Wednesday, 26 May 2010

Nats Kevin Hogan spins the resource profits tax for his NSW North Coast audience

Well one NSW North Coast Nationals federal candidate in this year's Australian federal election, Kevin Hogan, thinks he has finally found a local issue on which to hang his hat.

His 25 May 2010 letter to the editor in The Daily Examiner suggests that the new resource profits tax and rebate scheme (an opt-in replacement of the crude oil excise operating in parallel with state royalties) will seriously impair Metgasco's Casino project:

A tax too far
I MET with representatives from Metgasco last week.
They are gravely concerned that the Rudd Government's proposed new Resource Profits Tax will in their words 'seriously impair' Metgasco's Casino project.
They have written a letter to Kevin Rudd expressing their concerns.
Metgasco has invested tens of millions of dollars in the project to date.
It has the potential to offer local jobs and boost the local economy.
It also will offer a supply of 'clean' energy to the Northern Rivers, replacing some of our reliance on coal-powered energy.
This project does not deserve to be killed off by another bad policy decision by the Rudd Government.
Local jobs are more important than Labor taxes to pay for wasteful spending.
KEVIN HOGAN, Nationals Candidate for Page

Predictably Mr. Hogan has gone electioneering without looking into the company background.

In 2007 Metgasco Ltd received a $1 million grant from the Australian Government to assist with its exploration and development in the Clarence-Morton Basin [RWE Australian Business News, 1 May 2007].

Three years later in April 2010 Metgasco told the Excellence in Oil & Gas Conference that it had "A$29 million" in cash at the end of 2009, no debts, energy resources (ten gas/oil exploration wells showing significant coal seam gas reserves ) in trial production with good profit margins anticipated once fully operational and, that the Casino power station had reached development application stage.

According to what the company told ASX at the end of April it is continuing to investigate gas commercialisation opportunities and currently in discussions with several prospective customers and will be progressing its exploration and testing activities.

The company's share price is also tracking above the last ordinary share issue listed price of 11 May 2010, according to the Australian Securities Commission this week.
This despite the fact that share price had been steadily falling between mid-April to early May this year:

[ASX,Metgasco Ord,Chart of daily prices over 6 months,Dec 2009-May 2010]

Indeed to date the company has never again reached the heady days of 2007 and 2008 when it share price went over the dollar.

Despite the Nationals candidate's protestations, the 11 May budget night announcement does not appear to have affected this company's Casino project. Something a spokesperson had to concede to The Byron Shire News on 11 May 2010.

The fact is that at this point in time Megasco is more an exploration company, rather than a fully operational development and production company generating strong positive cashflows and demonstrating significant value creation.
Therefore it is nowhere near attracting any form of 'super profit' in the foreseeable future.
The company would appear to be some years off from paying any appreciable level of tax directly to federal or state governments.

Metgasco is just another mining company lobbying against the prospect of paying a decent return to the nation when the good times roll and, Kevin Hogan just another wannabe politician happily stirring the pot in pursuit of his own ambitions.

Hogan's attempt to spin the deferred national emissions trading scheme met a similar response from a NSW North Coast resident in The Northern River Echo on 13 May 2010:

Carbon dating
Kevin Hogan levels the charge at Kevin Rudd that the Prime Minister only believes in the latest opinion poll on an issue (Echo, May 6). Amongst other things, Mr Hogan links this claim to the deferral of the emissions trading scheme. Maybe Kevin Hogan doesn't study opinion polls because they have consistently shown over the last few years that the vast majority of Australians do want to see government action to decrease carbon pollution. Recent polling has the figure running at 65% in favour and it has been higher than that. The federal Labor government has attempted to get a price on carbon pollution and did strike a deal with Malcolm Turnbull to get the carbon pollution reduction scheme through the Senate. The Liberal/National coalition then moved to change its leadership to prevent the scheme from being enacted. Global warming may still be the greatest moral issue of our time but the Liberals and the Nationals do not believe that it is, and are doing all they can to make sure this Labor government does not get an emissions trading scheme underway. The electorate will have the opportunity to break the deadlock in the Senate at the next election. Maybe then we won't be in a position where the coalition blocks everything socially and environmentally progressive. A delay is not a backflip when the people creating the delay are the opposition parties. The cowardice on the issue of carbon pollution and global warming is being displayed by the Liberal/National coalition.
Eric Kaiser,Kyogle

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