RSPT: Lack of Transparency is the Issue

From the point of view of the mining industry and their potential financial bankers in the banking industry there are two key issues:

1. How are existing projects where the government hasn't been accounting itself as a passive shareholder to date to be dealt with.

2. Whether the government is really going to refund losses in the event of a project failing. The miners and banks are saying they place no value on this guarantee and, therefore, no-one will lend to mining projects at the long-term government bond rate. Here, there are two sub-issues. One is that it seems highly likely that the government would do a backflip in the future and in the event of a recession that resulted in many mining projects going under, refuse to hand over billions in tax refunds to "rich foreign mining companies". Rudd's rhetoric on the RSPT suggests that this is a real risk. Second, there is a lack of clarity of how the refund interacts with bankruptcy law. Will shareholder and creditors really have access to the tax refund in the case of a bankruptcy? I don't understand the details of the latter but it seems to be a real concern.

The government could assuage these latter concerns by adopting the full pure "Brown tax" by immediately refunding 40% of all costs upfront on a quarterly basis. But they don't want to do this. Obviously, they must think they gain by pushing these costs into the future rather than by funding them themselves at the government bond rate. If the government won't fund them at 6%, why should the mining and banking industries?

From the taxpayers' perspective the downside of the RSPT over royalties is the increase in the risky of government revenue that results. The Brown tax makes that explicit. Again the government would seem to be concerned about making that obvious to the public.