$90 billion wiped off resource stocks as Rudd’s big new tax sends investors in a spin

May 21, 2010

Australian workers and retirees continue to be hit by Kevin Rudd’s great big new mining tax, with more than one fifth of the value of resource stocks wiped out in the past five weeks, Shadow Superannuation Minister Luke Hartsuyker said today.

Mr Hartsuyker said Kevin Rudd’s tax grab had undermined market confidence and made Australia a sovereign risk for many investors.   “Every Australian with a super fund or share investment is paying the price for this poorly thought out policy. At midday on Friday 21 May, the value of resource shares had plunged $90 billion - or just over 20 per cent - since details of the tax were leaked to the press on April 13.  Approximately 9.3 per cent (or approximately $111 billion) of Australia’s $1.2 trillion held in superannuation assets is invested in resource stocks.

”These investments have lost a massive $23 billion since the tax was leaked and $14.9 billion since Labor’s response to the Henry Report. The Metals and Mining index has fallen to its lowest point since September 2009.  The $23 billion loss equates to a drop of almost 2 per cent in the balance of an average super fund.  We also must remember the collapse in mining share investment is having a domino effect right through the economy. This great big new tax is creating a lot of uncertainty which explains why other sectors are also being hit. That will drive down super returns even further.

“The mining tax is now hitting the Australian dollar, with global investors recognising the sovereign risk caused by Rudd Labor and deciding to stay away from investing in Australia.   Every worker and superannuant has a stake in Australia’s resources sector through superannuation. This government does not understand that superannuation performance depends on a strong resources sector.”

Mr Hartsuyker today released a number of graphs which detail the drop in market value of major mining companies.  Since the new tax was leaked to the press, BHP has dropped by 19.62 per cent, Rio Tinto 16.36 per cent, Fortescue 35.05 per cent and Macarthur Coal 40.74 per cent.

Percentage decline in share price since RRPT was leaked to the media (13 April 2010)

Index                                                    Decline (%)

Metals and Mining (XXM)                       20.11

Energy (XEJ)                                        17.2

BHP (BHP)                                            19.62

Rio Tinto (RIO)                                      16.36

Fortescue (FMG)                                   35.05

Macarthur (MCC)                                   40.74

 

Percentage decline in share price since RRPT was confirmed by Labor (2 May 2010)

Index                                                    Decline (%)

Metals and Mining (XXM)                       12.68

Energy (XEJ)                                        12.57

BHP (BHP)                                            12.31

Rio Tinto (RIO)                                      17.61

Fortescue (FMG)                                   25.55

Macarthur (MCC)                                   36.72

 

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