Dickybird, I think the idea of investing the future fund into BHP is one alternative but what are the risks associated with doing this? Surely there is another model of private/public partnership that will provide a 'least risky' option so that sustainable and responsible investment is encouraged.

@Dickybird:

"However if you put in a lot of work and a small investment, it can be made to yield very considerable value in the form of vegetables. But until you put in the effort it has no value, just like the whole of undeveloped Aus"

Dickybird I'm not sure this analogy really works. The soil has no value because it is not the soil that is being sold, it's the vegetables which are grown from it. But in the case of exractable commodoties it is the minerals that are being sold. They have inherent value - and they are a non renewable good, legislated and commonly accepted as being owned by the Government of Australia for its people. In the latter case it is simply a matter of owner setting the price, and seller buying. The fact that the seller has to perform some measure of work to secure the goods is factored into the price. It's an amicable agreement - we can't mine the minerals, and you can't own them. Let's work together shall we? You take your slice, and we'll take ours. To say that the minerals have no value until they are discovered is completely incorrect. Of course they do. They're extremely valuable and a shared public good.

"Incidentally presumably as a result of the Petroleum tax, I am told that practically no new exploration has been done in Aus and we now import oil. The effort isn’t worth it."

Incorrect, Australia's petroleum industry has boomed in recent times on the back of rising oil prices. That was partly the point of this article. Scroll down to the bottom of the page to see just how much.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/8412.0/

Tristan might just as well have cut and pasted from the Labor website.

As with many political statements, what has been left out is more important than what has been included.

- The oil and gas industry has expanded with the rent tax, but notably, only those projects exempt from the tax have done so.

- The 37% profit on mines excludes massive investment in exploration, head office overheads etc. The real profit of the mining companies is much lower.

- The mines are already taxed above average world wide, the new RSPT will make them by far the highest taxed.

- All existing Australian mining assets will lose their value as leverage, and only the multinationals with external assets will be able to raise funding. The consequences of this is that small local companies will seldom be able to raise funds for new projects, and in the face of competition from multinationals will simply disappear.

- Any increase in superannuation for the next 10 years will be wiped out by the loss in value of the stocks.

ETC

@Shadow Minister

"The oil and gas industry has expanded with the rent tax, but notably, only those projects exempt from the tax have done so."

Do you have a link for this I can check out?

"The mines are already taxed above average world wide, the new RSPT will make them by far the highest taxed."

What do you mean by this? Do you mean that Australia's tax on mining is higher than the average world wide? The only relevance this would have is in discussions on whether the rate will negatively effect our comparative advantage over the long term. There is some evidence to suggest it will not.

Like Henry said, Norway is an example of a country that taxes their extractable commodities industry at a rate above what is being proposed here, and they have managed to avoid capital flight.

Your final two points sound more like scaremongering than anything solid.

Profit is directly related to risk. Take away the profit and no one wants to invest. If you had a block of land that you wanted to develop and put a couple of houses on it, the incentive is wiped away if the return is not there and the bank won't lend you money because it is too risky. The Australian public (and some overseas investors) have put a great deal of money into mining projects with no high dividends paid over many years. As soon as something pays off, the socialists are there with their hand out to spend as they think fit without taking the risk. It has been suggested that they will take some risk, to the extent that they will pay 40% of non viable projects, but out of tax payer's money of course.

Mining is not easy and takes a lot of investment and a lot of searching to find something worth developing and then years of hard slog to get a good return. As soon as it pays off however, the government is there to take any extra profit of course. It just replaces the superannuation taken from the retiree's dividends who had the foresight to invest in the first place. Resources don't belong to all Australians unless they have actually helped to find it and to dig it out of the ground; over and above the normal taxation imposed on all companies at a fair and reasonable rate.

Thank you Foyle for broadening the discussion to look at the implications of the RSPT on exchange rates and the competitiveness of other sections of the Australian economy. The Government have, I think, backed away from asserting these broader benefits because they could readily be distorted into fear mongering that Government is deliberately throttling the geese that lay the golden eggs. In industries other than mining, companies often expend up to 30% of their revenue in purchasing their raw inputs - they do not add this percentage of their costs to their reports of taxation paid. Nor ought mining companies include the cost of their raw materials in their estimates of percentages of taxation paid.