What Others Say about the Super Tax

See the comments below from finance and tax experts, workers, contractorsand other industry leaders...even some worried ALP candidates.

David Murray Chairman of the Government's $61 billion Future Fund

Said the tax proposal had several significant flaws, robbed future generations and represented a risk to Australia's international investment reputation. He called for changes or fir the tax to be abandoned.

Mr Murray said that if Australia could not "achieve a design that does not penalise the existing projects - that's a sovereign risk issue and a design that does not discriminate between recurrent spending and long-term intergenerational wealth creation - if those things can't be done, the tax should be abandoned". (source: Business Spectator, 4 June 2010)

John Ralph, Respected head of the Ralph Review of Business Taxation

If you increase taxes, you reduce investment and reduce jobs in the future...Once you introduce retrospectivity into, particularly into international transactions, then you will have sovereign risk priced into all future transactions for quite some time and this has implications for the Australian community because as a nation we will pay more for the capital that we need to import as a capital deficient nation and ...will have implications not just for the mining industry but for all Australians because the cost of borrowing will rise. (source ABC AM 25 June 2009)

I am perplexed about the apparent lack of understanding by the commonwealth government of the long-term damage they are about to inflict on the Australian community if the proposed resource super-profits tax is implemented as planned. (source OpEd John Ralph in The Australian 25 June 2010)

Chris Richardson, Access Economics, former senior Treasury officer, respected economist -

Access Economics analysis suggests mining output would suffer and would take 50 to 100 years to pick up, not the 10 years suggested in the KPMG Econtech modelling commissioned by the government.

Mr Richardson said the RSPT had been "modelled and marketed" as if the tax were perfect and would not distort investment. "There is no practical way to isolate 'rents' on minerals from the effort to extract them," he said. "That makes the RSPT a tax on effort and entrepreneurial expertise as well as a tax on mineral resource rents. The upshot is that miners are being taxed on some of their 'normal profit' as well as any 'super profit'."

"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 . . . The cost impact of the new tax will send some greenfield developments towards Canada, Indonesia, Brazil and other places." (source: AFR 3 June 2010)

Magistrate Dr Sue Gordon, respected WA Indigenous Leader, WA Training Board, Australian Employment Covenant:

"This is not just the mining companies' argument," Dr Gordon said. "It is the elephant in our room and it's affecting our future."(source: The West Australian 8 June 2010)

PeterCorish former President National Farmers Federation and Chairman Primeag:

The chairman of corporate farmer Primeag, Peter Corish, said the proposed resource tax was having an impact beyond the mining sector and could deter foreign investors from other industries.   “One of the overwhelming strengths they see in investment in agriculture in Australia is the lack of sovereign risk.  We’ve had comments made to us that the proposed tax will certainly undermine that.” (source:Australian Financial Review 4 June 2010)

Ross Garnaut Leading Economist and co-architect of the Resource Rent Tax concept:

Economist Ross Garnaut has called on the Rudd government to consider changing its proposed resource super-profits tax after questioning Treasury's key assumptions on guarantees for project losses and the cost of financing new projects. Professor Garnaut, Australia's leading public economist and the federal government's chief adviser on the emissions trading scheme, last night said it would be in the public interest for Treasury and the government to be "prepared to listen to the debate and to contemplate variations to their approach". (source: The Australian 21 May 2010)

"For my best interests, I would probably be better off voting for (Mr Rudd), because of my work, but I can't bring myself to," Mr Balmer said. He said the super-profits tax was a "shocking idea" which would cause price rises everywhere. (source: The Australian 7 June 2010)

John Sirca, Fencing Contractor Rockingham-Kwinana:

John knows a "bad tax" when he sees one. "I've voted Labor for 30 years but I've had enough. I'm disappointed in Rudd. There's the boatpeople and now this. I can't vote for them." (source: The Australian 7 June 2010)

Matt Morgan, Biomedical research editor, Glenelg North:

Thinks Australia shouldn't go out on a limb but instead co-operate with countries like Canada to implement similar tax regimes for mining. "Acting unilaterally is just going to drive the investment elsewhere," he said. (source: The Australian 7 June 2010)

Trent Baker – retrenched worker Wandoan mine project:

"Kevin Rudd doesn't realise what his new tax is doing to communities like ours; he is buggerising with people's lives and businesses," (source: Trent Baker quoted in The Australian 4 June 2010)

Brendan Ostwald – CEO Ostwald Construction Dalby:

said it wasn't just Xstrata's decision to suspend work on the Wandoan mine, but the uncertainty that had spread across the region because of the planned new resources tax.

