New Oz PM

[nlagalle]

We'll see, we'll see.

If you don't I'll turn my faction on you...

 

[Flashback]

If you don't I'll turn my faction on you...

Turn your back just like everyone else

 

[nlagalle]

Turn your back just like everyone else

Can't you hear me sharpening my knife???

 

[Durin's Bane]

This aspect of mining companies not going ahead with new projects is one of the things that don't add up with their opposition to the RSPT. On the one hand the tax is unfair on existing project because new projects get tooich of an advantage. But on the other hand they aren't going to go ahead with these unfairly advantaged projects.

It certainly does add up. Wouldn't you reconsider investing say a lazy $5B (RTIO Pilbara Growth projects) or $10B (BHPBIO RGP5, RGP6, Quantum 1, Quantum 2) or $20 billion (BHPB Olympic Dam) if you had to pay RSPT on all returns exceeding the Government Bond rate?

As for the tax it'll be redone with industry consultation. That much is clear.

Only because Labor was facing a wipeout in WA and haemorrhaging in QLD... even with this "consultation" we'll see what happens.

 

[Hvr]

It certainly does add up. Wouldn't you reconsider investing say a lazy $5B (RTIO Pilbara Growth projects) or $10B (BHPBIO RGP5, RGP6, Quantum 1, Quantum 2) or $20 billion (BHPB Olympic Dam) if you had to pay RSPT on all returns exceeding the Government Bond rate?




Only because Labor was facing a wipeout in WA and haemorrhaging in QLD... even with this "consultation" we'll see what happens.

So is it true that the mining coys have just negotiated an increase in the amount of royalties paid to the states? If so a nice little reward for WA Liberals and the height of hypocrisy that mining coys will go bankrupt if they pay another cent in tax.

 

[medhead]

It certainly does add up. Wouldn't you reconsider investing say a lazy $5B (RTIO Pilbara Growth projects) or $10B (BHPBIO RGP5, RGP6, Quantum 1, Quantum 2) or $20 billion (BHPB Olympic Dam) if you had to pay RSPT on all returns exceeding the Government Bond rate?

I was referring to greenfields development not brownfields but now you mention it the "benefit" the miners were complaining about was related to the offsetting of capital costs against he tax. A nice big expansion is going to provide a big heap of capital cost.

Only because Labor was facing a wipeout in WA and haemorrhaging in QLD... even with this "consultation" we'll see what happens.

Actually no. That is the reason we have a new PM. The new PM will, IMO, address the faults in the process because that is how it should
Have been done to start with.

 

[drron]

So is it true that the mining coys have just negotiated an increase in the amount of royalties paid to the states? If so a nice little reward for WA Liberals and the height of hypocrisy that mining coys will go bankrupt if they pay another cent in tax.

No BHP and Rio lost the discount they had been receiving.Royalties are now the same as that paid by all other companies.And they fought it tooth and nail.

 

[medhead]

I asked Alanslegal a follow-up query on a post, I am not sure if you are putting words in his mouth or mine.

I'm putting words in my mouth to explain the reasons I think your question is irrelevant. Also to correct the words you put into the PMs mouth.

 

[11sjw]

So is it true that the mining coys have just negotiated an increase in the amount of royalties paid to the states? If so a nice little reward for WA Liberals and the height of hypocrisy that mining coys will go bankrupt if they pay another cent in tax.

They agreed to the removal of the Iron Ore discount to the royalty rate, ie they now pay the same royalty as all other miners (this discount was instituted in the 60s as IO fines were not valuable back then, they are now).

They also agreed to a one off payment of $350M and the state agreed to not object to a JV between BHPB and Rio Tinto.

Yes they pay more in royalties but Rio Tinto will get a cash injection from BHPB and BHPB will get what it covets, an increase in port capacity via the use of Rio's ports. The state will also see an increased revenue via higher royalty payments. Win-win-win.

Outside of that resources are owned by the states not Canberra.

The height of hypocrisy is plucking one item from a review of our taxation system and introducing it alone on the thought that it will go over ok with the electorate, making it retrospective on all existing mining projects and claiming it as non negotiable.

 

[medhead]

I guess you are saying that you believe that the stimulus was the only thing that allowed us to sidestep a recession. The stimulus was one factor, but other factors such as low interest rates, the China effect, and encouraging households to take on more debt via the (misnamed) first home owners grants.

My problems with the stimulus were its excessive size, and the poor targetting of some programs.

I'm certainly not saying that I believe it is the only thing that saved Australia from recession. I'd attribute most of that to China for Australia as a whole. But I do think that the stimulus did save a lot of areas within Australia from the worse hardships. WA and QLD would have been fine without the stimulus, but how much worse would western sydney have been?

I'd also say that our interest rates are high by international standards. 0 to 1% interest rates in the USA didn't help them.

For those that say debt isn't a bad thing, what are we running at currently? $100-$200B? When you're paying the monthly interest on that it can be measured in large infrastructure projects that don't get the go ahead. How that can be a good thing is beyond me.

It is the stimulus that I believe is a good thing and if we have to have debt to achieve that then that is also good. The fact is that we have a modest amount of debt. $100 to $200B is only about 10 %to 20% of GDP. The tax take in Australia is about 26% of GDP. This is certainly easy to manage. We can compare that to the USA that is running a deficit of something over 100% of GDP, iirc. The fact is that not even Howard could get rid of government debt, the government will always have to have some debt because bond markets depend on the existence of government bonds.

