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The mining tax is shaping up to be one of the biggest issues of the federal election and it’s a sore spot for Kevin Rudd.
Yeterday mining company Xstrata suspended two mining projects in Queensland. One was worth $586 million, the other $600 million, and they would have created an estimated 3000 jobs. 60 contractors were sacked yesterday by Xstrata.
QLD Premier Anna Blight stepped in, asking the PM to “put down the baseball bats, to stop the advertising and get on with solving it”. Rudd refutes Xstrata’s claims that the RSPT is to blame for the projects’ suspension.
One week it seems like the government will make a deal with the miners, next week it’s a standoff. Rudd didn’t attend the Mineral Council of Australia’s annual dinner and it’s lost him significant brownie points. There’s talk the miners are chatting to the Greens, since it’s now possible the Greens will hold the balance of power in the Senate.
So should Kevin Rudd stop the whinging and start negotiating with the miners? Or is standing strong his best political option?
Here’s what the pundits are saying:
The Australian
Jennifer Hewett and Dennis Shanahan: Drinks with Kevin fail to lift spirits of mining bosses
They [miners] told him about the damaging impact the tax would have on investment and their unhappiness about the government’s strident attacks. But they say the Prime Minister did not concede any flaws in the design of the tax or suggest ways the government might consider to resolve the differences.
Bryan Firth: Rudd can’t afford to pooh-pooh public statements by miners
That remark simply demonstrates Rudd’s lack of understanding as to how the mining industry works and the long lead and expenditure that has to go into developing a project such as Wandoan to the point where a final decision is made to proceed.
Henry Ergas: Going retro with cash grab
Mining taxation does need fixing. But there are far better ways to do it. The best would be as part of a comprehensive redesign of our collapsing fiscal federalism. Now that would be real, hard, reform. But it would take time. The pay-offs would be long term. And it would not raise huge revenues in the short run. This tax will. Need one say more?
Sydney Morning Herald
Elizabeth Knight: Stick to the facts - some projects are on the line
It was a stupid idea by Xstrata to exaggerate and gloss over the detail in order to push its point. It detracts from the merits of its debate.
The Age
Katharine Murphy: Miners in money suits have a blast
Given Rudd had fled the miners’ dinner to celebrate a one-term Labor prime minister, Andrew Fisher, down the road at another venue, the generals could go for broke. Sorrow, anger, doomsday, explosives, T-shirts, prawn cocktails, anecdotes about drill parts from Broken Hill in 1932, power points on good policy making, high finance, high intrigue.
They could have heaved a giant Kevin07 voodoo doll on to the stage and stuck spears into him.
Michelle Grattan: Rudd’s tax plan mired in the mud
The government might think it weakens the companies’ resistance by pushing the talks out towards the election. The miners know that if Labor is returned, it will be able, politically, to ignore their cries. (If Rudd lost, they would have hit the jackpot.)
But the costs for the government of delaying any changes are high. The row is drowning out other issues, such as the health reforms, and helping Tony Abbott.
The Courier-Mail
Dennis Atkins: Govt refuses to debate $586m in mining developments six times
…if the Government fails to settle or win the mining tax argument it will find it hard to succeed in the bigger debate.
The West Australian
Andrew Probyn: Gloves off in mining tax flight
It’s gone from shadow boxing to a title fight, with real blood and bruises.
Suddenly, we’re not just talking about phantom projects being shelved or non-existent jobs being at risk, we’re now talking about real projects and real workers being lost.
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11 Comments
The miners are becoming more and more hysterical day after day. Rudd better hold his nerve - his political life depends on it. I suspect Australians will begin to see through the statements of the mining companies, just as they saw through the statements of big business when it came to WorkChoices last election.
Rudd is still failing, however, when it comes to selling the package. He needs to get out there more; he needs to argue the finer points of why they are introducing this tax. It’s almost as if he thinks the Australian public is too stupid to comprehend the economic issues which brought about the need for this tax in the first place (the two-speed economy as Jessica Irvine explains here: http://www.smh.com.au/opinion/politics/growing-rich-pains-the-downside-to-mining-boom-20100513-v1jf.html or Ross Gittins here: http://www.theage.com.au/business/henrys-bike-has-three-speeds-20100521-w1tu.html).
In case anyone missed it, we at The Daily Bludge have put together a mining tax fact site, which collates much of the information out there in the media at present in order to answer some of the frequently asked questions on the tax - it’s available at http://www.mining-tax.com.au
One new bit of info I dug up yesterday regards the level of foreign ownership of the big mining companies which can be hard to quantify. While I’ve seen figures of only 40% for BHP elsewhere, I found this gem in a presentation by Rio Tinto Global Head of Strategy, Doug Ritchie:
“The major mining companies – BHPB, Rio Tinto, Anglo, Xstrata – are now majority foreign owned, and that ownership has allowed Australia access to the global capital it needs to develop its resources. The stock of foreign investment in Australia at 31 December 2007 totalled $1.6 trillion. And mining companies, most of which are foreign owned or controlled, produced 8 per cent of our national GDP in 2008.”
Keep up the good work Crikey!
http://www.aph.gov.au/
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Advantage server?
I don’t think so.
