Don’t feel sorry for Xstrata
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The media and the opposition would have you believe the fifth horseman of the Apocalypse, looking very much like Kevin Rudd riding on his RSPT, had gone into Mt Isa and wreaked havoc, in the wake of Xstrata’s decision to suspend its Wandoan coal project and an extension to its Ernest Henry copper mine. It’s garbage, and the cleverly tax-avoiding Switzerland-based empire has played this game before. Let’s look at the facts of what they’re claiming to do — facts you won’t get from the mainstream media today. The “$6 billion” Wandoan coal project — it’s still in the planning stage and hasn’t even received the requisite environmental approvals yet — isn’t intended to produce coal for export. As Xstrata itself admits in its spruiking of the project, massive road, rail and port infrastructure upgrades are required if the coal could ever be exported. Instead, the project was dependent on the Wandoan Power project — a Carbon Capture and Storage initiative that is entirely reliant on federal government funding. The government is investing billions in trying to make the so-far commercially-unproven CCS technology viable, but it’s not even yet clear if the Wandoan project will attract funding from the government, and won’t be for quite some time. And as always when it comes to the mining industry, look at what they do, not what they say. Remember that huge $4.85 billion bid by the coal industry for QR’s coal lines last week? That’s the one where the bidders specifically said they were prepared to pay a premium — using borrowed money — for the infrastructure because they were so confident of ‘future growth’ in coal exports. Who’s leading that bid? Who has such confidence in growth in coal exports that they’re prepared, even in the light of the RSPT, to pay over the odds for infrastructure? BHP and Xstrata. Again, look at what these people do and not what they say, because when they open their mouths they lie. When it comes to the Ernest Henry copper mine, even Xstrata itself is confused. It says it’s not proceeding with one extension, but it is with another. Ernest Henry will still be going for another decade, according to the company. The real reason why it isn’t proceeding with its more expensive expansion of the mine at this point is simple: the copper price has tanked and doesn’t look likely to recover any time soon, not while there are concerns about sovereign debt and banks in Europe and the Chinese government is trying to rein in growth. Nothing to do with the RSPT. How do we know? Well, Xstrata shut down a major copper operation in Canada back at the start of the year. Since then, the price of copper has fallen further. This isn’t the first time that Xstrata has made these sorts of claims, though. In March last year, at the height of the CPRS debate, Xstrata confidentially told Malcolm Turnbull they wouldn’t proceed with the Wandoan project if the CPRS went ahead. Turnbull, eager to score points off the Government, used the claim in question time, saying it was evidence the CPRS would cost thousands of jobs. An embarrassed Xstrata then had to back down from the claims, admitting the project wouldn’t be substantially affected by the CPRS. In the ‘perpetual present’ of political coverage, of course, that’s long been forgotten by journalists. As one former coal industry insider told Crikey: “this is a total con”. Threatening to halt or delay projects was, they said, a common industry tactic, and was frequently used during the campaign against the CPRS. “This was all just tactical bullying and everyone in the industry knew that at the time.” And in the mainstream media and lazy journalists, they have a willing ally. |
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114 Comments
Isn’t that the truth. Especially over in the OX.
Great article BK. Somebody please flock this article around to keep people informed because the majority of the media are hopeless, may be they do not know that they are being manipulated like puppets.
The “majority of the media” is owned by “one block” with one intention, to influence the electorate to “their” way of thinking, for the unelected political influence that delivers - they’re paying these people to write this sort of stuff, to peddle this “PR crap” in their “media” and influence the electorate to their end.
The ‘X’ strata must be the strata where all the bullshit is buried.
Thank god Bernard is one of the few journalists not stuck in a perpetual history-less present.
yes good job Bernard. I watched the Xstrata chief lie through his teeth to Ticky Fullerton on Lateline Business last night.The bloke couldn’t lay straight in his bed.
On Perth am radio this morning, Aussie stocks & shares read out.
Radio host asks news reader “Xstrata?”
Reply: “Not Australian - that’s overseas”.
Snicker.
Thanks for excellent post.
Dr Harvey M Tarvydas
BK, saviour of reason, sanity and truth, good on Ya.
A bit of people power needed here. A protest march (calling all courageous Aussie’s who know what’s good for them and their country) Invoke – out!!!! arseholes, all the slimy foreigners spewing lies and deceit to devalue life for citizens of this country in their own country, treating them as fools, stealing their natural wealth – OUT !!! Who needs you – keep their money and kick them out but cover them in slim first so they know what we are talking about. We will give the opportunity to another after a tender process that’ll give them the shits.
Xstrata and the lap dog Coalition claim that 3,000 jobs have been lost. So, 3,000 jobs, which never existed in a practical sense, have evaporated?
In line with this logic, I’m down $15M from last Tuesday’s Lotto draw.
“Laziness” and “short memory” on the part of mainstream journalists are not convincing reasons for failure to report the facts.
Thankyou again, Bernard for an excellent article.
Sadly, now it is both ABC’s, Auntie as well as Akerman, Bolt and Co, who have become willing allies.
Dr Harvey M Tarvydas
If we do what the Norwegians did, knowing the specific resource call for international tenders to develop it and exploit it on behalf of Australia (its people) and the tenders would come rolling in making Australia’s share such that it would dwarf the new super profits tax then we would all be rich and we could all kiss the Mining company that wins the tender all over as often as it desires.
Dr Harvey M Tarvydas
ZUT ALORS me too.
Let’s sue the coalition’s accountants $15 million each ‘cause we both missed out.
These are the accountants who give this sort of advice to the poor coalition. They’re bound to fall for it unless the coalition thinks the accounting methods up for itself without professional help and advice.
I agree completely with this article.
Sadly, I also know many who will keep believing the fear propaganda of the coalition and the super mining companies.
But… where are the defenders of the rich? Where are the bloggers for the wealthy? Why have not the usual writers jumped in to criticise this article and tell us that all the poorly-done-by billion-dollar-profit mining companies are being treated badly…. come on … I have seen the adds on tele: “everyone” in Australia will pay for this tax….. It is going to ruin the land…. the sky will fall in…. all that…
Funny, people claim its all a media con, that they are all ‘owned by one block’, etc.
Perhaps if you wander over to the Business Spectator, which is not part of that so-called ‘one block’, you might get a more complete picture.
I also note they they gave space to Bernard to trumpet his views to Business Spectator’s readers, something which seems to be strangely lacking in reverse. Whats up Crikey, afraid of a dissenting view in the echo chamber?
I might agree with you about the copper mine Bernard. There is no doubt copper prices have had an impact on the viability of copper mine projects. However the same does not apply to the Coal mine.
From the Queensland Government website regarding this project (http://www.dip.qld.gov.au/projects/mining-and-mineral-processing/coal/wandoan-coal-project.html)
“The Wandoan Joint Venture (WJV) are proposing a new open cut thermal coal mine and supporting infrastructure with the capacity to the produce around 30 million tonnes per annum (Mtpa) of run of mine (ROM) coal, over a 30 year period. “
“The coal will be crushed, processed and blended on site before being transported to port via a proposed rail connection between Wandoan and the existing Moura-Gladstone Line (known as the Southern Missing Link). The coal will be transported via this rail connection to either the Wiggins Island Coal Terminal at Gladstone or the proposed Balaclava Island Coal Export Terminal near Port Alma for export”
I don’t know how you can then claim the coal was not meant for export based on those statements. Just because they want to supply some coal to the CCS power plant does not mean all the coal is going there.
Xstrata has spend $200 million over 3 years in feasibility studies and environmental impact statements on this project. That’s a lot of dosh to walk away from to make a political point. Regardless of whether the tax is 100% the reason why Xstrata has walked away, or 10%, it is still a factor.
Yesterday I was talking with a couple of friends who have either sold down their BHP and similar shares in the past two weeks or have sold out entirely from mining. These are all retirees.
They were, every one of them, acting after receiving advice from full fee charging brokers. Now, I do not blame the brokers - they probably gave the advice that their clients sought and they cop a fee from the transaction.
The pity of this is that, due to the decline in the $A, private shareholders in Australia are being stampeded into selling down these stocks, in large part due to the bulldust which is emanating from the overseas spruikers from these same companies.
Nett effect: Private Aussies poorer in the long term. Foreign ownership of target companies increases.
There is damage being done right now due to the scare mongering and distortion of facts and outright lying being done in the mainstream print and electronic media, and this is far from being only the fault of one single megalomaniac geriatric proprietor or a distracted national broadcaster. This is a full-on, orchestrated attack on Australia by some of the largest corporations in the world.
Good on you, Bernard. Keep it up.
