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  • Mining giants push demands on Rudd over resources super profits-tax

     

    Related Coverage

    Miners to launch new anti-tax ads The Australian, 10 hours ago

    The statement concluded by stating that “at present, there is no formal acknowledgment from government that these key issues will be addressed”.

    But while the government remains committed to a 40 per cent tax rate, the Prime Minister confirmed just hours after the meeting today that it might be prepared to budge on transitional arrangements that were “particular” to certain industries affected by the tax.

    “On the different qualities and different circumstances of let’s call it `sections of the industry’ it’s quite plain that we will be considering with different parts of the industry their respective requests for transition arrangements which may be particular to their industry,” Mr Rudd said in a press conference held before question time.

    “Whether we respond positively to that is a separate matter, but that is currently the negotiation process that Martin Ferguson is directly engaged in.” 

    His comments came as Tony Abbott attacked the government for not considering more flexible tax rates for different parts of the resources sector as part of its consultation with the miners.

    The Liberal leader is maintaining his opposition to the 40 per cent resources super-profits tax and criticism of the government for its lack of consultation with the miners before announcing its detailed proposal.

    Mr Abbott said the consideration of a flexible tax for different minerals should have been addressed before the announcement on May 2 of the new tax.

    “This is a good question and it’s one that the government should have thought about before it made its decision,” he said this morning.

    “I mean, this is a government which decides first and thinks later. Again, it’s no way to run a country.

    “And this idea that the Prime Minister is somehow going to demonstrate how tough he is by having a great big fight followed by a great big backflip is just crazy.”

    Mr Abbott’s comments follow on from question time yesterday when Opposition MPs tried to target the government over the level of consultation it engaged in before pushing ahead with the tax.

    Mr Rudd hit back in question time today, seeking to portray himself as a reformer pitted against an anti-reform Coalition.

     “This is a debate between those who support the reform and those who oppose reform,” he said. “Those who support reform believe a profits-based regime for the future is the right way to go.”
     
    Mr Rudd sought to link the Coalition to the interests of mining magnates and billionaires like Clive Palmer, and to those who were opposed to change in the industry.
     
    “The Leader of the Opposition stands alone with his new best friend, the pin-up boy of the Liberal and National Party, Clive Palmer.
     
    “Mr Speaker, they (the opposition) will simply take a position in this debate which is subservient to the likes of Clive Palmer in pursuit of a sectional interest, in pursuit of an individual who bankrolls the Liberal National Party in Queensland.”
     
    Earlier, spelling out his position on mining taxation reform, Mr Abbott said he thought the existing regime was “fine”.

    “The better the mining industry does, the more tax it pays. It pays more tax through royalties when production goes up. It pays more tax through company tax when profits go up. That’s the way it’s always been. That’s the way it should stay.”

    The Rudd government is now negotiating “generous transition provisions” looking at different resource sectors in different ways.

    Mr Ferguson said today the petroleum sector, minerals sector and low value resources sector, including sand and gravel, had argued against uniform transitional arrangements for the government’s proposed resources profits tax.

    “They are each arguing that there is no one-size-fits-all model,” he told ABC Radio.

    “What I am doing is actually taking on board the generous transitional arrangements that we indicated we’re prepared to think about and working them through with the Prime Minister and the Treasurer and treasury and actually thinking about what are the potential nature of those transitional arrangements.

    “We’re not talking about different tax rates there will be headline rate of 40 per cent.”
     

  • Govt under scrutiny over mining tax ads

    Govt under scrutiny over mining tax ads

    Yahoo!7 June 16, 2010, 9:30 pm

    Related Links

     

    The Rudd Government is facing an inquiry into its broken promise on political advertising.

    7News can reveal a public servant who recommended the advertising watchdog be dissolved is now being paid a small fortune to do the job himself.

    Auditor-General Ian McPhee will front a Senate committee in Canberra tomorrow to publicly detail his concerns about Prime Minister Kevin Rudd’s back flip.

    Earlier this year Mr Rudd dumped a system which proposed advertising campaigns be scrutinised by the auditor-general independently.

    He has since passed the role onto a committee of former public servants, including advertising review author Dr Allan Hawke.

    The way in which Mr McPhee was swept aside by Dr Hawke’s review has guaranteed a new controversy.

    Dr Hawke is career bureaucrat and former chief-of-staff to Paul Keating. His review led to Mr McPhee being dumped from the independent role.

    Dr Hawke took 18 days and was paid $60,000 to recommend a new panel to oversee government ads, which he now heads.

    He works four days a month for $175,000 a year.

    The move came despite Mr Rudd’s “100 per cent guarantee” promise before the 2007 election that government advertising would be independently reviewed.

    In an explosive letter, copied to Mr Rudd, Mr McPhee said the government review “seriously misunderstands” his role.

    He said it contains “a number of inaccuracies” and “generally softens” the rules removing “rigour and discipline in this sensitive area.”

