There has been a lot of commentary questioning the revenue estimates being slotted into the Forward Estimates arising from MRRT. How is that the MRRT is expected to raise $10.5 billion figure over two years, while the RSPT (it quite brings a tear to the eye, that old acronym) was expected to raise $12 billion.
It fails the dumb blonde test because:
- The tax now only applies to iron ore and coal and affect just over 10 per cent of the number of firms that would have been dragged into the RSPT net.
- The rate has been lowered from 40% to 22.5%.
- The uplift factor has been raised to LTBR + 7%.
- Companies with profits under $50 million will not be liable to pay the MRRT.
- The analysts’ estimates of the impact of MRRT on the NPV of the affected companies’ projects is now around the 1% mark, compared with over 10% under RSPT.
Now Ken Henry has hinted that one major reason for the discrepancy in the revenue estimates relates to the use of updated commodity prices – he kindly pointed out that they had increased significantly this year (yes, we had noticed) - and exchange rate forecasts when calculating the figure for the MRRT.
What we need to know is how these new assumptions when slotted into the RSPT modelling – yes, ceteris paribus – would have affected the anticipated stream of revenue under RSPT. So we can compare apples with apples; so we can know what the government has in reality foregone in revenue by virtue of the “successful negotiation” with the three large mining companies.
There are some other reasons why the revenue from MRRT and RSPT would differ even if the assumptions on commodity prices and the exchange rate were identical. There are none of the tax credits and offset for project closure (hard to know what was being assumed there for the two year period) in MRRT that were part of the RSPT. Also companies do not receive a rebate for royalty payments if they are not liable for MRRT, which differs from the RSPT arrangement. We deserve to be told what is the dollar impact of these differences.
And I’m not quite sure how the dumping of the exploration rebate has been handled in terms of the revised forward estimates.
All up there is a strong case for disclosure and transparency – something that Treasury would always see as the hallmark of good public policy. I’m wondering what formal means exist to ensure this disclosure – through a Parliamentary Committee, Senate Inquiry, FOI? Any thoughts?
Oh, by the way, companies do not update their models every other week just because commodity prices have changed. Rather, a number of long term commodity prices are chosen and the modelling undertaken on the basis of these different prices. There is no monthly chopping and changing which would bring chaos to decision making … there’s a hint in there.
You are quite right Judith this is a departure from normal practice. Forecasts are published twice a year and coatings are conducted using the most recent forecast ( in this case Budget). Then any subsequent changes flow through as a parameter variation at MYEFO or PEFO.
Samuel J
7 Jul 10 at 4:26 pm
err it was changed merely on one month’s changes in commodity prices.
That fails the dumb blond test.
They were updated as ABARE told Treasury of their updated forecasts.
I think the current BOGS figures would tell even a dumb blond something is going on.
Treasury give us as much information in this as they give us in their budgets and even then Catallaxy crackpots get it badly wrong.
Why would dumb blonds need more information.
Yes the present tax is vastly inferior to the RSPT but then dumb blonds have to take a lot of the blame.
They didn’t understand it , complained about it, were blind to large mining companies keeping small companies silent and hey this is what we get.
Thanks.
This isn’t reality son this is catallaxy
Butterfield, Bloomfiled & Bishop
7 Jul 10 at 4:36 pm
Quite the gentleman aren’t you, Homer?
dover_beach
7 Jul 10 at 5:17 pm
Homer
you are Exhibit A that you don’t need to be blonde to be dumb.
jtfsoon
7 Jul 10 at 5:19 pm
Actually I would be really dumb if I thought the Soviet Union collapsed because of the financing of the Afghanistan invasion!
That isn’t reality son that is catallaxy.
Butterfield, Bloomfiled & Bishop
7 Jul 10 at 5:24 pm
Great post, Judith. I’m emailing my local member and senior libs to demand Wombat-Henry releases the information.
JC.
7 Jul 10 at 5:25 pm
“Actually I would be really dumb if I thought the Soviet Union collapsed because of the financing of the Afghanistan invasion!”
No one ever said that exactly. But how do you finance 5 million armed personnel when factory workers quip “they pretend t pay us and we pretend to work”?
.
7 Jul 10 at 5:28 pm
Moderator:
Homer Butterfield is spamming threads again with worthless trolling and flaming. Is there any chance we can have his comments restricted to the open forum or when Nazi economics is discussed?
JC.
7 Jul 10 at 5:28 pm
Speaking of worthless trolls, JC has to be the best of the worst.
rog
7 Jul 10 at 5:30 pm
…… factory workers quip “they pretend t pay us and we pretend to work”?
Ha. Homer knows that saying quite well. He practiced it for most of his adult life.
JC.
