UBS Report: MRRT Revenues Seen to Fall Short More than 50%
Receding profits by mining giants would lead to lower revenues for the controversial mining tax, which takes effect July 1 and has been projected by Federal Treasurer Wayne Swan to rake in for the federal government more than $13 billion over the next four years.
However, a UBS report said on Monday that miners such as BHP Billiton and Rio Tinto would most likely experience shrinking net incomes in the immediate years, by as much as four per cent, as the prices of commodities continue to soften.
Market watchers backed the UBS report, arguing that volatility in the eurozone and the cooling down of the Chinese economy over the next two years would continue to bring down commodities price levels.
The only exceptions are iron ore and coking coal, according to UBS analyst Glyn Lawcock, which has so far maintained considerable price levels over the past periods, thanks mostly to the consistent high demands coming from the Chinese steel industry.
"The Chinese are still producing 2 million tonnes of steel a day, which requires a lot of iron ore and coking coal," Mr Lawcock told The Herald Sun on Monday.
The products' steady shipment out of Australia, however, will not be able to compensate for the significant profit setbacks that will be suffered by giant mining firms over the next four years, which consequently shaves off some 35 per cent from the anticipated revenues to be delivered by the minerals resource rent tax (MRRT), the UBS report said.
From the original four-year income of $13.4 billion, the federal treasury will see consistent shortfalls within the period and end up collecting only a high of $4.78 billion, UBS said.
The report, however, stressed that Australian miners will remain profitable in spite of the present levels of commodities prices, which since last year's record highs have been retreating consistently.
In his reaction to the UBS report, opposition treasury spokesman Joe Hockey said on Monday that the data presented only showed that "the government has been inflating its mining tax proceeds and it's been spending and spending and spending against that money."
"It is evidence of a government that makes big heroic promises and just keeps getting it wrong," Mr Hockey was reported as saying by the Australian Associated Press (AAP).
Also, he reiterated his earlier warning that the MRRT will only serve as "a sovereign risk disaster for Australia," and contrary to claims by the Labor-led government, the tax program "s only going to raise one third of the revenue the government forecast."
In light of the new UBS analysis, Coalition Senator Mathias Cormann called on Mr Swan to make public the calculation models he had employed in presenting the projected MRRT collection.
"Specifically the treasurer must release the commodity price and production volume assumptions he has used to estimate the MRRT revenue," Senator Cormann told AAP on Monday.