THE lesson for a government entering a renewed honeymoon period is to negotiate the resource super-profits tax swiftly and in good faith.

From a broader shareholder perspective, Canberra has made considerable progress. Shareholders represent about 50 per cent of voting Australians and, despite all the impressive work the government has done with its economic management of the global financial crisis and on fat-cat remuneration, it will be Telstra and the RSPT which it will take into the election and on which shareholders will make their judgment.

Despite the opposition's warnings that the new Prime Minister, Julia Gillard, is using "honeyed words" in order to stem the avalanche of public criticism of the RSPT, the majority of miners have come to the party. It seems the honeymoon period for the new leader has taken effect, allowing a window for genuine negotiations. In addition, the smarter mining executives have already taken a leaf from Telstra chief executive David Thodey's playbook - to tone down hostilities and seek a swift resolution.

It should be in everyone's best interests to have the RSPT debacle relegated to history.

Negotiations ought to be fast-paced and decisive. Gillard has a reputation for being a strong negotiator and needs to send a clear message that she can effectively follow through on her commitment to resolve this impasse.
Moreover, the market craves certainty. Any agreed compromise will see resource company share prices recover dramatically - especially if the flaws of this new tax grab are weeded out.

One need look no further than the negotiations with Telstra, the other major source of shareholder contempt for Canberra.
This ill-feeling has largely evaporated with the announcement of a non-binding draft heads of agreement on the national broadband network.

The uncertainty created by the NBN negotiations with Telstra, combined with the government's push for the company's functional separation, was weighing heavily on the share price. Now that the telco has a deal, the market's immediate response was to push Telstra's share price up 10 per cent.

It is hard to tell if the NBN is a good piece of infrastructure for Telstra as details remain subject to negotiation. Despite this, the bounce in Telstra's share price was noticeable. For too long, shareholders had been uncertain about the seemingly endless negotiations and threatening tactics used by the government. That uncertainty has now eased.

It appears Telstra will receive a minimum of $11 billion and Communications Minister Stephen Conroy is expected to back off from his plans to split the telco, to limit its access to wireless broadband and to allow the NBN to enter the retail market.
This headline figure excludes potential revenues from assisting the NBN actually build the network and any revenue from selling its recycled copper assets.

Further, current cashflows are not expected to peak for another eight years, so the actual amount of cash received by Telstra may be substantially more.

If the miners can negotiate a similar outcome, Canberra's renewed honeymoon period is sure to be extended.

This article by Stuart Wilson, Chief Executive Officer of the Australian Shareholders' Association featured in his weekly Shareholder Opinion column in The Australian on Tuesday 29 June 2010.