Australian Foreign investment essential: Ferguson

Professor McKibbin issued the warning yesterday as the Greens released their own research into foreign ownership of Australia's mining industry to prosecute their case for higher taxes on the sector, triggering an angry backlash from miners.

While the Greens latched on to claims that $50 billion worth of mining company dividends would flow overseas in the next five years, the party's own figures also revealed that for every $1 sent offshore more than $4 was invested back in the Australian mining industry.

The $50bn figure for mining dividends sent offshore has also come under scrutiny for apparently being based on the assumption that the sector has the same average dividend payout ratio as all foreign equity profits.

That average ratio of 19 per cent could be inflated because listed miners traditionally reinvest their cash in expansions and pay very low dividends to their shareholders, who rely on growth in share prices for their returns.

Minerals Council of Australia figures for the 10 years to 2008-09 show miners generated cashflow of $210bn, of which $80bn was paid in tax and revenues and $125bn was re-invested.

This would leave just $5bn over a decade (or a 4 per cent ratio) that could be paid back in dividends to all mining investors, compared with the $10bn the Greens claim would be returned to foreign investors as dividends annually, on average, for the next five years.

The dispute over the research flared as the Greens and miners traded insults over the party's use of a nationally televised address to accuse the industry of lining pockets of foreign millionaires. Greens leader Bob Brown told the National Press Club the party would continue to press Julia Gillard to lift the rate of her planned mineral resources rent tax, warning last year's compromise deal with miners over the tax would cost Australian taxpayers $100 billion over the next decade. "While Australia gets jobs, export income, royalties and company tax from our minerals, the (mining companies') foreign owners get profits, dividends, capital appreciation and influence.

While Australia's superannuation system assists in providing the capital needed, if Australia is to fully capitalise on the growth in global energy demand the required investments are so great that overseas investment will be essential."

Mr Ferguson said when it came to energy supplies an open and transparent foreign investment framework was crucial.

The resources minister said not only was Australia dependent on foreign investment but it also relied on overseas workers.

"At the same time as Australia is competing internationally for capital, we also need to ensure we have sufficient skilled labour and this includes skilled migration."

Senator Brown on Wednesday released a report suggesting 83 per cent of the mining industry is foreign owned.

Over the next five years corporate giants will earn about $265 billion from Australian resources with $50 billion in dividends sent offshore, the report states.

Mr Ferguson on Wednesday played down that claim by saying "foreign investment (generally) is welcome in Australia.