Killing The Gold-Laying Goose
Federal Government’s Extraordinary Tax on New Guinea Mining Industry
Written for THE PACIFIC ISLANDS MONTHLY by W. A. Freeman, of Directors of Placer Development Ltd. and Bulolo Gold Dredging Ltd.
I THINK that public attention should be directed to the action of the Federal Government in imposing a revenue tax of 10 per cent. ad valorem upon aeroplanes and mining machinery and parts entering the Mandated Territory of New Guinea.
One recognises, of course, that the New Guinea Administration and the Commonwealth Government have at the present time to solve financial prob lems of very great difficulty, and one sympathises with them in their efforts to balance their budgets. But it is necessary to point to the unwisdom of killing the goose that lays the golden egg in this case, literally, the golden egg.
As has been pointed out by The Pacific Islands Monthly, New Guinea is a territory of great potential wealth.
I believe that this region, over which we hold a mandate from the League of Nations, can be made of outstanding value, not only to Australia, but to the Empire. It is capable of development on a scale that now almost suggests a dream; and, so developed, it can pro vide an extensive market for Australian manufactures and foodstuffs, and em ployment for Australian labour.
At the present time, two large buc ket dredges are being built in Sydney for the Bulolo Gold Dredging Com pany. As a matter of no little economic importance in the world-wide slump in commodity values now ruling, they can be made to produce gold for the Empire and for Australia, and produce it now, and rapidly.
Stimulus Of Gold
The Territory is of considerable area, and has on the whole a very fertile soil and wide variety of climate. In the very forefront of its natural riches is gold.
The world’s history of the past 200 years shows that when gold in large quantities is discovered in any coun try, there follows extraordinarily rapid development of its other poten tial industries. To my mind, the dis covery and opening up of the rich gold field in the mountains of New Guinea, in the environs of Edie Creek, will bring about, within the next few years, very quick exploita tion of the capacity of this country to give us many varieties of tropical and sub-tropical products. It will also lead to the prospecting of other parts of the Territory for gold and other metals.
How foolish it is, then, to place any handicap upon the rapid development of the gold industry. If the Common wealth Government wishes to establish a source of rich revenue for the devel opment and administration of the Ter ritory it should subsidise rather than tax the eager private enterprise which is ready to spend money in the develop ment of gold mining there.
Take the case of the two companies with which I am connected namely, Placer Development Ltd. and Bulolo Gold Dredging Ltd. We have raised the large sum of £489,000 for these en terprises, and the equipment, which ws are purchasing and transporting to the New 7 Guinea mountains, includes two large aeroplanes, hydro-electric plant, the bucket dredges mentioned above, and considerable miscellaneous machi nery. I and my fellow-directors bud geted carefully so much for the preliminary expenses, so much for plant so much for transportation, so much for developmental expenses, and finally, so much to meet the royalty tax of 5 per cent., which we shall have to pay to the New Guinea Administration on the gold produced.
Estimates Disturbed
Now, just when our activities are well advanced, we have had imposed
upon us, without any warning, this new tax in the shape of Customs duty of 10 per cent. Frankly, it has gravely embarrassed us. Our capital has been raised, not only in Australia, but in Britain, the United States and Canada, and we submitted to these financial in terests our detailed plans, which con tained careful estimates, but which made no provision for a 10 per cent, duty. How then are we to raise money for the equipment of further producing, and royalty paying, properties are we to inform our friends in other countries that we unintentionally mis led them in the case of the financing of the Bulolo Company, or are we to accuse the governments concerned of lack of faith?
We could not take the latter course, because up to the present we have had nothing but thoughtful consideration from the Administrator of New Guinea and from the Commonwealth Minis ters in all matters relating to our operations in New Guinea.
Let me give one example of the dif ficulty in which we have been placed by this new tax. We are importing in to New Guinea for the transport of our mining and hydro-electric equipment two very large aeroplanes, the landed cost of which, with spare parts, will be £65,000. This is absolute pioneer work, involving us in much responsibility, apart from the cost in money, and it is pioneer work of value to New Guinea and to the development of outlying parts of the Empire generally Yet, under this unexpected tax. we are faced with the necessity of finding an unbudgeted £6,500 in cash before we can land this pioneer equipment.
It seems to me that in imposing this tax, the authorities have overlooked one very important point namely, that the New Guinea administration is to receive a 5 per cent royalty on the gross value of all our gold Our production of gold from the Bulolo property is assured, and the royalty payable will prove a rich and stable source of revenue for the New Guinea Administration.
From the Bulolo area alone, the royalties will amount to not less than £15,000 per annum for at least ten years; and there is a prospec tive further £15,000 to £20,000 ner annum in sight from two other
areas now under investigation by us.
Surely, then, it is most unwise for the Government to impose this discourag ing tax upon us, when, if we are en couraged in our enterprise, the revenue to be derived from our production may easily make the New Guinea Adminis tration one of the wealthiest in the South Seas.
Let me repeat the argument that not only will the development of this gold industry return large revenue to the Government directly, but it will indi rectly stimulate the growth of all industry particularly primary indus tries in New Guinea.
We have made urgent representa tions to the Commonwealth Govern ment and to the Administrator of the Territory in this matter, and we con fidently believe that, in view of the special circumstances, we shall be given relief in some form or other.