The reason they don't just pay it off is because it is only a modest amount of debt and to just pay it off would mean significant cuts to those very programs that you suggest could do with the interest money (health etc.)

[edit: Looking at my situation, I run about 60% debt to assets. That is good because it gets me an income, assets (the house), which also give my family a roof over their heads. It has also given me an opportunity to get a house now, instead of save up for 30 years and then buy a house. The cost of that opportunity is interest.]

But, despite my opinions above, I do agree that some of the stimulus projects were very poorly managed.

btw from the little bit I've read it seems that the first home buyers grant is having some interesting effects of the housing market now. Apparently first home buyers have stopped taking mortgages and have just about dropped out of the housing market.

 

[simongr]

My primary issue with comparison of government debt to corporate debt is that Corporations can use the debt they incur to generate higher returns. The interest cost is offset by the higher returns on the projects subject to the investment.

A government can't exactly do this. It isn't like they can spend money on a stimulus then expect higher tax revenue in subsequent years. All that can happen is that as the interest falls due then there is less money for projects/programs.

I have fundamental issues with governments taxing people at a higher rate simply because they can or because there is the money there to take. I think it is neither right nor moral.

 

[Dee Thom]

I have fundamental issues with governments taxing people at a higher rate simply because they can or because there is the money there to take. I think it is neither right nor moral.

Maybe an electronic debit tax of say 3.5/4 % may be the answer, with no other tax's either State, or Federal. Would also mean that Australia would be a duty free country, probably halve the P.S. as well..................

Cheers Dee

 

[NM]

Would also mean that Australia would be a duty free country

would that mean I don't have to walk through the duty-free shops at Sydney airport after clearing security/immigration?

 

[JohnK]

While there is no detail about how they are going to achieve it, the new PM has signalled a reduction in immigration.

That sounds like a good idea.

 

[Hvr]

No BHP and Rio lost the discount they had been receiving.Royalties are now the same as that paid by all other companies.And they fought it tooth and nail.

They agreed to the removal of the Iron Ore discount to the royalty rate, ie they now pay the same royalty as all other miners (this discount was instituted in the 60s as IO fines were not valuable back then, they are now).

They also agreed to a one off payment of $350M and the state agreed to not object to a JV between BHPB and Rio Tinto.

Yes they pay more in royalties but Rio Tinto will get a cash injection from BHPB and BHPB will get what it covets, an increase in port capacity via the use of Rio's ports. The state will also see an increased revenue via higher royalty payments. Win-win-win.

Outside of that resources are owned by the states not Canberra.

The height of hypocrisy is plucking one item from a review of our taxation system and introducing it alone on the thought that it will go over ok with the electorate, making it retrospective on all existing mining projects and claiming it as non negotiable.

And yet because money goes to their Liberal party mates they aren't screaming and whinging like cut cats.

Maybe there should be a reduction in the GST that is paid to WA because of their extra income? Yeah right like that will ever happen, they cry poor and demand extra money like all rich people. Sadly it is too politically dangerous to call them on their greed at the moment.

 

[drron]

And yet because money goes to their Liberal party mates they aren't screaming and whinging like cut cats.

Maybe there should be a reduction in the GST that is paid to WA because of their extra income? Yeah right like that will ever happen, they cry poor and demand extra money like all rich people. Sadly it is too politically dangerous to call them on their greed at the moment.

Now come on.The agreement was always due to run out at the end of this month.If your Labor mates had won the last election they would have got it eh!

 

[Smackbum]

Now come on.The agreement was always due to run out at the end of this month.If your Labor mates had won the last election they would have got it eh!

Greed IS good. Got it!

 

[Durin's Bane]

I was referring to greenfields development not brownfields but now you mention it the "benefit" the miners were complaining about was related to the offsetting of capital costs against he tax. A nice big expansion is going to provide a big heap of capital cost.

Still doesn't change the fact that when a company will seek funding for billions of dollars worth of projects the returns are severely impacted by a RSPT and hence places question marks over its viability.

Actually no. That is the reason we have a new PM. The new PM will, IMO, address the faults in the process because that is how it should
Have been done to start with.

So where was the PM who was formerly Deputy PM during the initial process? You know as well as I do consultation is only happening because Labor knows this issue has the potential to lose them seats. If these particular seats were safe there would be no consultation whatsoever.

 

[Durin's Bane]

So is it true that the mining coys have just negotiated an increase in the amount of royalties paid to the states? If so a nice little reward for WA Liberals and the height of hypocrisy that mining coys will go bankrupt if they pay another cent in tax.

You seem to forget the mining companies were relatively non-partisan in terms of leaning towards either side of politics until Krudd and his posse including the now PM decided to introduce this ridiculous new tax on a successful industry.

Maybe there should be a reduction in the GST that is paid to WA because of their extra income? Yeah right like that will ever happen, they cry poor and demand extra money like all rich people. Sadly it is too politically dangerous to call them on their greed at the moment.

"like all rich people"? Sounds like you're one of those Labor heartland folk who eats up the class warfare tactics used by Labor.

 

[Alanslegal]

Sorry I have been off-line for a day or two following my laptop crashing (and I'm on a 7 week RTW vacation). Cost 600BHT ~$24 to fix it at a computer shop in MBK @ Bangkok

Will read this later.