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ER
02-05-2010, 07:08 PM
Millions of Australians are set to reap higher retirement savings, funded by a tax on miners, as the Federal Government makes major changes to the country's superannuation system...
The Henry Review. A masterstroke or a (cause for a) stroke?
Please discuss.

Desmond
02-05-2010, 07:39 PM
I thought employers paid the superannuation. Or do they pay it and get reimbursed in this plan?

CameronD
02-05-2010, 07:44 PM
I thought employers paid the superannuation. Or do they pay it and get reimbursed in this plan?

I think the business tax rate is being dropped as "compensation"

I think 12% is too much for a business to pay. Id prefer a 3% mandatory employee contribution instead of the increase.

ER
02-05-2010, 07:47 PM
I thought employers paid the superannuation. Or do they pay it and get reimbursed in this plan?

They will continue to do so (pay for supper).
I haven't yet studied the review but of what I 've seen so far


A reduction in company tax from 30 to 28 per cent by 2015


Small business to benefit from company tax cut from 2012

and


The RSPT will be tax deductible.

the latter can be seen as a bit of an oxymoron, since we have a case of a tax being tax deductible!

Desmond
02-05-2010, 07:51 PM
They will continue to do so (pay for supper).
I haven't yet studied the review but of what I 've seen so farOK so they will pay more super and pay less in other areas that somehow will balance out with the miners getting taxed more.

I thought this was meant to make things simpler.

Basil
02-05-2010, 08:09 PM
I thought employers paid the superannuation. Or do they pay it and get reimbursed in this plan?
Employers pay. That's an extra 3% on payroll expense. As far as offset on company tax goes, it should be noted that company tax is paid on profit. One needs to make quite a profit to receive an equivalent offset. Companies not making a profit, or a marginal profit simply cop the super in the neck. Some mum and dad/ small business operators looking at this tonight will be no doubt wondering why they bother. Lefty government workers won't be contemplating this at all, except for sizing up a big juicy tick in the VOTE 1 KEV box.

Carry on!

Basil
03-05-2010, 11:32 AM
Employers pay. That's an extra 3% on payroll expense. As far as offset on company tax goes, it should be noted that company tax is paid on profit. One needs to make quite a profit to receive an equivalent offset. Companies not making a profit, or a marginal profit simply cop the super in the neck. Some mum and dad/ small business operators looking at this tonight will be no doubt wondering why they bother. Lefty government workers won't be contemplating this at all, except for sizing up a big juicy tick in the VOTE 1 KEV box.

Carry on!
I know that many lefties aren't particularly bright with these matters so I'll spell out what should be somewhat obvious.

SUPER INCREASE
A very small business with an annual payroll of $150,000 (not incl super and outside of directors'/ owners' wages) will pay an extra $4,500 in super each year.

COMPANY TAX OFFSET
If that same company was making a $50,000 profit (outside of directors' wages) the company tax payable on $50,000 (at the old company tax rate of 30%) would be $15,000.

Under the new system of 28%, the company would pay $14,000 in tax - a saving of $1,000 against the old tax rate calculated in the para above. This company model would be relieved of a net ($4,500 super increase less $1,000 company tax saving) $3,500 by Swan/ Rudd. Good work Laba.

This example is based on what I would consider a healthy little business. And that is what Swann/ Rudd is saying is win for small business!!!!!!

Even most lefties should be able to work out that a struggling business (making less of a profit or even a loss) is going to get next to nix in the way of company tax offset but still cop the super increase in the neck.

Igor_Goldenberg
03-05-2010, 01:13 PM
How is resource tax different from the old slogan "tax the rich!" (so everyone will be poorer)?

Garvinator
03-05-2010, 01:56 PM
I know that many lefties aren't particularly bright with these matters so I'll spell out what should be somewhat obvious.

SUPER INCREASE
A very small business with an annual payroll of $150,000 (not incl super and outside of directors'/ owners' wages) will pay an extra $4,500 in super each year.

COMPANY TAX OFFSET
If that same company was making a $50,000 profit (outside of directors' wages) the company tax payable on $50,000 (at the old company tax rate of 30%) would be $15,000.

Under the new system of 28%, the company would pay $14,000 in tax - saving of $1,000 on tax against the old system - and an overall being relieved of a net ($4,500 super increase less $1,000 company tax saving) $3,500 by Swan/ Rudd.

This example is based on what I would consider a healthy little business. And that is what Swann/ Rudd is saying is win for small business!!

Even most lefties should be able to work out that a struggling business (making less of a profit or even a loss) is going to get next to nix in the way of company tax offset but still cop the super increase in the neck.
And of course, for all service based industries, these increased costs are passed on to the consumer, so the consumer loses out as well. Which in a lot of cases is the employee that the Kevin Rudd government is claiming to help.

Sir Cromulent Sparkles
03-05-2010, 01:57 PM
How is resource tax different from the old slogan "tax the rich!" (so everyone will be poorer)?

i think its interesting that as opposed to an extra tax proportionate for all companys generating profits, the government has chosen to segregate the mining sector.

as far as i know banking is still making nice profits. maybe the government should slug them an extra tax as well. rudd and company certainly seemed happy to help bail them out in recent times (deposit guarantees etc), maybe its time for a little return generosity.

or is it only the resource sector who should pay......................

Capablanca-Fan
03-05-2010, 02:44 PM
How is resource tax different from the old slogan "tax the rich!" (so everyone will be poorer)?
Except that extremely rich actors tend not to be targeted by lefty politicians, since actors tend to be unthinking leftards.

TheJoker
03-05-2010, 03:57 PM
COMPANY TAX OFFSET
If that same company was making a $50,000 profit (outside of directors' wages) the company tax payable on $50,000 (at the old company tax rate of 30%) would be $15,000.

Under the new system of 28%, the company would pay $14,000 in tax - a saving of $1,000 against the old tax rate calculated in the para above. This company model would be relieved of a net ($4,500 super increase less $1,000 company tax saving) $3,500

A minor error in your sums. The tax saving will be $2,260 not $1,000. Since the $4,500 extra super payments will reduce the taxable income to $45,500. Still worse off.

However, given the situation where a company makes profit before tax that is more than 108% its payroll expense it will end up better of. For example:

Current
Payroll expense of $100,000
Profit before tax of $110,000
Tax @30% $33,000
Net Profit of $77,000

Under the new scheme they will pay an extra $3,000
Profit before tax of $107,000 ($110,000 - $3,000)
Tax @ 28% $29,960
Net Profit $77,040

I am not sure whether many companies would have a Profit Before Tax greater than their payroll. Perhaps an accountant could offer a better perspective on that

Basil
03-05-2010, 04:10 PM
A minor error in your sums. The tax saving will be $2,260 not $1,000. Since the $4,500 extra super payments will reduce the taxable income to $45,500.
Correct and thanks. Silly me for forgetting that the company profit had been eaten into :doh: Like spendulus, I think lefties thinks this stuff just falls from the sky. Listening to them bleat over bus fare increases or job losses makes me wanna puke.

TheJoker
03-05-2010, 04:42 PM
i think its interesting that as opposed to an extra tax proportionate for all companys generating profits, the government has chosen to segregate the mining sector.

as far as i know banking is still making nice profits. maybe the government should slug them an extra tax as well. rudd and company certainly seemed happy to help bail them out in recent times (deposit guarantees etc), maybe its time for a little return generosity.

or is it only the resource sector who should pay......................

Banks will pass on the additional cost immediately to local consumer in a rate rise / fees. It would be political suicide.

Resources firms tend to export most of their product, therefore the cost is either borne by overseas customers or shareholders, or employees the political fall out is much more manageable.

Garvinator
03-05-2010, 05:13 PM
makes me wanna puke.I am sorry but that is not allowed in this thread. We already have threads for that purpose, so it is not allowed in this one. Too difficult to clean up and it smells! :P :P :P

TheJoker
03-05-2010, 05:18 PM
On a side note I believe the Henry Review made 138 recommendations, of which the Government cherry picked 4 that it thought might be favourable for the election.

Kevin Bonham
03-05-2010, 05:24 PM
On a side note I believe the Henry Review made 138 recommendations, of which the Government cherry picked 4 that it thought might be favourable for the election.

I take it the most excellent proposal to raise the tax-free threshhold to $25,000 wasn't one of those?

ER
03-05-2010, 05:44 PM
I take it the most excellent proposal to raise the tax-free threshhold to $25,000 wasn't one of those?

Wait till the budget and the election campaign, there will be some more juicy surprises! :)


I am sorry but that is not allowed in this thread. We already have threads for that purpose, so it is not allowed in this one. Too difficult to clean up and it smells! :P:P:P

You can't deprive Howie of his most effective war cry! http://smileys.on-my-web.com/repository/Disgusting/vomit-3.gif as long as he uses the right place! http://smileys.on-my-web.com/repository/Others/others-086.gif

Jim_Flood
04-05-2010, 07:27 AM
A minor error in your sums. The tax saving will be $2,260 not $1,000. Since the $4,500 extra super payments will reduce the taxable income to $45,500. Still worse off.

However, given the situation where a company makes profit before tax that is more than 108% its payroll expense it will end up better of. For example:

Current
Payroll expense of $100,000
Profit before tax of $110,000
Tax @30% $33,000
Net Profit of $77,000

Under the new scheme they will pay an extra $3,000
Profit before tax of $107,000 ($110,000 - $3,000)
Tax @ 28% $29,960
Net Profit $77,040

I am not sure whether many companies would have a Profit Before Tax greater than their payroll. Perhaps an accountant could offer a better perspective on that

Just as an aside, I could not see where the reduced company tax rate will apply to sole traders or partnerships.

Jim_Flood
04-05-2010, 08:45 AM
And for the salary slaves, as the current 9% is included in the concessionally taxed superannuation limits ($25,000 under 50yo and, until 2012, $50,000 for 50+yo with both levels indexed in $5k increments), so shall the 12% I assume. You may wish to do some projected calculations to avoid the tax hell of excess contributions.

There will probably be a side effect as a consequence in that as the 12% amount together with any amount up to $25k limit will effectively increase your gross salary which will then be subject to tax at personal marginal rates. Ergo, a tax take increase.

Happy hunting folks.

Igor_Goldenberg
04-05-2010, 09:38 AM
I take it the most excellent proposal to raise the tax-free threshhold to $25,000 wasn't one of those?

Indeed, it's amazing that no politician in Parliament seem to understand the importance of that. This single measure will have greater effect on unemployment then any other policy, as it drastically reduces the highest margin of the tax (moving from the dole to work, that is).

Capablanca-Fan
04-05-2010, 11:01 AM
I take it the most excellent proposal to raise the tax-free threshhold to $25,000 wasn't one of those?
I tend to agree with you, and the LDP likewise has one. But what about the problem that those who pay no taxes have no incentive to vote against government over-spending?

Basil
04-05-2010, 11:12 AM
However, given the situation where a company makes profit before tax that is more than 108% its payroll expense it will end up better of. For example:

Current
Payroll expense of $100,000
Profit before tax of $110,000
Tax @30% $33,000
Net Profit of $77,000

Under the new scheme they will pay an extra $3,000
Profit before tax of $107,000 ($110,000 - $3,000)
Tax @ 28% $29,960
Net Profit $77,040
That would be a relatively unusual and certainly minority scenario. Don't forget that mum and dad need a salary - along with their two or three employees. Let's say mum and dad are also on $50K each (for working all hours under the sun) - that means mum and dad have a business returning them $177,000 p.a. with two employees. It happens.