@Michael James:
Look who contributes to and manages the Business Spectator. If you are after a complete picture, you will not get it from a chorus line of converts.
Paul Keating, in another context, framed the beautiful and descriptive term “conga line of ar_eholes”. Perhaps this relevant in the present context.
The problem with the big business lot though is that lead levels are on the rise in children in Port Pirie, Kakuda is being increasingly poisoned, BP is spewing out billions of litres of oil and destroying the US and so on and so forth.
The stupid old farts still think that BHP is Australian and the bloody brokers need their arses kicked.
If the silly old farts here sell BHP how do they think that helps anyone?
Bhp and RIO are worth $400 billion they cannot go broke.
A clear case of THE SHEEP THAT CRIED GREED IS GOOD
The ABC has sure been crimped.
Bernard, your article fails to prove anything. Indeed, to paraphrase Bob Carr, you’d need to have a wiretap inside every Xstrata meeting room, to know for sure.
Word is Lachlan Harris is not doing a very good job despite a docile Canberra press gallery.
Bernard Keane should be a shoe in for that job should it become available.
He does the job already apparently on Crikey’s coin.
Apparently Xstrat shut down a copper mine in Canada.
Ipso facto they’re liars and and the closure of projects in the pipeline has nothing to do with a capriciously changed investment risk-benefit analysis profile.
Kevin Rudd is soooo handsome and sweet. Isn’t he Bernard?
Troy, it is on their own website mate, go and have a read.
It is another case of pretending that jobs that don’t exist will be lost.
Stupid people should remember that we are not all idiots.
Lib MPs made geese of themselves in Question Time yesterday, honking about “3000 people who’ve lost their jobs”.
It was the silliest confected outrage.
They’re over-excited. They’ll step in it soon. The voting public will see it happen, and they will remember on election day.
Yes, there is a hysterical and predictable reaction to a good tax policy.
Yes, it is morphing into a co-ordinated campaign by the biggest of big business to try to distort public debate in their favour.
Yes, thanks Bernard Keane and a few others for persistently picking their lies apart.
But no, it won’t work. As badly as the government is selling this policy, it’s strength will out.
@John Bennetts: “Yesterday I was talking with a couple of friends who have either sold down their BHP and similar shares in the past two weeks or have sold out entirely from mining. These are all retirees.”
You may not blame the brokers but I would. But really it is hard to be sympathetic with your “friends” (assuming this story is not apocryphal) who must pretty lame brained. Such people should not be in the stock market. And incidentally most of the selling is done automatically by big funds who must maintain certain weightings etc. Obviously in any downturn individuals should just hold on tight and ride it out (despite anything Marcus Padley might say). Also sometimes in any given stock price fall it often turns out to be on very thin trading — ie. hardly anyone actually buying/selling, yet that is hardly ever cited in reports.
@ Troy C:
What use would wire taps be? The whole article is about comparisons between what XS say on the record and what they do.
Did Troy C bother to read the article, or just race to the bottom with a comment?
reply John,
I can only repeat myself: Bernard’s article proves nought. Zero, nada, none.
@ Michael R James:
First, as to the comment that used the term “apocryphal” to infer that I was lying… not so. Discussion between friends. Happened last night. As I said. Why the slur?
My point is not that superannuation and other funds and automated transactions are responsible for the majority of trade - they can look after themselves.
My point was and is that the information supplied to small investors, especially the older ones who are trying to manage their own money, has been tainted by the deceit and lies which are coming from the media and the proprietors of the mining businesses.
I do not appreciate being called a liar any more than these good but ill-advised folk enjoy being bilked out of their money.
I have absolutely no intention of self managing a share portfolio when I am 70 or 80, but some of that age still try to do so and that is their absolute right. 80? Old? Ask Rupert.
Seems like the mining industry only knows how to do business in an adversarial manner. A whole heap of energy going into adopting a defensive strategy prior to even knowing exactly what the impacts will be.
Question time has become required viewing lately.
@TROYC Ok in your opinion BK’s article proves nought….so keep going why?, whats your proof it doesnt. Your obscure comment says nothing. I will take on board what he has written failing some other reasonable explanation.
@Nelson
The mining industry didn’t start this fight. Kevin Rudd picked this fight with them very deliberately. He thought it would give him a political advantage. He made the wrong call yet again.
By all means, demonise Clive Palmer. Certainly, hold Xstrata up to scrutiny. However, BHP and Rio Tinto are not cowboy outfits. Neither is Santos.
This proposed tax should have been laid out for public scrutiny and discussion in January. The government should have had fair dinkum discussions with the various stakeholders. The unintended consequences would have been discovered at that stage, well before they had any chance to wreak market havoc or threaten jobs.
@David.
You’re at it again.
Implying the absence of proof of nothing to imply your silly-something assertion is correct.
Bernard Keane, what are you trying to prove?
- that the mining industry isn’t closing down next week? Of course it isn’t.
- that half the pipeline projects in the country aren’t being cancelled? Of course they’re not.
- that Aussie share prices haven’t collapsed lower than those of international miners more exposed to the European credit shocks? Strange but true, they haven’t.
Wow, does that mean the RSPT has no effect on the mining industry, or is actually beneficial for it, in some way that the executives haven’t seen the light yet?
No, it means three things, mostly gradual effects in the future rather than one-off shocks right now, and you’re being disingenuous to pretend you don’t know this.
1. Future growth in the Australian mining sector will be more subdued because profitability is significantly reduced relative to other countries
2. Competitiveness of the Australian mining sector, currently among world’s best if not the best, will slowly deteriorate because the tax system will mitigate losses while penalising profits. Until now it was a merciless, risky business where you could either succeed brilliantly or crash and burn, but now the middle-of-the-road operators will have their day.
3. Applying the RSPT to existing projects, not just new ones, means Australia will no longer be near the top of the list of best countries to do business in general, because the international community now knows Australian governments are prepared to partly nationalise projects that are already in operation.
Of these three effects, the third one is the most dangerous, and the message will remain for a long time even if the government turns around and cancels the RSPT next week. The word is now out that businesses in Australia that become too successful are fair game for retrospective nationalization. That’s why the comparisons to Hugo Chavez are being bandied around, it’s not just hyperbole.
It’s the biased way the tabloid media (with it’s penetration, influence and “political proclivities”), with a party to sell, is covering the whole thing, with so little real attempt at “enlightenment about the facts”, about a very complex matter, for either side - apparently happy with the way this is playing out, because it’s running as suits “their dog in this fight”.
James MacDonald…you lost me when you said “partly nationalise”….
So now, taxation is “nationalisation” (well, “partly nationalisation”). Hmmm…
So we are not allowed to change tax schedules or tax rates? Oh yes.. it sends a “bad signal” that a government might just want to share just a bit more in the super profits of the multinationals that are making so much wealth out of a nation’s resources. Now that is sooooo bad… I forgot…
We are suppose to just let ‘em do whatever they want - or keep cosy deals they made in the past. If we gave them super beneficial arrangements and they are making tens of billions a year profit, well… you seem to be suggesting that we just keep that super beneficial arrangment in place. Tough luck Australia: we were ripped off but just leave it like it is? We supposedly can never change anything. After all: we wouldn’t want other multinational companies who want to rip us off the same amount, to not come and do that, would we?!
“Nationalisation”. Not the right word to use to describe “taxation”.
Let’s think about the reverse of “nationalistion”: “Privatisation”. I guess taking public companies and selling them off to the wealthy (those with excess wealth to invest in the stock market, those with education to take advantage of that, those with contacts and know-how) - to take companies from the country, (from everyone) and make them available to the wealthy - that is okay. But to go the other way is terrible. Hmm.. And hang on a minute: we are not actually nationalising anything - so we are not going the other way at all. Rudd is proposing a bit more tax.
But taxing the wealthy a bit more… wow… what a sin!
Oh dear - the super rich companies of the world might think twice about investing in Australia. But guess what? After thinking about it, they will still invest here. They want our resources. They can’t always get them as easily elsewhere - and they will still make billions and billions of dollars profit (even after the tax). Some of the other locations are in unstable countries, with poor infrastructure, with corrupt governments that require “gifts” that are more costly than the new tax regime. And sometimes there are not enough resources to go around, and we just happen to have a lot of some of them.
Not convinced. Sorry.
It does not matter which side you believe, the fact is that the 4.85 billions bid last week shows that analysts are optimistic about the future and the RSPT will be modified to a workable form. Now both sides are just gearing up to bargain for the best deal; that is how the game is played.
This is meant as a serious question, I have no bias either way on this: what would be the advantages and disadvantages of nationalising the mining industry?