7 Jul 10 at 5:30 pm
Listen to JC’s pathetic whining, moderator moderator moderator – that boy over there was mean to me!
Anybody with more than one brain cell can see that JC uses freedom of speech to broadcast his abusive tripe and then pathetically pleads for regulation when the tide changes against him.
An arch hypocrite
rog
7 Jul 10 at 5:32 pm
I notice the two loons (Homer and Wodge) were let of the cellar.
JC.
7 Jul 10 at 5:34 pm
Wodgie:
Like you, Homer has absolutely nothing to add to a discussion. You both eat up pixels. There’s no reason for you two to ever comment.
you embittered, venomous loser.
JC.
7 Jul 10 at 5:38 pm
Homer Butterfield is spamming threads again with worthless trolling and flaming. Is there any chance we can have his comments restricted to the open forum or when Nazi economics is discussed?
.
I’m with JC.
daddy dave
7 Jul 10 at 5:43 pm
So what exactly does ‘let of the cellar’ mean?
rog
7 Jul 10 at 5:43 pm
Looks like DD is volunteering for fleas
rog
7 Jul 10 at 5:44 pm
Forrest,
yeah except I told you lot all about this a few days ago.
It does help to understand the topic if you are writing a bout it.
Treasury updates their forecasts when asked or as on this occasion prices have changed since they were previously asked to examine likely revenue from such a tax.
Forrest you never ever add anything to a discussion as you know nothing about it.
however this is a valued at catallaxy
Butterfield, Bloomfiled & Bishop
7 Jul 10 at 5:44 pm
Wow this thread went downhill fast.
Tillman
7 Jul 10 at 5:56 pm
Homer:
For the last time….
Judith has made the valid point that the raw numbers… the expected tax grab… from the first proposal to the revised one does not compute too well as the drop in the tax rate along with the allowances forming the new version is quite considerable.
After we’ve seen the fudging that has gone on from Treasury in the recent past it’s no longer possible to accept anything Treasury says without verification. That department is totally untrustworthy and completely politicized.
If you think you have the answer then perhaps you could show us the numbers by breakdown as to how there was only a small drop in receipts from the old to the new.
If not then piss off and stop wasting everyone’s time.
Are you able to provide the breakdown? Ummmm?
JC.
7 Jul 10 at 6:00 pm
“Treasury give us as much information in this as they give us in their budgets and even then Catallaxy crackpots get it badly wrong.”
Except Homer this whole policy has been a disaster from its inception and was full of mathematical holes. It was so bad it destroyed a sitting PM. Even with the new PM (a historic one at that) and all of its tweaks it still wreaks of bullshit. The common link to all this is Swan and Gillard.
The public has a right to know, after all treasury work for us. If there is nothing to hide, why not disclose?
DavidJ
7 Jul 10 at 6:21 pm
ABARE forecasts are only next fin year. At best the treasury forecasts, if based on ABARE projections, are extrapolations. Using any thing but LTA for commodity price projections three years out is pretty dubious.
Entropy
7 Jul 10 at 6:55 pm
I wonder if treasury have changed their models based on what they had learnt thru negotiations with the mining companies? If so it would ve nteresting to see what the RSPT would hav sized under the same assumptions. Which the government wouldnt want to be widely known as it might damage their reknowned reputation as economic managers, which we know about because they keep telling us.
Entropy
7 Jul 10 at 7:00 pm
Buses and iPhones don’t mix well.
Entropy
7 Jul 10 at 7:03 pm
Commodity prices in a projection are made the same way exchange rate projections are.
Mind you anyone who has looked at one budget would know that.
Entropy are you trying to show up Forrest.
Henry told us exactly why Treasury changed the commodity price projection.
David J no Rudd was gotten rid of because Caucus members are as adept at statistics as catallaxians are. the ALP was NEVER going to lose the next election.
Forrest again shows how stupid he is.Sorry he isn’t stupid he is simply mad.
He doesn’t read anything. So he can write something that was explained earlier.
this isn’t reality Son this is catallaxy
Butterfield, Bloomfiled & Bishop
7 Jul 10 at 8:07 pm
whatever
entropy
7 Jul 10 at 8:12 pm
Homer,
You’re too retarded and simple minded to be posting anything here.
Fat head, commodity prices are not just the issue, you retard.
No matter what commod prices were used we still don’t know how a material drop in the tax grab has basically caused a small retreat in the tax take of $1.5 billion.
Instead of telling us how comod prices were applied, explain exactly to us why the large change in the tax grab only caused a small movement in estimated future collections.
Here’s my guess. You haven’t got a clue, which is why you shouldn’t posting here, you gooose.
JC.
7 Jul 10 at 8:50 pm