But not as often as say my original, or even more abject;
No profits this year (break even)
Payroll of $500,000.
Rudd/ Swan slug of $15,000

:wall:

Basil
04-05-2010, 11:13 AM
Just as an aside, I could not see where the reduced company tax rate will apply to sole traders or partnerships.
Correct. No benefit to entities not incorporated but which still employ.

Igor_Goldenberg
04-05-2010, 01:57 PM
I tend to agree with you, and the LDP likewise has one. But what about the problem that those who pay no taxes have no incentive to vote against government over-spending?
They actually paying the highest rate of tax if you take withdrawal of welfare into account. Even though LDP scheme makes it much more transparent.

TheJoker
04-05-2010, 04:43 PM
That would be a relatively unusual and certainly minority scenario.

I suspected as much.

Basil
05-05-2010, 11:02 AM
Swan's Schoomate Says The Treasurer Hasn't Learned Much About Business (http://www.theaustralian.com.au/business/in-depth/wayne-swans-former-schoolmate-feels-stitched-up/story-fn5eo6td-1225862279158). An excerpt:


The company employs six permanent and two casual staff so he'll be paying more in superannuation contributions. But as Northside Embroidery is not an incorporated company, it will not receive as quickly the tax cuts on the way for incorporated bodies.

Jim_Flood
05-05-2010, 12:09 PM
This will either make you laugh or groan depending on your point of view. It is from a securities research house.


The truly scary aspect of this is the lack of understanding from Rudd and Swann towards equity risk premiums. The equity risk premium is the extra return an investor is paid in return for taking equity risk. The new tax is slated to apply if a business earns more than a 6% return (equal to the rate paid on "risk free" government bonds). Effectively they are saying we should not bother investing in industry that offers a better return than government bonds or they will double tax you.

Our strategist asked Treasurer Swann a question yesterday on this issue and asked why the tax kicked in when returns exceeded the bond rate rather than the bond rate + an equity risk premium of say 5% (otherwise known as a companies cost of capital). Swann did not understand the question no matter how it was re-phrased - in other words the treasurer of Australia does not know what the cost of capital is for Australian companies. This is economics 101!

Comments from our Strategist - Capital will continue to flow from Australia until either labour loses the election or this tax is dropped. This is the greatest sovereign event Australia has faced since 1974 when Gough Whitlam was ousted.

Also amused at the comments of BHP Billiton CEO.


Mr Rudd said: "Over the last decade, the mining companies generated $80 billion in higher profits; at the same time, governments received only an additional $9 billion over that same period."

Mr Kloppers said that Mr Rudd - for whatever reason - had chosen to include only the royalties the industry had paid.

"The government did not choose to show the company and the petroleum taxes we also pay," Mr Kloppers said.

Could be classified as a "Damn, where are those annual reports from BHP again?" moment.

Capablanca-Fan
06-05-2010, 02:27 AM
Wall Street Journal is incredulous about how KRudd wants to wreck an industry that helped us through the recession in:

The Rudd Mining Grab (http://online.wsj.com/article/SB10001424052748704342604575221552182071826.html)
A windfall profits tax won't make the economy any ‘fairer’.


Australia is the only developed country that didn’t have a technical recession after the global financial crisis, mostly because its mining sector kept feeding China’s economic boom. Now, the Labor Party government has decided all that wealth creation was a bad thing, and it’s time to levy a 40% “super-profits” tax on these companies and redistribute the money…

This economic thinking runs counter to everything that made Australia rich over the last three decades: namely, the embrace of competition and capitalism, which rewards high risk with high returns. Setting up a mining company is not akin to opening a restaurant. Companies invest billions of dollars in exploration, build infrastructure to bring their products to a port, and then have to compete in a global marketplace and deal with volatile prices for their goods…

The truth is that all windfall taxes, however they are dressed up and sold by politicians, are arbitrary and economically damaging. BHP Billiton estimates the “super-profits” tax would raise its total effective tax rate to about 57% from 43%, making Australia one of the most burdensome places to mine in the world. The increased tax burden would reduce profitability, discourage future investment and restrict companies’ ability to return cash to shareholders through dividends.

Bloody nonsense by economically illiterate KRudd (not that it would phase his drooling admirers like GoughFather and Mischa). “Super-profits” is meaningless. KRudd refuses to realize that the quest for profits is what drives prices down.

Capablanca-Fan
06-05-2010, 02:31 AM
The Canadian Government just loves KRudd's plan (http://www.theaustralian.com.au/business/mining-energy/super-profit-tax-to-boost-canadas-competitive-advantage-says-jim-flaherty/story-e6frg9df-1225862465958):


AUSTRALIA’S proposed new tax on its resources industry could be a huge competitive advantage for Canada, according to that country’s finance minister, Jim Flaherty.

Mr Flaherty noted that Canada had been reducing its corporate tax rate, and corporations in most of Canada would face a combined 25 per cent tax rate by 2012.

He said the “easiest thing” for a politician to do is raise taxes, which immediately increases revenues, but limits growth.

Igor_Goldenberg
06-05-2010, 09:42 AM
The Canadian Government just loves KRudd's plan (http://www.theaustralian.com.au/business/mining-energy/super-profit-tax-to-boost-canadas-competitive-advantage-says-jim-flaherty/story-e6frg9df-1225862465958):


AUSTRALIA’S proposed new tax on its resources industry could be a huge competitive advantage for Canada, according to that country’s finance minister, Jim Flaherty.

Mr Flaherty noted that Canada had been reducing its corporate tax rate, and corporations in most of Canada would face a combined 25 per cent tax rate by 2012.

He said the “easiest thing” for a politician to do is raise taxes, which immediately increases revenues, but limits growth.
I don't remember, is the Rudd's favourite strip club in US or Canada?

Garvinator
06-05-2010, 09:04 PM
I don't remember, is the Rudd's favourite strip club in US or Canada?New York

Sir Cromulent Sparkles
07-05-2010, 05:12 AM
the joker
Banks will pass on the additional cost immediately to local consumer in a rate rise / fees. It would be political suicide.

im not sure how youve made the connection from my previous comment that because i chose banking as an example to indicate the disparity between two sectors in the australian economic environment that i feel banking shouldnt function as it normally would. adjusting interest rates in accordance with the reserve banks decisions is a normal function of banking. receiving safety nets to protect the sectors business such as "deposit guarantees" in the recent financial meltdown is not normal course of business. that is my point.

how you can even suggest that a normal banking process such as adjusting loan interest rates in relation to reserve bank rate fluctuations and government intervention like the discriminatory mining "supertax" is similar is really quite puzzling.

banks should be doing all they can to make the maximum profit they can obtain but only a profit earnt entirely through merit without any govenrment intervention. so im not arguing against them operating their business in the normal course of their business model by mirroring interest rate movements and making profits etc.

now the mining sector which has been the backbone of this country in recent times has been responsible in part for staving off higher unemployment levels and creating strong revenue streams and its reward is a slap in the face and punishment simply because it has showed competence in its field of endeavour. thats simply ridiculous. why create an environment for economic mediocrity and reward incompetence as ruddski and wayne swan have done whilst placing extra burdens on strong industries when jobs and income are at stake ?

so labours brilliant and positive way forward includes curtailing economic activity in a sector, which has proven robust in difficult economic times facilitating reliable avenues of wealth to help avert a recession in australia and aiding in enhancing lower unemployment levels.

a feat of staggering genius. take a bow kevin. how fortunate we all are for all the erudite comrades and ECONOMIC BOFFINS in the labour party that want to punish competence.

the joker
Resources firms tend to export most of their product, therefore the cost is either borne by overseas customers or shareholders, or employees the political fall out is much more manageable.

ok.............................. i dont quite understand your point.

the only issue im discussing is the cost for australia in relation to employment and the strength of the economy.

you seem to just be stating the obvious in that australias export minerals are mostly sent overseas and paid for by foreigners.
am i missing something ?? .........................

Igor_Goldenberg
07-05-2010, 11:11 AM
I think The Joker's point was that the opportunistic envy driven money grab by Rudd would meet stiffer resistance if he went after the banks.
Mining companies seemed to Rudd an easier target.
Irrespectively who Rudd goes after (banks, mining companies or even tobacco companies),this cheap populist money grabbing shot is completely unjust and unfair.

TheJoker
07-05-2010, 12:25 PM
im not sure how youve made the connection from my previous comment that because i chose banking as an example to indicate the disparity between two sectors in the australian economic environment that i feel banking shouldnt function as it normally would..

Not at all I assuming you would expect banks to function normally, therefore you can understand (or not as it seems) why the government would not to impose addtional taxes on the banking sector because that effect would be felt immediately by the majority of the voting public.


adjusting interest rates in accordance with the reserve banks decisions is a normal function of banking. receiving safety nets to protect the sectors business such as "deposit guarantees" in the recent financial meltdown is not normal course of business. that is my point.

I think by normal function you mean your idea of "ideal" function. Just look at the history of what government support has been issued to banking insitutions in the past and you will find government support during a crisis is in fact normal. It's probably not ideal but sometimes necessary.


how you can even suggest that a normal banking process such as adjusting loan interest rates in relation to reserve bank rate fluctuations and government intervention like the discriminatory mining "supertax" is similar is really quite puzzling..

I did suggest it was similar at all, I suggested the reason for the discriminatory practice was it was more politically viable way of raising tax revenue for the government.

The other reason is of course that the government owns the resources and charges the mining firms to access those resources (either through tax or royalties), if the government feels they are selling the access to those resources to cheap, they are quite within their rights to up the cost. Whether it makes business/economic sense to do so if difficult to assess. But as Igor suggests I think its more to do with a money grab to fund voter incetives, but I could be wrong.


banks should be doing all they can to make the maximum profit they can obtain but only a profit earnt entirely through merit without any govenrment intervention. so im not arguing against them operating their business in the normal course of their business model by mirroring interest rate movements and making profits etc..

It an intersting discussion, I am not against banks making profits, but one should also be aware that the banking industry has high barriers to entry, some of which are caused by necessary government regulations and licensing to ensure prudence this means the industry isn't always very competitive


now the mining sector which has been the backbone of this country in recent times has been responsible in part for staving off higher unemployment levels and creating strong revenue streams and its reward is a slap in the face and punishment simply because it has showed competence in its field of endeavour. thats simply ridiculous. why create an environment for economic mediocrity and reward incompetence as ruddski and wayne swan have done whilst placing extra burdens on strong industries when jobs and income are at stake ?.

I am not sure that there was any incompetence in the Australian banking sector as you suggest.... I am not necessarily in favour of the new tax, in fact I don't know enough to about the mining industry, industry tax/royalties arrangements, nor about ownership of mining companies have any real opinion on whether it makes economic sense. But the political sense in terms of increasing revenues to fund voter incetives just prior to an election is obvious to me.


so labours brilliant and positive way forward includes curtailing economic activity in a sector, which has proven robust in difficult economic times facilitating reliable avenues of wealth to help avert a recession in australia and aiding in enhancing lower unemployment levels.

