Facts about the RSPT.

[Guest]

http://www.theaustralian.com.au/busi...-1225874550046

THE Australian economy grew at a much slower pace in the first quarter than at the end of last year as the withdrawal of Kevin Rudd's economic stimulus to combat the GFC, surprising weakness in business investment and sluggish growth in export volumes took some of the steam out of activity.

But economists say the moderation in the $1.2 trillion economy will be short-lived as firms continue to plan significant investment, especially in the mining sector, while a substantial upswing in commodity prices is already washing through the economy.
__________________________________________________ ______________

If the RSPT was going to be sooooooooooo detrimental to the mining industry, investment in it would be the first casualty. Except economists are predicting "significant investment" is coming into the mining industry not leaving as the mining execs and lying farking libs would have us believe!

Just one example of the mining execs lying through their fat teeth? No, if you read the latest top 200 rich list in Forbes magazine, 6 of the top ten in Australia all mining magnates. And even during the GFC, mining companies and their execs increased their net worth by the billions, not millions, billions!!

This is one industry that can take a bit more taxing!

Chook.

[Kingbilly]

Chook,
can you believe a journalist ?

Not saying you are right or wrong, but to me calling up an example of mining execs lying against something written in a newspaper aint exactly good logic.

Execs don't take their truth serum as often as they should, but no one makes up facts and publishes things without the need for truth as a journalist of any political persuasion.

[stephenj]

i dont blame them for lying, oops thery might have to pay a fair shake of tax, how un australian, even their ads are a tax deduction atm!

[Guest]

Chook,
can you believe a journalist ?

Not saying you are right or wrong, but to me calling up an example of mining execs lying against something written in a newspaper aint exactly good logic.

Execs don't take their truth serum as often as they should, but no one makes up facts and publishes things without the need for truth as a journalist of any political persuasion.

It's not a journalist I am believing KB, the quotes come from three economists from AMP, UBS and the Commonwealth bank.

Chook.

[Guest]

It's not a journalist I am believing KB, the quotes come from three economists from AMP, UBS and the Commonwealth bank.

Chook.

Lol

How many economists are there in the world and how many different points of view do they have?

[Guest]

Lol

How many economists are there in the world and how many different points of view do they have?

I don't care how many economists there are in the world as it's irrelevant to the topic, kinda like you.

What I do care about are the opinions of Australian economists regarding the impact the RSPT will have on the mining industry as opposed to the spin we have been feed by the mining lobby and the Libs.

If you can generate enough brain power to provide a related comment on that go for it, otherwise continue your standard routine of being completely irrelevant.

Chook.

[Guest]

I don't care how many economists there are in the world as it's irrelevant to the topic, kinda like you.

What I do care about are the opinions of Australian economists regarding the impact the RSPT will have on the mining industry as opposed to the spin we have been feed by the mining lobby and the Libs.

If you can generate enough brain power to provide a related comment on that go for it, otherwise continue your standard routine of being completely irrelevant.

Chook.

As I said economists have different points of view

http://www.crikey.com.au/2010/05/25/...alian-economy/

Tuesday, 25 May 2010 / 7 comments
Ask the Economists: What impact will the RSPT have on the Australian economy?
Crikey intern Matt de Neef
Kevin Rudd isn’t winning any popularity contests of late and his Resources Super Profits Tax (RSPT) might not be helping the cause. According to the RSPT announcement document, the RSPT will force mining companies to pay 40% of their profits to “ensure the community receives a more consistent share in the returns of Australia’s non-renewable resources”. The tax has attracted criticism from the opposition, with Tony Abbott promising to rescind the tax should the coalition return to government later this year.

Since the government announced the RSPT, several large mining companies have ramped up the rhetoric about putting their Australian projects on hold. Rio Tinto’s proposed $11 billion venture into Western Australia’s Pilbara region has apparently been shelved with Fortescue also putting two major expansion projects on hold while details of the tax are fleshed out.

Debate about the tax continues to play out in the media,while voters are left scratching their heads and presumably to the surprise of the government, taxing the big old rich mining companies hasn’t given them any traction in the polls.

To cut through the confused commentary and politics of the RSPT, Crikey boiled it all down to a simple question for four of Australia’s leading economists:

“In your opinion, what impact will the new Resources Super Profits Tax have on the Australian economy?”

Stephen Walters, chief economist, JP Morgan: The debate over the RSPT already is having an impact on the Australian economy and financial markets, including the value of the Australian dollar. The extent of the “damage” is hard to quantify, with the truth somewhere between the two extreme positions currently being debated — the government’s assertion that the new tax will boost investment, and the mining industry’s position that the tax will destroy Australia’s golden goose.

