PERTH (miningweekly.com) – Queensland’s minerals and energy sector has been heartened by the state’s attempt to have the federal government overhaul its proposed resources super profits tax, the Queensland Resources Council (QRC) said.

“Like state Treasurer Andrew Fraser, the Queensland resources sector acknowledges that a national resources taxation regime can work, but also that the model confirmed in last night’s federal budget will not work,” said QRC CEO Michael Roche.

Roche noted that with more than A$100-billion worth of new resources investments in Queensland under the microscope as a result of the super tax, the Queensland government has “every right” to be concerned about the future of the investment, regional development and job creation.

The state’s initiative in securing a meeting with Commonwealth Treasury officials was welcomed, but Roche said that the reality was that the federal government’s consultation agenda was centred on implementation of the super tax, not its rationale or design.

‘The flaws in the super tax are self-evident. Fraser has zeroed in on the fact that the profits-based tax that has been in operation for more than 20 years in the offshore oil and gas industry offers double the threshold rate of return before kicking in, and when it was introduced, it applied only to new projects.”

Roche added that Fraser was on the right track, although the reality was prevailing rates of return necessary to justify a new resources investment in Australia were well north of even the 11% applying to the offshore oil and gas tax.

He added that the strength of industry opposition to the super tax was ‘palpable’ with industry veterans such as Xstrata’s CEO Mick Davis calling it the biggest assault on the mining industry in living memory.

“The magnitude of the tax, its retrospective application and the absence of consultation ahead of its announcement has put Australia under a cloud as a reliable place to invest the billions needed to start and operate resource sector operations,” Roche said.

“The government’s promise of industry consultation extending for several months beyond the next election only risks worsening the anticipated flight of new capital to Australia’s resource competitors including Canada, Chile, Brazil, Indonesia and South Africa.”

Roche said the QRC had written to Queensland federal MPs and Senators offering them briefings on the implications of the current super tax proposal and how remodelling could stop new resource investment heading offshore, which, he said, must be viewed as the largest risk to achieving a budget surplus by 2013.

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