Two new, high-profile taxes on carbon and mining have some Australians and certain foreign investors concerned about the durability of economic growth Down Under and the continuing hospitableness of the jurisdiction to foreign capital.

“Taxation” is clearly an emotional issue that politicians use to great effect. But its impacts are different from company to company, even within sectors and industries. A minority government has managed to push through two controversial–and consequential–pieces of legislation. But the broader case for Australia as an investment destination is still strong.

These aren’t positive developments for investors, but for the very basic reason that they’ve introduced just a little more uncertainty at a time when not even that much more is welcome. The actual impact on cash flows at the company level is our primary concern. How will these new taxes change the ability of Australia-based companies in the energy and mining sectors to pay dividends, if at all?

Beginning Jul. 1, 2012, Australia’s largest companies will pay AUD23 per metric ton of carbon emitted into the atmosphere as a result of their operations. This fixed price will have effect until Jul. 1, 2015, when a “flexible,” market-based system modeled on Europe’s cap-and-trade scheme will be implemented. This is law, as the so-called Clean Energy Future legislative packaged has passed Australia’s House of Commons and its Senate.

Last week, in the dead of the Australian night, the House of Commons passed Prime Minister Julia Gillard’s Mineral Resource Rent Tax (MRRT), what’s commonly referred to as the mining “super tax.”  The mining tax is all but assured passage in the Senate, which means exactly what, we don’t know. One news outlet described the legislation, which was subject to a last-minute compromise before its under-cover-of-the-night passage Nov. 23, as “one of the great lose-lose outcomes.”

As it stands, a 30 percent nominal tax rate on coal and iron ore profits exceeding AUD75 million will kick in Jul. 1, 2012. The government hopes to raise more than AUD11 billion over the next three years to pay for a general corporate tax cut, infrastructure projects and an increase in the country’s pension system matching guarantee from 9 percent to 12 percent.

Because these latter plans are fixed and the amount to be generated by the MRRT, which will fall on several hundred companies, can’t be determined, the new scheme could cost more than it brings in new revenue. But that’s an issue for politicians to debate and voters to decide.

Ultimately the costs for this tax are likely to be borne by countries that import large quantities of Australian coal and iron ore, specifically China and to a lesser degree India. These are the consumers to whom Australian producers will pass costs. They don’t like it, but it’s simply another variable in a complex global pricing equation.

It’s a fair guess that Australia will fall a couple places in The Heritage Foundation’s 2012 ranking of countries according to “economic freedom.” The think tank released its findings for this year when it thought carbon-tax legislation was on hold because of “political opposition” and well before the mining “super tax” passed Australia’s lower house of parliament. These factors weren’t ignored in the calculation of the country’s overall “fiscal freedom” score, which was 61.3 out of a possible 100. The global average is 76.3; Australia’s poor showing is exacerbated by relatively high income and corporate tax rates.

But the factors that drove the country’s No. 3 showing in the 2011 appraisal by one of Washington, DC’s leading factories of conservative scholarship–including longstanding openness to global trade and investment, generally even application of transparent and efficient regulations, an independent judiciary that protects property rights, and levels of corruption–are largely intact.

“Fiscal freedom”–which under the Heritage Foundation construction encompasses basically all forms of taxation, whether corporate or personal–is just one component of overall economic freedom. The Heritage Foundation also concluded that “with robust supervision and sound regulation, the banking system has coped well with the financial turmoil” attending the global financial crisis.

We’ve emphasized its net debt-to-gross domestic product (GDP) ratio because it focuses on what’s owed to external rather than domestic creditors, but Heritage is right to point out the uniqueness of Australia’s 25 percent gross debt-to-GDP ratio.

