Government Negotiations Must Commence from Rudd's Final Position
Perth 29 June 2010:
In a speech today to the Australian Financial Review’s WA Economic Outlook Conference, Fortescue Metals Group Limited (FMG) CEO, Mr Andrew Forrest, said new Prime Minister Julia Gillard must ensure her Government achieves a substantially improved position on aspects of the super mining tax compared to the position that was achieved with former PM Kevin Rudd immediately prior to his departure.
FMG was one of a number of companies which had been working closely with Mr Rudd’s office in the days leading up to his departure and achieved a position on the handling of the super mining tax which FMG wanted to see released as a discussion paper to the mining industry.
The key aspects of the revised position included:
- To reduce the retrospective nature of the tax by doubling the value of spent capital;
- An immediate write‐off for new capital;
- The taxing point for projects moved to the point of mineral extraction;
- Full transferability of super mining tax liability across projects within a ta paying group;
- Increase of uplift rate from 6% to 15% (FMG will continue to argue for an uplift of over 10% above a Company’s borrowing costs to protect small mining companies); and
- Removal of 40% Government guarantee – recognised as no value to the finance
- or mining industries.
Consideration of the above issues is vital, together with an open discussion on the headline 40% rate, if a true solution is to be developed for the industry.
It was during the meetings with Mr Rudd that Mr Forrest declared the original framework of the super mining tax was dead and buried. This has been FMG’s view since the tax was announced, and was reinforced by the discussions with the former PM and his office.
Mr Forrest said Ms Gillard’s Government would need to improve on the key aspects of the negotiations as noted above to achieve any forward progress of the super mining tax with the industry.
“It should never be forgotten that the existing design of the super mining tax meant Australia would pay more than double Canada’s tax rates, which would have seriously harmed the Australian economy as capital relied on to build Australian jobs would have fled the country,” Mr Forrest said.
“It would be a great shame if the finalised outcome of any negotiations between the Gillard Government and the mining industry were anything less than what was achieved while Mr Rudd was PM, otherwise his departure will be recognized as futile.”
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