Twiggy delivers real keynote address
OUT AND ABOUT: Delegates who have lasted all three days of the Diggers & Dealers conference in Kalgoorlie were treated to a lesson on the proposed Minerals Resource Rent Tax.
The lesson was given by Fortescue Metals Group, soon to be, chairman Andrew Forrest.
“If I’m leaving you with any impression that we have a government who either understands the mining industry, or supports it, then I have done a really bad job,” Forrest told the conference.
Before launching into his assessment of the tax, Forrest made the point that it actually provides his company with a $12 billion tax deduction.
Forrest has often been portrayed as being anti-tax simply because he doesn’t want to pay more.
The theme to emerge from his address, however, was more that the question should be asked as to why the “big three” major players in BHP Billiton, Rio Tinto and Xstrata will end up paying less tax than the smaller end of town and why they were the only ones present when such a cosy deal was negotiated.
“We’re, in fact alright, Jack. We’re in the lifeboat,” he said.
“We don’t have the hundreds of billions of dollars of tax deductions, which would be available in shelter to the big three but we’re looking good.
Forrest implied the three majors that negotiated on behalf of the mining industry over the terms of the MRRT basically walked out of the room holding ‘Get out of Jail Free’ cards.
“The tax was negotiated in secret. What is so bad about this tax, that it must be kept secret?” he asked.
“How is it then that the juniors and the developers will pay the MRRT full rate of 45%, the highest tax rates in the world?
“In the government’s own numbers, the majors flat line in their tax, how is that possibly fair?”
He said what emerged from these negotiations was the idea that if you are a big company you will receive a tax shelter but a tax liability if you’re a small player.
“That goes right across the grain of everything the Labor Party stands for,” Forrest said.
“When the union officials and the leadership work out that the big three got a get out of jail free card – that it let them off that tax and it hammers the developers, the little guys trying to have a go, that the union movement stands for, how can they front members and say, ‘we think this is a good tax’?”
“How can they support Treasurer Wayne Swan when he refuses to answer how much tax the majors will pay because he knows he gave them the get out of free card?”
Forrest challenged Treasurer Wayne Swan’s public proclamation that the majors will be paying most of the tax.
“That’s not correct,” Forrest said.
“If the majors pay much at all it will be by accident.
“It is an inefficient tax that will discourage production across the industry, except for the one per cent.”
Forrest said he anticipated the reports in tomorrow’s papers to be quoting the government saying there would be no way that it would spread the tax across the rest of the resources sector to take in other commodities besides the iron ore and coal it already targets.
“No way, we will spread it across the resources sector,” Forrest said mimicking Prime Minister Julia Gillard.
“We will not tax gold and lithium and everything else. Only coal and iron ore.
“Yeah right Julia, no Carbon Tax.”
The driving force behind Forrest’s address seemed to be simple that the MRRT, as it currently stands, creates a scenario of unfairness across the resources sector.
His fears extend to the ability of smaller companies to not only get their projects up to the point of development and production but whether, in the future, they will be able to obtain acreage to explore in the first place.
“We now have a very tilted playing field,” he said.
“You have the most profitable paying very little of the new tax, while the least profitable will be paying it all.”