Super tax has damaged Australia’s global invstment reputation :Rio Tinto

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“From my own perspective, this is my number one sovereign risk issue on a global basis,” he said.

Mr Albanese flew into Australia over the weekend for Rio’s Australian annual general meeting in Melbourne, which is scheduled for Wednesday.

Rio iron ore boss and chief executive for Australia, Sam Walsh, said the uncertainty over the tax proposal was delaying investment decisions.

But neither he, nor Mr Albanese, would list any that would be delayed.

“The problem we have is until we have certainty as to how this tax is going to be calculated, what it actually is, it actually makes it very difficult to make decisions,” Mr Walsh said.

He pointed out that after the consultation period, there would be a federal election and then a further wait before it was legislated.

“We are facing an extended period of certainty here and that in itself is a bad thing in that it is delaying projects,” he said.

Mr Albanese said new tax did not hurt the case for the proposed $US116 billion ($141bn) tie up of its iron ore operations with those of BHP Billiton, saying that the $US10bn-plus of synergies expected were more important than ever.

He again rejected government claims the tax would have reaped an extra $35bn in tax if it was put in a decade ago, saying Rio’s investments in the Pilbara would not have been as great had the tax been in place earlier.

His comments came as the resources industry said it was willing to negotiate over the resources tax with the federal government, as it was flagged that amendments to the controversial proposal were likely to be made.

Woodside Petroleum chief executive Don Voelte said today that the industry was ready to negotiate a different tax and wanted to give a fair share back to Australians.

“The key is how you balance the right amount of money back to the citizens, versus the economic return on billions and billions of dollars of investment,” Mr Voelte told ABC Radio today.

“People keep saying those are our resources but those resources aren’t worth anything in the ground, it takes billions of dollars by those companies at great risk.”

Mr Voelte’s comments followed a report in The Australian today that suggested the mining tax consultation panel would urge the government to reconsider the 40 per cent tax refund for failed projects.

Fortescue Metals chief executive Andrew “Twiggy” Forrest stepped up the campaign against the super tax yesterday, highlighting that the 40 per cent refund on failed projects did not benefit miners when trying to attract capital for new mines and expansions.

Australia’s leading public economist, Ross Garnaut, backed the miners’ concerns about the risk to their financing abilities under the government’s proposal to have a 40 per cent interest in each project and offering to repay a miner for 40 per cent of the loss should the mine fail.

“Mr Forrest was saying that although he’ll be getting what is in effect a government bond equal to 40 per cent of his negative cashflows, he won’t be able to fund that,” he told Inside Business yesterday.

“Well, if that really is the case, then that’s something that has to be examined.”

Any move to wind back the tax break on losses would save the government hundreds of millions of dollars, delivering flexibility to address one of the key complaints about the tax — the 6 per cent profit threshold after which the super-profits tax applies.

Treasurer Wayne Swan said today mining companies were acting “hysterically” by exaggerating the amount they would pay under the tax.

“Miners have access to a range of generous deductions, which means that they are paying well below the official (corporate tax rate) of 30 cents in the dollar. So those companies are not telling the truth,” Mr Swan told ABC Radio.

But the federal opposition said the government’s claim that mining companies paid an effective tax rate of between 13-17 per cent was based on a working paper by a graduate student at an American university.

“This is the shonkiest piece of work you’ve ever seen,” opposition finance spokesman Andrew Robb told ABC radio.

Mr Robb rejected as a “classic piece of spin” the government’s argument that the figures, contained in the Henry tax review, were sourced from National Bureau of Economic Research in the United States.

Queensland Premier Anna Bligh, who held discussions with the treasurer on Friday, said today there was some need to reconsider the rate at which the super-profits tax cuts in.

“We’ve made that clear, we’ve put that to the federal government,” she said.

It was not in the national interest that the government and miners were campaigning against each other, Ms Bligh said.

The government was widely expected to make changes to the proposal, with Resources Minister Martin Ferguson saying yesterday that there were refinements that could be made to make the tax more appropriate and balanced from a mining point of view.

But he said the headline rate was going to be 40 per cent.

The mining sector has stepped up its campaign against the proposal, with Rio Tinto urging its London investors to voice concerns about it and the Minerals Council of Australia launching a radio advertising campaign today against the tax.

Mr Albanese told The Times that institutional investors in London needed to add their voices to the growing anger over Australia’s proposed super tax on mining profits.

Additional reporting: AAP