RSPT revisionism

Kevin Rudd was back on TV talking about the RSPT last night.

Number one, why did we originally call it a resource super profit tax? Because it was designed to tax super profits. In other words, we understand acutely I come from the mining State of Queensland – that these are massively capital intensive projects and they therefore require long lead times. But if you get to a point where you are generating sustained super profits then it’s right for the people to say we want a larger slice of that action. That’s what the argument was about.

He has obviously learned his line since May 2010 when the tax was first introduced. When asked on 6PR what a super profit was Rudd offered this explanation:

A super profit will be defined as if you’ve got a company … [that's] investing a certain amount of money what you then do do is deduct their expenses.
What you then do do also is deduct further the amount which would be collected if for example they were investing their funds in long-term bond markets. In other words what would constitute a reasonable rate of return on investment.

On his second attempt Rudd offered

Which is you have the total investment of the company, the total earnings of the company, you deduct their expenses.
And then of course you look at what would be a normal rate of return for that company if it were investing its money elsewhere, and it’s only if they go in excess of that is a super profit tax imposed.

On the third attempt

It is calculated on the basis of a company in terms of first of all, their total level of investment, secondly the revenues they earn in a given year, thirdly you remove the expenses that they generate in a given year, fourthly you then take into account what that company would otherwise earn if they were putting their money, for example, into an investment on the long term bond market, and it’s only if they are profitable using that formula, and earning super profits, that you would impose this… tax.
It’s not foreign, for example, to all those folk who are currently operating up there on the Northwest Shelf, the Petroleum Resource Rent Tax has operated for the last 20 years and on that basis huge projects, like the Gorgon project, have come into being.

Mind you on Q & A he didn’t say what a super-profit was, just that it was meant to be taxed. In emails that were released under FOI legislation a Treasury official is quoted as saying:

Expressions like “tax is payable only after providing a normal return to shareholders” are best avoided.

So the obvious questions are; does Kevin Rudd now know what a super-profit is, and does he still believe that normal profits are equal to the long-term government bond rate?

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15 Responses to RSPT revisionism

  1. Token

    So the obvious questions are; does Kevin Rudd now know what a super-profit is, and does he still believe that normal profits are equal to the long-term government bond rate?

    After seeing Obama re-elected via vacuous populism, why would anyone think that Rudd would not try the tricks from 2007?

  2. Big Jim

    The only reason anyone would invest in our cowboy resources sector, yee-hah, God love ‘em, would be in the hope of super profits. Super profits are what you use to break even from super losses.

    Krudd is as interested in finance as Gillard is in foreign policy, and it shows.

  3. I am the Walrus koo koo k'choo

    So glad he’s out of the Lodge.

    ‘It’s right for people to say we want a larger slice of the action’.

    On what basis is it right?? Because some fucktard with a bowl cut and personality disorder says so??

    What an appalling turd.

  4. David

    I think the best way for him to explain it would be by analogy.

    For example, if an individual was earning approx 60K per annum for a number of years. By virtue of working hard enough and long enough maybe one day they could get a promotion that has them earning 100k per annum.

    How much extra tax would you take from said individual if you considered it a super profit. After all it’s right for people to take a slice of the action.

  5. Steve of Glasshouse

    You have all missed the point .It’s the prolixity that
    counts in the K Rudd narrative.

  6. This is democracy. Where people completely ignorant of economics, are given responsibility for an economy, by other people completely ignorant of economics.

  7. Brian of Moorabbin

    Its all about the programatic specificity…

  8. A super profit is defined by the jealousy and the financial need (and greed) of the Labor politician implementing the tax. It is a goalpost that shifts ever upward.

  9. Aqualung

    You can see the subtlety of the NBN – that thing will never turn even an ordinary profit.

  10. Frank

    Because some fucktard with a bowl cut and personality disorder says so??

    But which one: narcissistic, borderline or psychopathy?

  11. ar

    Chris Richardson called the RSPT a “turbo charger”…

    Huh? More like rev limiter…

  12. H B Bear

    Why didn’t KRuddy ask The Goose?

    He was the one who picked it out of the Wombat Whisperer’s bag of tricks after sitting on it over the Christmas break.

  13. johno

    The obvious question is why wasn’t he asked to explain what the super profit tax by an ABC employee? They keep telling us that they hold government’s to account. Why don’t they hold this government to account?

  14. Rabz

    But if you get to a point where you are generating sustained super profits then it’s right for the people to say we want a larger slice of that action.

    Inspirational.

    Spoken like a true Fiscal Conservative.

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