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David Prosser: Australia makes its assets sweat

Wednesday 05 May 2010 00:00 BST
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Outlook How British politicians must envy Kevin Rudd, the Prime Minister of Australia. Every time they even hint at the possibility of higher levies on the City, the engine room of the UK economy, the banks and the hedge funds insist they'll decamp to Switzerland faster than you can say windfall tax. Mr Rudd, by contrast, knows the mining industry that he is about to hit with a 40 per cent supertax on profits can make no such threats. It must base itself where the world's minerals are to be found. For the likes of Rio Tinto and BHP Billiton, getting out of Western Australia would be unthinkable.

Naturally, the mining industry is mounting a furious rearguard lobbying exercise, seeking concessions such as higher capital allowances or a lower tax rate. There are dark hints of compromised investment decisions and falling prosperity. If Mr Rudd sticks to his guns, however, it's difficult to see what real damage the mining sector could do to the economy of Australia. The Prime Minister offers miners access to hugely valuable resources in a stable democracy – a combination sorely lacking elsewhere in the world. It's payback time.

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