The corollary to this is that Australians have a lower debt service per capita than virtually all their developed market brethren. This is one of the realities that motivated Fitch Ratings to boost its rating on the Australian dollar to AAA. The Australian headlined the Web version of its story on this Fitch move as follows:

Fitch Ratings upgrades $A rating on low sovereign debt

This formed a nice juxtaposition with the headline for a story on another Fitch move:

Fitch lowers outlook on US to negative, affirms triple-A status

These two headlines help define one of the essential pillars of Australian Edge, that the long-term appreciation of the aussie versus the US dollar will contribute to market-beating total returns. Fitch’s decision to upgrade Australia’s “Long-Term Foreign-Currency Issuer Default Rating” reflects the country’s “high value-added economy, strong political, civil and social institutions and its flexible policy framework.” Noted the rating agency:

The combination of low public debt, a freely floating exchange rate, a credible inflation target framework, and liberal trade and labour markets provides Australian authorities the flexibility to run strong counter-cyclical fiscal and monetary policies during both economic downturns and upturns. These factors have helped Australia weather a number of externally-driven shocks over the past two decades.

To dismiss Australia because of these two taxes of as-yet undetermined consequences is to throw a potential wealth-generating baby out with the proverbial bathwater. And broad generalizations about the carbon tax and mining tax gloss over the essential fact that these levies will take different strokes out of different folks–in other words, at the end of the day it still boils down to individual businesses. For example, specific worries have cropped up concerning what could otherwise be a liquefied natural gas (LNG) boom for Australia but for the threat of the carbon tax.

Santos Ltd (ASX: STO, NYSE: STO) in its public statements on the matter has noted that although production at its LNG facilities will result in carbon emissions and therefore new taxes Australia’s ongoing shift away from coal as the main feedstock for electric power generation toward natural gas would result in a long-term net benefit.

Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY) also stands to benefit because of the nature of its overall portfolio, which includes significant natural-gas and renewable-fired power generation.

For other companies, including LNG producers, it will boil down to questions such as how carbon intensive is the extraction/production process. Fields that are known to be more carbon intensive to develop, such as the Cooper Basin, where Santos has a major presence, will draw additional scrutiny. So will coal seam gas projects, where costs could run higher because of emissions resulting from “beneficiation,” the process that separates what’s produced into marketable material and “gangue,” which is waste.

Carbon advisory and analytics firm RepuTex has forecast the carbon tax would add AUD33.4 billion to the cost of doing business during its first 10 years. About AUD14.6 billion is expected to be passed on to consumers. The remaining AUD18.7 billion will be worn by listed companies, mainly at the smaller end of the Standard & Poor’s/Australian Securities Exchange 200’s mining and energy sectors. This AUD18.7 billion is about 1 percent of the total underlying profit of the S&P/ASX 200.

So far the threat of new taxation hasn’t stemmed the flow of new mining and energy projects in Australia, although it’s probably too early to make a judgment either way. Most of the projects in the “under construction” or “committed” stages in the Australian Bureau of Resources and Energy Economics’ (BREE) biannual Mining Industry Major Projects report for October 2011 obviously were underway well before these ideas metastasized into full-blown bills.

But the fact that committed capital in the resources sector grew by 34 percent during the six months ended Oct. 31, 2011, to AUD231.8 billion is an encouraging nonetheless that Australia remains poised to ride what will still be a long commodity cycle.

The Roundup

Australian Edge Portfolio Aggressive Holding GrainCorp Ltd (ASX: GNC, OTC: GRCLF), the biggest grain handler in eastern Australia, continues to enjoy a strong recovery for the broader Australian agricultural economy in the aftermath of the disastrous storms and flooding that marred the 2010-11 season.

The company reported that net profit after tax (NPAT) for the 12 months ended Sept. 30 more than doubled to AUD171.6 million from AUD80.2 million a year ago. That beat management’s forecast of AUD145 million to AUD165 million, and guidance for the remainder for 2011-12 was decidedly upbeat. CEO Alison Watkins noted during a conference call to discuss results that GrainCorp has “shipped out about 1 million tons” in October and November, though normally at this time of year “our ports would be a lot quieter.”

Ms. Watkins also downplayed the potential impact on GrainCorp’s business of potential new competitors, noting that her company is already pretty well entrenched at existing sites and well advanced as far as capacity expansion is concerned. GrainCorp added 835,000 metric ton of extra storage at 21 existing sites in Victoria and New South Wales in 2010-11. The company had originally planned to build 670,000 tons. It added about 1 million metric ton of extra capacity in 2009-10.

