I have been out of the country for a little while and the country seems to have gone to hell in handbasket in a very short time.
How could this be? There are really only three types of governments: ones that achieve real reforms (rare); unimaginative, reasonably competent, minding the shop types (probably the predominant type); and disastrous and destructive. Where does the current government fit?
I am amazed that there are no signs of resolution on the RSPT; if anything, things have worsened including the announcement of the government undertaking an anti-mining industry advertising campaign, using some sort of “emergency” power. Truly astonishing.
Perhaps even more amazing is the idea that the industry superannuation funds will go into bat for the tax. Memo to Trustees: your sole interest is to act in the best interest of the members (Governance 101). To act in any other way is to act unethically, unprofessionally and possibly unlawfully.
Superannuation members are interested in maximizing the returns on their funds under management. To use members’ funds to pay for a campaign in support of RSPT is unimaginable. Why not advocate the nationalisation of the banks next? Am I being cynical when I suggest that this may be some sort of quid pro quo for the lifting of the SGC from 9% to 12%, which was NOT a recommendation of the Henry Review.
What also happened to the idea of an old tax (the royalties) being a good tax. And don’t believe the estimate in the Henry Review of the deadweight losses of the royalties being 70 cents in the dollar; this is just unbelievable.
And what about the extraordinary compliance costs of RSPT? Where is this factored into the Treasury’s analysis? In fact, the modelling appears to assume that there are ZERO DEADWEIGHT LOSSES associated with RSPT. This must be some sort of joke.
It is one thing to levy volume-based royalty payments on a project by project basis – this is relatively straight-forward and easy to implement. It is another thing altogether to levy a profits-based tax on a project by project basis.
Many companies will not account for profits on a project basis – it makes little sense; commodity by commodity is not uncommon. The allocation of joint costs becomes a nightmare – think HUGE ATO manual. RED TAPE – wasn’t the government going to reduce this? – will escalate enormously.
Economists, including I’m sure those boffins in Treasury who dreamt up RSPT, are inclined to look down their noses at accountants. But I’m sure if you ask any accountant what they think of RSPT, they will hesitate, sputter and let you know that it can be done but with great difficulty and cost and that they will get back to you.
All up, a very sad time for a country with such fantastic natural resources as well as many other advantages. At least, the Government and the Treasury can be relieved we will not be catching the Dutch disease!