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The Forum > Article Comments > Risky business? For government or mining? > Comments

Risky business? For government or mining? : Comments

By Geoff Carmody, published 2/6/2010

If the government puts our money in mining it will learn the cost of risk.

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Good article and if the Federal Government was honest in its proposal is what it would do. There is actually precendent for this approach. In the Innovation Investment Funds which invest in high technology companies the goverment would match private sector equity contributions 2:1 and if the fund was successful would then receive back its investment compounded at the long term bond rate. There was also a kicker in that of the remaining proceeds the government would receive 10%(?).

The real problem with this tax is that it is retrospective. There are 4200 mines and quarries in this country that have been created under one regime and now are going be taxed under another.

Also the world is in the top part of the commodities cycle and it is now when new mines (which can last say 40 years) are planned and built. Until the tax is passed into law (say at least two years away), no responsible investor or miner is going to propose building a mine in Australia.

The lack of business acumen and fiscal irreponsibility in this Government defies belief. Australia currently has 5% unemployment and 3% growth. The last time it had those vectors was 2006 and the fiscal surplus of $17 billion. This year the fiscal deficity will be $57 billion a turnaround of $74 billion. I never thought I would write this but the Rudd government is beginning to make the Whitlam government look frugal!!
Posted by EQ, Thursday, 3 June 2010 8:13:43 AM
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