@John 4.44pm: “However, BHP and Rio Tinto are not cowboy outfits.”
Now, I don’t wish to make any stupid remarks about these huge companies but still I wonder. Rio paid a stupendously ridiculous inflated price for (Alcan I think) apparently partly as a ploy in the “too big to be swallowed” defense against BHP-B. Kind of destroy the village to save the village strategy and it almost did it. And BHP-B trying to buy Rio didn’t look too bright either; in the end it cost them a cool half bill. (ok small change).
Now these two behemoths still want to partly merge by merging their Pilbara operations. Currently we have three giants in iron ore, (Vale of Brazil being the biggest), and they want to reduce it to two. They can blather on about cost savings — -I don’t believe it; with companies already this huge what can their be? If there is a lot (I think they said $10B pa) then they must be fantastically inefficient now. No, obvious to the blind, deaf and mute, this is entirely about monopoly pricing. But what does anyone rate their chances of bringing such an outrageous move off (the EU will probably kill it dead, let’s hope before it goes any further). Do we (and I mean Australia) really wish to enrage China (and Korea, Japan, EU, the world) any further? The Stern Hu incarceration was all about these companies abuse of market power and we want to allow the merger of these behemoth into a $400B entity. We do not expect companies, especially the big multinationals, to operate on ethical standards. The law is the only thing they (sometimes if they really must) follow. Strikes me they are pretty dumb but are just so greedy (and who knows what role ego of top managers is? They would love to be running the world’s biggest company for no other reason.)
(My irrelevant opinion is that Wayne Swan and is it Chris Bowen, should have a quiet word with these companies and tell them to forget the whole merger thing. It is not good for them and definitely not good in Australia’s national interest.)
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John Bennetts. Not intended as a slur (I’m just an insensitive swine.) But I remain sceptical. Like sex stories I suspect a lot of people are economical with the truth when it comes to stock market history. (If anyone tells me they bought Amazon in 1993, or Apple in 2000 I tell them they will be paying our bar tab for the rest of our lives!) And, though I am not a spring chicken, and this happens continuously, I still am credulous that people can be so stupid. I mean they did what?!
Jim Reiher:
“We are suppose to just let ‘em do whatever they want - or keep cosy deals they made in the past.”
In two parts:
“Let ‘em do whatever they want” - No. Like all businesses they must be held to laws on environmental impact, and they must negotiate fairly with previous owners of land including Aboriginals.
“Keep cosy deals they made in the past” - Yes. If we drop the meaningless word “cosy”, I can paraphrase this as “honour deals we have made with them in the past”.
As for “nationalization”, it’s an issue of the perception of those who matter in capital markets — which doesn’t include me, and chances are it doesn’t include any of us in this thread.
ANU economist George Fane, explains the issues better than any I’ve seen. Like you he is in favour of progressive taxation of the rich, and says we should be getting more tax out of miners than we do. But …
But …
I highly recommend reading that entire George Fane article. He is neither pro-miners nor pro-Rudd, but somewhere in the middle. If he’s pro-anything, it would be intelligent solutions.
@John
“However, BHP and Rio Tinto are not cowboy outfits. Neither is Santos.”
So you’re assertion is that these (fabricated) job losses are the government’s fault because they attempted to impose this tax on the mining companies, is that correct? You seem to realise that Xtrata is somewhat in the wrong here, but i don’t understand how you feel you can defend the other companies’ moral standing, or assert their propensity to accept anything that will affect their bottom-line. There is no question at all that these companies are “cowboys”. Whatever the f*** that means exactly i’ll assume it’s a negative. I’ll wager that, for all three of the mining companies you mention, just 10 minutes of research will provide you with evidence of the hideous conduct that multinational mining companies display when faced with political and social situations which may harm their bottom-line. Furthermore, you’ll probably find evidence of situations where inequitable systems have been perpetuated for their personal gain.
I’m not only talking about (apparently) morally neutral issues such as taxation either. I’m talking about stuff like (in Rio Tinto’s case):
Murder
Torture
Perpetuation of slave labour
Environmental degradation causing the collapse of ecosystems, and death and disease in human populations.
The funding of repressive private armies.
The bribery of repressive governments and military dictatorships
If you didn’t have your blinkers on you would’ve probably known these things went on already and this might’ve tempered your naive and unthinking acceptance of the mining companies line. These guys don’t “negotiate”, they are essentially above the law.
Because research requires the mental faculty to google i’ll do you a favour and link the site where i got my info:
http://londonminingnetwork.org/2010/04/rio-tinto-a-shameful-history-of-human-and-labour-rights-abuses-and-environmental-degradation-around-the-globe/
Apoligies for repetitions and poor editing in that post. Anyway, it’s a very good article.
Jim Reiher/James Macdonald.
“If the Commonwealth government wants to share in the equity risks of new projects, it should get the Future Fund to purchase mining shares.”
Presumably the Future Fund already owns some BHP-B and Rio (it is probably asking too much to hope that they bought up big during the big stock market dip of the GFC). But funny how this notion was so controversial 30 years ago when the Whitlam government tried to do something similar (and nothing illegal or “communist”) via those Khemlani-arranged loans. Imagine just how much those investments in our own resource stocks would have grown!
Yes, it is asking too much to hope. The only investment the federal government spent up big on during the crisis was Residential Mortgage Backed Securities (RMBS). Rent-seeker extraordinaire Christopher Joye talked them into it. Goes with the FHOG subsidy.
Here’s the third paragraph I meant to quote from George Fane, instead of repeating the second:
^ “But it is important to note that in the case of a mining lease that has already been allocated, the minerals no longer belong to the community: they belong to the successful bidder who, in exchange for promised development and exploration expenditures, has been promised the right to sell whatever can be produced within the term of the lease.”
A lease does not imply ownership, merely temporary occupation/use of something. Ownership remains with the lessor, in this case the Commonwealth of Australia.
Does your landlord come in after you’re all settled in and announce that he’s more than doubling the rent?
Just watched the ABC Stateline, Qld edition. Interview with the PM. He hasn’t done too badly though I lost count of “Just let me say” and other Ruddisms including a couple of working families. The ABC reporter, Jessica van Vonderen (who also doubles as newsreader on weekends I think) was ok but repeatedly asked if the PM would be apologizing to Queenslanders for all the jobs lost from the Xstrata cancelled projects.
Just as we Crikey readers expected, they ignore the facts and seem to get their cue cards from News Ltd.
Of course how can the ABC compete against the vast research resources and staff of Bernard Keane and Crikey? But at least they could read Crikey! The PM did cite “some media sources today” as contesting Xstrata’s claims.
@James
When property value increase landlords do increase rents, councils do increase rates, that is the fact of life. Now you are comparing it as doubling the rent is an unfair comparison. Nevertheless I do see the concerns from both sides and I am sure there will be a workable resolution reached.
@zut alors
“What would be the advantages and disadvantages of nationalising the mining industry?”
Advantages: We would own 100% of two-fifths of fuck all.
Disadvantages: We would own 100% of two-fifths of fuck all.
Socratease:
The Commonwealth of Australia does not own minerals in the ground. I believe that constitutionally they belong to the States. ence royalties are determined by the States. You have it right, except for this.
So can I take it those on the left have no objection if state tenancy laws are amended so that landlords can raise rents arbitrarily for existing tenants, rather than in limited increments? Well, now I’ve heard everything.
@ John 7.57 post
To date that’s the most intelligent and original answer.
@James
Common James you know that this is the commonwealth enforcing tax, a fair bit different to your example not to mention that they do propose to rebate the state royalty. My brother pay top income tax bracket more than 40 per cent and cannot negotiate compared to the one of miners the other day who said they pay 35%. I do not agree with the RSPT entirely in its current form but I do believe reform is needed.
@JB, yep my error. The Commonwealth owns offshore and states and territories onshore.
@James Mc: governments have a lot of catching up to do to become bastard landlords of the likes of Westfield.
@James
By the way James by saying that it is like doubling the rent means that the miners are paying 20% tax currently so all their claims about what they pay are false and the other side is telling the truth. Please do not exaggerate and make the problem worse than it needs to be, we need a calm and clear discussion for the benefit of the country.
“The government is investing billions in trying to make the so-far commercially-unproven CCS technology viable”. This is an exaggeration that even the Govt spruikers would find difficult to match. Bernard, try again and quote an ascertainable amount.
In any case, the CPRS should not go ahead, as there is no scientific justification for it.
