The Green unknown

WITH many companies holding off important business decisions until the outcome of the federal election, Australia looks set to face another dangerous period of uncertainty even though markets have largely priced-in a Labor party victory.
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Mine Life senior resources analyst Gavin Wendt.

Blair Price

The perception of Australia as a resources-friendly country is already damaged, as evidenced by the response from mining company executives to this year’s RESOURCESTOCKS magazine World Risk Survey.

While the federal government has triggered a wave of uncertainty with its mining tax proposals there are growing concerns about what is coming from the mouths of the Greens party.

Mine Life senior resources analyst Gavin Wendt told ILN there was a very real prospect that the Greens would assume the balance of control in the Senate.

“What’s so scary about that is that it really does lead us into the unknown,” he said.

“The scary part about the mining tax is the Greens seem to change their view from day to day and also seems to depend on who you to talk to in the party.”

The Greens have discussed working with the government of the day but have also made several calls to resurrect the resources super-profits tax.

Since the government decided to replace the RSPT with the Minerals Resource Rent Tax, Treasury also discovered the older version of the tax would have raked in about $24 billion of revenue, double the intended tax take.

In the event of a Labor victory on Saturday and a Greens-controlled Senate, Wendt suspects the Greens will push very strongly for “some sort” of changes to the MRRT.

He said that could involve ratcheting up the overall tax rate to where the original tax stood, or an additional impost on coal, or broadening the tax to the uranium sector, or specific handicaps for those two industries.

Wendt expects that uncertainty will remain for the first weeks and months of the new term of government, especially if Labor gets re-elected.

He said it was easy to say the markets have priced-in a Labor victory.

“But you can’t price-in that ongoing uncertainty of what might happen if there are changes to the mining tax.”

Runge chief executive Tony Kinnane recently said uncertainty was the industry’s biggest enemy.

The company is already redeploying people offshore.