Some mining investment already has been affected, which may cost jobs, partly because the real world of investment decision-making does not always correspond with what happens in theory. Indeed, despite what the economics tells us, in the real world of risky mining investment and a finite supply of capital, not all positive net present value (NPV) projects get approved and, more importantly, funded.

As far as international investors are concerned, the government’s announcement of the new tax has added to the weakness in the Aussie dollar, albeit at the margin, because it changed the risk parameters associated with investing in Australia. Many global investors trade the market first, and ask questions later. The lingering uncertainty over the structure of the tax, and the sometimes shrill tone of those making the opposing arguments, is only making things worse.

Shane Oliver, chief economist, AMP Capital Investors: Taking the Resources tax together with the other announcements around the Henry review and the Budget — notably the cut to the company tax rate and measures to further boost savings — I think the whole package should be positive for Australia over the longer term.

However, I am not in a position to assess the competing claims of the mining sector and the Government regarding the impact of the tax but in the interest of ensuring that we don’t damage the prospects for the Australian resources sector over the long term, and foreign investors’ perceptions of Australia as a reliable low risk and competitive global provider of commodities, I think there is a case for both sides to compromise on the tax. This is particularly the case given the continuing uncertainty regarding the global economic outlook and the role the resources sector has played and can play going forward, in providing a bit of a buffer for the Australian economy.

Steve Keen, Associate Professor of Economics and Finance, University of Western Sydney: Firstly, the definition of super profits in the announcement document is an example of how utterly naive conventional “neoclassical” economic theory is about real industry, and how much damage neoclassical economists can do when they are allowed to fiddle with the real world. They imagine that marginal costs of production exceed average costs: that the last tonne of ore extracted costs more to mine than the previous tonnes.

Yet almost 200 empirical studies have shown that this isn’t true: for over 90% of industries, average costs exceed marginal costs. Neoclassical economists ignore this empirical fact because it would stuff up their textbook theories — in fact, most of them don’t know this empirical fact, even though the data is readily available Marginal cost pricing would send most companies bankrupt.

Though I support the concept of a tax to capture some of the earnings from mining for the Australian public, this is a naive, neoclassical notion that can clearly do more harm than good.

Secondly, I agree with Malcolm Fraser’s comments on last night’s Q & A that the real debate should be about securing more of the value added from our mineral resources — a debate that did occur some decades ago but has now died out.

Thirty years ago, the then Gina Hancock ran an ad in The National Times for her father’s 65th birthday which had the lines: “There’s nothing wrong with Australia. There’s plenty of wealth in this country. All it takes is people with the guts and imagination to dig it up and sell it.” Sadly, that “wealth is a hole in the ground” attitude won out over developing Australian industry, and the best we can now do is debate how much we should tax the profits from mining.
Dr Ron Woods of www.roneconomics.com.au, independent funds manager: Whatever the merits or demerits of RSPT the timing of it is wrong. Whether real or imagined, the announcement has drawn undue negative attention onto Australia at a time when markets are especially skittish about any change in the sovereign risk of various countries. Thus this is likely to cause some negative assessments of the economy’s prospects and as these tend to become self-fulfilling it is likely to be a drag on the economy.

Not that I'd place much credence in what ecomists say as 99% of them didn't see the GFC comming.

[Guest]

And yet another opinion from a economist


Forecaster brands resource tax modelling faulty

http://www.theaustralian.com.au/busi...-1225874749243


Jennifer Hewett From: The Australian June 03, 2010 12:00AM

ONE of Australia's most respected economic forecasters, Chris Richardson, has demolished the intellectual and economic modelling behind the government's resource super-profits tax, effectively telling Treasury it got it badly wrong.
Mr Richardson, chief of Access Economics, said the tax would slow the development of new projects and while minerals might not be mobile, investment in them certainly was.

He said the prospect of the tax raising mining output -- as the Henry review predicted -- would take 50 to 100 years and would occur only once Australia had returned to its initial relative position on the global cost curve.

The assault on the fundamental logic of the tax will seriously embarrass the government and the architect of the tax, Treasury secretary Ken Henry, given their repeated claims that their model will not deter investment and the mining industry is merely running a fear campaign.

According to Mr Richardson's analysis, this also presents a very big problem for investors. He said that as a result of the new tax, the effective tax rate for Australian shareholders paying the top personal rate would be 67.9 per cent.

"Even superannuation funds -- otherwise lightly taxed -- will pay marginal rates ranging from 40 per cent to 49 per cent. The matching additional marginal tax rate paid by foreign investors will be up to 80 per cent and could be more."