The environmentalists falsely assume that the atmospheric greenhouse effect is real, and consequently CO2 emissions must be capped. The simple truth is that the greenhouse effect only exists in a greenhouse because convective cooling is eliminated, whereas convection is the major process of heat transfer in the earth’s atmosphere.
There is no scientific evidence that proves the supposed relationship between CO2 concentration and air temperature in the earth’s atmosphere. Such a relationship only exists in the minds of those who have reached political consensus regarding acceptance of environmentalist ideology. Scientific experiments prove the lack of effect that CO2 content has on atmospheric air temperature.
Without the atmospheric greenhouse effect, there is no anthropogenic global warming and, consequently, no need to cap CO2 emissions.
As Ray is not a climate scientist there is no need to pay any attention to his obscurantist gobbledygook.
@Ray:
Fair dinkum, mate. You drag yourself into a discussion at post #57 and then want to change the topic.
The CPRS needs and offers no scientific justification for its proposal. In fact, precisely the opposite. If GHG/AGW/Climate Change was not real, there would still be the same case for CPRS or similar.
The short answer is that the economy of the world has been damaged during the past 3 years by a crisis brought about through derivatives trading and related issues, especially through the hidden banking system. No mention of GHG or climate warming yet.
As a result, the stresses on every western nation’s budget and most of the rest apart from hunter-gatherers and subsistence farmers, have increased hugely, mainly due to the freezing of the international currency and trading processes. Transfer of money, whether to raise loans, pay bills or whatever, effectively dried up because no bank trusted any other bank.
Still with me? No GHG, etc.
So, the Australian Government, the Brits, the Yanks, China and a whole lot of other governments had to adjust and defend their economies. Locally, this was via a Keynesian program of accellerated government expenditure, to save corporations, smal and medium companies, partnerships and sole traders, as well as millions of employees’ futures.
Still no GHG.
So, having spent that money to save the world, ar at least Australia, these governments are now forced to revise their forward plans for both expenditure and income. On the income side, the Henry Report made clear that the miners have struck contracts for the purchase of coal, iron ore, nickel ore, etc, at prices which pertained years ago. Typically, during the past 3 or 4 years, the value of these products, measured in $/tonne, have multiplied by 3 or 4, yet the price of the ores (royalty) has stayed fixed.
The income and hence the profits of the established miners have thus exploded. Zoomed skywards. This is for sale of ores which until they came out of the ground were still the property of Australian Governments.
Still with me, Ray? There will be a short quiz after this training session, to determine your competence in these matters. Nothing hard, but designed to sort the simpletons from those with functioning brains.
So, the Royal Australian Federal Government, elected by and for us to run things like the economy of Australia, decided to listen to Dr Henry and propose a tax on these super profits. This tax has been designed to taper off and actually go into reverse if individual mines are not so lucky as to make super profits. This is great, because it helps weak mines to survive and new ones to get established.
No GHG, etc.
So, Ray, there is no reason for you to bring forth half-ars_d comments re global greenhouse warming, greenhouse gasses, anthropegenic warming, climate change or the state of the weather on this thread. It is about money, not temperature and rainfall.
There is no need to link CO2 emissions with the super profits tax. Ditto convective cooling, the idiology or otherwise of climate scientists and those who pontificate about climate.
IT IS NOT ABOUT CLIMATE. IT IS ABOUT THE ECONOMY AND ABOUT EQUITABLE DISTRIBUTION OF WINDFALL PROFITS GAINED BY THOSE WHO DIG UP AND SELL THIS COUNTRY’S ORES.
Turn the page for the 20 question multiple choice quiz.
No climate scientist has been able to prove the supposed relationship between CO2 concentration and air temperature in the earth’s atmosphere. If David Sanderson has the proof, why does he not table it and share it with us.
I have no intention of being drawn into the silly games that climate change deniers like to play. They do not have standing as relevantly-qualified scientists and nor do they have the respect of eminent scientists. I do not, unlike Ray, pretend to have any expertise in the area but I do make the rational choice to give credence to those who have acknowledged knowledge, standing and respect in this area.
I also make the equally rational choice to disrespect and dismiss those who fool themselves into believing that they have an expertise they do not actually possess.
Ray is incorrect re CO2 and atmosphere. There are very simple experiments which validate this hypothesis. If you have not heard of them, then you know nothing at all about climate science. Try here, or do your own Google search.
http://www.srh.noaa.gov/srh/jetstream/atmos/ll_gas.htm
John Bennetts, you misinterpreted my comment.
With regard to your ridiculous claim, “If GHG/AGW/Climate Change was not real, there would still be the same case for CPRS or similar”, common sense dictates that if it aint broke, don’t fix it.
I did not read the rest of your diatribe. I prefer to read the comments of real-world economists, such as Henry Ergas, who know what they are talking about. See his RSPT article in today’s Australian at http://www.theaustralian.com.au/news/opinion/going-retro-with-cash-grab/story-e6frg6zo-1225875235219
Great, Ray.
You found a typo. Where I typed CPRS I meant to type RSPT.
Now, go back to the original and read on.
You state that CO2 is not a green house gas. I included a link to a simple experiment which you can do at home to demonstrate that it is indeed a GHG.
Professor Henry Ergas, whilst an eminent economist, tends to represent a point of view which is frequently to be found in the Australian in relation to climate change and its effects on the economy. I do not share that view.
Before you put all your eggs in this one basket, I suggest that you review some of Ross Gittins’ writings in the SMH.
Then, in order to listen to a top flight polymath, economist, businessman and writer, turn to Ross Garnault.
Professor Garnault is Vice-Chancellor’s Fellow and Professorial Fellow in Economics at the University of Melbourne, Distinguished Professor of Economics at ANU and Chairman of the International Food Policy Research Institute in Washington, DC. He has chaired the boards of large public companies continuously for more than 20 years and has long been an advisor to Prime Ministers, recently producing the Garnault Climate Change Review (2009).
I suggest that you read Prof Garnault’s Report and his even more recent work “The Great Crash of 2008” rather than rely entirely on the work of a single economist.
Yes the positive role of the tabloid media in our democracy is scant if not “interesting”. Up here Queensland’s virtually “a one whore’s town”, and the “horse’s arse” that passes for “our paper” has a colourful history.
During the Bjelke-Petersen years, and their “standard” of “government”, it was quite happy to operate as their “advertiser” with the money, profits and “responsibility” that delivered - indeed it wasn’t til the ABC started digging around in the “graveyard”, in the “moonlight”, that it turned out “our paper” had had one of their journalists doing “much the same thing”! Almost like “In Case of Emergency Break Cover”?
“Funny” the feelings that exist on that frontier - plus there’s “Media Watch” of course.
In the lead-up to “Hewson’s miracle” it was all for “change” - even the election eve editorial was urging “a vote for Hewson”. Coincidentally, the place I was working, foreign owned, was placing slips in employees pay advices, doing the same - what a jolly jape.
Then as Howard rode into town - “promises blazing” (including his new code of ministerial accountability that would end “Keating’s excesses”) it was “let’s form a posse and lynch these socialists!” There wasn’t a lot of subsequent navel gazing on that “non-core front” - “bugger all light”, by which to do it, really.
Then there was the virtues of a “GST for you all”.
Hanson was a drain on the national psyche, not to mention a large lump of conservative constituency - now, it seems, in the Right hands, her “policies” are “excusable”?
Then along sailed Border Protection - as embodied by the “very complex” issues of “Tampa” and “Children Overboard” that seemed “much too complex to explore and investigate to anything but a superficial and supportive level (as would such things if they’d crawled out of a Labor hole)”?
(Funny, when you think about it, Abbott’s “role in her downfall” - and subsequent “salvage and refloating of her sort of policies”?)
And who can forget “The Iraq Show”, with it’s ratings?
Then they were granted “Latham” by the “Labor Party Fairy God-mothers”!
Last election on the surge of a tsunami (“and face to save”?), on election eve there was the editorial edict issuing a (probably tear soaked) “pro-Rudd prod” - preceded that same week by two individual editorials (Tuesday then Thursday?) one dedicated to begging the saving of the Senate seat of Boswell (who isn’t “Green” - imagine the Greens holding the balance of power in “Murdoch’s Land”?) and the whole state getting one urging the voters of one seat, Longman, to return Brough.
Then a couple of months ago, again “for Longman”, the whole state was treated to the seemingly daily diet of “getting to know this nice young Liberal candidate, Longman can vote for come election day”!
Now we’ve got their role in this muddy, “tailings dam” of a tax issue.
