Greens keen to tap super to keep coal local

THE Greens see no reason why a current proposal to develop tax incentives to entice superannuation funds to invest in Australia’s infrastructure cannot be replicated to promote local investment in the country’s mining industry.
Greens keen to tap super to keep coal local Greens keen to tap super to keep coal local Greens keen to tap super to keep coal local Greens keen to tap super to keep coal local Greens keen to tap super to keep coal local

The first Clermont coal leaves the stacker/reclaimer. Image courtesy of RTCA.

Staff Reporter

The proposal was put forward in a briefing paper prepared by Naomi Edwards to back up the Greens support of a super profits resources tax.

Entitled foreign ownership of Australian mining profits, the paper also suggested slowing down the rate at which minerals were extracted to a level where Australian investors could make a significant contribution to their development.

“Australia is capable of extracting its own resource base – over time, but it is not capable of extracting its resource base at the rate at which foreign investors can,” it said.

“The obvious mechanism for achieving this would be via Australia’s extremely large pool of superannuation assets, over $1280 billion, which is currently heavily invested in cash.

“There is no reason why superannuation funds could not invest directly in mining, if they are investing in roads and railways.”

Another argument was to retain more value from these resources by increasing the value-add component and sourcing it locally.

“With diminishing economic resources, a discussion about optimal national extraction rates, value-adding and profit ownership ought to now occur,” the paper stated.

“The ABARE new project report lists only $5 billion of planned new investment in mineral processing compared to $38 billion of extraction projects.

“Foreign owners are unlikely to want to invest in value adding in Australia; again more investment by Australian investors would be required.”

Mining lobby group the Minerals Council of Australia was quick to hit back at the report, labelling it xenophobic and based on flawed projections, which it said made a crude case for punitive new mining taxes.

At the heart of the paper were estimates that $50 billion in earnings derived from local mining investments would go offshore during the next five years, and that Australians were unaware of the rapid rate of foreign ownership of minerals taking place in their own backyard, adding that 83% of the industry was now controlled by overseas groups.

The paper also stated that of the $265 billion to be earned by foreign owners in the next five years from their Australian investments, $50 billion would leave the country as dividends, while $205 billion would be re-invested in further mining developments. Of that, more than half is forecast to come from iron ore and coal.

“The RSPT was an attempt to retain some of this value for Australia and would have preserved about 20% of forecast foreign profits for Australians,” it said.

“The percentage of foreign ownership is on a rising trajectory – the Foreign Investment Review Board approvals for mining grew from $20 billion in 2007 to $75 billion last year.

“Given the enormous investments being made ($24 billion in iron ore, $10 billion in coal and $3.5 billion in gold) in mining by foreign owners, we can conclude that the rate of extraction will increase over the next 10 years and foreign ownership will creep up from its current level of 83%.”

MCA chief executive officer Mitch Hooke said the paper was not “based on real figures” and he was somewhat perplexed by the numbers being bandied about.

“I don’t see where they get the $50 billion from and you really need to go to the motive here,” Hooke told ABC News Radio.

“The Greens are not about generating wealth for all Australians from Australia’s premier industry, they are about shutting it down.

“Senator Bob Brown is on record as saying he wants to close down the coal industry, ban uranium and now he wants to revert to a tax that will tax us out of existence.

“They don’t have the real figures and they don’t seem to have an understanding of how the wealth is generated.”

Hooke said it was clear the Greens had no intention of promoting the development of the country’s minerals industry, adding the report was irreconcilable with the facts.