    Mr Rudd suggested Mr McPhee was uncomfortable being the umpire of government advertising

    “The Auditor-General in fact wrote to me and indicated that he regarded this as potentially in conflict with his position,” Mr Rudd said.

    Other politicians, like Independent Senator Nick Xenophon, see it differently.

    “Make no mistake, the government has sacked the independent umpire on this,” he said.

    “The Australian people have every right to think this stinks.”

    Greens Senator Bob Brown has a bill before parliament to reinstate the auditor-general’s role, as the $38 million taxpayer-funded mining tax ad blitz continues to flood our screens.

    “It’s again an example of the executive government simply changing the rules to benefit itself,” Senator Brown said.

     

  • Why the Wind Market is hurting

     

    “Demand for wind is simply not at the level where a lot of these companies that are making these investments woud like it to be,” says Matt Kaplan, a senior analyst with IHS Emerging Energy Research.

    The first major factor in the slowdown is the drop in electricity consumption. With lower demand for electricity, utilities don’t have to procure as much renewable electricity under their state targets. This has impacted a number of project owners who sell power on the competitive wholesale market.

    Secondly, natural gas prices have fallen about 65% since 2008, from $11 per MMBtu to around $4 per MMBtu. Given that wind competes directly with natural gas, this makes the resource much less competitive. And with more shale gas reserves being tapped in the U.S., prices will stay low in the coming years.

    Finally, the lack of a long-term national target for renewables in the U.S. is causing major component and turbine manufacturers to reconsider investments in the country. As a result, job growth in manufacturing will likely fall flat again this year.

    The reduction in demand for wind means that prices for turbines are coming down. Utilities are watching the equipment prices and waiting to sign power purchase agreements, wondering if prices will continue to fall. Meanwhile, more competition in manufacturing – particularly from asian players – is forcing turbine suppliers to focus heavily on differentiating their products in an increasingly crowded field.

    “It’s a tough market out there…[but] we keep focusing on technological innovation,” says Mike Revak, director of Siemens’ American wind division. “Clearly we don’t sit idly by…staying on the cutting edge of technology gives us a competitive position.”

    Revak says that Siemens won’t see installations of its turbines drop much in the U.S. this year. But if the demand picture stays they way it is today, sales will certainly be impacted into 2011. Revak believes that a federal renewable energy target could not only increase demand for wind, it could also help make the industry more competitive during challenging times like today.

    “Without that that long term policy, you can’t drive down the cost of wind. You can’t have the innovation along the supply chain,” says Revak. “With that support we can make the investments and improvements to make wind more competitive with all energy.”

    So what does all this mean for the wind industry this year? Matt Kaplan of IHS Emerging Energy Research predicts a 40% to 60% drop in installations.

    Things could potentially turn around over the next 12-18 months. With a long-term national target in place and an increase in demand for electricity, wind might be able to make a good comeback. Clearly, despite the short-term retraction, many of the largest companies in the world are still very bullish on wind. And some executives, like Sonia Bonfiglioli, CEO of the leading components manufacturer Bonfiglioli, believe that the downturn will eventually be a good thing for the industry.

    “Renewables faced a lot of speculation…from this crisis the real businesses will survive. I’m convinced that this will move toward a real industry with competent businesses and people, and no doubt it will grow,” says Bonfigioli.

    The big unknown is exactly when the growth will pick back up. It’s still uncertain how quickly the industry can rebound, given all the factors working against it.

    To hear more analysis on this issue, listen to this week’s podcast linked above.

  • Wanted: Some belief in a leader

     

    Of course, we also wanted a leader who believed in things and would stick to his guns. A leader we could respect. A leader who, if he went on and on about something being really important, wouldn’t just ditch it when the going got tough.

    A big part of Rudd’s problem is inexperience. As a result of that inexperience and bad advice he has seriously underestimated the electorate. He thought he could stay popular by appearing to pander to our whims.

    Turns out we have no respect for a leader who merely gives us what we say we want. Somewhere inside us there is a semi-conscious understanding – probably born of our experience as children – that we need a leader who sometimes imposes on us things we don’t fancy but he knows are for our own good.

    The tyro politician’s error is to assume success is simply about never telling us anything we don’t want to hear. That’s the appearance but there’s a deeper and more complex reality.

    In the months before the 2007 election, Labor’s focus groups detected public dissatisfaction over the rising cost of living. Rudd tried to capitalise on this disaffection by expressing great concern about the issue and implying – without actually promising – there was something he could do about it.

    This was the origin of two of the early setbacks in Rudd’s term as Prime Minister, the failures of Fuel Watch and Grocery Watch, the first bits of evidence fostering the public’s growing (if unfair) conviction that Rudd is all talk and no action.

    Guess what? If you conduct focus groups today you’ll find much dissatisfaction over the rising cost of living. It is, I suspect, an almost permanent state. The cost of living is always rising – but so too are wages and pensions. We have genuine cause for complaint only when the rise in prices is outstripping the rise in our incomes. And though that happens from time to time, over the past 10 or 15 years wages have grown a lot faster than prices.

