Rinehart says investors to flee Australia

Gina Rinehart says the Albanese government’s capital gains tax changes will ultimately hurt the federal budget bottom line as mining and other business investment moves offshore.

Mrs Rinehart said the tax changes were ill considered and left wage earners facing a double whammy if they chose to invest in mining to boost their wealth in what was already one of the ­highest-taxing jurisdictions in the world. Australia’s richest person spoke out as her early stage investment in Arafura Rare Earths appears set to deliver a new mine near Alice Springs, and help ­Australia and its allies loosen China’s grip on critical minerals supply chains.

“These CGT changes will make it even harder for junior and medium explorers to raise the money needed to search for and develop new projects,” she told The Australian.

“Smaller and medium mining companies rely heavily on investors willing to back high-risk exploration years before there is any return. If you reduce the incentive and ability for people to invest, you reduce future discoveries, ­future mines, future jobs, future revenue and future growth for Australia at a time when our country sure needs it.

“Additionally, what is also being missed in the CGT increase is that people are investing money they have already paid tax on through PAYG and other taxes, and yet any profits they make on that reinvestment is now going to be subject to even higher taxes.”

Her comments came as Wesfarmers chair and fellow West Australian Michael Chaney threw his qualified support behind the tax changes.

“(The) capital gains tax concession and negative gearing have been prime factors in house prices being as high as they are in Australia, which is completely out of kilter with most similar-sized economies – and so I think change was inevitable,” Mr Chaney said.

“The problem is that we need wholesale, not piecemeal, tax reform that includes lowering personal and corporate tax rates.”

Mrs Rinehart said other countries were competing hard for investment, yet Labor’s tax changes compounded other unhelpful policy settings in Australia.

“Unfortunately, the proposed changes to capital gains tax don’t recognise how widespread their effect is, given CGT was initially brought in in 1985, affecting all assets and projects since,” she said.

“The increases are ill thought-out and risk future investment and jobs, and hence tax revenue.

“Canberra needs to realise that other countries have resources like we do, and other countries make themselves welcoming to investment, while investment in Australia in real terms continues to decline.”

Mrs Rinehart said the US had lower company taxes and was attracting multibillion-dollar investments under the Trump administration, and that Saudi Arabia – another jurisdiction where her private company invested – had no personal income tax as well as pro-mining policies.

“New Zealand points out that it has no capital gains tax and suggests publicly (that) struggling Aussies invest in New Zealand instead. Investment is internationally mobile,” she said.

Under Labor’s changes, which replace a 50 per cent CGT discount with a discount linked to the rate of inflation, the tax payable on the shares sold in a company after it makes a major minerals discovery will almost double.

Mrs Rinehart topped The Australian’s 2026 rich list with a fortune estimated at $41.66bn. She battled in her early business career before forming a partnership with Rio Tinto to develop the Hope Downs iron ore mines, and in 2015 her Roy Hill mine became the first mega project in the male-dominated resources sector to be financed, built and run by a woman. She is also a major player in Australian agriculture and onshore oil and gas production.

Her father, Lang Hancock, never made the leap from prospector to miner but is credited for his pioneering exploration of the vast iron ore deposits in WA’s Pilbara, including what are now the Hope Downs mines.

“In the instance of Hope Downs, we had to save for years to provide for tens of millions of capital gains tax expense to cater for bringing in joint venture partners essential for Hope Downs development, which could have been spent much more productively bringing the project forward,” Mrs Rinehart said. “Why make such a hurdle even higher?”

Rinehart-backed Liontown Resources’ chairman, Tim Goyder, last week said that Labor had “lost it” and its CGT changes would have a disastrous impact on mineral exploration as well as the ability of Australians to create wealth.

About 35,000 retail investors helped Liontown move from an explorer to lithium producer.

Arafura Resources managing director Darryl Cuzzubbo diplomatically declined to comment on the CGT changes last week, while attending a press conference with Jim Chalmers and Resources Minister Madeleine King to confirm his company would build the Nolans rare earths project about 130km from Alice Springs. However, Mr Cuzzubbo praised Mrs Rinehart for her support from the early days of the ambitious project aimed at creating an integrated onshore mining and processing operation to produce rare earths oxide in what was a first for Australia.

“We would not be here today moving into construction if it wasn’t for Hancock (Prospecting) taking an early risk on us,” he said.

Mrs Rinehart, via Hancock, on Friday agreed to contribute another $85m and cornerstone a $350m institutional placement that will take her stake in the company to 17.5 per cent.

Arafura and its Nolans project have received significant taxpayer backing through the federal government.

“Hancock was pleased to support this patriotic and nationally significant investment early, as Darryl said, well before many larger institutional investors were prepared to take such risks,” Mrs Rinehart said.

“Darryl and the Arafura team deserve enormous congratulations for getting the nationally important Nolans project achieved to this stage.

“Large-scale mining projects are complex, capital intensive and take years of persistence, technical work and resilience against large and overlapping bureaucracy and approval systems to progress from initial exploration, to construction, jobs and finally revenue – i.e. major tax revenue.”