MAp hops aboard the Rudd wagon - with good reason

Something happened to MAp Group chairman Max Moore-Wilton between his AGM on May 27 and having a chat with federal Transport and Infrastructure Minister Anthony Albanese last week.

He went from informing the AGM that he was not competent to comment on the resources "super profits" tax to telling Albanese "everyone thinks the idea of a profits tax makes sense".

Well might the organisation formerly known as Macquarie Airports be wary of getting on the wrong side of the government and its RS profits tax - if the same principles were applied to MAp, it would be wiped out.

It may be drawing a long bow, as Channel 7's Sunrise did at the weekend, to suggest on the basis of the above snatch of conversation that Max the Axe has climbed aboard the Rudd tax wagon.

The rest of the grab consisted of Albanese – a creature of the NSW machine – enthusiastically agreeing with an "absolutely", before Moore-Wilton added: "It's the detail …"

John Howard's former department head left that statement hanging with a grin that could be interpreted in several ways. I think the kindest would be: "… that's a complete disaster."

It's drawing an even longer bow to think that at the back of Moore-Wilton's mind there may have been an exchange he had with shareholder activist Stephen Mayne at the MAp AGM. The corporate gadfly suggested MAp was a sitting target for some sort of super profits tax or regulatory hit from Labor, given the amount of money MAp makes, the chairman's political background, the corporate structure registered in Bermuda and MAp paying “a miserly $12 million tax” on assets purchased for $5.6 billion and now valued at $11 billion. He could have added something about the monopoly rent gouge Sydney Airport enjoys, but didn't.

MAp would need to call in the receivers if the “super profit” tax was applied. Contrary to the Rudd/Swan propaganda we're paying for, the proposed new tax is not applied to a miner's profit, but to something more like the equivalent of a company's EBITDA (earnings before interest, tax, depreciation and amortisation), minus 5 or 6 per cent.

Not having a PhD in tax minimisation and financial engineering, MAp's accounts are something of a mystery to me. MAp is big on reporting its EBITDA, but you have to dig a bit to get some sort of idea of what its old-fashioned net profit might be.

Peering into the 2009 annual report, you can variously find EBITDA rising 2 per cent to $767 million, but a bottom line loss of $573 million despite being able to pay a distribution of 21 cents per security, a tax benefit of $138 million, but $12 million tax paid on the cash flow statement and a deferred tax liability of $1.94 billion. No, I'm not making that up. Maybe it's something about the Bermuda sunshine.

The monopoly gouge – a sort of "economic rent" elegant economists talk about to justify a super profits tax – is considerable at Sydney Airport, but so is the debt. Tax is not. The latest MAp figures, for the March quarter, show EBITDA of $186 million, “proportionate earnings” of $100.7 million and just $7.2 million of tax paid.

That might have helped Moore-Wilton be somewhat circumspect at the AGM when answering Stephen Mayne's question about what MAp was doing to manage the regulatory risk. Replied the chairman:

“I really don't want to be a commentator on what's happening to resources companies at the present time. I'm not competent and frankly I'm quite bemused. But that being said, the one thing about airports in Australia is that you do have a very, very detailed regulatory framework.

"Most of it is mandated by Parliament. Maybe it shouldn't be but it is. So we have a quite clear, at this stage, regulatory framework, within which we operate. It (a) both limits the operational characteristics of our Australian assets, which is deplorable, and secondly provides certain things which we must meet to meet the requirements of the law.

"We are very scrupulous in meeting that whether the government is of the current complexion or any other complexion and it doesn't rely on personalities, it relies on us meeting legal requirements which the government expects us to meet. I have no reason to believe that any federal government will behave in an inappropriate fashion in regard to changing that situation. But nevertheless, that's democracy and if that circumstance arises then we will have to accept it at the time."

The Australian mining industry (and the federal Mining Minister for that matter) had no reason to believe the federal government was about to impose a 40 per cent tax before interest and significant depreciation minus the bond rate, as well as maintaining the 30 per cent company tax on what's left – but that can indeed be democracy. Telstra didn't think it was going to be partially nationalised either.

And so we go into the seventh week of the PR war we're helping to fund. Last week the government may have done a little better thanks to the bad look of the billionaires' protest in Perth – it certainly struck a chord with the nation's cartoonists – and Xstrata being caught out on its dubious Wandoan stunt. On the other hand, Wayne Swan's continuing to tell fibs about the government take from Queensland coal. They almost deserve each other.

At least the resources battle pre-empts other complaints about Kev and Wayne using our money to try to get re-elected and support media companies. On top of the information-lite health reform commercials, we're now suffering perfidious National Broadband Network advertising.

Last week I chaired a day-long banking and finance IT innovation conference that had participation by all the usual suspects. There was all sorts of stuff ranging from mobility and improved services and i-this and i-that to shop design – but not a single mention of the NBN until I asked if anyone cared about it. Apparently not much.

And now Australians' take-up of broadband is actually going backwards just as Kev, Wayne and Stephen Conroy are using our money to tell us what a great job they're doing spending $42 billion or so to prevent competition and roll out a network with no commercial business case.

Michael Pascoe is a BusinessDay contributing editor.