Bare knuckles out as Kevin Rudd faces miners

Dennis Shanahan, Political editor from: The Australian May 06, 2010 12:00AM





WHEN Kevin Rudd journeyed to Perth to meet half a dozen West Australian businessmen, he had no idea it would turn into a confrontation with 30 of the nation's most powerful executives, starting with boxing gloves and ending with a bare-knuckle brawl.

As the Prime Minister prepared to attend a pre-arranged dinner at the Perth headquarters of law firm Lavan Legal, mining industry executives scrambled for a chance to discuss the new 40 per cent resources super-profits tax. They included Fortescue Metals Group's Andrew Forrest, Rio Tinto Iron Ore's Sam Walsh, BHP Billiton Iron Ore's Ian Ashby, Atlas Iron's David Flanagan and Woodside Petroleum's Don Voelte.

To start the evening, Mr Forrest, a friend of the Prime Minister, presented him with a pair of boxing gloves labelled "Fair suck of the sauce bottle mate" but that's where the humour ended.

Mining executive after mining executive lined up to tell Mr Rudd they believed he had done "irretrievable harm" to Australia and would force them to invest overseas.

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After the Prime Minister cited Norway's example of higher taxes on resources, mining chiefs were left sputtering about "a virtually socialist system" and challenging Mr Rudd as to whether this was the system he wanted.

Rio Tinto's Sam Walsh said that, as an Australian, it "irked" him to have to advise his company to look for investment overseas and at projects in Canada where it wouldn't face such high tax.

Given Canadian Finance Minister Jim Flaherty yesterday was urging his colleagues in parliament in Ottawa to promote Canada in the face of Australia's new tax, Mr Walsh was prescient.

Mr Walsh even warned Mr Rudd that Rio couldn't guarantee current production levels under the new tax, let alone expansion to new projects.

In response to Mr Rudd's arguments about the pressures of a high dollar and the impact it was having on attracting foreign students to Australia, Atlas iron chief David Flanagan said 25,000 Australian shareholders - "mum and dad punters" - had had their investment in the iron ore industry halved and "could no longer afford to retire".

When Mr Rudd pointed out that the Australian goldmining industry had "survived" the introduction of a gold tax, executives responded by saying they would survive but not expand.

"We will survive but Brazil and our other sovereign competitors will be cheering because they will expand and we will not," one executive said.

An impassioned Mr Forrest told the Prime Minister that if this proposed tax had been in place in 2006, what is now a $15 billion Australian icon, Fortescue Metals Group, "would not exist".

Mr Rudd's use of the term "super tax" was also attacked. It was described as a fib since it was just another tax on profits and not one on super profits.

After what Mr Rudd described as a "robust" meeting, the next round was adjourned to Canberra next week where Queensland resources executives hope to get their chance to be heard.

http://www.theaustralian.com.au/business/in-depth/bare-knuckles-out-as-kevin-rudd-faces-miners/story-fn5eo6td-1225862783300