And yesterday there was an editorial mourning the passing of the tenure of a member of the stature of Petro Georgiou with his principles, “more than a party hack” - without the slightest hint of recognition that it’s due in no small part to the partisan role of much of “our” media, owned as it is, with it’s overt partisan politics (with two sets of standards, and one side seemingly not able to understand “why they can’t be allowed to get away with what “they do” by that media”“) that delivers us these “hacks” in the first place.
Today it’s reference to “what Rudd should be doing” (re this tax on “the poor miners” - with their IR record during down-turns?), “in the national interest”, and “for the whole country” - as if that comes before “self-interest” as exemplified in the way it consistently carries on, with it’s political patronage, itself.
This morning:
“Copper hit a five-month low after weaker-than-forecast US jobs data fractured confidence already dented this week by worries over Chinese monetary tightening and euro zone debt.
Zinc and tin hit 10-month and three-month lows, respectively, nickel hit its lowest in nearly four months, while lead and aluminium hit their lowest in almost a year. ” (business spectator)
…that hissing sound you hear is the hot air coming out of the commodities boom, which was largely fueled by hot speculative money (very cheap US dollars) and talked up with the Chinese story of a never ending explosion in growth.
Xstrata reads the tea leaves too, and any decisions about hundreds of millions of dollars in future investment aren’t made in a few weeks, new tax or otherwise.
Lousy US employment numbers, the Euro zone in fear of some debt defaults, and the global economy can easily turn to sh1t in a bucket, and these are the considerations that companies like Xstrata take into account in long term planning, and would have had on their mind long before Rudd announced the new profits tax.
Oh, and just for a behind the times account, this today in the Oz:
“AUSTRALIA’S golden goose is laying again by producing a new surge in mining exports. Yet, incredibly, the headlines are about mining projects being cancelled and mining jobs being lost as Swiss-based Xstrata begins making good on the industry’s threats against Labor’s 40 per cent resource super-profits tax. “
…never let a chance go by to look in the rear view mirror and extrapolate into the future and plug your political agenda at the same time, huh?
Michael Pascoe wrote an article which exposed the motives and lies from all parties of interests I recommend everyone to read to find out the truth. I will try to cut & paste it here and hope no one minds.
The resources tax does count - for the wrong reasons
by Michael Pascoe
posted on Jun 04 03:37pm
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Michael Pascoe
Michael Pascoe
The whole RSPT has been muddied by extreme statements and attempts (mainly failed attempts) to be less than truthful in the hope of swaying public opinion.
There’s a fair chance you’re already bored with the resources rent tax battle – unless, perhaps, you’re a West Australian or have a lot of resources stocks in your portfolio. Unfortunately, however boring it might seem, this fight is important to all of us.
Doubly unfortunate is the way the stoush has so quickly deteriorated into set camps and doctrinaire commentary from the sidelines. Say something about the resources rent tax (or that dreadful PR man’s moniker, Resources Super Profits Tax) and you’re immediately pigeonholed as being a lackey of the miners or the Labor Party.
Less than truthful
The whole thing has been muddied by extreme statements and attempts (mainly failed attempts) to be less than truthful in the hope of swaying public opinion.
Make no mistake, the government started the fibs when Wayne Swan and Kevin Rudd first launched the tax – and having damaged their credibility at the outset, they’ve been unable to reclaim it. That they’re now spending $38 million of our money on half-true/half-false ads is extra galling.
The mining industry, through the Minerals Council of Australia, is fighting PR spin with PR spin – that boring ad of theirs that claims the mining industry saved Australia from the GFC isn’t quite true either. It certainly helped and will continue to help, but even in that sphere, it was Chinese demand for our minerals rather than any wisdom or bravery on the part of the miners that mattered.
Resources industry: Crying wolf?
And the resources industry does have form in crying wolf – the petroleum resources rent tax didn’t turn out to be a disaster, and neither did the loss of gold mining’s tax exemption status. Do I suspect there’s more than a touch of a stunt in Xstrata’s freezing its Queensland investment? Yes. And as for Kevin and Wayne’s credibility, well, maybe both sides deserve each other.
But for me, it’s not what the government’s saying that is the real problem; it’s what it’s not admitting that’s disappointing.
The reality that neither Rudd nor Tony Abbott wants to confront voters with is that Australia needs to raise more taxes in the years ahead. Abbott’s attitude to tax is either dishonest or dangerously ignorant. Rudd is fudging almost as much.
The real bottom line
A hint about the real bottom line slipped out during the botched hospital “negotiations” between the feds and the states: Just the health costs of our aging population means that all of the GST would be consumed by it. Canberra taking over some of the funding just means Canberra has to find more money.
That’s one of the reasons why Australia needed a genuine tax review. The Henry review tried and actually did a good job within its limits, but it was knobbled from the outset by Swan and Rudd forbidding Henry to consider any changes to the GST.
Henry still came up with a vast number of recommendations for a better, fairer and simpler tax system, nearly all of which Swan and Rudd immediately ruled out.
A “fairer” tax system
It’s a falsehood to claim the RSPT is what a “fairer” tax system is all about. A fairer tax system would include a lot of other changes; including capital gains tax on owner occupied housing and a meaningful resolution of the vastly differing tax treatments of dividends, rent and interest -things that have more compelling arguments than the RSPT.
But both Rudd and Abbott value their own jobs more than a fairer tax system – neither is game to be honest with Australians about it. And if you think the miners are protecting their vested interests in fighting a new tax, the average home-owning voter would too if faced with capital gains.
So, Rudd and Swan have looked around for someone they think they can win a political fight with to increase tax revenue. And there’s the mining industry sitting on windfall profits from the higher than expected prices being paid by China for key minerals.
Far from reasonable
It is reasonable that Australia receives a fair share of the value of the minerals it sells to the miners who then extract them and sell them to China and others. It’s also reasonable that we have an open debate and negotiation about what that fair share might be and how it should be paid.
The proposed RSPT package is not reasonable. It’s a very academic confection that might work in one lot of theoretical economic modelling, but it doesn’t work in another and it has blatant failings just on a real world assessment.
The proposed system of the government paying for 40 per cent of dud projects is nothing short of ridiculous – too delayed, too complicated and simply not credible. The miners don’t want. And there’s an obvious problem in getting the taxpayer to subsidise the non-performers in any industry.
The existing state royalty systems
The exploration subsidy proposed as part of the package – at a cost of $1.1 billion – has been rejected by the explorers who instead want the Canadian flow-through shares system, estimated to cost just $130 million.
The existing state royalty systems also have faults, some of them serious. There’s a Northern Territory project with a royalty based on profit – and, funnily enough, the mine hasn’t shown a profit. The citizens of the NT have not received any payment for their minerals that have been dug up and sold.
I find some theoretical attraction in the WA royalties system. Unlike the impression Canberra has created, WA does not just levy a volume-based royalty. WA charges a percentage of the value of the mineral mined and adjusts that percentage depending on how much value is added to the mineral by the miner.
For example, iron ore straight from the ground attracts a 10 per cent charge. Treat the ore and the royalty is reduced.
The RSPT needs to be buried
WA Mines and Petroleum Minister Norman Moore rejects the idea of charging miners a percentage of profit. He likens the exercise to the farmers and grocers who provide produce to a restaurant – they want to be paid for the value of the goods, not promised a percentage of the restaurant’s profits which may or may not exist. Moore thinks Australians should set a price for the minerals and then it’s up to the miners to see whether than can mine them profitably or not.
The RSPT needs to be buried and the process of negotiating an improved payment for our minerals started again.
Disclosure: I was a paid speaker at this week’s Association of Mining and Exploration Companies annual conference. They didn’t like my idea that the industry will have to end up paying more to the federal government – they don’t want any new tax, trying to protect their vested interests like anyone else threatened with new tax.
John Bennetts,
You’ve got a good point about recent price hikes leading to windfall profits. That fairly addresses the first of my three problems above. Mining tax reform is needed, and it needs to increase.
I maintain that the second and third of the those three problems are serious problems with the RSPT model for achieving that tax reform.
This is a fight that Rudd cannot win. Just as Howard could not win the Work Choices fight. Every job that is lost, every mine that is closed will be blamed on the RSPT (just as each job lost was blamed on Work Choices). Get a few people stating that their job was lost due to the RSPT on the nightly news regardless of the real reason and public opinion will change rapidly.
With respect to Xstrata. Not sure if many here have ever been to Mt Isa but from my discussions with the locals they are actually quite happy with Xstrata. After MIM sold up the community has benefited greatly from Xstrata moving in and not only reestablishing mining in the region but also reinvigorating the community as a whole. Just a thought…
Thanks Bernard, you are by far one of Australia’s best journos. Truth is all we seek and need.
Like vampires and light, rightards and truth, incompatible.
