One of Colin Barnett’s biggest criticisms of out-going WA Premier Alan Carpenter was that he didn’t know how to stand up to big mining companies. Look no further than the way Fortescue Metals used Brian Burke and Julian Grill to achieve all sorts of government fast-tracking of its Pilbara operation.
The new Liberal premier of WA will now have an opportunity to deliver on his threats as there won’t be a politician in Australia with more influence over big miners than him.
Andrew Forrest is no longer Australia’s richest man, after Fortescue shares tumbled another 3% to an 8-month low of $5.74 this morning. The market is spooked about rumours of operating problems and concerned that it won’t even be able to get its half year profit out before today’s deadline.
Colin Barnett has slipped straight into the customary over-statement of public finances, telling ABC radio’s AM program this morning that WA has a $2 billion annual budget surplus.
If so, why on earth is the state government borrowing a record $7.4 billion in 2008-09?
As usual for a state leader, Barnett’s figure is “recurrent” and excludes all capital spending, such as the record $27 billion infrastructure binge proposed for the next four years.
Check out pages 9 and 10 of budget paper number three produced by the WA Treasury and you’ll see that net debt is forecast to hit a record $12 billion by 2012.
The same link shows that mining revenue is forecast to hit $3.42 billion in 2008-09, suggesting that the 25% for the National Party’s “royalties for regions” policy should actually be $855 million, not the $675 million mentioned by Barnett on AM this morning.
Other miners have plenty to worry about too. It was this interview Barnett gave to The Australian‘s Jennifer Hewett during the election campaign where he laid out his opposition to the BHP-Billiton bid for Rio Tinto as follows:
“If they want to do that (merge), then other things would come into play,” he said.
“For example, why would they continue to receive a concessional royalty rate? It would be time to get rid of that. The current rates fall well below the normal rates for mining royalties. It would be one of the issues we would have to discuss.”
Business Spectator‘s Stephen Bartholomeusz explained the mechanics well last week, whilst opposing any royalty increase.
Resource nationalism is on the rise globally and we recently saw the Queensland government jack up coal royalties from 7% to 10% for all revenues generated above $100 a tonne.
So why on earth should the likes of BHP-Billiton, Rio Tinto and Fortescue Metals continue to pay as little as 3.75% on Pilbara iron ore exports?
Colin Barnett clearly needs some more revenue to control debt and fulfil his deal with the National Party and if he is so tough with big miners, why not just follow Queensland’s lead?
Disclosure: Stephen Mayne is running for the BHP-Billiton board on a platform opposing chairman Don Argus and the Rio Tinto takeover, as was explained on Sky Business Channel last week.