Recently from Domainfax:
While Mr Joyce was a leading critic of federal Labor’s now-defunct mining tax and has close ties to mining magnate Gina Rinehart, he appears to have an open mind on Mr Grylls’ controversial plan.
“Minister Joyce said the proposal was a matter for the state government and he would not run down any proposal that was designed to get a better deal for its constituents,” said a spokesman for Mr Joyce, who is currently acting PM.
But today it’s not so good, from The West Australian:
Mr Joyce, speaking in Canberra this morning, made his most explicit criticism of the plan from his WA counterpart that would see a $5-a-tonne iron ore “production rent” imposed.
“I don’t think a new tax is something we want,” he told reporters.
“We want to see the development of regional areas, and if the parties – both the State Government, the Federal Government and these major miners get together and say well lets work towards a process of seeing further development of regional areas, moving people to regional areas, growing towns in regional areas, that’s the outcome we want.
“I don’t think a new tax is going to inspire that growth. But of course if they don’t develop the mines then there’s no development there.”
His comments follow criticism by mining industry leaders of the plan at a major function in Canberra last night.
It’s not a tax Barnaby, it’s a royalty and if negotiated correctly then it will not impact investment at all. If applied today, the Grylls levy would leave RIO and BHP with iron ore margins above 90%:
These are super returns in today’s low interest rate world.
I acknowledge that we are in a market share war so there is a high risk that prices will fall again and much more volume will need to come out of the seaborne market. Some of it will eventually be from the majors too. That’s why I argue that the Grylls charge is too high. $2.50 would better. The amount should be calibrated so that BHP’s and RIO’s competitiveness is not adversely impacted causing them to lose volumes (and therefore investment). That level is more like $2.50 per tonne than the proposed $5 which would put them on par with Vale, from UBS:
However, margins as they are “economic rents” and the people of Australia are being reamed for the privilege of developing their dirt. Remember that this is a non-renewing natural resource owned by the people of WA and Australia. It’s depleting nature needs to be reflected in the revenue being received for their development.
I would like to see WA Nats also commit to paying down debt with the windfall (or to invest it strictly in infrastructure or an SWF). If the debate is about equity over generations then the revenue should be accordingly distributed over time.
Do-nothing Barnaby is defending rent-seeking over his own people.
Meanwhile, Brendan Grylls has no idea what he is arguing at the ABC:
Mr Grylls dismissed the criticism and said his party would not be backing away from its tax plan.
“There will be no stepping back. We will prosecute this argument until the day of the election,” he said.
The WA Nationals want to increase the current 25 cent per tonne production rental fee on iron ore mined by Rio Tinto and BHP Billiton to $5 per tonne.
That would raise an estimated $3 billion annually in new revenue.
Left with a massive drop in GST revenue in the wake of adjustments for record royalties paid during the mining boom, the Barnett Government has delivered record budget deficits and state debt.
The WA Nationals argue the new tax revenue would help return the budget to surplus and pay down debt, which is forecast to exceed $40 billion by 2020.
Mr Grylls said an increase in the rental fee was fair and justified.
“I plan on winning the argument. I plan on winning the support of mums and dads in Western Australia,” he said.
“I plan on winning over the politics of Western Australia to force Malcolm Turnbull who continues to deliver a fundamentally unfair share of GST.”
He savagely criticised federal Liberal MPs for failing to ensure WA received a greater share of GST.
“Every single West Australian [Liberal] MP that goes to Federal Parliament has the balance of power,” he said.
“If you X-ray them you cannot find a spine in a West Australian federal MP that votes for subcontracts but does nothing on the floor of the Federal Parliament to win the GST fight.”
It’s almost enough to pull my support for the levy. The GST has nothing whatsoever to do with the argument for the levy. Moreover, the GST is NOT unfair at all given the lagging formula delivered huge windfalls to WA in the fist half of the boom.
Grylls is just another rent-seeker.
