Survey: Institutional investor anger over resources super profits tax

The fund managers, who collectively control more than $125 billion of investments in Australian shares, expressed a high level of concern over the proposed tax when surveyed by research company Radar Group on May 5th and 6th.
Two thirds of those surveyed said the tax will have a significant adverse impact on future investment in the resources sector, and 71 per cent said the policy significantly added to Australia’s level of sovereign risk.
The survey, commissioned by the Minerals Council of Australia, highlighted the following areas of concern from investors:
. potential exodus of global capital in Australia
. emergence of Sovereign Risk
. insufficient industry consultation
. fundamental misunderstanding of the resources business
. future investment to suffer - and current investment to stall
Comments made by the institutional investors included:
Radar executive director, David Greer, said he had never experienced such hostility on a subject from institutional fund managers.
“It’s clear from the results of this survey that the RSPT will have far-reaching implications for investment in Australia’s resources sector,” Greer said.
“All of the institutional investors we surveyed said the tax will change their investment decisions in relation to the resources sector, which will lead to a massive shift in money away from Australian mining companies.
“There also appears to be a major concern about the increased spectre of sovereign risk associated with Australian Government policy, which could have flow-on effects to Australia’s broader reputation as an investment destination.”
Greer said that in turn, this could lead to a shift of global capital out of Australia which may make it harder for all companies to fund their existing operations and future growth.