Barnaby Is Right

Back in December, a mining industry executive walked your humble blogger through the details of the GilSwan mining tax. He helped us all to see that Julia and Wayne have done it again. The mining tax is a high farce. One that will produce the opposite result of what the Government – and especially the Greens – have proclaimed.

Far from “spreading the wealth” of the mining boom, we saw that the MRRT will help the Big 3 foreign miners to increase their oligopoly, at the expense of local miners. And, it will smash another yawning chasm in the government’s budget. Making us all poorer (see GilSwan Conned – Mining Tax The Greens’ Pit Of Despair).

Now … 3 months later … after the legislation has passed into law … “expert” analysts have come to a very similar conclusion.

From The Australian (emphasis added):

BHP, Rio tax take forecasts ‘too high’

THE Gillard government’s forecast of $10.6 billion in revenue from the mining tax over the next three years is looking increasingly shaky, after expert modelling by three investment banks found the nation’s biggest miners would pay much less than expected from July 1.

Analysts at Goldman Sachs estimate that the world’s biggest mining company, BHP Billiton, would pay just $443 million under the minerals resource rent tax in the next financial year.

Modelling by UBS suggests rival miner Rio Tinto would pay a minimum of $US472m ($454m) on its dominant Hamersley iron ore unit in Western Australia, which would fall to zero after three years.

Meanwhile, analysts at investment bank Credit Suisse said their modelling had shown that Fortescue Metals Group, the nation’s other big iron ore producer, would have a maximum potential MRRT liability of $US200m in 2014 but this would fall away in later years.

The Gillard government has said previously that the three big miners who helped design the MRRT – BHP, Rio and Xstrata – were expected to account for 90 per cent of the revenue.

It is counting on raising $3.7bn from the MRRT next year but analysts doubt whether this is possible given the massive deductions available to the big miners that recognise the tens of billions of dollars they have spent on their operations over decades.

Revenue is also likely to be affected by falling commodity prices, a higher Australian dollar and rising costs since Treasury released its latest MRRT projections in May last year.

Any shortfall in MRRT revenue poses a significant risk to the government’s budget position because Wayne Swan has committed the $10.6bn over three years to superannuation reforms, company tax cuts, small business instant asset writeoffs and regional infrastructure funding.

*shakes head sorrowfully*

[ Insert perjorative of reader’s choice here ]

Tags: BHP, Big 3, MRRT, RIO, surplus, wayne swan, Xstrata