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John Passant

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February 2013



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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole

Sick kids and paying upfront


Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. (0)

I am not surprised
I think we are being unfair to this Abbott ‘no surprises’ Government. I am not surprised. (0)

Send Barnaby to Indonesia
It is a pity that Barnaby Joyce, a man of tact, diplomacy, nuance and subtlety, isn’t going to Indonesia to fix things up. I know I am disappointed that Barnaby is missing out on this great opportunity, and I am sure the Indonesians feel the same way. [Sarcasm alert.] (0)



The Minerals Resource Rent Tax and other lies

So now the truth is out. The much vaunted Minerals Resource Rent Tax raised a miniscule $126 million in the first six months of its operation. Why it was only in October last year that Wayne Swan was telling us it would collect $2 billion over the 2012/2013 income year.And before that Treasury predictions were it would raise $3 billion.

Why the difference? Wayne Swan told us today that it was because of global uncertainty, a high Australian dollar and a fall in commodity prices.

Well the global economy is no more uncertain now than during the GFC in 2008 when mining companies were making super profits of about 20% on investment. They still are.

Yes, the Australian dollar is high, just as it was in October when The Treasurer announced in the Mid Year Economic Forecast that the MRRT would collect a revised down figure of $2 billion.

As to iron ore prices, they may have had an impact. According to the Treasurer the price of iron ore has fallen from $170 a tonne at the end of 2011 to $80 a tonne in September last year. But here’s the thing. Many supply contracts are long term to provide certainty to both the buyer and seller. Even though most are expressed in US dollars, the price of American dollars is around the same now as in October last year when the Treasurer forecast a $2 billion tax take for the MRRT for this financial year.

Even the US dollar long term contracts will be hedged to spread currency risk. So the fall in iron ore prices might mainly have an impact on spot trades. These now account for about half of all iron ore sales, according to the RBA. This is a change from 5 years ago when most contracts were more long term, either annual or quarterly in terms of prices.

So falling iron ore prices might account for part of the fall, but they are on the rebound.

Coal prices, the other resource covered by the MRRT, have fallen about 20% in the last year, although they have increased from a low in September last year by 12% and will continue to increase.

Now the MRRT was the Julia Gillard do nothing tax. She knifed Kevin Rudd and his more expansive Resource Super Profits Tax. The RSPT applied to all resources and would have taxed the super profits at 40%. The MRRT, the mini-me resource tax the new Prime Minister Julia Gillard and her deputy, Wayne Swan negotiated personally with the big 3 mining companies, only applies to iron ore and coal and has an effective rate of 22.5%. It also gives a credit for mining royalties levied by the States and Territories.

So guess what? State governments have increased royalties on iron ore and coal.

There are other design issues with the MRRT to do for example with market value and immediate write off of investment undertaken after 1 July.

The money is there. So why not start all over again? I have a suggestion. How about a 40% super profits tax applying to all resources? Oh…The ghost of Kevin Rudd ensures that won’t happen.

And while we are at it, why not a super profits tax on all super profits, not just those in the resource sector. The Big 4 banks come to mind.


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