The superannuation industry has savaged opponents of the Government’s Resources Super Profit Tax, dismissing claims it would harm superannuation holders by showing last week’s downturn in resources stocks — along with the rest of the sharemarket — would cost $57 to the average superannuation account.
Representatives of traditionally hostile sectors of the superannuation industry, including former NSW Liberal leader John Brogden as head of the Investment and Financial Services Association, came together this morning to strongly support the Government’s proposed increase in the Superannuation Guarantee, urge the Coalition to back it and attack the “erroneous” claims of Government critics and the mining industry about the impact of the RSPT.
The group released material examining last week’s fall in resource stocks, noting the overall sharemarket had fallen 6.5% as well and that analysts were recommending resource stocks as a ‘buy’ having been sold off too hard. Global resource stocks have also been hit hard overseas, with local miners actually outperforming miners on the London stock exchange.
“Clearly the fall in mining and resource stocks cannot be solely attributed to the Government’s announcement on RSPT,” the group concluded. Nevertheless, the impact of the fall on a $50,000 superannuation account was calculated using standard weightings for investment in resources equities. The result: a drop of $57.
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“Such an impact is within the normal volatility of equities. Indeed as at noon May 7, the ASX S&P 200 index had fallen to a greater extent than the ASX S&P materials index,” the group pointed out.
The group also blasted claims from the Coalition that the increase in the superannuation guarantee would amount to a tax increase for business. “Increased superannuation means a reduced burden on the aged pension in the future, and the less requirement Government has to fund the pension … equals a lower call on tax revenue by the Government in the future,” Brogden said.
The superannuation industry is the big winner from the Government’s response to the Henry Review, but it is rare to see the whole industry united, and they are significant investors in the mining industry. This is only the latest counterstrike on the mining industry’s froth-mouthed reaction to the RSPT.
The industry was deeply embarrassed late last week when the former head of the Minerals Council, David Buckingham, called its “hysterical” campaign against the RSPT “complete rot.” Buckingham expanded on his comments at Business Spectator today.
Wayne Swan also used his regular and normally trivial Sunday Economic Note to demolish the industry’s claims, explaining how the deductibility and risk-sharing elements of the tax would benefit the industry and particularly smaller miners and extensively quoting the similarly hysterical claims advanced against the Petroleum Resource Rent Tax in the 1980s.
Resources shares rose this morning, with Rio up 4%, BHP nearly 3% and Fortescue 3.6%, recovering much of the ground lost last week.