Grim result for coal industry

INDEPENDENT Tony Windsor, a long-time opponent of coal developments in the Gunnedah Basin, has effectively ensured the Labor party can introduce the Minerals Resource Rent Tax by backing the Gillard government along with fellow independent Rob Oakeshott.
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Dan Teal

Blair Price

Windsor, the member for the seat of New England, has supported the Caroona Coal Action Group’s resistance against the development of BHP Billiton’s Caroona Coal longwall project.

He has also taken shots at China Shenhua Energy’s Watermark project in the region.

Both Windsor and Oakeshott backed a Labor party government because of its approach to regional broadband access, renewable energy and climate change.

Independent Bob Katter stuck to his National party roots and backed the Coalition, but the Gillard government will retain power by a shaky two-seat margin.

Windsor said a Gillard government would be more likely to serve the full three-year term.

Given the growing support for the Coalition, he suspected a deal to form a minority government headed by Opposition Leader Tony Abbott would result in a quicker return to the polls.

In publicly announcing his support for the Gillard government, Oakeshott pledged his support of Prime Minister Julia Gillard, subject to “exceptional” circumstances such as maladministration.

Two tax hits coming to coal companies

Oakeshott and Windsor won a federal government review of the Henry tax reform proposals from their deal-making since the election.

“By June 2011, we have got a commitment to have the Henry Tax Review thrown into the public domain with full recommendations from government and a fair dinkum open debate about tax in this country,” Oakeshott said.

“That is a good and big outcome from this process and one that hopefully demonstrates this is not going to be a weak parliament, this is going to be a strong parliament."

Mine Life senior resources analyst Gavin Wendt is not counting on the two independents to oppose the MRRT, or even an enhanced version of this mining tax which he expects the Greens to champion.

He told ILN there was a very good chance the MRRT would be ramped up as the Greens wanted the revenue the original mining tax would take in.

Wendt crunched the figures of the MRRT and forecast this tax to bring in $2-3 billion of revenue in the first two years, not the $10.5 billion expected by Treasury.

Resources data company Intierra is estimating a $2.5 billion MRRT tax take in this timeframe.

While the coal industry is in the firing line to receive a profits-based tax, what was largely off the radar during the recent election campaign was the possibility of a carbon tax.

“I think there is a very good chance we will see a carbon tax if this parliament goes full term,” Wendt said.

“That’s going to have a huge impact on the coal industry and the energy industry in Australia.”

He said the Greens have flagged it and have got “Labor by the short and curlies on this one”.

On a more positive note, Wendt expects the new minority government to last about 18 months, which would be enough time for the wheels to come off.

“Everyone is going to play nice for part of the first 12 months,” he said.

“Labor and the independents certainly don’t want another election.”

Labor would be concerned about its skinny margins, while Oakeshott and Windsor may not want to go back to the polls because of the decisions they made in non-Labor electorates, Wendt said.

Hunnu Coal chairman Matthew Wood found some positives from the election result.

“A very sad day for those of us that love the Australian mining industry, but a great opportunity for developing mining economies such as Mongolia and for high-growth Mongolian-focused coal stocks like Hunnu Coal,” he told ILN.