Alan Kohler in his weekend briefing for the always excellent Eureka Report today, fwiw:
"I really don’t know whether this is an efficient way to tax mining companies or not. The Petroleum Resources Rent Tax doesn’t seem to be holding back LNG projects on the northwest shelf and no one complains about it, and economists I respect all get up and wisely purse their lips and explain patiently that a resources rent tax is the best way to go.
Fine. Whatever. But as Peter Costello said on Business Spectator this week, this one adds up to 57 per cent! And when you announce that you’re going to take more than half the profits from investments that could be made elsewhere, you’d better make sure other countries do it too.
And they’re not going to, so guess what? We have suddenly a relative sovereign risk problem. On top of a 10 per cent valuation adjustment to our mining companies’ share prices because the new tax will apply to existing projects, bankers are taking Australia off their lists of preferred locations for lending on resources projects - and everything else for that matter - because they think that the politicians here have lost their minds and gone anti-business.
So suddenly it’s impossible to finance a new mining project. Companies that have projects all over the world, like Rio Tinto and BHP Billiton, simply shuffle ones in other countries to the top of their priorities list and displace the Australian projects, but those with only Australian orebodies, like Fortescue Metals and ERA, are stuffed. Those that are listed here and only have foreign mines, like Lihir Gold, are big winners.
It’s all pretty disheartening in the midst of a difficult period of global deleveraging. The tax will not get up in its present form, but over the next 18 months till the RSPT bill is supposed to be presented to Parliament, we could be left behind."
This quote has been republished with the permission of Eureka Report.
