Australia says mining tax won’t threaten China FTA
AFP | 25 May 2010
Australia says mining tax won’t threaten China FTA
SYDNEY — Australia Tuesday denied that its planned 40 percent mining tax would hurt attempts to strike a free-trade agreement with China, a key market for the country’s resources.
Trade Minister Simon Crean also reiterated that the controversial tax would not drive up commodity prices, as mining magnate Andrew Forrest warned the reforms would leave the lucrative sector in the hands of Chinese investors.
"I’m absolutely convinced (concerns about the tax) won’t creep into the FTA negotiations," said Crean, who has just returned from trade talks with Beijing.
Crean said at "no stage in any of the discussions was concern raised about this tax in terms of its impact on investment in Australia.
"The only time it was raised as a concern was in relation to a potential impact on price. I made it clear that (the) tax will not put upward pressure on price," he said.
"The argument that this will be bad for investment isn’t borne out. If you look at the structure of the tax it actually will encourage expansion of investment," he added.
Crean said Chinese officials were "reassured" by his remarks and, though he expected discussions on the issue to continue, the levy’s stimulatory effect on supply had "got to be a good thing in the minds of the Chinese."
"That’s why you haven’t heard any threats from them despite what some people have argued about this being an impact on investment," the trade minister said.
His comments came as Forrest, head of Fortescue Metals Group, warned that the tax would open the door for foreign investors to "come in and buy Australian assets because Australians can no longer afford to".
"You will see a wholesale change in the resources sector ownership from the mums and dads of Australia to Chinese foreign governments or other foreign governments because they’re the only ones with the money now," Forrest told Sky News.
Fortescue chairman Herb Elliot said the iron ore miner was "bewildered" by the government’s lack of consultation on the "poorly thought-out proposal".
"Australia has maintained a proud history of being viewed as a safe international investment destination," Elliot wrote in an open letter to shareholders urging them to lobby against the proposal.
"However, with no consultation, the implementation of an additional 40 percent take ... has changed this perception forever.
"It is incumbent upon us all to get rid of the (tax) to limit the damage to our country’s reputation."
Fortescue last week suspended two planned iron ore projects due to the new tax, which Rio Tinto has labelled its top regulatory threat worldwide.