Mr Richardson, in a speech to the Minerals Council of Australia, said the tax would slow greenfield development by cutting the return for Australian development.

"Miners -- indeed all businesses -- put their money where after-tax returns are highest," he said. "As the RSPT more than doubles the tax take in royalties, that affects after-tax returns on greenfield mines."

This would push investment in greenfield developments to countries such as Canada, Indonesia and Brazil as substitutes for what was to be a very highly taxed activity in Australia.

Enthusiastically received, Mr Richardson targeted the modelling done by Econtech, saying it was implicit in this that there was no difference between resource rents and super-profits.

"There is no practical way to isolate 'rents' on minerals from the effort to extract them," he said.

"The upshot is that miners are being taxed on some of their normal profit as well as any super profit. That's a problem. Any income that's not resource rent but is taxed as though it is will become among the most highly taxed types of income in Australia."

Mr Richardson also warned that the tax ran the risk of producing a "perverse outcome", delaying Australian mining development for moderate returns to the public, despite notably increased taxes on the profits of miners. His argument undercuts the claim that it will preserve more of the benefits of mining for later generations.

[Guest]

Not sure what you’re trying to achieve rcptn unless you are agreeing with me? Your first post and the opinions of those economists reaffirm what I said originally that this tax won’t be the big bad the mining lobby and libs are claiming.

And in your second post, Chris Richardson talks about the ramifications of the application of the tax on shareholders, but doesn’t say the tax itself will be bad for the mining industry.

The problem as I see it is with the royalties scheme. It hasn’t changed in line with the increase in the amount of mining taking place. It’s a flat rate paid to the states where the mining is taking place. That is the issue here. The government wants to replace the royalties scheme with a tax on the amount of mining that takes place, not a flat rate on where the mining take places.

Chook.

[Guest]

One of the Worlds biggest banks reduces its shareholdings in Australian mines due to RSPT.

http://www.theaustralian.com.au/busi...-1225875236516

JPMorgan cuts BHP, Rio stake because of proposed resource super-profits tax Matt Chambers From: The Australian June 04, 2010 12:00AM

ONE of the world's biggest resource fund managers has sold down a quarter of his BHP Billiton and Rio Tinto holdings because of Kevin Rudd's proposed 40 per cent tax on mining profits, which he described as a "wake up call".
JPMorgan Chase's Ian Henderson said Rio had been his biggest investment, about 4.5 per cent of the $US7 billion ($8.2bn) of resource assets under his control, but he had reduced his holding by about $US100 million.

He said also that he had made a "reasonably significant" reduction in his holdings of Fortescue Metals Group because of the proposed tax, but the JPMorgan resource funds had increased their holdings in gold miners.

"I'm sorry to say we've reduced our Australian exposure," Mr Henderson told Bloomberg.

"It's been a wake-up call, frankly. I had not thought that the changes in Australia would be quite as drastic as they are proposed to be."


Mr Henderson, who is based in London, manages JPMorgan's Global Natural Resources fund.

"It clearly does reduce the attractions of developing new projects in Australia and indeed investing in Australian-based mining ventures," he said.

"It has made people aware of the potential for these industries to be used as milk cows by governments. That has altered the risk profile for the mining industry probably for quite a long time."

Mr Henderson's comments back up claims from international and local mining companies that their big shareholders are seriously worried about the negative effects the tax will have on investments in Australia.

Xstrata chief executive Mick Davis said the government's planned tax changes meant mining projects in Australia would now need a higher rate of return to balance the added uncertainty.

"Investors will also expect higher project returns to justify the increased risk of investing in Australia," he said.

Rio chief Tom Albanese said yesterday on Sydney radio 2GB that he believed the mining tax had weighed on his shares.

But a look at the performance of the world's top-five miners since the tax plans were announced early last month does not back the claim.

Rio and BHP, with falls of 2.5 per cent and 4.5 per cent, respectively, have outperformed Vale, down 7.5 per cent, Xstrata, down 6.8 per cent, and AngloAmerican, down 5.9 per cent.

Those three have less Australian exposure than BHP and Rio.

Mr Albanese said he felt like he had been "sucker-punched" by the Rudd government on the tax.

"Over the past year, we have been assured that we would be given the opportunity to provide input," Mr Albanese said.

"And I felt like I got sucker-punched when the thing came out (without any consultation)."

He emphasised the strength of the Australian economy, compared with the rest of the world, during the global financial crisis.

"I've been travelling all over the world last year, in the depths of the recession, and the only place anywhere in the world where people were actually in restaurants was in Australia as they were the only ones in the world that had any money," he said.

[Fairfax]

http://youtu.be/H4PcQfz0MfU

This is hilarious!