Dr Harvey M Tarvydas
@JOHN BENNETTS Hear, Hear JOHN BENNETTS
“This is a full-on, orchestrated attack on Australia by some of the largest corporations in the world.
Good on you, Bernard. Keep it up.”
Hear, Hear JOHN BENNETTS
Here’s part of Cory Bernardi’s Emissions Trading (CPRS) speech in August last year :
“A few brave companies have been prepared to go public with the impact on their workers of this CPRS. The Minerals Council has found that over 66,000 jobs will be lost or forgone as a result of the CPRS. Rio Tinto has stated that ‘the CPRS as proposed will cost jobs—now and in the future’. Xstrata predicts that between 5,000 and 10,000 jobs nationally will be lost. Alcoa has concerns about 1,800 jobs at risk in Geelong and Portland. Exxon predicts the loss of 350 jobs at their Altona refinery. Hundreds of jobs will or could be lost at BlueScope and OneSteel. The aluminium smelting industry would cancel their expansion plans, with a loss of 3,000 permanent jobs and up to 15,000 construction jobs.” http://bit.ly/9k6wwG
Not that Abbott or anyone else in the Opposition hangs on Cory Bernardi’s words but you’d think Bernardi himself may have recalled Xstrata pulling another jobs crisis furfy. With all these corporates seemingly on the brink of annihalation why is the Opposition so hysterical about a handful of displaced persons?
It is an absolute pleasure to read a well-researched article such as this one. When I read it, I was immediately transported back to the 1970s, where the tactics of the big mining companies to secure policy changes mirrored those described by Bernard Keane. Then, they terminated hundreds of staff contracts (actually to save money, but officially to reflect a conseqence of unwanted government policy). The policy change they wanted took place at around the time the market picked up, so everyone was hired again.
Whatever the merits or otherwise of the RSPT, its proposition was terribly badly handled and if Mr. Rudd had bothered to look back at earlier stoushes with the mining industry, a more nuanced and negotiated policy could have been developed. As that boring old cliche states “Those who do not learn from history are condemned to repeat it”.
Dr HMT:
Thank you for your support. The fellows who I was discussing the share market with are in my Rotary Club. Cautious blokes, mostly. Careful with their money, but now becoming scared because they do not understand the new reality, which seems to be “If you are not too big to be allowed to fail, you are too small to own shares.”
Some have been ripped of by financial advisors in the past, others never trusted them in the first place, so they try to keep fit together at the gym most mornings, play golf together, have a beer before the weekly meeting and chew the fat. More than a few are becoming worried during the past three years, because their idea of banking and shares has been turned upside down.
I suggested that they consider placing some of their pot into industry super funds because of the lower management fees, but like the good old right-wingers they are, they won’t go within a country mile of anything that smells like a trade union outfit.
There is a real need to educate/support these independent-minded folk. Across Australia there must be hundreds of thousands of them, quite a few of whom will burn a lot of dollars in the next couple of years.
Wow… a lot of writing in 24 hours!
Back to an earlier point of contention: nationalisation is not what Rudd is doing. “Partial nationalisation” is not happening either. With all due respect to economist Fane, nationalisation is when private shareholders loose ownership of the shares they own: when the company is taken over by legislation (or armed force) by a government. Sometimes the shareholders might get some compensation per share, and in extreme nationalisation, they will get nothing.
To say that increased costs and smaller profit margins is akin to nationalisation is just scare-mongering. To say that nationalisation takes from the owners and gives to the government is true. And to say that increased taxes takes some of the profits from the owners and gives them to the government is true. But these are NOT the same and should not be confused. Who still owns the actual company? That is the question.
Re rent: yes, I have been a renter in recent years. Landlords can change the terms of the agreement and up the rent a couple of times a year. No negotiation: pay more or get out. I don’t like it when it happens to me, but it happens. (And no conservatives have ever stood up for the renters or lobbied that laws allowing such arrangements should be changed!) Of course it can be argued that we sign an agreement that allows them to do that. The law allows it. But what are the options? There are no other arrangements on offer to do instead!
Banks do it to: raise interest rates whenever they want on existing loans.
Governments do it too to ordinary workers when they raise tax rates. I started in a job at a certain tax rate… why should the government raise that rate without consulting me? How can they just … change it!… But they do.. and none of the people who are defending the super rich mining companies, come to the defense of the workers being taxed more.
The goverment can and does change company tax rates when it wants to as well. They just do it: to existing companies that might have started their businesses calculating in the current tax rates in their estimations of profitability or not. But they do find that the tax rates change at times. And they survive and continue (or not) with it.
It happens everywhere for goodness sake.
Retrospective taxation on profits in the past should not happen. But should a government be allowed to raise the tax rates on future profits? Of course they should.
Kevin Rudd, the fifth horseman of the Apocalypse, is wreaking havoc on Labor’s re-election chances.
He’s destroying higher-paying jobs of the future to prop up lower-paying jobs of the present.
This isn’t reform. It’s sclerosis.
Ken Henry believes the mining tax will fail if financiers put no value on tax credits for projects that fold. In Ken Henry’s own words, the logic of the entire tax collapses and this becomes just a 40 per cent tax grab which will damage the industry but Rudd’s only defence is to attack the mining industry instead of admitting his mistake with the tax. This tax will drive Australian miners overseas for potential projects. Companies will look for new assets which will not have the same financial risks associated with prospecting within Australia.
@JOHN
Ever heard of the term “come in spinner” well you’re it, what a tool.
I now understand why taken a crap is called “on the john”
Regretfully the electorate is not seeing Rudd as a David and Goliath struggle , 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, also 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 favor of Labor. That people is the hardest decision I have had to consider, now made easy by this turncoat who treats his own collegues as rubbish.
It is not yet too late to take action and toss the tosser out, but it soon will be.
Yay! David finally talks some sense!
Stop prancing around……… come over to the Light…..join us rightwingers in frocks.
If they winge too much about paying a fair rent resource tax, We, the TAX PAYERS, should take the miners & grinders at their word, they’ll just pick up their (our, akshally) mines and take them elsewhere.
AR, you got that right..Let’s find a place to take them to.
It’s hilarious watching a bunch of fat, greedy thugs whining about being down to their last billions.
@AR & @shepherdmarilyn
I don’t think you are making the right arguments to cause Rudd and Swan to believe this great big new tax on mining is a vote winner.
After all, the coal and the iron ore were sitting in the ground unexploited by the native population of Australia.
It only becomes potentially valuable after it has been discovered by mining exploration companies.
It only becomes actually valuable after it has been dug out of the ground by the mining companies and put onto ships a long way from the mines.
If the minerals are too far from the coast, the cost of transportation makes digging them up unprofitable.
Exploration burns cash.
Digging it up requires heaps of capital in the form of equity and debt.
If you tax business out of existence, you’ll have to learn how to live as hunter gatherers.
@JamesK I find it difficult sharing the same planet with you……..
David: why not the Greens?
Preferential voting is both great and ugly… you have to end up voting for a major party (that is the ugly part at times like this), but the good side of it is:
- you can protest and vote for alternatives first - sending signals to the major parties. (Imagine if 30% or 40% of all voters did not vote Liberal or Labor - they would start panicking big time)
- you can give the $2, (or however much it is), that goes to every number 1 vote, to a smaller more true to progressive policies party (like the Greens) instead of to one of the major parties (when hundreds of thousands of people vote Green, for example, that helps their next election campaign. If they vote Green number 2… the party does not get a cent from that vote). [I think a party has to get over 4 or 5% to get anything out of that set up].
- your vote will make an impact if more and more people do the same thing (the majors will reluctantly come on board and try to look like they are taking some of the policies the public clearly want, to keep them from permanently deserting them)
- you might even help elect some people in smaller parties or independents if enough people do the same thing!
So even though it is rather depressing looking at our major party options…. think long term…. and think about supporting a minor party or independent who actually supports the policies you believe in.
John I do not believe you uttered such bloody drivel. Blame the natives for not digging up the stuff.
Good grief where do you live.
If we left it in the ground there would not be a single problem in the world, we would simply have to use the sun and wind for power.
Less pollution, less asthma, less heart attacks and cancers in Lithgow and the Hunter Valley.
Less lots of things.
But on another note. Is there any more proof needed that our useless media have completely lost the plot than the claim that Rudd can’t win a trick because Obama cancelled his trip again.
My god, parochial, pathetic little tossers.
The pack on Insiders are useless wankers having a little cosy chat among themselves about not much anymore and failing to even address the actual issues while whining about advertising.
Fran Kelly’s remark that the mining industry adds are effective shows her increasing senility.