    So our unceasing complaint about the rising cost of living – always changing its focus, from the cost of petrol to interest rates to the price of electricity – is just another case of us wanting to have our cake and eat it. We wish we lived in a world where prices never rose but incomes rose as they do now. Dream on.

    Our problem is not with the rising cost of living but with our efforts to keep up with the rising standard of living. We worry about every price rise because, in our unceasing attempt to keep up with the Joneses (who strive to keep up with us), we over-commit ourselves. When you spend all your income – perhaps more than your income – you always feel poor, always have trouble making ends meet, no matter how high your income.

    Politicians who imagine this kind of foolish selfishness defines the electorate underrate us. We’re looking for politicians who, in their concern to protect and advance our interests, demand more from us.

    Rudd thinks we went cold on his emissions trading scheme because his opponents gave us an exaggerated opinion of what it would do to our cost of living. But Hugh Mackay, the noted social researcher, has a roughly opposite take: having been convinced by Rudd and others that our greenhouse gas emissions need to be reduced, we expected to be asked – even compelled – to change our behaviour.

    When cities were running out of water, we had to stop using water in certain ways. Few resented this and almost all complied. The more we complied the more convinced we became of the seriousness of the problem and the need for strong action.

    With climate change, however, no immediate demands were made on us. This was partly because of Rudd’s misguided fear that making demands on us would make him unpopular.

    Mackay makes the psychologist’s point that our changes in attitude don’t last unless they’re quickly and strongly reinforced by a change in our actions (a truth that doesn’t fit easily with economists’ aversion to moralising, compulsion and even voluntary action, in favour of mere changes in prices).

    Now, thanks to his great misstep in abandoning his trading scheme, Rudd lacks the moral authority to be believed even when he assures us the mining companies’ claims that the resource tax would damage the economy are self-serving scaremongering.

    Ross Gittins is economics editor.

     

  • Olympic Dam expansion at risk over tax: Morgan Stanley

     

    “We think further project curtailments, including that of the $US20-$US40bn Olympic Dam project, are likely if the RSPT remains in its current form,” he said.

    “Under the RSPT as proposed, the project has no economic value, in our view.

    “The RPST reduces the net present value of the project to an extent that it becomes negative, and return on invested capital below minimum hurdle rate of 15 per cent used by the mining industry.”

    BHP has undertaken a feasibility study into the expansion of Olympic Dam which could see the advent of open pit operations in addition to the existing underground mine.

    Xstrata earlier this month shelved spending on two Queensland projects expected to cost a combined $6.6 billion and employ 3250 workers, including the $6bn Wandoan coal project in the Surat Basin.

    Fortescue Metals last month also put $US15bn of projects in the Pilbara on hold because of the uncertainty surrounding the tax.

    Campbell said key changes on the RSPT are needed to enable projects to proceed including lifting the basis of a super profit to a minimum of 10 per cent, and preferably 15 per cent, from the 6 per cent proposed.

    This issue of where the tax kicks in has been a key issue for Fortescue boss Andrew Forrest.

    Morgan Stanley’s note came as the Rudd government is said to be considering modifying the tax for different minerals in the first sign of compromise in its battle with the industry.

    Campbell also called for the headline tax rate to be reduced to 20 per cent from the proposed 40 per cent.

    Morgan Stanley’s preferred mining exposure is copper and companies with assets outside Australia.

    Campbell said there are three primary areas where the RPST could be challenged under the Australian Constitution after discussions with a “leading constitutional legal firm”.

    bennetm@theaustralian.com.au

  • Tiny desert town goes solar in a big way

     

    Each 240-foot-long trough row concentrates the sun on photovoltaic modules attached to the edges of the arrays. That boosts the solar cell’s electricity production as does a tracking mechanism that allows the arrays to follow the sun throughout the day. Such concentrating photovoltaic systems — which Skyline calls “high gain solar” — have been a niche market due to their relatively high costs. But as solar cell prices decline and solar thermal projects get bogged down in environmental disputes, they have become increasingly attractive as they can be built near utility substations and plugged directly into the grid eliminating the need for expensive new transmission systems.

    Skyline has pushed to lower costs by using common materials — glass, steel — and by designing the arrays so their components can be mass-produced by automotive manufacturers. The company last year struck a deal with the Michigan subsidiary of Canadian auto manufacturing giant Magna International to make components for its HGS 1000 solar system.

    In other news on the solar frontier Thursday, Silicon Valley startup MiaSolé said the National Renewable Energy Laboratory had confirmed that the company’s copper indium gallium selenide solar cells have 13.8 percent efficiency in production. Such thin-film cells typically have a lower efficiency than standard polysilicon solar cells but are cheaper to manufacture. With an efficiency approaching 14 percent, MiaSolé could give some standard module makers a run for their money.