Swan calls for calm over mine rent tax

Treasurer Wayne Swan has launched a salvo at mining executives from his "Treasury
bunker" as the war of words over federal Labor's proposed resources rent tax
intensifies.
Mr Swan on Sunday called on shareholders to tell company managers to "calm down, get
into the process and engage properly", as he spelt out in detail the benefits of the
new tax regime.
Some mining executives - such as Queensland's Clive Palmer - had been engaging in
"inflammatory rhetoric about despotic regimes and communism", while others had
calmly started negotiating on transitional arrangements.
"The second approach will work for companies, the first will not," the treasurer
wrote in an economic note.
"Threats and abuse will not alter the government's resolve."
Mr Swan said the note "comes to you from my Treasury bunker just two days out from
this year's budget".
But outside the bunker, big miners BHP Billiton and Fortescue Metals Group weren't
backing down from their claims that Labor's so-called resource super profit tax
(RSPT) would impact on expansion plans.
"The uncertainty is in place - it would be very difficult to approve any of those
projects," BHP chief executive Marius Kloppers told ABC TV.
Fortescue executive director Russell Scrimshaw said his company would shift its
focus to projects outside Australia if the tax was imposed.
"We do have offshore assets that we would certainly look at," he told Sky News. "New
Zealand is one example."
But Mr Swan insists the critics are wrong.
"Any tax change will have its opponents, but history tells us the complaints can
sometimes be overstated," he said.
Labor's proposed tax contained two key elements that had been underestimated.
RSPT deductions were transferable and also refundable if a project wound up, Mr Swan
said. Essentially, the government was now sharing the risk on the downside as well
as the upside.
"This helps to make start-up mines more viable to develop."
The treasurer rejected claims by some mining companies that the government was
double-dipping by taxing super profits on top of company tax.
That reading was so wrong "it's hard to know where to start", Mr Swan said.
But he did. He argued:
* the RSPT is not in addition to company tax, but deductible from it
* company tax is being cut from 30 per cent to 28 per cent
* the RSPT applies to less of a mine's income than company tax or royalties
* rates vary according to project returns.
"Projects involving highly valuable resources will tend to pay more tax - to
compensate the Australian people for losing a valuable, non-renewable resources," Mr
Swan said.
"More marginal projects will tend to pay less."