They are nothing but a pack of stupid lies that were debunked well and truly by the fact that they laid off 15% of their staff and closed mines during the downturn, that their exports decreased over the 18 months and so on.
Honestly if Australian media is so frigging brain dead what hope is there.
http://www.nytimes.com/2010/06/06/us/06rig.html?pagewanted=1&hp
Read the corruption of BP and weep.
David that is complete twaddle. It was not Garrett’s portfolio you idiot. As to contempt for his colleagues, do grow up.
Michael James is right. THis is my first time on Crikey, and I have no idea who the author is or his connection with this website, but my first impression after reading the article and many of the approving comments, is that the tone is very reactionary. So much so that, to me, it calls into question it’s objectivity and that of it’s author. It reaches hypocrisy in a way, firstly by assuming that mining companies will always ‘lie’ to get their way (while the authors view is presented as fact) , then by presenting certain ‘other’ factors and asserting the view that these are the only elements in play and that the mining tax has little or no effect. The fact is and economic theory states that when you increase the costs in any enterprise the incentive to undertake that enterprise diminishes relative to other similar ventures. This is simple demand and supply, cause and effect, undeniable forces that exist. If you raise the price of locally produced steel imported steel will become more competitive. It follows that local steel produces will be significantly burdened by a 40% ‘tax on everything’ they buy. If companies were to break under the strain. That means Australian businesses, that means Australian jobs.
The article also fails to point out the lies that the Rudd Government have been telling for example the non-renewable resource lie. They keep saying mining companies are extracting non-renewable resources, but many metals are recyclable. And any way even a tree (which is supposedly renewable) is not strictly renewable. THe tree extracts certain elements from the soil which it does not replace.
And the lie the Govt told when they declared a National Emergency in order to ‘get around’ their own laws on Government advertising. They had the letter all drafted weeks before the mining tax proposal was even presented to the mining industry, thus they planned the campaign all along.
However you view it you cannot escape the fact that increasing the Government’s share of resource mining is going to have a material effect on investment. Otherwise you may as well argue against the laws of physics. The Govt chose this fight by announcing the policy proposal to the public and then telling the mining industry to lump-it-or-like-it without first adhering to sensible consultative processes. In this context the miners have the right to tell Rudd and Swan to shove it. They have in fact indicated some willingness to compromise, but the Government has to make the first move, it has to lower it’s guns. With hot-head Rudd in the PM seat it’s an unlikely event, but it will have to happen if Labor want any semblance of victory at the polls. A govt divided against one of the most productive and economically influencial industries in Australia will not win an election. Nor should it.
@shepherdmarilyn:
“If we left it in the ground there would not be a single problem in the world, we would simply have to use the sun and wind for power. Less pollution, less asthma, less heart attacks and cancers in Lithgow and the Hunter Valley. Less lots of things.”
Kevin and Wayne,
I rest my case!
Well said John, we will be “less lots of things”. Australians that is. All Australians will have a lot less because the price of everything that contains a mineral resource will go up in price. Yes it’s a fallacy to think that the miners will pay, it will be us who pay. It will be local industry dependant on raw materials who will pay.
But really if we want to charge more for our resources why not auction the royalties? Thus setting the price at the international level.
More importantly why is Rudd calling this tax reform? Adding a new tax (tax on profits) to the existing royalty scheme adds to complexity. If it was real reform the Government would have done what the tax review suggests and what the mining indutry suggested which is to REPLACE the royalty scheme with the profits tax, not just lump the two together. It’s obvious Rudd could not afford to do this unless he wanted to pay of the deficit a lot slower. A deficit that has produced a fatal insulation scheme, a bribe to pay for a fultile and rushed so-called ‘Health Reform’ package, a pathetic BER which produced school buldings for a cost of up to 4 times the industry standard (the Education Department payed twice as much as the Csthoilic Education system for the same buildings) , and all the other waste that has added to the Labor legacy. Playing to that section of the community that naturally rail against the establishment at any opportunity was a desperate move by an increasingly desperate Labor Government.
But then again what’s new?
Edhan, recycling is not mining old son. Sure enough things can be recycled but they have to be made first and they are never again going to be dug out of the ground.
And the twaddle you have written above about the deficit should be considered to the garbage bin post haste because if you bothered to read anything real you would know that Alan Hawke made it clear the government were not at fault for the insulation deaths, that the program made insulation about 1000% safer than before the program and the amount of complaints over 1.1 million houses insulated were miniscule.
The BER is delivering excellent school buildings all over the country in spite of the drivel the Australian publishes.
As for the OX trying to start a class war between catholic schools and public schools they should be ashamed of themselves.
All schools got the same money and if that is a bad program I will eat my hat.
The buildings are beautiful. The Catholic school thing I was was really ugly, more like a half brick box than a useful stadium.
The deficit is almost nothing, people borrow up to 10 times their own incomes to get a mortgage, we have a debt of less than 3% of the countries wealth.
Do stop these tired and ignorant tirades.
Name J Gottfred
Subject Broke European Economies
Visit Time 4/06/2010 1:50 PM
Remark I just discovered you two listening to As it happens on CBC discussing the broke European Economies.
We need a pair like you in the States. …Now. ….Please.
Name Daniel
Subject Gillard
Visit Time 4/06/2010 1:06 PM
Remark How much longer do we have to put up with the myth that Gillard would be a good Prime Minister?
She is equally culpable with Rudd, Swann,and Tanner in all the disasterous policy failures, rorts, ripoffs and unbeleivable waste of taxpayers money on pink batts, BER and numerous other failures.
She is a habitual liar and never answers a question.
Its time for the media to get tough on this viperous, nasty fake.
Name jeffrey grey
Subject Julia Gillard interview
Visit Time 4/06/2010 12:06 PM
Remark Kerry,
Let begin by saying that I’ve always voted Labor.
Having said that I found your supine chat with the Deputy PM embarrassing and a completely wasted opportunity. I found myself grinding my teeth. To not prosecute her on the “Tuck-shop Fiasco” and then allow a statement “I want to learn lessons from the implement taskforce” to go unchallenged are not the actions of an independent interviewer. Having watched you in the past grill/argue with members of the opposition (the Malcolm Turnbull one being the gold standard) I know you’re quite capable of interrogating politicians. But sadly not on this occasion.
These are Billions of our tax payer dollars being poured into the coffers of well connected builders who are being paid at rates that would make a Defense contractor blush.
An opportunity was clearly missed. If you can no longer tackle such an important subject objectively and unbiased it may be time to pass on the baton to someone who can. Australia deserves better scrutineers.
Name Arch Murphy
Subject Miners Pay Greek Tax
Visit Time 4/06/2010 11:59 AM
Remark Quote from Page 7 of the Financial Review of May 26 titled ‘Treasury highlights concession dilemma’:
‘The ATO data shows that of 4200 mining companies, 68% paid no tax in 2007-2008. The total income for miners was $160 billion, but after tax deductions it was only $29 billion. The net tax liability on that was $8 billion but after offsets and credit the tax payable was $659 million.’
Note that 07-08 was a good profit year for mining before serious impact from the GFC.
Assuming the above quote is factual, this is equivalent to a person with taxable earnings of $100,000 paying $2,270 in tax - could we all have it so good please.
@shepherdmarilyn…try reading the words I wrote ,without getting hysterical. Did I mention it was his portfolio? Read the words. My meaning was entirely clear. As a Minister of the Crown and the environment Minister at that, he should have been in on the decision making. Not just the favored four. And there is concrete evidence Labor supporters are deserting the Govt and Rudd personally in their thousands. I repeat read the Galaxy poll in Q/Land. Why the pork barrelling in Tanners electorate, millions of it.? He is in deep trouble that’s why. Reflect on the word idiot, you toss around.
@shepherdmarilyn
You have to be joking.
The BER was not an education revolution’s arsehole.
And don’t get me started on Catholic schools. Don’t you believe in separation of church and state?
Finally, people who borrow up to 10 times their own incomes to get a mortgage quite often lose the lot.
If Rudd and Swan believe that sort of borrowing is responsible, we are all in deep shit.
John ? , who said Rudd and Swan said that borrowing 10 times etc etc blah blah blah ? I think Shepherdmarilyn said that the country (Australia ) has a debt of 3 % of the countries wealth , much better than say Japan at about 120 %. Better of reading with both eyes and vote Greens first , then your stupid party A or B .
