Queensland, not WA, is shaping as the biggest loser from the Australian Government's proposed super-tax on mining profits, a realisation slowly dawning in Canberra and one that could lead to the first of the "special deals" if the tax is to move
Queensland, not WA, is shaping as the biggest loser from the Australian Government's proposed super-tax on mining profits, a realisation slowly dawning in Canberra and one that could lead to the first of the "special deals" if the tax is to move off the drawing board.
A hint that a deal is being hatched to favour Queensland projects came in remarks by Resources Minister, Martin Ferguson, at APPEA conference in Brisbane last month.
The target of his comments was the multiple liquefied natural gas (LNG) projects using coal-seam gas as a feedstock and earmarked for the port of Gladstone.
A second hint came when the Australian Government's own commodity-forecasting agency, the Australian Bureau of Agricultural and Resource Economics (Abare) released on May 19 its updated 75-member list of "new resources projects" with a heavy emphasis on coal-seam LNG.
A third hint came this morning when the national daily newspaper, The Australian, took the Abare forecasts and used them to create a list of the 20 projects it believes to be under greatest threat of falling into limbo because of the new tax.
Neither the Abare projects list, with a total value of $109.6 billion, nor The Australian's top 20 with a notional value of $71.2 billion is absolutely accurate. There are plenty of reasons other than tax which can cause a project to fall over, and there are always new projects emerging which can leapfrog up the list.
They also follow a Minerals Council report this week, which said nickel, gold and copper projects would be hit hardest by the new tax, but the reality is that new projects in these sectors are tiny compared to iron ore and gas.
What's significant about the 20 projects nominated by The Australian is that it highlights the heavy exposure of Queensland to the tax, and that's interesting because Queensland is the home State for the Prime Minister, Kevin Rudd, and his Treasurer, Wayne Swan.
Unless there is a special deal done for Queensland, and that will open up claims (and accusations) from other States, then more than $40 billion of fresh investment in the Prime Minister's backyard is under threat.
The breakdown of the top 20 reveals nine Queensland projects with a collective price tag of $42.4 billion. In WA there are said to be eight project worth $17 billion threatened. The other three projects are in South Australia, NSW and the Northern Territory.
One reason why WA escapes relatively lightly is that the lion's share of the value (if not the number) of our new projects are in the conventional LNG sector where an offshore resource rent tax already applies, with LNG operators being offered a once-off chance to stick with the tax they know, or switch to the new super-tax.
There is a long way to go before the tax debate is resolved, and while the entire process is highly political, one issue seems likely to emerge above all the others - will the Queenslanders attempt to deliver a special deal to make themselves home town heroes.
If that card is played, and coal-seam LNG gets special treatment, you can expect calls for the same treatment for South Australia's big Olympic Dam copper/uranium project, and Newcrest Mining's planned goldmine expansion in NSW.
WA's highly-profitable iron ore industry is certainly a prime target of the new tax, but it might not prove to be its biggest victim.
Perhaps the final decision on who gets special treatment, and who doesn't, will depend on the number of marginal seats in the Federal Parliament at stake in the next election - or is that being too cynical?
