MINING billionaire Andrew Forrest has claimed the mining tax will raise between nothing and $50 million from his company, Fortescue Metals Group, during the first five years of the levy.
With critics saying proceeds from the tax will fall well short of revenue targets, Mr Forrest yesterday stepped up his attack on the government, blasting forecasts that it will raise $10.6 billion as a "charade".
He also escalated his war of words with the Treasurer, Wayne Swan, who has accused Mr Forrest of using his wealth and influence to pursue vested interests.
"I would say we will pay between zero and $50 million of MRRT [minerals resource rent tax] some time in the next five years I am not sure when it is and it will depend on iron ore prices. But will it raise the $10 billion? No," Mr Forrest said at the National Press Club in Canberra.
If accurate, the prediction suggests Fortescue would receive hefty concessions under the tax. Stockbrokers expect the company's pre-tax profits to exceed $20 billion in the next five years.
Mr Forrest's prediction is the latest blow to the government's forecasts after the chief executive of BHP Billiton, Marius Kloppers, last month said it was "impossible" to say how much mining tax it would pay. Treasury expects that BHP, Rio Tinto and Xstrata which helped design the tax will pay 90 per cent of the tax between them.
However, Mr Forrest said the multinational miners had "fleeced" the government in the secret talks, which took place after Labor dumped Kevin Rudd as prime minister in mid-2010.
Mr Forrest has threatened to challenge the mining tax in the High Court.
Mr Forrest, whose speech was about improving employment among indigenous Australians, also blamed the federal government for the weak condition of the economy, saying its decisions had made businesses more uncertain.
Asked if he would consider entering federal politics, after billionaire miner Clive Palmer this week sought preselection to run in Mr Swan's electorate, Mr Forrest said: "I would be surprised if Mr Swan contests that seat because I think a three-legged dog would beat him to it."
A spokesman for Mr Swan said Mr Forrest, and the opposition, did not "want Australians to share in the benefits of the resources that we all own".
"They can stand up for vested interests and their mining profits the government will keep standing up for working Australians by using the mining boom to increase superannuation, tax breaks for small businesses and invest huge amounts in infrastructure," the spokesman said.
Frequently Asked Questions about this Article…
How much did Andrew Forrest say Fortescue Metals Group will pay under the minerals resource rent tax (MRRT)?
Andrew Forrest told the National Press Club he expects Fortescue to pay between zero and A$50 million of MRRT in the first five years of the levy, saying the exact amount will depend on iron ore prices and insisting it will not raise the government’s A$10.6 billion forecast.
Why did Andrew Forrest call the government’s A$10.6 billion mining tax forecast a “charade”?
Forrest argued the government’s A$10.6 billion estimate is unrealistic because he expects Fortescue to pay almost no MRRT in the first five years. He also criticised secret negotiations with major miners and said multinationals had effectively “fleeced” the government during those talks.
Which mining companies does Treasury expect to pay the bulk of the mining tax?
According to the article, Treasury expects that BHP Billiton, Rio Tinto and Xstrata — companies that helped design the tax — will pay about 90% of the MRRT between them.
What did stockbrokers say about Fortescue’s expected profits?
The article reports that stockbrokers expect Fortescue’s pre-tax profits to exceed A$20 billion over the next five years, a point used to highlight potential concessions under the tax if Forrest’s MRRT prediction is accurate.
Has Andrew Forrest threatened legal action over the mining tax?
Yes. The article says Mr Forrest has threatened to challenge the mining tax in the High Court.
How did Treasurer Wayne Swan and his office respond to Forrest’s comments on the mining tax?
Treasurer Wayne Swan accused Forrest of using his wealth and influence to pursue vested interests. A spokesman for Mr Swan said Forrest and the opposition did not want Australians to share in the benefits of national resources, and that the government would use mining revenue to back policies such as increased superannuation, tax breaks for small business and infrastructure investment.
Did Andrew Forrest raise other issues besides the MRRT at the National Press Club?
Yes. Forrest’s speech also focused on improving employment among Indigenous Australians. He blamed federal government decisions for making businesses more uncertain and was asked whether he might enter federal politics, responding with a pointed remark about Mr Swan’s electorate.
What does the MRRT debate in this article mean for everyday investors following mining stocks?
The article highlights significant disagreement between mining executives and the government about how much revenue the MRRT will raise, notes Treasury’s expectation that a few large miners will bear most of the burden, and reports threats of legal challenge. Everyday investors should be aware that forecasts and company statements vary, creating uncertainty around tax liabilities and potential impacts on miner profits.
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