Again you make assumptions based on insufficient knowledge, ever heard of a thing called elasticity of demand. I expect China's demand for resources is rather inelastic, a small variation is price might not effect demand much at all. So the effect of the new tax might neglible to the mining industry, then again it might not, it needs serious economic analysis. Not armchair critiscism.




the joker
Resources firms tend to export most of their product, therefore the cost is either borne by overseas customers or shareholders, or employees the political fall out is much more manageable.

ok.............................. i dont quite understand your point.

the only issue im discussing is the cost for australia in relation to employment and the strength of the economy..

You asked why the super profits tax was being leveraged only on the resources sector... the answer is that it is simply more politically palatable because the short-term direct impacts won't be felt by everday Australians. You have to understand the tax is most likely politcal in nature and is about raising funding to support programs that will act as voter incentives in coming election.

In relation to economic impacts that is best left to economists to judge. But breifly one might consider whether barriers entry to create abnormally high profits for businesses in the industry considering the level of risk. You might also consider where those profits end up (in Australia or Offshore). You might also consider whether the tax will impede these firms in raising capital or not. If the profits are abnormally high (as suggest by the government) then the supply of willing investors might exceed the industry's demand for capital. You'd also consider the elasticity of demand. You might also consider the fact that the government is increasing their revenue risk by replacing royalties with taxation. Anyway suffice to say it is not a simple exercise, nor very precise.


you seem to just be stating the obvious in that australias export minerals are mostly sent overseas and paid for by foreigners.
am i missing something ?? .........................

Only that the tax will not directly effect the bulk of Australian voters in the short-term, hence it is politically viable. If you where to increase tax on petrol to fund election promises it wouldn't really sit too well with most voters.

BTW being a conservative (in the true sense of the word) I personally would like to see the government exercise great caution in making any changes.

TheJoker
07-05-2010, 01:08 PM
I think The Joker's point was that the opportunistic envy driven money grab by Rudd would meet stiffer resistance if he went after the banks.

Mining companies seemed to Rudd an easier target.
Irrespectively who Rudd goes after (banks, mining companies or even tobacco companies),this cheap populist money grabbing shot is completely unjust and unfair.

I wouldn't go quite that far. But there are clear political incentives for targeting the resources sector over other sectors.

I wouldn't call it unjust or unfair, since essentially its a market transaction, the government who owns the resources sets the price for access to those resources. Whether it makes business/economic sense for the government requires signficant analysis. I'd equally hate to think we are giving away our resources to mining companies to cheaply.

Also note the move is away from a fixed charge system (royalties) to a variable charge system tax. Which means the government is taking on more of the risk. As such it is expected that their be some additional risk premium

The question is is the government as agents of the people acting in our long-term interest. Or is the tax politically motivated to increase short-term prospects of winning the election. It's the classic "agency problem". Call me a cynic but I expect it is the later

Sir Cromulent Sparkles
08-05-2010, 08:59 AM
Originally Posted by trailer park lovers
so labours brilliant and positive way forward includes curtailing economic activity in a sector, which has proven robust in difficult economic times facilitating reliable avenues of wealth to help avert a recession in australia and aiding in enhancing lower unemployment levels.



Again you make assumptions based on insufficient knowledge, ever heard of a thing called elasticity of demand. I expect China's demand for resources is rather inelastic, a small variation is price might not effect demand much at all. So the effect of the new tax might neglible to the mining industry, then again it might not, it needs serious economic analysis. Not armchair critiscism.

joker says - "ever heard of a thing called elasticity of demand"
my reply - no, ive never heard of a concept taught in high school economics. but thanks for the heads up. by the way have you heard of competitive edges and the fact that, for example, overseas iron ore produces such as brazils vale will now have a greater competitive edge when negotiating prices with the chinese over the likes of bhp and rio tinto. you really dont need to analyse the situation very seriously to see what the inherent problem is. im sure the chinese wouldnt hesitate to import all their iron ore from south america if the situation warranted it. a situation might be reached where bhp and rio were forced to negotiate prices that included retrieving a part or full share of the extra tax impost but ultimately were unsuccessful in negotiating the sale of their product simply because another global miner had less constraints placed on it by the country that it is currently registered to pay tax in and was able to offer their own product at a more competitive rate. then the whole elasticity of demand concept would become completely redundant for obvious reasons ........... ;) ;)

anyway champ, i have no idea why you feel the need to claim my statement is based on insufficient knowledge, yet in the same paragraph exhibit the same vaguaries/inaccuracies that you charge me with. you feel the burning desire to alert me to my "supposed" predilection towards making unqualified assumptions in the form of a paragraph which includes your own unqualified assumptions as a continuation to the original sentence. its enough to give me the impression that you enjoy contradicting yourself.

once again hilarity prevails !!!!!! :clap: :clap: :clap:

if you care, please remind me once again which part of the original statement is the culprit for you identifying it as an assumption based on insufficient knowledge.

is it ...............
a) labour is curtailing economic activity in the mining sector
b) mining has proven robust in difficult economic times
c) mining has helped avert recession in australia
d) mining has aided lower employment levels

or the industrial strength, all inclusive....
e) all of the above...

TheJoker
09-05-2010, 01:12 AM
brazils vale will now have a greater competitive edge when negotiating prices with the chinese over the likes of bhp and rio tinto.

Do Brazil have a competitive edge? In what areas? I am not sure about mining but the overall tax burden on comapnies in Brazil is much higher than in Australia according to the World Bank. Perhaps you'd care to explain why Brazil would have a competitive advantage over Australian firms in supplying minerals to China if the new tax where implemented, please include all the relevant data including cost structures, product quality etc.


You really dont need to analyse the situation very seriously to see what the inherent problem is...

Actually you do need to analyse it seriously. Because you needs to understand the the cost structures of all the competitors, also whether demand exceeds supply.Also you need to consider that the new tax is replacing the existing state royalties which means moving from a fixed accesss charge to a variable charge, this changes the miners risk profiles and therefore their cost of capital. Their has already been economic modelling done showing that it is beneficial (albeit government funded "independant modelling". But het I am sure your more informed :rolleyes:




anyway champ, i have no idea why you feel the need to claim my statement is based on insufficient knowledge, yet in the same paragraph exhibit the same vaguaries/inaccuracies that you charge me with. you feel the burning desire to alert me to my "supposed" predilection towards making unqualified assumptions in the form of a paragraph which includes your own unqualified assumptions as a continuation to the original sentence. its enough to give me the impression that you enjoy contradicting yourself.

I'll I agree I don't know whether your arguement is based on suifficient knowledge. What I should have said is that you haven't provided sufficient evidence to back-up your claims.

As for me I am not making any claims about whther the tax is good or bad,because frankly to do so would require significant analysis, I prefer to leave that to the experts.


if you care, please remind me once again which part of the original statement is the culprit for you identifying it as an assumption based on insufficient knowledge.

is it ...............
a) labour is curtailing economic activity in the mining sector
b) mining has proven robust in difficult economic times
c) mining has helped avert recession in australia
d) mining has aided lower employment levels

or the industrial strength, all inclusive....
e) all of the above...

Only a).

Garvinator
09-05-2010, 01:16 AM
d) mining has aided lower employment levels Do you really mean this? Or do you mean either:

Mining has aided in lowering unemployment levels, Mining has aided in increasing employment levels.

Sir Cromulent Sparkles
09-05-2010, 03:44 AM
Do you really mean this? Or do you mean either:

Mining has aided in lowering unemployment levels, Mining has aided in increasing employment levels.

my mistake. it should have read the highlighted portion....

Sir Cromulent Sparkles
09-05-2010, 06:33 AM
correspondence with "the joker" ............

Do Brazil have a competitive edge? In what areas? I am not sure about mining but the overall tax burden on comapnies in Brazil is much higher than in Australia according to the World Bank. Perhaps you'd care to explain why Brazil would have a competitive advantage over Australian firms in supplying minerals to China if the new tax where implemented, please include all the relevant data including cost structures, product quality etc.

the point i mentioned is that a brazilian miner has increased its strength indirectly through our governments decision to tax mining at a higher rate. that is all. i never said brazilian iron ore producers have an absolute competitive edge, only that their competitive edge to negotiate iron ore contracts in relation to taxation has increased. unless the situation of negotiating individuals contracts for iron ore has changed this is still a factor in determining the strength of australian mining in relation to iron ore.

Actually you do need to analyse it seriously. Because you needs to understand the the cost structures of all the competitors, also whether demand exceeds supply.Also you need to consider that the new tax is replacing the existing state royalties which means moving from a fixed accesss charge to a variable charge, this changes the miners risk profiles and therefore their cost of capital. Their has already been economic modelling done showing that it is beneficial (albeit government funded "independant modelling". But het I am sure your more informed :rolleyes:

so minings growth and job opportunitys wont be hindered due to, as commented by bhp ceo marius kloppers, that their effective tax rate is increasing from 43 p/c to 57 p/c by 2013. i guess we'll still need to construct a supply and demand chart to prove what the likely impact will be. of course we will, its absolutely necessary. :wall:
if a 14 p/c increase in tax to the strongest members of the mining industry isnt enough to convince you that this is a decision made in error then i cant imagine what is.

by the way, please refrain from rolling your eyes its a most unbecoming gesture ....... ;)

I'll I agree I don't know whether your arguement is based on suifficient knowledge.

correct.

What I should have said is that you haven't provided sufficient evidence to back-up your claims.

this is the sufficent evidence that you refer to ................
mining has been slugged with a extra 40p/c increase in tax to their profits.
the effective tax rate of the big miners will change from 43 to 57 p/c by 2013.
there is absolutely nothing else that needs to be known.

As for me I am not making any claims about whther the tax is good or bad,because frankly to do so would require significant analysis, I prefer to leave that to the experts.

you dont need to be an expert to realise what kind of impact a 14% increase in tax is going to place on the industry. its a 14% increase in the tax bracket saddled to the strongest performers in recent times. that should set off alarm bells instantaneously ................. it really should.

if you dont think that an increase of that magnitude is serious enough and need further proof of the dynamics relating to the mining industry then your simply clutching at straws to defend labour. the mining boom isnt a guaranteed event. it could easily finish tommorow with china reducing their dependence on australias minerals and we'd unfortunately still be operating under the new supertax. id like to know where you think the jobs will be found in this case due to the probability of mines operating profitably decreasing. i havent seen any proof that a single cent from the 9 billion a year tax slug is going into any policys for job creation as a precautionary measure to hedge against this event happening. the only policies rudd and co are considering funding are gimmicks to coerce every short sighted malleable vote caster to tick the appropriate box come election time.