The mining industry see this attack as an attack on their viability and profitability. Their loyalty is to their shareholders and investors, not to this nation, this government and this tax.
If their boards fail to fight this with every weapon available they are complicit in the destruction of shareholder value. They are fighting to protect the value of their shareholders investments, failure to do so would be a repudiation of everything Crikey’s founder stands for.
Mayne has made a career about holding boards accountable for their responsibilities to their shareholders. Failure to fight the RSPT would represent everything Stephen Mayne has fought against over the last decade or more.
I look forward to Stephen Mayne weighing in on the minig industry’s side in a Crikey editorial sometime soon.
Michael James, the mining company bosses are damaging their companies’ reputations and share values by reacting hysterically about the effects of the policy.
I imagine this would concern Stephen Mayne greatly.
This story is only such a big media issue now because much of the media swallow and repeat the mining company bosses lies without investigating, the govt has done a lousy job of explaining it, and the govt have made it worse by embarking on the advertising war.
The media barons love that, of course.
I would think Mayne would be more concerned with BHP spending $500 million in a failed takeover bid for Rio than the resource tax. The bid failed and there was never any guarantee that if it had succeeded it would improve the bottom line. The resource tax will not as the big miners claim be a danger to their viability but it will certainly reduce their excess profits. In affect it means no extra tax when there is no boom in prices paid for the resources. A similar rate of tax that was in force when many projects were started a decade ago and that didn,t stop those projects.
Does that mean the miners are now saying that a project needs excessive profits to be viable when their current operations began with expectations of normal ( non boom ) profits ? Australia is not Nauru and I would hope we have the nous to get a long term value for our resources for all Australians. Norway hasn,t suffered any adverse affects with its similar tax and Brazil is looking favourably at what the Australian government has proposed. Do we decide who profits from our minerals and coal or have we ceded our resources to International mining companies ?
@JJ Fiasson,,,regretfully the electorate is not seeing Rudd as David and Goliath, as seen this morning in the Galaxy poll…I have said on contributions to other blogs here at Crikey, unless Rudd changes his personal and public persona he is dragging the Govt into a pit where they will find they are not going to be able to dig themselves out.
Today’s admission by Minister Garrett, that he learned of the back down by Rudd, on the whole climate change policy,by reading it in the media, is the last straw for me and I am convinced will be also, by thousands of usually loyal Labor voters.
Unless the senior team within the Govt have the guts to tap Rudd on the shoulder and tell him to resign the leadership immediately and obviously instate Juila Gillard as leader, then this country, come the election will be put in the hands of a religious right wing fanatic, surrounded by similar types and there is no saying where the country will head.
Abbott is the proxy for the catholic church and all that organisation stands for, the Murdoch media, as we now see the billionaires of this country lead by the mining bosses and the top heavy income earners of the land.
My miserable vote will not go to the Liberals, or the Greens, however if Rudd is still in the PM’s seat come election time it certainly will not be ticked in favour of Labor. That people is the hardest decision made easy by this turncoat.
@ David - I tend to agree with you although from my experience, people either like or hate Gillard a la Abbott. I am not a particularly big fan although it would be fantastic to see a female PM one day (plus, she is an old Adelaide girl!). I don’t know who the next ALP PM will be to be honest, I used to like Tanner but am starting to change on that one…
I don’t buy into Abbott being a religious right wing fanatic as a PM, it just wouldn’t work. I have been really really suprised by Abbotts performance as Opposition leader and it seems that the public generally like him and importantly, females aren’t revolting against him. Rudd is being beaten at his own game now that the media has turned against him - the media won him the last election - and could quite possibly lose him this election.
Whilst it is probably not suprising, I cannot understand how the hard left supporters do not see the miners perspective on the tax? for lefties to suggest that it won’t change the industry at all, is just plain humorous and perhaps contributes to the perception that the ALP aren’t good economic managers. Miners will find ways to operate under the tax by probably spreading their projects out and pushing them into the next financial year. The smarter countries will now lower their taxes to encourage resource exploration at our expense.
Miners prospect for minerals, not favourable tax regimes.
Where they find viable deposits of minerals, they mine.
We should make sure they pay for the resources. This new tax will not stop any viable deposit from being mined.
@Michael James, Stephen Mayne has already written an article proposing that mining companies spend $200 million to fight the tax - http://www.crikey.com.au/2010/05/24/miners-should-spend-200m-on-campaign-but-be-open-about-it/
@Napoleon Dynamite, people understand exactly what the mine owners are on about. The local ones are multi-billionaires, and who knows how many other billionaires around the world have been minted off the back of our national resources. Resources that once dug out and sold off are gone forever, leaving behind a big hold in the ground or an expensive mess to clean up.
At the very least, Australia should be getting a much better return on this value extraction industry so that we can invest in industries that create long term value.
Are we Norway or Nauru?
Government should be adroit at uniting disparate viewpoints, facilitating our working together towards common goals, improving understanding between groups and creating a harmonious and co-operative Australia.
Attacking industries and groups is a recipe for expenses, conflict and disaster.
Perhaps this govt has watched the media too closely, and gotten sucked into its conflict centred view.
Perhaps also, some conflicts are real and require front.