John Bennetts’ link http://www.srh.noaa.gov/srh/jetstream/atmos/ll_gas.htm
provides a good example of the misleading and deceptive information that socalled climate scientists (this time at the US National Weather Service) use to misinform the general public about anthropogenic global warming . They falsely infer that a simple experiment, comprising a 2-litre bottle partially filled with water to which is added two seltzer tablets and placed near a table top lamp for an hour, simulates the alleged CO2-caused greenhouse effect in the earth’s atmosphere. Unlike the interior of the glass bottle , earth’s atmosphere is subjected to many more influences , including heat convection processes. It is sheer folly to suggest that such an experiment validates the atmospheric CO2 greenhouse hypothesis. Yet, that is unquestionably accepted by climate scientists who should know better.
Henry Ergas makes a critical observation in his article (http://www.theaustralian.com.au/news/opinion/going-retro-with-cash-grab/story-e6frg6zo-1225875235219) : ” what is striking is just how low long-term rates of return have been. Since 1987, the nominal before-tax rate of return on capital in the mining sector has averaged 12.5 per cent, close to (or even below) the risk-adjusted cost of capital”.
This conclusively dispels Rudd’s claim that the mining industry makes super profits. It shows up both Treasury’s and the Government’s poor understanding of the mining industry.
Gotta laugh at the miners proclaiming that they’ll invest elsewhere because of the tax!
Miners prospect for minerals, not favourable tax regimes.
Where they find a viable deposit, they mine.
So, if the New Zealand govt were to announce that they wouldn’t tax minerals at all, so long as tax paying Kiwis were employed to drive the heavy machinery, would the miners go and dig up South Island? There’s no profit, super or meagre, in that.
Socratease said something interesting on Friday night: “Governments have a lot of catching up to do to become bastard landlords of the likes of Westfield.”
Yes, shop owners have told me how shopping-centre owners claim the right to inspect their books, supposedly to “help” those having trouble, but actually to charge higher rent to those doing particularly well. The increased rent is a form of super-profits tax. It penalizes performance and rewards mediocrity in what we could call a race to the middle. The RSPT will do something similar. That was my second point in my original post on Friday night.
Occasionally shop-owners have rebelled all together and refused to hand over their books (an option not available to miners). This has led to shopping centres being occupied mainly by chains and franchises, not independents.
Darko: “By the way James by saying that it is like doubling the rent means that the miners are paying 20% tax currently so all their claims about what they pay are false and the other side is telling the truth. Please do not exaggerate …”
Yes, when I said “Does your landlord come in after you’re all settled in and announce that he’s more than doubling the rent?”, I was simplifying for effect. Actually if miners pay only the 13 per cent tax that Wayne Swan claims, then from 13 per cent to 57 per cent is more than quadrupling the tax on existing projects, equivalent to Westfield telling a shop owner “You are making great profits now; I’m quadrupling your rent.”
Jim Reiher: “Re rent: yes, I have been a renter in recent years. Landlords can change the terms of the agreement and up the rent a couple of times a year. No negotiation: pay more or get out … Banks do it too: raise interest rates whenever they want on existing loans.”
In Australia some states have limits on how much per cent the rent can increase per year; in NSW tenants can challenge an excessive (over-market) rent increase in the CTTT. The reason is that after a tenant has settled in, the landlord gains a huge pricing power advantage. The pricing power is much more balanced when trying to attract a new tenant.
Housing mortgage lenders screw borrowers by pulling them in with low rates and then raising rates when they’ve got enough mortgages on their books. Their ability to charge very high exit fees prevents the borrower from refinancing. In some jurisdictions (eg the USA) excessive exit fees are considered anti-competitive and therefore prohibited.
Just because people are screwed in some markets doesn’t mean it’s OK for the government to screw people or corporations whenever they want to. Two wrongs do not make a right.
James McDonald, I see where you are coming from in the argument about changing the tax rate years after a company has fixed its settings based on expectations at the time a mine started. I see it and I understand it but i don’t accept it. I think it is a rhetorical rather than meaningful point and I think way, way too much is being made of it. Whether the government has morality or ethics on its side is only salad dressing - with or without the dressing the miners will eat the sandwich and the country will still belch in contentment, thankyou. If the announcement had been made last January or last century we would still have had the same bunfight - we are always in election mode aren’t we?
By the way, how much has the Stern Hu thing cost us in terms of relations between Australia and China at a government level? Should this go down on the ledger as a cost brought about by Rio which is being picked up for them by Australian taxpayers? Oh yes, there are lots of hidden costs and only some of them are paid out by our poor old mining companies - not one of which has a vote, by the way.
@James
You are either fudging it or incapable of reasoning.
BHP and Rio, one of them said that they currently pay 43% and with the new tax it will raise the total to 57%, while the other said they currently pay 35%. How the hell did you do the maths to become more than doubling or quadrupling after the tax comes in? And suppose to make credible claim for the right policy?
When I said 20% I was simplying it as half of the 40% the government proposed to make it short and simple. If you are gonna write please be truthful and do not waste my time.
@James
Just in case you dont understand me: the 20% which is half of the 40% is in response to your claim of ‘more than doubling’. Do not use the 57% claim of one side and mix it together with the other side claim of 13% to make an argument, that is blatantly dishonest.
Darko, for the last time, by “doubling the rent” I was making a point about significantly changing the terms after an investment (project) is committed; I was not making any point about the precise degree or ratio of tax increase. John Bennetts’ answer was much better than yours — he pointed out that the terms of existing projects had already been changed by commodity price increases during the lifetimes of those projects. If you don’t follow that, I’m not going to waste any more time explaining it.
Hugh McColl, I see your point that the general is of more consequence than the particular, but I disagree with it on a philosophical level. Even from a utilitarian angle, “whether the government has morality or ethics on its side” is much more than salad dressing; it can set precedents and these can profoundly influence global expectations about all sorts of matters, whether Australian governments feel bound by principles of fair play or whether they decide every matter on the expediency of the moment.
As for the Stern Hu issue, I don’t see any connection. If there’s any connection to other recent issues, I’m more inclined to suspect the RSPT is Rudd trying to re-establish alpha male status after having his character-test CPRS compromised (by the coal lobby, according to popular perception) and consequently abandoned by the Greens.
@James
If you were merely talking about that then you should not use the 13% figure to make your argument, I dont even use that figure myself. Your point about that income has gone up because of the price spike which offset it goes without saying because that is precisely why they are proposing this tax. It’s not that I believe in the structure of this tax proposal, what if the miner makes no profit, what are we Australians gonna get for the value of the minerals being dug up? But put the discussion on the table in objective manner and not taking side.
James, if you disagree then after John Howard said “never, ever” to a GST and then did it anyway, you really would be duty bound to change ships. I see that as being ‘typical’.
Hugh, you assume a lot about which ship, if any, I hitch myself to. I don’t recall ever saying that John Howard earned a place on my ideological side.
James you have more Sir Humphreyisms than Sir Humphrey eg….I see your point that the general is of more consequence than the particular, but I disagree with it on a philosophical level. Even from a utilitarian angle, “whether the government has morality or ethics on its side” is much more than salad dressing; it can set precedents and these can profoundly influence global expectations about all sorts of matters, whether Australian governments feel bound by principles of fair play or whether they decide every matter on the expediency of the moment.
As for the Stern Hu issue, I don’t see any connection. If there’s any connection to other recent issues, I’m more inclined to suspect the RSPT is Rudd trying to re-establish alpha male status after having his character-test CPRS compromised (by the coal lobby, according to popular perception) and consequently abandoned by the Greens.
Is that a yes or a no!!!
David, it’s a no. I was disagreeing with this statement from Hugh:
Hugh seems to be saying that a government doesn’t need to bother with principles, as long as what it does works OK.
I completely disagree. If governments are given license to follow expediency rather than principle, then we have no defence against minorities being abused for sake of the (supposedly) greater good.
@James..thankyou.
If Australia, wants to reduce returns on mining relative to other countries. THen it’s basically a no brainer. The compamies with the greatest acumen will decide to invest in the countries that provide the higher returns. It follows that the ‘left-over’ companies wil be the ones to mine in Australia. These companies costs structures are going to be inferior to those more efficient companies who chose to concentrate on overseas ventures with higher returns. Rudd’s achievement therefore will be to drive ventures held by superior compaines overseas, reducing the mean efficiency of mining ventures in Australia, and further lowering returns on Austalian mining. His only option is to increase Australias competitiveness by lowering the 40% or removing other taxes affecting the mines (such as royalties).
At the moment the propsed legislation is lacking appropriate detail. The wording of the law will be critical in terms of potential challenges in the courts. The immediate problem seems to be the fact that mining rights are owned by the States and the Constitution contains strict laws regarding expropriation of State assets by Federal Government.