Only a)

a consistent yet startling response.

please look forward to commodity prices dipping to levels that compromise the viability of australian mines. dont imagine it hasnt happened in the last few years, because as recently as 2008, both diversified miner "oz minerals" century zinc mine and b.h.p.'s ravensthorpe nickel mine, a mine which is currently not operating at all, have undergone that fate. oz minerals and bhp are both high profile australian miners but additionally you can add numerous small and single mine operations that have disappeared completely due to poor commodity prices in recent years and the associated job losses with these events.

but not to worry we'll all be able to subsidise those people that relied on mining for employment when various mines become uneconomical and unemployment benefits paid from the governments coffers drain the public purse. brilliant plan. :confused:

at least all out of work mining personnel will be thankful for the incremental 3% increase in superannuation over the next 10 years. its a blessing in disguise. :clap:

Sir Cromulent Sparkles
09-05-2010, 09:33 AM
I think The Joker's point was that the opportunistic envy driven money grab by Rudd would meet stiffer resistance if he went after the banks.
Mining companies seemed to Rudd an easier target.
Irrespectively who Rudd goes after (banks, mining companies or even tobacco companies),this cheap populist money grabbing shot is completely unjust and unfair.

it just seems moronic that australia has navigated through a financial crisis in better shape than most, and immediately after this crisis the government decide to discriminate against the industry that pound for pound did the most to help avoid recession. it truly is bizarre.

i dont doubt that targetting banks would be unpopular but surely the supertax on mining should be a tax shared with every other publicly listed company (if a tax is actually justified in the first place).

im not particularly impressed with the argument that since the minerals come out of publicly owned regions that the government has the right to receive an excessively increased portion of the profits. we might as well target commercial fishing for taking advantage of our aquatic resources if thats the slant the government thinks is appropriate. but that wont happen any time soon.

this whole tax has probably been created just because kevin got stroppy that the emissions trading tax didnt get through.

Igor_Goldenberg
09-05-2010, 11:25 AM
...(if a tax is actually justified in the first place)...
It's not

Garvinator
09-05-2010, 11:29 AM
this whole tax has probably been created just because kevin got stroppy that the emissions trading tax didnt get through.Garbage, double garbage actually. If KRudd really believed in the ETS he would go double dissolution and get it passed that way, which he could easily do.

Sir Cromulent Sparkles
09-05-2010, 01:20 PM
Garbage, double garbage actually. If KRudd really believed in the ETS he would go double dissolution and get it passed that way, which he could easily do.

hes not exactly a shoe in though is he. i mean i agree the likelihood of tony abbott winning isnt great but a lot of people can see through kevins verbose meanderings so theres still a chance for salvation.

it is also possible rudds calculated that his re-election chances are increased more by serving the normal course of his term rather than a reduced period (even if it was called earlier this year).

maybe a carefully orchestrated budget prior to the normal cycle of his 3 years in power is what was planned for, providing the chance to implement enough subterfuge to erase the recent memories of garretts insulation batt bungles, the national high speed broadband, boat people, hospital takeovers, the school hall fiasco, alcopops, fuelwatch, grocerywatch (where exactly do we stop ?). have those year 9-12 students got their computers yet ? and a truly impressive body of "work" it all is.

a double dissolution doesnt bode well for this to occur and would take the spotlight away from kevin softening up key labour demographics that are financially constrained at the moment with the necessary enticements.

anyway he loves the spotlight too much. i cant remember another p.m. that was such a media whore. go to the labour website right this minute and he's actually posted mothers day "tweets" - happy mothers day to all mums (what a great guy :clap:. its enough to puke your guts up ). go to the liberal website and abbotts not posted one single tweet for 14 days which may indicate who is more inclined to cheap vain sideshows and who is applying themselves to the work at hand as best they can. i can just imagine abbott discussing with his media advisor the need to use this facility and thinking what complete nonsense tweets are. kevins vanity is truly staggering.

the e.t.s. wasnt exactly a policy that was going to win votes anyway. something like a tangible gift of increased superannuation should be much more effective.

so again, kevin could have gotten stroppy over the ets much like he was reported to have gotten stroppy towards an air hostess on a plane flight a little while back.

he just a regular guy with a big heart trying his best. ;)

ER
09-05-2010, 05:15 PM
you tell 'em TPL! :clap:

Igor_Goldenberg
09-05-2010, 06:53 PM
...go to the liberal website and abbotts not posted one single tweet for 14 days...
He hasn't updated his dairies for few months either :owned: :owned:

Sir Cromulent Sparkles
09-05-2010, 09:26 PM
He hasn't updated his dairies for few months either :owned: :owned:

moo.
apologies for that i really couldnt help myself. :D

as for tony, i hear on the grapevine hes been kept extremely busy with various tasks. for instance, today he was busy taking green waste to the tip, performing an oil change to his toyota camry and leaving messages on his mothers answering machine (which still havent been returned so he should probably call again). i also know that he has to go to the local indian restaurant for a vindaloo, some garlic naan bread and a 600ml bottle of coke zero in about half a hour because tea time is soon.

ill let him know your an interested observer of his completely factual and honest account of the life and times of the man that should be voted into office and ask whether he will ever pull his finger out and make a further contribution.

kind regards

sporadically productive autobiographical ghost writer

TheJoker
10-05-2010, 10:11 AM
the point i mentioned is that a brazilian miner has increased its strength indirectly through our governments decision to tax mining at a higher rate. that is all.

Fair enough. But whether it makes significant difference at all to the competitive position remains unseen.


so minings growth and job opportunitys wont be hindered due to that their effective tax rate is increasing from 43 p/c to 57 p/c by 2013.

Possibly retarded but accroding to KPMG Econtech their will be continued growth in the sector.


if a 14 p/c increase in tax to the strongest members of the mining industry isnt enough to convince you that this is a decision made in error then i cant imagine what is

If selling access to your resources too cheaply couldn't also be a major error, then I'd like to know why?



this is the sufficent evidence that you refer to ................
mining has been slugged with a extra 40p/c increase in tax to their profits.

Wrong the the tax is not an extra 40% increase. It's a 10% increase


the effective tax rate of the big miners will change from 43 to 57 p/c by 2013.
there is absolutely nothing else that needs to be known.

I beg to differ. Also I doubt the final increase will be that big, considering the government has already suggested it is willing to negotiate


a 14% increase in the tax bracket saddled to the strongest performers in recent times. that should set off alarm bells instantaneously ................. it really should.

I think it has, otherwise this thread wouldn't be as active as it is.

But we should also remember that it is government's interest to maximum its own revenue, so if the new tax reduces industry revenues it will also reduce tax revenue. This is not a zero-sum game unlike royalties.


if you dont think that an increase of that magnitude is serious enough and need further proof of the dynamics relating to the mining industry then your simply clutching at straws to defend labour..

I am not trying to defend labour. I've already stated that I expect it's a politcally driven tax. Just I am not ready to hammer the nail into the coffin until I've seen some serious analysis that confirms this. You might note that the Government commissioned "independant" research suggests that the effect will be minor and the industry will continue to grow.


the mining boom isnt a guaranteed event. it could easily finish tommorow with china reducing their dependence on australias minerals and we'd unfortunately still be operating under the new supertax. id like to know where you think the jobs will be found in this case due to the probability of mines operating profitably decreasing.

Firstly the additional tax only kicks-in when profitability is above 6%. I agree it is absurd to call 6% a super profit, given that one can obtain 6% on treasury bonds.

Secondly as mentioned earlier, it is in the governments interest to ensure that mining revenues do not fall otherwise tax revenues will also fall.


i havent seen any proof that a single cent from the 9 billion a year tax slug is going into any policys for job creation as a precautionary measure to hedge against this event happening. the only policies rudd and co are considering funding are gimmicks to coerce every short sighted malleable vote caster to tick the appropriate box come election time.

I agree.


Only a)

a consistent yet startling response.

please look forward to commodity prices dipping to levels that compromise the viability of australian mines. dont imagine it hasnt happened in the last few years, because as recently as 2008, both diversified miner "oz minerals" century zinc mine and b.h.p.'s ravensthorpe nickel mine, a mine which is currently not operating at all, have undergone that fate. oz minerals and bhp are both high profile australian miners but additionally you can add numerous small and single mine operations that have disappeared completely due to poor commodity prices in recent years and the associated job losses with these events..

I am sure it is inevtiable. But the new tax does have a threshold so once that happens the tax won't actually apply. Secondly, the government will always move to maximise its tax revenues so it is never going to tax the industry out of existence.

Basically this is a market transaction, the public is the owner of the natural resources it is selling them to the miners, if it makes them to expensive it won't have enough buyers and will have to lower the price. If the new tax starts drastically reducing mining revenues and subsequently tax revenues it will be droped quicker than a hot potatoe.

TheJoker
10-05-2010, 10:37 AM
im not particularly impressed with the argument that since the minerals come out of publicly owned regions that the government has the right to receive an excessively increased portion of the profits. we might as well target commercial fishing for taking advantage of our aquatic resources if thats the slant the government thinks is appropriate. but that wont happen any time soon.

I think the government not only has the right to maximise revenue from the sale public resources but has a duty to do so on our behalf.

I think you will probably find that in fisheries there are licensing fees, which are essentially a charge for accessing public resources.

Sir Cromulent Sparkles
10-05-2010, 04:40 PM
Fair enough. But whether it makes significant difference at all to the competitive position remains unseen.

14% tax increase. 14% tax increase. 14% tax increase. repeat....... 14% tax increase.

Possibly retarded but accroding to KPMG Econtech their will be continued growth in the sector.

for you to assume that all along ive been contending that growth will completely negated is false, i dont. im specifically concerned with this tax placing downward pressure on growth and the potential job creation/ job losses/exploration etc. nowhere have i mentioned that growth will be completely starved.

If selling access to your resources too cheaply couldn't also be a major error, then I'd like to know why?

selling access to resources too cheaply would be a major error, i dont deny that. but this policy overlooks all the associated potential activity (local and international exploration investment etc) that will have less likelihood of being developed.

Wrong the the tax is not an extra 40% increase. It's a 10% increase

so a rise from 43 to 57 is a 10 per cent increase is it ? :lol: :lol: :lol:

it looks to be 32.56% (which id imagine is supertax (40%) - any offsets)

I beg to differ. Also I doubt the final increase will be that big, considering the government has already suggested it is willing to negotiate

and obviously we can only go on information that is available. unless you know of anything other than what is reported speculation in regards to future finessing of the policy is redundant

Firstly the additional tax only kicks-in when profitability is above 6%. I agree it is absurd to call 6% a super profit, given that one can obtain 6% on treasury bonds.

again, its potential activity and investment that we should be encouraging not trying to scare it away.


Secondly as mentioned earlier, it is in the governments interest to ensure that mining revenues do not fall otherwise tax revenues will also fall.

kevin rudds track record of incompetence at the helm of the good ship labour is second to none.

I am sure it is inevtiable. But the new tax does have a threshold so once that happens the tax won't actually apply. Secondly, the government will always move to maximise its tax revenues so it is never going to tax the industry out of existence.

i never said the industry was going to be taxed out of existence but ........

at times when mines cannot receive prices that are greater than their costs they usually place the mine on care and maintenance. care and maintenance costs significantly less than operating at a loss but is still a cost borne to the owner. now, if in times of strength that same mine is producing and receiving income but has the tax impost to contend with the probability of it surviving in times when it cannot at least retrieve its operating costs is significantly increased.

and although bhp and rio tinto may be able to compensate for this since they are both diversified miners, single resource miners will be the ones who find themselves in a bind.


Basically this is a market transaction, the public is the owner of the natural resources it is selling them to the miners, if it makes them to expensive it won't have enough buyers and will have to lower the price. If the new tax starts drastically reducing mining revenues and subsequently tax revenues it will be droped quicker than a hot potatoe.

yes but the damage to the industry would take longer to repare due to the time it takes to develop mines . minerals dont just grow on trees and its actually a much riskier venture than the government would have the general public believe. the guarantee of actually finding an economic ore body is a terrific challenge in itself so although the land is owned by the government, it takes significant private capital to identify it, then develop a working mine to get the ore out the ground to start with.