"But there has been a ripple across the region, with projects being delayed and investors - mums and dads who bought houses to rent - all backing out. And if Wandoan doesn't go ahead, then it will mean a lot of other smaller projects won't go ahead." (source: The Australian 4 June 2010)

Steve Coughlan, Managing Director of contractor Byrnecut:

Mr Coughlan said the deal (to develop the shaft sink at the Ernest Henry copper mine in Cloncurry) would have resulted in 50 or 60 direct jobs for his company. Now, it's dead in the water.

"Unfortunately, the bureaucrats in Canberra seem oblivious to the effect of this (tax)," Mr Coughlan said. "They believe it's not costing jobs. Well, it is. It already has." (source: The Australian 4 June 2010)

Eureka Report Economics and Market Commentary:

This flight of capital is not just taking place among foreign investors. Wealthy Australian families are starting to sneak the odd million out of the country out of fear that Rudd will be re-elected later this year. Australia has gone from being regarded as the “miracle economy” to a seriously dodgy proposition.

You don’t need to look very far to see that the RSPT is having serious effects beyond the mining industry. Earlier this week the chairman of steel maker OneSteel, Peter Smedley, felt compelled to announce that the tax in its current form would – over time – put the Whyalla steelworks out of business (Source: Eureka Report 28 June 2010)

Dick Karreman Managing Director Karreman Group (Quarrying Company):

"When you drive home, the roads you're on come out of this quarry...The Gateway Arterial comes out of this quarry. When you walk into your house in excess of 70 per cent of that house comes out of one of these quarries.

"And the government wants to go and increase my tax bill by 100 per cent ... You are going to have to pay, the new home buyers are going to have to pay and at the end of the day no one can afford it." (source: Sydney Morning Herald 19 May 2010)

Lindsay Partridge, MD Brickworks One of Australia’s major listed building materials suppliers:

Says the new resources super profits tax will hit housing costs. “We are concerned that the new resource super tax is going to placed on building materials which will clearly increase the cost of all housing across Australia,” Mr Partridge said...”In a situation where we have a shortage of housing, the last thing we want to do is increase the costs. (source AFR 18 May 2010)

Credit rating agency Moody's:

Warned that Australia risked following Zambia, which was forced to abandon a similar windfall profit tax after only one year when its exploration industry collapsed.  "Other resource-rich nations such as Canada, Brazil and China may figure more favourably in global miners' plans if Australia enacts the RSPT," the agency said. (source: The Australian 19 May 2010)

Investment bank JPMorgan:

"The imposition of the RSPT would result in significant wealth destruction in the Australian mining sector and would only encourage speculative investment in marginal projects," the bank said. (source: The Australian 19 May 2010)

Stuart Wilson, CEA Australian Shareholders Association

While the tax in its current form is unworkable over the long term... Had the government bothered to go through the process of truly consulting with industry, it could have avoided the fallout it is now copping. Lowering the 40 per cent tax rate, increasing the profit threshold to better reflect risk, dropping the retrospective nature of the tax and ensuring a balance between federal and state levies are all major changes, but necessary ones. (source ASA OpEd The Australian 8 June 2010)

Robert Gottliebson Business and economic commentator:

“Unless this tax is dramatically changed (and I think it will be), Australia will become like New Zealand – a low growth country. There is a very good case that over the medium term the mining tax as it is presently constituted will reduce, not increase, taxation revenue.

“The government is right – we do have a national emergency and so does the Prime Minister. (source: Business Spectator 1 June 2010)

Even ALP candidates have concerns about the tax (while towing the party line)

WA's most high-profile ALP candidate, former state planning minister Alannah MacTiernan, has conceded the tax is flawed, though she says she unequivocally supports it. (Source AAP)

Chas Hopkins, ALP candidate for the seat of Cowan said "I am concerned that the rate of six per cent should be a bit more, there should be room to move on it and there needs to be negotiation," (source AAP)