Grain receivals doubled to 14.9 million tons, while exports totaled 8.1 million tons, up from 3.5 million tons a year earlier. Stockpiles totaled a record 6 million tons as of Sept. 30. GrainCorp has received 5.2 million tons of grain so far in the 2011-2012 season.

The wheat crop for the current crop year is forecast to be in line with last year’s record 26.3 metric tons, which put Australia No. 3 in the ranking of global wheat exporters. Exports for 2012 could hit a record 20.3 million metric tons, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

Management declared a AUD0.15 per share final dividend and a AUD0.20 per share special dividend, bringing the full-year dividend to AUD0.55 per share. That works out to 64 percent of fiscal 2011 NPAT, above management’s guidance range for a payout ratio of 40 percent to 60 percent but largely a function of the special dividend declared.

Both the final and the special dividends, declared Nov. 24, will be paid Dec. 21, 2011, to shareholders of record Dec. 7, 2011. The Australian Securities Exchange (ASX)-listed shares trade ex-dividend Dec. 1. GrainCorp is a buy up to USD8.50.

Here’s when each of our current holdings is expected to go ex-dividend the next time. To collect the dividend, investors will have to be stockholders as of the “record date,” which is typically a couple days later. All dates shown are estimated.

Conservative Holdings

• AGL Energy Ltd (ASX: AGL, OTC: AGLNF, ADR: AGLNY)–Mar. 5, 2012
• APA Group (ASX: APA, OTC: APAJF)–Dec. 23, 2011
• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–May 10, 2012
• Cardno Ltd (ASX: CDD, OTC: COLDF)–Mar. 7, 2012
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–Feb. 15, 2012
• Envestra Ltd (ASX: ENV, OTC: EVSRF)–Feb. 10, 2012
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–Feb. 9, 2012

Aggressive Holdings

• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)–Feb. 17, 2012
• GrainCorp Ltd (ASX: GNC, OTC: GRCLF)–Jun. 15, 2012
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)–Feb. 11, 2012
• New Hope Corp Ltd (ASX: NHC, OTC: NHPEF)–Mar. 20, 2012
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)–Feb 24, 2012

Just as they pay dividends semi-annually, so do Australian companies report financials only semi-annually. That makes it doubly important to pay attention when the numbers do come out.

Companies typically announce earnings release dates a few weeks before revealing their numbers and making filings. As a result, the dates shown below are only expected reporting dates, which can vary several days or even weeks. Note that releases are classified as “interim”–which show how a company is doing at the halfway point in its fiscal year–and “final,” which is the fiscal year in full.

The notable exception here is ANZ, which actually does release quarterly earnings data. Approximate reporting dates for the company are Feb. 2, May 2, Aug. 18 and Nov. 2 (full year). Also, Newcrest Mining and Origin Energy issue a quarterly “Sales and Revenue Releases,” in addition to interim results. Newcrest even issues monthly updates.

Conservative Holdings

• AGL Energy Ltd (ASX: AGL, OTC: AGLNF, ADR: AGLNY)–Feb. 23 (interim), Aug. 24 (final)
• APA Group (ASX: APA, OTC: APAJF)–Feb. 22 (interim), Aug. 23 (final)
• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–Feb. 2, May 2, Aug. 18, Nov. 2 (final)
• Cardno Ltd (ASX: CDD, OTC: COLDF)–Feb. 15 (interim), Aug. 15 (final)
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–Feb. 16 (interim), Aug. 16 (final)
• Envestra Ltd (ASX: ENV, OTC: EVSRF)–Feb. 23 (interim), Aug. 25 (final)
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–Feb. 9 (interim), Aug. 10 (final)

Aggressive Holdings

• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)– Feb. 8 (interim), Aug. 24 (final)
• GrainCorp Ltd (ASX: GNC, OTC: GRCLF)– May 26 (interim), Nov. 23 (final)
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)– Feb. 9 (interim), Apr. 18 (qtr), Jul. 21 (qtr), Aug. 15 (final), Oct. 20 (qtr), monthly sales releases
• New Hope Corp Ltd (ASX: NHC, OTC: NHPEF)– Mar. 22 (interim), Sept. 20 (final)
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)– Feb. 22 (interim), Apr. 29, Aug. 22 (final), Nov. 2