Sir Cromulent Sparkles
10-05-2010, 04:46 PM
I think the government not only has the right to maximise revenue from the sale public resources

unfortunately this is true

but has a duty to do so on our behalf.

no it doesnt. the governments duty is in creating policies to provide the greatest quality of life for all citizens to experience. if it cant use the proceeds from the extra revenue in a responsible way (and the nature of obtaining the extra revenue is actually diminishing quality for life eg job losses etc) then it shouldnt be hindering business that otherwise provides a greater opportunity for an enhanced quality of lifestyle......

and as for fishing i realise there are fees for commercial fishing. just like there are obviously fees to explore and construct mines but i doubt fishing is going to have a supertax placed on it anytime soon proving that the comment made in regards to the motivation for the tax being in part because minerals are situated in common or publicly owned areas is a lie/mistruth.

TheJoker
11-05-2010, 10:21 AM
selling access to resources too cheaply would be a major error, i dont deny that. but this policy overlooks all the associated potential activity (local and international exploration investment etc) that will have less likelihood of being developed..

Uhhh.... wrong, there are a number of additional exploration incentives that are part of the policy



so a rise from 43 to 57 is a 10 per cent increase is it ? :lol: :lol: :lol:

it looks to be 32.56% (which id imagine is supertax (40%) - any offsets).

IIRC the nex tax is 40% of profits replacing the normal corporate tax rate of 30%. That is a 10% increase in the tax rate


again, its potential activity and investment that we should be encouraging not trying to scare it away.

Yes but we also shouldn't be selling our resources so cheaply that the majoirty of benefits from the natural resources that belong to the public flow primarily to a few investors and mining employees.

[
yes but the damage to the industry would take longer to repare due to the time it takes to develop mines . minerals dont just grow on trees and its actually a much riskier venture than the government would have the general public believe. the guarantee of actually finding an economic ore body is a terrific challenge in itself so although the land is owned by the government, it takes significant private capital to identify it, then develop a working mine to get the ore out the ground to start with.

I believe the government has made a commitment to make additional investments in exploration to offset some of that risk.

Igor_Goldenberg
11-05-2010, 12:26 PM
IIRC the nex tax is 40% of profits replacing the normal corporate tax rate of 30%. That is a 10% increase in the tax rate
No, normal company tax stays and applies to miners as well. 40% is an extra tax. You also missed the point of effective tax rate that will rise from 43% to 57% for BHP.



I believe the government has made a commitment to make additional investments in exploration to offset some of that risk.
Do you seriously think it's a good policy?

TheJoker
11-05-2010, 12:35 PM
no it doesnt. the governments duty is in creating policies to provide the greatest quality of life for all citizens to experience. if it cant use the proceeds from the extra revenue in a responsible way (and the nature of obtaining the extra revenue is actually diminishing quality for life eg job losses etc) then it shouldnt be hindering business that otherwise provides a greater opportunity for an enhanced quality of lifestyle.......

I'd argue that the government is increasing the revenue it earns from selling the natural resources because it believes that investing that revenue in increased superannuation will provide a greater benefit to all Australians as opposed to the continued rapid growth of the mining sector.

Considering employment in the mining sector accounts for about just under 5% of total employment a figure has been pretty much static for the last 60 years (including the current boom), they might well have a good argument.

Also the idea that mining is soley responsible for Australia avoiding a recession is a major furphy. In the post GFC financial services contributed more to GDP growth than mining. Moreover the last 10 years financial services has controbuted more to GDP growth than mining (about double the amount).

TheJoker
11-05-2010, 01:44 PM
No, normal company tax stays and applies to miners as well. 40% is an extra tax. You also missed the point of effective tax rate that will rise from 43% to 57% for BHP.

You are right, The super-tax applies to earning above a 6% ROE and is fully tax deductible for income tax purposes. Talk about confusing



Do you seriously think it's a good policy?

Not sure really. I've only skimmed through what the government is actually proposing. Once I have time to read it properly and seek some genuine criticism I'll let you know.

In the meantime I suggest everybody should read this note which clarifies what the government is proposing:
here (http://www.treasurer.gov.au/ministers/wms/content/economicnotes/2010/attachments/018_Treasurer's_Economic_Note.pdf)

Capablanca-Fan
21-05-2010, 06:34 AM
Former Hawke Government minister Barry Cohen (http://www.theaustralian.com.au/news/opinion/mr-treasurer-we-have-a-few-dozen-questions/story-e6frg6zo-1225869365694):


Which brings us to the 40 per cent resource super-profits tax.

...

I am not suggesting governments should never impose new taxes on business, but they have to be reasonable increases and they should apply across the board to all businesses, not just one.

The GST is a case in point. It was signalled well in advance and was applied equally.

Nor should they be imposed retrospectively. If the government wants to impose new taxes let them be on new projects.

Newcomers will know what they are up for.

We are told by government MPs and trade union officials that the "supertax" will have no effect on the mining industries' profits or employment.

How can that be? How can you suddenly impose a tax of 40 per cent on "super" profits and not affect their profits?

It beggars belief. The government must explain to us lesser mortals how this works.

The second, most important, question is, was the government really serious when it suggested that a "super profit" is anything over the 6 per cent government bond rate? If so, why wouldn't they just put their money in the bank?

...

We are told that the tax will not deter future investment in mining. Really? It may not stop every project but I'll wager it will stall quite a few.

...

I can't believe that a 40 per cent tax on profits won't affect an industry that provided us with such benefits during the global financial crisis and promises future benefits in the years ahead, and I am far from being alone.

Sir Cromulent Sparkles
21-05-2010, 07:22 AM
joker responds to me in a previous post .............

Also the idea that mining is soley responsible for Australia avoiding a recession is a major furphy.

another clear embelishment of the truth on your behalf joker ..........

in no previous post have i said "mining is solely responsible for australia avoiding a recession". STOP DRIBBLING FAECES DOWN YOUR CHIN.
what i have said is that mining, pound for pound, has been the best performing industry in australias recent near brush with recession. and obviously to any sensible person that couldnt possibly be construed as being close to what youve mysteriously conjured up.

would it be possible if you could reply using references to ACTUAL statements ive made instead of slipping in and out of some sort of dystopic reverie when you correspond.
honestly its not that hard to interpret it accordingly.

jokers response to igor..............

You are right, The super-tax applies to earning above a 6% ROE and is fully tax deductible for income tax purposes. Talk about confusing

no its not confusing at all. although i do find it highly amusing that somebody who felt it necessary to patronise me by questioning me whether i was familiar with a concept learnt in high school economics cant even comprehend a simple shift in the tax bracket and the associated % difference.

confusion contradiction and embelishment of the truth - introducing "the joker" !!!! ;) ;)

TheJoker
21-05-2010, 10:49 AM
what i have said is that mining, pound for pound, has been the best performing industry in australias recent near brush with recession.

Well you'll pleased to know that statement is wrong.

Contributions to GDP from industries 09/2008 to 09/2009
$Millions:

Mining 102,062

Manufacturing 128,710

Construction 105,781

Financial Services 148,173


Contributions to GDP Growth:

Mining 0.0%

Manufacturing -1.1%

Construction -0.2%

Financial Services +0.3%


no its not confusing at all. although i do find it highly amusing that somebody who felt it necessary to patronise me by questioning me whether i was familiar with a concept learnt in high school economics cant even comprehend a simple shift in the tax bracket and the associated % difference..

You don't even understand the new tax so stop parroting you were quoting a change in the effective tax rate that only applied to BHP, as though this was the change for every mining company, not mentioning that for some firms the effective tax will be reduced. It's not a simple shift in the tax bracket at all.


confusion contradiction and embelishment of the truth - introducing "the joker" !!!! ;) ;)

Got no argument so resort to personal insults introducing TPL.

Perhaps you'd like to respond to some real questions about the new tax:

You've already acknowledged the government has the right to charge miners for resources, given that do you agree that the price of that charge should reflect the value of the commodity in the global market?

Given that fixed royalties fail to adjust to changes in the global commodity prices and that there has been a boom in those prices, do you agree that the effective tax rate on miners has been declining over the past decade? Do you also agree that there is a possibily that the government is selling the resources too cheaply to miners given the boom in commodity prices?

Do you agree that the effective tax rate on miners has been declining over last decade due to the inefficiencies of royalties?

Are you aware of any serious economic modelling that shows the new tax scheme will reduced overall GDP growth? You will that KPMG Econtech has forecast an increase in GDP as result of the tax, what's your response to this finding?

Sir Cromulent Sparkles
21-05-2010, 12:54 PM
Well you'll pleased to know that statement is wrong.

no it isnt. "pound for pound" relates to comparisons of entitys on equal footing. raw gdp figures do not equate to an equal representation.

its hardly correct to post raw gdp figures irrespective of the labour content and capital expenditure pertaining to each industry and claim its a true indication of the "pound for pound" best performer.

you might as well compare a flyweight and a heavyweight boxer.

i refer to your post where you mentioned that the mining labour force was 5% of the national workforce. you cant honestly believe that the other 3 industrys you mentioned have a proprotionately smaller workforce to earn the contributions they also provide to gdp and still believe that mining isnt performing about the rest.

unless your unfamiliar with the aforementioned colloquialism i cant really understand what your trying to achieve..........

You don't even understand the new tax so stop parroting you were quoting a change in the effective tax rate that only applied to BHP

funny stuff.
and this is coming from the guy who replied to igor ...............

"You are right, The super-tax applies to earning above a 6% ROE and is fully tax deductible for income tax purposes. Talk about confusing "

i guess you were confused whether the supertax should be fully deductable or not.

lets see, without supertax being allowed as a deduction the big miners would pay roughly ........
100-(14%~).......then........86% of retained profit x (existing tax rate of 0.43)~= 36.98%~ profit retained (taxed @ 63.02%~).
is it confusing to determine whether the ridiculous tax level of 57% is not ridiculous enough and needs a 6% increase to tax this industry at a much more appropriate level? or is the confusion whether 63%~ is too much ?

i think ill have to pass on your q and a.

and as for insults, im not insulting you. im just stating habits you seem to favour.

TheJoker
21-05-2010, 02:47 PM
no it isnt. "pound for pound" relates to comparisons of entitys on equal footing. raw gdp figures do not equate to an equal representation.

its hardly correct to post raw gdp figures irrespective of the labour content and capital expenditure pertaining to each industry and claim its a true indication of the "pound for pound" best performer.

Ok I agree my mistake, the figures I provided don't disprove the "pound for pound" arguement. They only show that mining played a much lesser role in our economic recovery than say financial services.

Why don't you provide the figures that prove that mining was the best "Pound for Pound". I assume you have them handy since you are able to make that claim with some authority


i think ill have to pass on your q and a.

Well not much point debating with you if you are going to avoid the serious questions at the heart of the issue is there.

Igor_Goldenberg
26-05-2010, 07:22 PM
There was an argument somewhere on the forum that royalties are not flexible and do not keep up with the world price.

There is a simple remedy:
Apply it as a percentage of the sale price, somewhat similar to GST (albeit a rate might be different).

