From today’s The World Today on ABC radio. Economics correspondent Stephen Long discussing a report from KPMG commissioned by the Mineral Council of Australia. Full transcript here, emphasis is mine.
ELEANOR HALL: Does it kill the argument for the tax?
STEPHEN LONG: No I don’t think it does. It really is a design or implementation issue. It doesn’t remove the argument for the tax, which is that the public, which owns the resources hadn’t been getting a fair charge or a fair price for the exploitation of the resources and their development by mining companies.
And it’s also a question or assumption, I, KPMG actually acknowledges that in the long run you’re likely to see the capital markets and the people who fund this adapt and start funding it at that rate.
ELEANOR HALL: Well, interestingly KPMG was also behind the report the Government has been citing wasn’t it? That the tax will have no long-term effect on the industry. So which one of these reports do we believe?
STEPHEN LONG: Yes it does - amazing flexibility. Well KPMG actually raises that and they say that when they advised the Henry Tax Review on the tax and found that it would be neutral and wouldn’t have any impact on investment, they were looking at the macroeconomic impacts and weren’t taking into account these implementation or design factors, which changed the whole equation.
Now you could be cynical and say this is all pay-the-piper research and it rests on the assumptions. Now in this report that they provided for the Minerals Council, the Minerals Council commissioned it and I would point out that they give a disclosure that the financial monitoring is based on parameter instructions provided by the Minerals Council of Australia and it also assumes that that 40 per cent tax credit from the Government won’t affect the cost of equity or the cost of debt.
Now you would have to imagine that if the Government’s taking on 40 per cent of the risk that over time, when markets adapt and understand this, it should actually reduce the cost of funding a project. But that’s not their assumption.
ELEANOR HALL: At the same time presumably the Federal Government commissioned the other report?
STEPHEN LONG: Yes they did and I think the bottom line is - he who pays the piper calls the tune.
ELEANOR HALL: Stephen Long our economics correspondent, thank you.