted out last April or May.

But as I will explain later in this piece, two months have since passed and there now awaits another unpleasant surprise for Henry and his now beleaguered treasury.

The final mining tax agreement is exactly what Kloppers has been suggesting which is why former BHP chairman Don Argus was prepared to go onto the review committee. I was frightened that explorers might be cut out of any deal, but the fact that the tax only applies to large ventures and is confined to iron ore and coal means that most small miners will be fine.

Moreover Argus' role is to look at future exploration incentives and almost certainly he and Resources Minister Martin Ferguson will suggest to Prime Minister Julia Gillard that there be tax deductibility for shareholders who subscribe capital for exploration companies. Ferguson had this included in the ALP's policy for the 2007 election but Swan and Henry spiked it replacing it with yet another idea that will not work.

I hope Argus and Ferguson will look at the oil exploration situation. The petroleum resource rent tax stopped wildcat oil exploration in Australia and exploration in this field needs to be started again.

Whyalla has been saved because the tax cuts off at the mine gate, and not the steel works as proposed under the resource super profits tax. Under the newly proposed minerals resource rent tax (MRRT), One Steel can use market values for the mine. And Olympic Dam is not in the MRRT net because copper and uranium are not in the tax. SA Premier Mike Rann will be over the moon.

By allowing companies to revalue assets and by changing the tax rates and calculation criteria plan there will not be major revenue flowing from the resources tax until well into the next decade, although no doubt we will have smoke and mirrors to try and say all is well with revenue.

Now the unpleasant surprise Gillard better go to the polls quickly because the global share market is telling us there is a slowdown in the global economy on ahead. We have already seen a significant slowdown in Asian manufacturing in the last two months and sharemarkets from Shanghai to New York and London are telling us that we are not looking at a rapid recovery, but rather (at best) a slowdown. Metal prices and the Australian dollar deliver the same message.

The 2010-11 federal budget is predicated on the reverse of what the sharemarket now expects, with Treasury forecasting global growth to rise to 4.5 per cent over the year and Australia to keep steaming along at a nominal growth rate of 8.7 per cent (reduced to 3 per cent by inflation and other adjustments). If Treasury is anywhere near right on their estimates the sharemarket is set for a huge rise. That's looking less likely each day that passes.

Australias reputation has been harmed by the Rudd-Swan bungle, but by sacking Rudd and reversing all the mining tax policies Gillard has repaired most of the damage. But if the sharemarket is right, we still have some storms ahead and more we were wrong signs will come out of Treasury. Finally here at Business Spectator we are proud to be part of the forces that caused Canberra to see sense. (An RSPT victory, July 2.)