Igor_Goldenberg
27-05-2010, 09:36 AM
Kevin Rudd to backflip on mining tax rate (http://www.theaustralian.com.au/business/in-depth/kevin-rudd-to-backflip-on-mining-tax-rate/story-fn5eo6td-1225871786155)

Only three weeks after unveiling the new resource super-profits tax, the government is preparing to lift the threshold definition of a super profit from 6 per cent to 11 or 12 per cent following a ferocious campaign by the mining companies.

To offset the lost revenue in raising the threshold to the same level as the existing petroleum resources rent tax, which applies to offshore gasfields, the government intends to withdraw the 40 per cent taxpayer-funded compensation originally offered for mining projects that fail.
Both measures make perfect sense to me.

Reducing the 40% tax rate will make this tax worthy of consideration.

TheJoker
27-05-2010, 11:55 AM
Kevin Rudd to backflip on mining tax rate (http://www.theaustralian.com.au/business/in-depth/kevin-rudd-to-backflip-on-mining-tax-rate/story-fn5eo6td-1225871786155)

Only three weeks after unveiling the new resource super-profits tax, the government is preparing to lift the threshold definition of a super profit from 6 per cent to 11 or 12 per cent following a ferocious campaign by the mining companies.

To offset the lost revenue in raising the threshold to the same level as the existing petroleum resources rent tax, which applies to offshore gasfields, the government intends to withdraw the 40 per cent taxpayer-funded compensation originally offered for mining projects that fail.
Both measures make perfect sense to me.

Reducing the 40% tax rate will make this tax worthy of consideration.

It's not really a backflip, rather an adjustment.

What's your reasoning for the 40% needing to be reduced?

Desmond
27-05-2010, 12:01 PM
I don't think it's a backflip either. They always said they would negotiate. I think the one think they said that they would not negotiate on is the 40% rate itself.

TheJoker
27-05-2010, 12:08 PM
There was an argument somewhere on the forum that royalties are not flexible and do not keep up with the world price.

There is a simple remedy:
Apply it as a percentage of the sale price, somewhat similar to GST (albeit a rate might be different).

The main problem with taxing volumes in such a generic way is that it over charges for access to small resource deposits. There are obvious economies of scale in mining. Mining a large deposit will have a much lower fixed cost structure compared to mining a small deposit. This means the small deposit is actually less valueable per unit resource than the large deposit. It wouldn't be fair of the government to charge the same price to miners for access to two resources that differ greatly in real value.

You could of course correct for this but that would be complicated since it would require an estimation of size of deposit, I doubt the government has the skills to do such estimations, and self-reporting would no doubt result in grosss underestimates. Also the government would need to understand the economies of scale in the industry, which will change overtime with new technology/process developments.

Igor_Goldenberg
27-05-2010, 03:07 PM
It's not really a backflip, rather an adjustment.
What's your reasoning for the 40% needing to be reduced?

Because a high tax rate is a disincentive, and I always prefer tax rates to be as low as possible.
I also have a feeling that at 40% it will be much higher then the current royalties, even if it cuts in at a higher rate of profit.

TheJoker
27-05-2010, 03:55 PM
Because a high tax rate is a disincentive, and I always prefer tax rates to be as low as possible.

What's your preferred figure and why? I assume by as low as possible you don't mean zero taxes or do you?


I also have a feeling that at 40% it will be much higher then the current royalties, even if it cuts in at a higher rate of profit.

Overall you are probably right, especially since the government is of the view that current royalties arrangement haven't captured boom in resource prices and are therefore under charging. For the inidivudal firm it will depend on whether tey are over the threshold and by how much, no doubt for some of the smaller operations less profitable operations will end up paying less tax.

Igor_Goldenberg
28-05-2010, 12:15 PM
What's your preferred figure and why? I assume by as low as possible you don't mean zero taxes or do you?

To be honest - no idea. Something that would roughly equate current royalties, might even slightly (but only slightly!) exceed it.

There is another problem with the tax, though. According to constitution, states (not the federal government) have the rights to the minerals.

TheJoker
28-05-2010, 02:22 PM
To be honest - no idea. Something that would roughly equate current royalties, might even slightly (but only slightly!) exceed it..

That would seem a bit foolish considering the historically high resources prices, assuming its temporary that apporach would leave a massive hole in future government revenues.


There is another problem with the tax, though. According to constitution, states (not the federal government) have the rights to the minerals.

This is a legal question, the federal government has the right to tax corporations. It's not actually taxing minerals it is taxing company profits, so may well fall within its jurisdiction

Capablanca-Fan
29-05-2010, 01:08 AM
Another KRudd backflip: in 2007, tax-payer funding of government's political advertizing was “a long term cancer on our democracy (http://www.theage.com.au/opinion/politics/rudd-treats-us-like-mugs-with-latest-backslide-on-government-ads-20100528-wja5.html?autostart=1).” But now he wants to spend $38.5 million to propagandize his impulsive tax-grab on our miners (http://www.abc.net.au/news/stories/2010/05/28/2912524.htm) if they earn a profit above the government bond rate.

KRudd's greed, economic incompetence, and self-serving mendacity makes him a worse PM even than Whitlam. The sharemarket and Aussie dollar agree.

Capablanca-Fan
06-06-2010, 03:00 AM
Andrew Robb on the Resource Rent Tax
(http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/robb_and_the_case_for_change/)
The Government’s so-called super profits tax on the resources sector is a bugger’s muddle.

Each day brings forward a new unintended consequence, confirming how little thought went into the consequences of the tax.

It is a great big tax grab to pay for continued reckless spending, it is not tax reform.

A decade ago, when the Howard Government introduced the GST, at the same time reducing income tax and abolishing a whole raft of inefficient taxes, the catchcry was “It’s not a new tax, it’s a new system.” Well, this is not a new tax system, it’s just a great big new tax.

The tax will increase the retail price of gas and electricity. When you increase the cost of producing energy, someone will have to pay. No doubt it is the end user.

The superannuation savings of millions of Australians will be significantly affected, and all to pay for the Government’s reckless spending.

One thing I did observe working on farms in my teens, even before studying economics, was that when the profits from producing wheat or sheep or beef went down significantly, farmers produced less of that product, and moved to producing more of something else which gave greater returns.

In a similar vein, I would have thought that if the returns from producing minerals in Australia went down significantly because of a 40 per cent tax on profits, then companies would be inclined to set up new mines in other countries where returns for the same generic commodity were much higher, and where the rules didn’t change mid-stream, without consultation, at the whim of an ignorant government.

No matter what the theoretical models say, with their assumptions of perfect capital markets and guaranteed growth, the real world doesn’t work this way.

The tax will see dozens of future new mining projects shelved. Billions of dollars of investment, and tens of thousands of jobs will go elsewhere in the world.

...

The government has cleverly and deceitfully implied that the mining sector currently pays nothing extra for the privilege of mining a resource that is finite and belongs to all Australians; implying that only by paying more tax will it pay its ‘fair share’.

What is never made clear is that the mining sector does pay around 33 per cent more tax than every other sector of the economy, namely around 40 per cent average effective rate of tax versus 28, 29 or 30 per cent paid by every other sector. And the mining sector should pay this extra 33 per cent tax as its ‘fair share’.

However, what the Government never makes clear is that it wants to increase the extra tax paid by the mining sector from 33 per cent to around 85 per cent more tax than every other business in Australia, namely an increase from 40 per cent to 55 per cent effective rate of tax versus 28, 29 or 30 per cent paid by other business sectors.

Contrary to the nonsense the Government has been asserting, these numbers were confirmed overnight with the release of KPMG work, modelled over the life of the projects across key minerals.

...

The problem is that Australia’s mining competition in other countries pay much less than the proposed 58 per cent in Australia, with the US at 40 per cent, Brazil at 38 per cent, Canada at 32 per cent and down from there.

Now Australia looks a lot riskier and far less profitable.

The brutal and personal political attacks by the Government on this important export industry and its leaders, combined with the naïve and dangerous design of the tax and the deliberate failure to consult, has left Australian business and overseas investors bewildered.

...

Igor_Goldenberg
02-07-2010, 12:40 PM
Gillard is trying to seat on two chairs:
1. On one side miners are happy because in reality they will pay very little extra tax (if any).
2. On the other side, Gillard can pretend that government will still collect significant amount of extra tax (which it will not), does not need to revise budget as much and promise surplus (which Labor almost never deliver anyway) in 2013.

Someone trying to sit on two chairs simultaneous runs a risk of ending up between them on the floor. On the other hand, double-faced politics quite often work.

Desmond
02-07-2010, 01:06 PM
2. On the other side, Gillard can pretend that government will still collect significant amount of extra tax (which it will not), does not need to revise budget as much and promise surplus (which Labor almost never deliver anyway) in 2013.
Well according to the official line, the SPT will not effect the surplus since the expenditure it was going to/will fund will be inline with the revenue it creates.

Igor_Goldenberg
02-07-2010, 01:19 PM
Well according to the official line, the SPT will not effect the surplus since the expenditure it was going to/will fund will be inline with the revenue it creates.
That's only if government estimation of figures is correct (which, I suspect, is not).

Igor_Goldenberg
02-07-2010, 01:25 PM
Government estimates the tax will collect 10.5 billions instead of 12 - a very small reduction. At the same time mining companies are relived they will pay next to nothing in extra tax.
Who is in error - government or miners?

Desmond
02-07-2010, 02:19 PM
Government estimates the tax will collect 10.5 billions instead of 12 - a very small reduction. At the same time mining companies are relived they will pay next to nothing in extra tax.
Who is in error - government or miners?
Who is saying that it will be next to nothing?

pax
02-07-2010, 04:56 PM
Government estimates the tax will collect 10.5 billions instead of 12 - a very small reduction.

I find that impossible to believe. They are reducing the rate from 40% to 30%, *and* increasing the uplift rate from 6% to about 13%, *and* applying it only to the coal/iron ore/oil and gas industries. They've gutted it, and I would be very surprised if the revenue is not gutted as well.

They claw some back by abolishing the 40% rebate to unprofitable projects, and hence this deal is worse for the small and medium size miners who could really use the extra security that those guarantees offered.

Spiny Norman
02-07-2010, 06:53 PM
You're possibly right. We'll have to wait and see. I'm also wondering whether they've factored in all the regular 30% of profits company tax revenues lost from deferred or cancelled projects (i.e. projects that might have been viable under the previous tax regime, but now don't return enough to investors).

The thing I find hard to stomach is that all the gang of four were out there defending the previous policy and telling us, hand on heart, that "we've got the policy right, we've got the right right; its a good policy".

Either they were lying/mistaken then, or they've jetisoned a good policy in order to try to hang on to power. They lose credibility both ways you look at it.

Aren't these the same people that criticised Howard for his notorious backflips? One man's backflip becomes another's pragmatism.

I'm sick of politics and politicians. Don't trust any of them any more.

Jim_Flood
02-07-2010, 08:56 PM
If you're interested, have a read of Michael Pascoe's analysis in the Age.

http://www.theage.com.au/business/henry-junked-as-miners-do-the-numbers-20100702-zsd3.html?autostart=1

Bear in mind he is a journalist and therefore on par with politicians in the respect stakes.:)

If true, one interesting point is that the Henry Review cast doubt in applying the Super Tax to lower-value minerals.

