The new agreement is also likely to not only see lower value resources including sand, gravel and limestone excluded from the regime, but exclude nickel mining and processing from the regime. That is another big win for the miners, who argued that the complicated, integrated nickel mining and processing process did not lend itself to the resources tax design.
The changes are all flowing from the government’s agreement that its ambitious plan to structure the tax as an effective 40 per cent “co-investment” in mining projects, skimming 40 per cent of profits but also bearing 40 per cent of the development costs and 40 per cent of the risk, should be replaced by a simpler tax on profits that beat the miners’ average cost of capital.
If the deal is confirmed as now expected, Julia Gillard will have met her first big test as Prime Minister.
Much more work will be needed to thrash out the fine details of the compromise, and smaller miners will need to be included in those talks. The government will also need to decide how it manages the revenue impact of the revisions, which will see the resources tax pull in less money than it would have. The proposed cut in company tax from 30 per cent to 28 per cent and the proposed increase in the superannuation guarantee from 9 per cent to 12 per cent have both been linked by the government to the resources tax and the revenue it was supposed to generate.
Those are however details: As soon as she became Prime Minister Gillard promised to settle the brawl with the miners quickly. The miners called a truce to their campaign against the tax in response, but warned that hostilities would resume if a deal was not clinched this week. It looks as if the new PM has met the deadline.
mmaiden@theage.com.au