Future Fund chairman says resources tax should be scrapped: Economy Roundup

Future Fund chairman David Murray says the resource super profits tax should be overhauled or completely scrapped.

In a Business Spectator interview, Murray says the structure of the tax needs to be redesigned. “It’s a long-term tax being applied to a short-term purpose,” he said.

“If we can’t achieve a design that does not penalise the existing projects, that’s a sovereign risk issue and a design that does not discriminate between recurrent spending and long-term inter-generational wealth creation. If those things can’t be done, the tax should be abandoned.”

Additionally, Murray said the returns of the tax should be placed into wealth funds or put towards budget surpluses.

“Investors are becoming a little bit concerned whether governments will become more desperate and impose things that might… that they might not otherwise have done,” he said.

“For Australia to do this now is not good timing.”

But despite mining giant Xstrata planning to suspend projects due to the upcoming tax, Prime Minister Kevin Rudd says the Government is still confident.

“The Government is confident of its argument (for the tax),” he told the Seven Network this morning.

“You should take what very big mining companies have to say in this big debate… with a bit of a grain of salt.”

He said the claim that Xstrata was paying too much tax was “remarkable,” and said that “I don’t know anyone in Australia who would accept that”.

Meanwhile, Foxtel has reportedly made an application to the Australian Competition and Consumer Commission to allow its internet-television service to be available only to Telstra customers.

The Australian has reported that the Australian Competition and Consumer Commission will now launch a review to determine whether Foxtel can supply internet TV via its iQ set-top box product on the condition those customers are connected to Telstra BigPond.

“This is a blatant land grab by Telstra in the lead-up to the NBN,” general manager of regulatory affairs at Optus Andrew Sheridan told the Herald Sun.

Elsewhere, Macquarie Private Bank has collected an industry award as the best banker to the rich. At the Australian Private Banking awards in Sydney last night, Macquarie received the award for best bank serving individuals with a net worth over $30 million.

Commonwealth Private took the award for individuals with between $1-10 million, while ANZ Private took the award for individual net worth between $10-30 million.

Shares down despite Wall Street lead

The Australian sharemarket has opened lower today, despite leads from Wall Street, with declines in equities and commodities.

The benchmark S&P/ASX200 index was down 45 points or 1.01% to 4440.8 at 12.10 AEST, while the Australian dollar remained flat at US84c.

ANZ shares have fallen 0.7% to $22.60, while Commonwealth Bank shares dropped 1% to $51.43. NAB lost 3.4% to $24.34, while Westpac lost 1% to $22.86.

JPMorgan Chase & Co fund manager Ian Henderson has reportedly sold off a quarter of his stake in mining giants BHP Billiton and Rio Tinto due to the Government’s proposed resources tax.

“It’s been a wake-up call frankly,” Henderson told Bloomberg.com. “I had not thought that the changes in Australia would be quite as drastic as they are proposed to be.”

Meanwhile, Woodside Petroleum has once again stated that a floating platform is the best method to take advantage of the Sunrise liquefied natural gas project.

“We have selected the concept that provides best commercial advantage consistent with good oilfield practice,” Woodside managing director Don Voelte told the UBS Resources conference in Sydney yesterday.

“While I cannot get into the specific details on the economics of Sunrise floating LNG development, I can say that at this stage in the development the calculated returns are robust and exceed all Woodside’s threshold economic hurdle rates.”

NAB in talks regarding investment platform sale

Meanwhile, National Australia Bank has confirmed it is in talks regarding the potential sale of its North investment platform, as part of the proposed $14 billion takeover of AXA Asia Pacific Holdings.

“However, at this stage there is no assurance that such a possible divestment will occur or that it will address the concerns raised by the ACCC,” NAB said in a statement to the ASX.

Overseas, the G20 will propose general principles rather than a specific charge in order to make financial institutions pay for their bailouts in the future.

“I don’t think we’re on the verge of a global consensus on bank levy yet,” US Treasury Secretary Timothy Geithner told reporters in Seoul.

While there was support in Europe, he said, “there’s not universal support for that across the G20, at least at this stage. And I don’t think that’s going to change in Korea”.

On Wall Street, investors were given a confidence boost by new labour department data revealing a drop in the number of people claiming jobless benefits. The Dow Jones Industrial Average gained 5.74 points or 0.06% to 10.255.28.