As for the tax in any shape or form allowing the SG to be increased is total rubbish. The SG (of which the Federal coffers take 15%) is payable by employers not the Government and the exercise was simply about shoring up Government revenues.

Igor_Goldenberg
05-07-2010, 10:08 AM
I find that impossible to believe. They are reducing the rate from 40% to 30%, *and* increasing the uplift rate from 6% to about 13%, *and* applying it only to the coal/iron ore/oil and gas industries. They've gutted it, and I would be very surprised if the revenue is not gutted as well.


My point exactly.



They claw some back by abolishing the 40% rebate to unprofitable projects, and hence this deal is worse for the small and medium size miners who could really use the extra security that those guarantees offered.

I think removing rebate is a good thing, any business must be responsible for the risk taken.

Spiny Norman
05-07-2010, 04:58 PM
Apparently the original tax grab was *vastly* underestimated by Treasury, whose competence must surely be called into question. Hence the apoplectic rage of the miners, who knew that their profits were going to be ripped to shreds.

Now that the tax proposal has been wound back in a huge way, we find that the loss to revenue in the Budget is tiny over the first few years.

Put the two together and you get the full picture. The original tax was a complete disaster. The new arrangements aren't nearly so bad. As such, I'm reconsidering my own opposition to the proposal. But I am still not endorsing it, as I am yet to see the detailed outcomes from all the ongoing discussions.

Once all the fine detail is known, it will be possible to assess whether to support it or again reject it. If the opposition are smart, they will similarly decide to hold off on rejecting or endorsing it ... e.g. they could probably do an about-face and endorse the tax, and then use that revenue to fund their (way-too-generous) maternity leave policy (although I would prefer that they ditched that too and just left the Labor party's policy in place).

Igor_Goldenberg
06-07-2010, 10:17 AM
Apparently treasury decided to uplift their forecast of the iron ore and coal price to arrive at higher figures.
When oil price was around 150$ a barrel, Venezuela (huge oil exporter running big socialists programs) assumed 60$ a barrel price when working out a budget.
But Gillard government uses highest possible estimate in their budget. Maybe she is even a bigger spinner then Rudd?

TheJoker
06-07-2010, 01:58 PM
Apparently treasury decided to uplift their forecast of the iron ore and coal price to arrive at higher figures.
When oil price was around 150$ a barrel, Venezuela (huge oil exporter running big socialists programs) assumed 60$ a barrel price when working out a budget.
But Gillard government uses highest possible estimate in their budget. Maybe she is even a bigger spinner then Rudd?

Igor, is it possible that treasury revised their estimates based on advice/estimates from industry?

Igor_Goldenberg
06-07-2010, 02:03 PM
Igor, is it possible that treasury revised their estimates based on advice/estimates from industry?
Joker, is it possible that that the treasury is revising their estimate based on direction from Labor government to suit their political goals (something Liberal did not do while in government).

And why treasure uses highest spot price instead of five-year average?

Capablanca-Fan
07-07-2010, 05:41 AM
Indeed, Ken Henry has shown that he has become an arm for the Labor Party instead of the impartial civil servant he should be.

TheJoker
07-07-2010, 11:11 AM
Joker, is it possible that that the treasury is revising their estimate based on direction from Labor government to suit their political goals (something Liberal did not do while in government).

Possible. I think it is more likely that the industry has asked the treasury to use higher estimates, claiming that they underestimated the initial impact of the tax. That way the final tax rate will be lower and and if prices aren't realised the industry could end up paying less tax than they are now. Certainly if I were a miner I'd be encouraging the government to use the highest price estimates possible so as to have the lowest possible tax rate.


And why treasure uses highest spot price instead of five-year average?

I don't know, I thought you did but seems you don't know either. I'd certainly hope the treasury is using a more sophisticated method than a simple 5-year average. I hope they would be including forecast changes to supply and demand and perhaps taking into consideration what prices industry are using to do their forecasting, since industry usually has a better handle on where prices might go in the future.

Capablanca-Fan
08-07-2010, 02:27 AM
If it's tax reform you want, try the GST (http://www.theage.com.au/opinion/politics/if-its-tax-reform-you-want-try-the-gst-20100622-yvgq.html#poll)
Peter Costello
Age, 23 June 2010

...

There was no more ferocious opponent to the GST than Prime Minister Kevin Rudd. Opposing the passage of the legislation in Parliament he declared: “When the history of this Parliament, this nation and this century is written, 30 June, 1999, will be recorded as a day of fundamental injustice — an injustice which is real, an injustice which is not simply conjured up by the fleeting rhetoric of politicians. It will be recorded as the day when the social compact that has governed this nation for the last 100 years was torn up.”

...

Let us go back to what did happen 10 years ago. Australia introduced a broad-based consumption tax in return for the abolition of wholesale sales tax, financial institutions duty, debits tax, bed taxes, stamp duties on shares, on leases, on mortgages, on cheques. A further tax should have been abolished — stamp duty on business property (including land) — but the states dragged their heels and eventually got the Rudd Labor government to release them from that obligation.

On the payments side, 12 family benefits were simplified and combined into three. Rebates for private health insurance premiums were introduced. Income tax was slashed. Back then every dollar of income over $50,000 was taxed at 48.5 per cent. Now the threshold is $180,000 and the rate is lower.

Pay-as-you-go tax was introduced with business making quarterly payments. All business in the country had to register for an Australian business number. The states were given a growth tax.

Although the GST did not survive the Senate unscathed, it is a broad-based tax with a single rate. And by world standards it is a low rate. Overall, the tax burden was reduced.

This is what is meant by tax reform: abolishing inefficient taxes, simplifying existing ones and reducing the tax burden. It is a far cry from introducing a complicated new tax such as the resource super profits tax on top of existing taxes and increasing the overall tax burden.

...

Desmond
08-07-2010, 08:31 AM
Indeed, Ken Henry has shown that he has become an arm for the Labor Party instead of the impartial civil servant he should be.
Hard to see how this follows, when Labor take on 4 out of 138 recommendations.

TheJoker
08-07-2010, 11:14 AM
Overall, the tax burden was reduced.

This is what is meant by tax reform: abolishing inefficient taxes, simplifying existing ones and reducing the tax burden ...

I am interested in the comment that the overall tax burden was reduced, that seems to be a lie as the tax revenue as percentage of GDP rose under the Howard government.

Capablanca-Fan
08-07-2010, 02:31 PM
Hard to see how this follows, when Labor take on 4 out of 138 recommendations.
Easily: I didn't say that the Labor Party is an arm of Henry.

Desmond
08-07-2010, 02:52 PM
Easily: I didn't say that the Labor Party is an arm of Henry.Well if he were a Labor puppet you would think his report would align pretty closely to what Labor was wanting to do. At 4/138 I don't see that being the case at all.

Capablanca-Fan
09-07-2010, 12:33 AM
Well if he were a Labor puppet you would think his report would align pretty closely to what Labor was wanting to do. At 4/138 I don't see that being the case at all.
No, if it were 125/138, it would look like Labor is Henry's puppet. But instead, Henry is just a shill for Labor, rather than one trying to push his own ideas.

Igor_Goldenberg
14-07-2010, 05:07 PM
Prices boom hides mining tax shortfall after backdown over super-profits levy (http://www.theaustralian.com.au/politics/prices-boom-hides-mining-tax-shortfall-after-super-profits-levy-backdown/story-e6frgczf-1225891697261)


Treasurer Wayne Swan conceded today that without forecast improvements in commodity prices, the government's new minerals resource rent tax would have raised just $4.5 billion.

This is not 4.5 billion reduction of revenue estimation I mentioned earlier,
it's 7.5 billion reduction. And Julie Gillard wanted us to believe the backdown was only 1.5 billion.

The mining tax was a stupid idea in the first place, so I have no problem with massive backdown. But why take us for the fools and keep lying?

Desmond
14-07-2010, 06:52 PM
Prices boom hides mining tax shortfall after backdown over super-profits levy (http://www.theaustralian.com.au/politics/prices-boom-hides-mining-tax-shortfall-after-super-profits-levy-backdown/story-e6frgczf-1225891697261)


Treasurer Wayne Swan conceded today that without forecast improvements in commodity prices, the government's new minerals resource rent tax would have raised just $4.5 billion.

This is not 4.5 billion reduction of revenue estimation I mentioned earlier,
it's 7.5 billion reduction. And Julie Gillard wanted us to believe the backdown was only 1.5 billion.

The mining tax was a stupid idea in the first place, so I have no problem with massive backdown. But why take us for the fools and keep lying?
You've gone from

he is a liar
to
if the figures are wrong and if they are intentionally wrong and if he knows about it, he is a liar.
to (7 days later)
he is a liar

It is a pity that you don't learn from what is shown to you. Nor read the whole article apparently, where Swan very clearly does convey what the figures would have been in a number of different scenarios.

Igor_Goldenberg
14-07-2010, 10:29 PM
You've gone from

he is a liar
to
if the figures are wrong and if they are intentionally wrong and if he knows about it, he is a liar.
to (7 days later)
he is a liar

It is a pity that you don't learn from what is shown to you. Nor read the whole article apparently, where Swan very clearly does convey what the figures would have been in a number of different scenarios.

It's a pity you can`t see the forest for the trees.

Spiny Norman
15-07-2010, 06:28 AM
Regardless (or, if you're struggling for a vocabulary, irregardless) ... :lol: ... the figures put out by Treasury and bandied about by the Government were wrong ... and in fact spectacularly wrong to the tune of $7,500,000,000.

If the Opposition had made a 7.5B blunder, we would never hear the end of it from the Government.

As such, its quite appropriate to stick it back to the Government and ask them why we should regard them as economically credible when they were told repeatedly that their new tax would rip the guts out of the mining industry; they repeatedly denied it and told the public that their policy (and the tax rate) was right; and now disclose that, after all, the tax was going to take far too much and they've had to wind it back.

Treasury is the bigger loser. Some people in there are clearly incompetent and ought to be demoted; they need to bring in some economic analysts who actually have some kind of grasp of reality, rather than these vaguely leftist "we can increase taxes without hurting industry" know-nothings.

As for Ken Henry, I hope he has plenty of super stashed, because about 5 minutes after the next Coalition government takes power he'll be given his marching orders. I cannot recall a more compromised and politically active public servant (other than Godwin Gretch, and we all know how that ended).

Desmond
15-07-2010, 08:54 AM
It's a pity you can`t see the forest for the trees.I admit it's possible I missed it, so by all means point me to your post where you substantiate your claim of "liar" by demonstrating that a) the figures are wrong, b) they are intentionally wrong, and c) Swan, Gillard knew it. Or perhaps you could simply admit that you didn't substantiate your case.

Igor_Goldenberg
15-07-2010, 09:20 AM
I admit it's possible I missed it, so by all means point me to your post where you substantiate your claim of "liar" by demonstrating that a) the figures are wrong, b) they are intentionally wrong, and c) Swan, Gillard knew it. Or perhaps you could simply admit that you didn't substantiate your case.
After changing the tax he said government gone down by 1.5 billion (when, in reality, it was 7.5 billions). And he already knew of revised estimate by that time.
It's a pity you take Swan's spin at a face value and don't see that it's a barefaced lie.

