Chris Zappone

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Mining ad focuses on superannuation threat

An industry super fund body is calling for an investigation into mining sector advertisement claims over the government’s proposed Resource Super Profits Tax, describing them as »scaremongering».

The Australian Institute of Superannuation Trustees singled out one newspaper advertisement by the Minerals Council of Australia which described the proposed tax as a »hand grenade» for people’s retirement plans.

»When it comes to the retirement concerns of all working Australians, the key issue is lifting compulsory super to 12 per cent rather than focusing on short-term market fluctuations which, arguably, are unrelated to the mining tax,» said AIST chief Fiona Reynolds.  

The MCA and its mining company members have been engaged in an advertising campaign expected to cost at least $100 million. The ad splurge is aimed at halting the government’s plan to tax windfall mining profits at a 40 per cent rate and use the funds to pay for a cut in company tax and an increase in superannuation.

Mining companies claim the tax poses a risk to Australia’s most successful businesses and threaten to raise Australia’s »sovereign risk» profile among international investors.

The federal government has begun a $38 million ad campaign of its own in a bid to counter what it claims is industry misinformation, and to raise wider public support for the tax.

»No-one would dispute that a strongly performing mining industry helps underpin a strongly performing share market given that mining and energy stocks constitute about a third of the stock market,» said an MCA spokesman, in defence of its campaign.    

Ms Reynolds disputed charges by the industry that global investors were dumping shares in companies such as BHP Billiton, Rio Tinto and Fortescue on fears of uncertainty raised by the government.

»Mining stocks have held up better than the rest of the market despite the global uncertainty affecting world markets,» she said.

Market data show shares in the materials sector have dropped 2.3 per cent since the May 2 announcement of the tax, against an overall market fall of 5.4 per cent in the same period.  Energy stocks have fallen 3.3 per cent since the start of May, while financial stocks were off 8.7 per cent and industrials more than 12 per cent, according to Bloomberg data.

The market fluctuations have been difficult to disentangle from wider market trends. Global markets were walloped in May after an acceleration of the European sovereign debt crisis spurred fears economic growth in Asia and elsewhere would stall.

Australian Securities and Investments Commission said it had no comment on the matter.

czappone@fairfax.com.au