Desmond
15-07-2010, 09:33 AM
After changing the tax he said government gone down by 1.5 billion (when, in reality, it was 7.5 billions). And he already knew of revised estimate by that time.
It's a pity you take Swan's spin at a face value and don't see that it's a barefaced lie.Again, I'm not making comment about it, just asking you to substantiate your claim that it was a lie. Your response does not do so. The fact that you didn't link to previous substantiation suggests to me that you conceded you didn't do so previously.

Igor_Goldenberg
15-07-2010, 09:42 AM
Again, I'm not making comment about it, just asking you to substantiate your claim that it was a lie. Your response does not do so. The fact that you didn't link to previous substantiation suggests to me that you conceded you didn't do so previously.
You might start by substantiating your claim that I did not substantiate my claim:lol: :lol: :lol: :lol:
Or you can stop playing silly games and debate the issue.

Desmond
15-07-2010, 09:58 AM
You might start by substantiating your claim that I did not substantiate my claim:lol: :lol: :lol: :lol:Let me know if this is a serious comment that requires a serious response. At the moment, I assume not.

I note that yet again you decline to acknowledge that you did not substantiate your case.

Or you can stop playing silly games and debate the issue.There is no need to put an opposing view when the first view does not even stand on its own.

TheJoker
15-07-2010, 10:31 AM
Regardless (or, if you're struggling for a vocabulary, irregardless) ... :lol: ... the figures put out by Treasury and bandied about by the Government were wrong ... and in fact spectacularly wrong to the tune of $7,500,000,000.

If the Opposition had made a 7.5B blunder, we would never hear the end of it from the Government.

As such, its quite appropriate to stick it back to the Government and ask them why we should regard them as economically credible when they were told repeatedly that their new tax would rip the guts out of the mining industry; they repeatedly denied it and told the public that their policy (and the tax rate) was right; and now disclose that, after all, the tax was going to take far too much and they've had to wind it back.

Treasury is the bigger loser. Some people in there are clearly incompetent and ought to be demoted; they need to bring in some economic analysts who actually have some kind of grasp of reality, rather than these vaguely leftist "we can increase taxes without hurting industry" know-nothings.

As for Ken Henry, I hope he has plenty of super stashed, because about 5 minutes after the next Coalition government takes power he'll be given his marching orders. I cannot recall a more compromised and politically active public servant (other than Godwin Gretch, and we all know how that ended).

Spiny are you sure its a government blunder and not a caving in to industry pressure. I wouldn't be surprised if the first proposal used a prudent figure for the estimates of commodity prices (some sort of long-term regression). I suspect it was industry that argued that the government should use a more realistic and less prudent figure, given the market forecasts for increasing commodity prices.

Obviously estimating future prices for commodities is a tricky business, and a number of approaches can be taken, one can use an apporach that relies on historical data or one can look at market estimates such as futures contracts. Often the two methods can yield totally different answers, neither one implies incompetence.

It's interesting that people on this board can simultaneously take aim at the Treasury for using a prudent estimation of commodity prices, saying that it causes them to vastly underestimate the effect of the tax and harms industry. And in the same breath lament them for revising the analysis to by using market estimates of higher commodity prices, claiming it is speculative and overestimates the tax revenues.

Spiny what is your own estimate for the relevant commodity prices and how do your revenue estimates for the tax stack up against the two Treasury estimates?

Igor_Goldenberg
15-07-2010, 10:44 AM
Spiny are you sure its a government blunder and not a caving in to industry pressure. I wouldn't be surprised if the first proposal used a prudent figure for the estimates of commodity prices (some sort of long-term regression). I suspect it was industry that argued that the government should use a more realistic and less prudent figure, given the market forecasts for increasing commodity prices.

It's quite possible, I'd even say it's quite likely that they used the estimation industry suggested. Miners were very keen to help government get out of the hole if it helps them escape the tax. It does not cost miners anything to give government the estimate it wants.


Obviously estimating future prices for commodities is a tricky business, and a number of approaches can be taken, one can use an apporach that relies on historical data or one can look at market estimates such as futures contracts. Often the two methods can yield totally different answers, neither one implies incompetence.

Agree. However, prudent governance of the finance requires using less optimistic forecast. Companies using very rosy forecast sometimes overstretch themselves, can't meet their liability obligations and go out of business.
Government in this case gets reelected.


It's interesting that people on this board can simultaneously take aim at the Treasury for using a prudent estimation of commodity prices, saying that it causes them to vastly underestimate the effect of the tax and harms industry. And in the same breath lament them for revising the analysis to by using market estimates of higher commodity prices, claiming it is speculative and overestimates the tax revenues.


That's a good, but slightly flawed observation - because it's different people that take opposing views.

TheJoker
15-07-2010, 11:05 AM
That's a good, but slightly flawed observation - because it's different people that take opposing views.

Actually I think its fair to say most people (myself included) don't actually have clue as too which commodity price estimate makes more sense.

Criticising the government for revising their estimates of commodity prices after consultation with industry is a bit brash, unless you can actually demonstrate the new estimate is overly optimistic.

Igor_Goldenberg
15-07-2010, 11:15 AM
Actually I think its fair to say most people (myself included) don't actually have clue as too which commodity price estimate makes more sense.
I never pretended to have a clue how to estimate future commodity price. I don't even know current price:lol:


Criticising the government for revising their estimates of commodity prices after consultation with industry is a bit brash, unless you can actually demonstrate the new estimate is overly optimistic.
I am happy to admit to be cynical, but I look at the context in which it happened. It could be an innocent coincidence, but do you really believe it's the case?
And Swan/Gillard only admitted they used different estimate when their statement of $1.5 billion reduction (which turned out to be a lie) was called upon.

Igor_Goldenberg
15-07-2010, 11:18 AM
http://resources2.news.com.au/images/2010/07/14/1225891/830690-100715-kudelka.jpg

TheJoker
15-07-2010, 12:00 PM
I never pretended to have a clue how to estimate future commodity price. I don't even know current price:lol:


I am happy to admit to be cynical, but I look at the context in which it happened. It could be an innocent coincidence, but do you really believe it's the case?
And Swan/Gillard only admitted they used different estimate when their statement of $1.5 billion reduction (which turned out to be a lie) was called upon.

No I don't think it's a coincidence, I think it's a product of consultation with industry. Whether or not that consultation has resulted in a more realistic estimate or not I have no idea.

Spiny Norman
15-07-2010, 05:51 PM
Spiny are you sure its a government blunder and not a caving in to industry pressure. I wouldn't be surprised if the first proposal used a prudent figure for the estimates of commodity prices (some sort of long-term regression). I suspect it was industry that argued that the government should use a more realistic and less prudent figure, given the market forecasts for increasing commodity prices.
I have no idea whether its a blunder, a cave-in, or both. If I were a betting man, I would say both.


Spiny what is your own estimate for the relevant commodity prices and how do your revenue estimates for the tax stack up against the two Treasury estimates?
I don't have an estimate for commodity prices; I know nothing about the subject ...but at least I own up and say that I know nothing about it, unlike some politicians from both left and right.

I'm about 80% "wise after the event". The 20% "wise before/during the event" consists of:
(1) my deep-seated suspicion about the inaccuracy of Treasury forecasts (based on historical efforts);
(2) my deep-seated suspicion about the reliability of anything that Kevin Rudd said (based on all the bullshit that flowed from his mouth); and
(3) my firm belief that its generally a better idea to reduce rather than increase taxes if you want a healthier economy

Desmond
15-07-2010, 06:07 PM
I caught an interview with Bernie Fraser on the 7:30 report. Sorry I don't know much about Bernie Fraser, he seems rather slow talking and reminds me a bit too much of the Sandman, but he seems to have a good resume and his opinions sounded sensible.

transcript (http://www.abc.net.au/7.30/content/2010/s2953813.htm)

Sir Cromulent Sparkles
15-07-2010, 07:05 PM
I caught an interview with Bernie Fraser on the 7:30 report. Sorry I don't know much about Bernie Fraser, he seems rather slow talking and reminds me a bit too much of the Sandman, but he seems to have a good resume and his opinions sounded sensible.

transcript (http://www.abc.net.au/7.30/content/2010/s2953813.htm)

when my local hospital runs out of anaesthetic they just hire bernie to recite count lev's "war and peace" to anaesthetise the patients.

about 10 pages is usually sufficient for the desired effect........

either bernie or comedian steven wright works the best.

Spiny Norman
16-07-2010, 05:32 AM
I managed to watch about half of the interview I think, but I nodded off somewhere in the middle; there was this soporific droning sound that went on and on and on ...

Desmond
16-07-2010, 09:10 AM
I managed to watch about half of the interview I think, but I nodded off somewhere in the middle; there was this soporific droning sound that went on and on and on ...Transcript might be better. :)

Anyway basically he rips into both sides of politics for selling out and playing the polls not the issues.

TheJoker
16-07-2010, 10:27 AM
(1) my deep-seated suspicion about the inaccuracy of Treasury forecasts (based on historical efforts);

Not a bad position to hold for any forecast. Certainly a good idea to question the quality of the assumptions that make up the forecast.


(3) my firm belief that its generally a better idea to reduce rather than increase taxes if you want a healthier economy

I think first you need to improve the efficiency of delivering public services and infrastructure, before reducing taxes otherwise a tax cut simply means a cut services and infrastructure. I'd certainly agree that there are massive efficiency gains that could be made and that would facilitate a reduction in tax. But be careful not to put the horse before the cart. Basically that what Howard did in his expenditure / tax cuts in the first few terms, but growing disatisfaction with service levels eventually led to spending returning to above the previous level by the time he left office.

Igor_Goldenberg
16-07-2010, 11:07 AM
Treasurer shows how to cook a magic pudding (http://www.theaustralian.com.au/news/opinion/treasurer-shows-how-to-cook-a-magic-pudding/story-e6frg6zo-1225891823187)


It's official. Commodity prices are soft. Budget Paper No 1, May 11:

COMMODITY prices are expected to moderate somewhat in 2011-12. A decline in commodity prices is projected over the medium term as increased supply brings prices down, but there is uncertainty as to the timing and magnitude of these falls. Current levels will not be sustained in the longer term, as increases in supply bring down prices over time.

It's official. Commodity prices are firm. Treasury secretary Ken Henry at a Senate committee on Tuesday:

CLEARLY, since the budget, people -- well, everybody really -- have been revising up their commodity price forecasts over the 2010-11 and 2012 period. As a general proposition, commodity prices over the forecast period have strengthened relative to budget.

It's official. We haven't got a clue. Henry later at the same hearing:

AS we discussed last time, commoditity prices tend to be relatively volatile. They go up and down. We think that we are in a period of elevated commodity prices relative to long-run history. But it would be courageous to pretend that commodity prices at some stage over the forecast period will not fall somewhat. They might. They might go up to even higher levels.

Let's use the highest possible estimate, shall we?

TheJoker
16-07-2010, 11:16 AM
Let's use the highest possible estimate, shall we?

Are they the highest possible estimates? What are the actual estimates and how do they compare to other market estimates?

Given the GFC and recovery it's not really that surpirsing to me that estimates could have changed radically. First half of last year talk was all doom and gloom and of a long and protracted depression/recovery. 12 months later and the mood has changed significantly and continue to do so on a daily basis.