May 3, 2010

Mayne: Mining slug mainly hits multinationals, so who cares?

The new mining tax is a good initiative by the Rudd government. Tony Abbott should get behind a move that slugs huge foreign companies but benefits little Aussie battlers.

Stephen Mayne — Journalist and Founder

Stephen Mayne

Journalist and Founder

While John Howard and Peter Costello did leave the federal Budget in structural deficit with all those tax cuts, you can always rely on a Labor government to crank up the spending and worsen the fiscal outlook.

However, at least most of the Rudd government’s new initiatives have been one-offs such as pink batts and the building education revolution.

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23 thoughts on “Mayne: Mining slug mainly hits multinationals, so who cares?

  1. shepherdmarilyn

    Is Joe Hockey having a brain snap over there on twitter? Sure looks like it.

    Thanks for this Stephen, most stupid Australian’s seem to think that these mining companies are Australian and that the profits are staying here.

    They are not.

    What gets me is the total inability of the media in this country to notice that the last two years have been globally shocking and that business as usual is not able to happen.

    We have wrapped ourselves in this putrid little bubble of self-serving greed and we don’t even consider the rest of the world.

    A good reason to demand this sort of tax is being played out in the Mexican Gulf as we speak, was played out in the East Timor Sea and so on.

  2. David Sanderson

    Abbott is a tin-eared political fool if he thinks that campaigning against a resource rent tax has popular resonance. His oppose everything strategy hit a deep pothole with health reform and opposing the rent tax might just break the axle.

  3. micka

    Most Australians are not stupid enough to spell Australians as Australian’s

  4. Venise Alstergren

    STEPHEN MAYNE: And I thought I was being a ‘Dog in the manger(ist)’ and was feeling guilty for being a sh*it.

    Now you come along with your excellent article, and I’m overwhelmed with a deep case of schadenfreude. It’s about time those huge mining giants realised from whence came the golden goose. How golden it is. And the facts say the birds home is in Oz.

    Perhaps the government could pay them a small bounty for selling first to the home market. Storing some of the stuff for when we as a country might use it wouldn’t hurt either.

    Someone on the radio was saying that Brasil could seize the iron ore market from us.

    Wouldn’t that mean much higher shipping costs?

  5. John Carusi

    As for miners crying poor and stating that they’ll go offshore or not develop in Australia as much, what a load of patent phooey. They have had the double luxury of a series of complacent and complicit governments (both State and Federal) and the societal stability inherent in this country to operate under: the benefits of both a developed country and the malleability of a hungry LDC.

    Not about time that a suitable super profit tax is applicable: as Mayne correctly pointed out, most of our mining operations are wholly foreign concerns, and that all of them have been flogging our dirt for very little recompense to the nation. It’s high time that they realise that they cannot get away with the idea that they can have their yellowcake and eat it too: there ought be a suitable fee form operating in a country that actually spends revenue on nation-building activities, such as infrastructure, universal healthcare and social welfare.

    I’m sure that a few might take their bat-and-ball and go to some other less-developed nation and try exploit them. Until they realise that there are certain things which when go wrong, they go terribly wrong, such as falling out of favour with whomever is in receipt of kickbacks, entrenched systemic corruption (having to meet the myriad obligations of that…or else) and likelihood of violent uprisings and coups. Although there are undoubtedly shenanigans in business Aussie style, these are exceptionally mild compared to other commodity nations.

    So what do they really want? Costly compliance, but conducted in a transparent and reasonably consistent manner, or takes their chances with some tinpot dictatorship, where the startup maybe cheap, but the unpredictable nature of feeding a corrupt beast?

  6. EngineeringReality

    We, as Australians, should all care that this is happening to finally redress the shocking giveaway of our mineral wealth to foreigners.

    Finally we are going some way to realising a fair return for selling off our minerals. We have been acting like a third world country being exploited by the colonising old world powers – where they dangle a few brightly coloured trinkets in front of our unsophisticated eyes and then [email protected] our natural resources for massive profits.

    It infuriating recently to listen to a whole gaggle of muppet politicians falling over themselves to trumpet the next big resource project and how many billions of dollars for a 30 year contract and then reading further into the announcement you read “the project is owned by the Exxon-BP-Shell- joint venture” and you realise that only a tiny fraction of the profits of each project will be returned to Australian pockets.

    Worries about our appalling current account deficit are always met with “yes but our capital account is in surplus so we are investing in projects that will allow us to pay back our foreign debt and then some in the future” but with the majority of the profits from our natural resources heading overseas how can we be secure in the future ability to pay off our debts (our massive private debt not smallish government debt)?

  7. Richard Wilson

    Any program that allows Australia to continue to be sold off to the highest bidder and then shut down under the punitive taxation rulesis just dumb. There are myriad unforeseen conseqiences to this strategy. In my view all foreign owned or, beneficially foreign controlled, entities (that includes I believe RIO and BHP), should only be allowed to lease land and or mining rights for a given period. But by the same token, they should be able to enjoy standard taxation levels for corporations. They would effectively pay their super taxes through their mining leases and land rents. They would not own our land and could be thrown out if they become obstreperous.

    The proposed super taxes will have the unintended consequences of inducing the major miners to move their operations to some poor African or South American nation and Australia will lose out totally. With the help of the international bankers, which I believe now beneficially control most major Australian miners, BHP is now the largest miner in the world. It couldn’t really care less if the Australian Govt decides to change its tax rates. It will vote with its feet and go somewhere else to dig its holes. The major miners, irrespective of where they are listed, are global entities which make their profits where they get the greatest exploitative return. Let them earn their profits here; just don’t allow them to own the land.

  8. Pete WN

    Less tax breaks for real-estate, and more incentives for shares might encourage more Aussie ownership of these companies that profit off mining.

    Wealthy investors buying their second or third investment property might put their funds into a profit-generating company that employs people, instead of a house which generates nothing except shelter.

  9. Graeme Orr

    The MSM is but a congenitally incompetent headline machine these days. Almost all page 1 reporting has been ‘Miners slugged for super boost’ as if Consolidated Revenue will fund the 12%. (As to which how many employers already pay above 9%?)

    I’m curious: when commodity prices fall and the RRT gives way, what will cover the hole created by a company tax reduction equivalent to over 6% of such revenue?

  10. mook schanker

    The point about the proposed mining tax is that it applies to excessive profits. This is pretty similar to private public partnership profit sharing, where excessive profit sharing is distributed between the owner (us) and the operator (miners). This provides incentive for efficient production and pain/gain sharing with suitable allocation of risk. If the base price we get for a mining operation is less after this tax, well I’m happy considering mining profit has rocketed from $8b to $80b p.a and the status quo profit sharing has remained the same…It is the Government (peoples) asset by the way…..

    If miners threaten to go offshore, well go for it, as I doubt the risk adjusted pricing following this mining tax will magically sway overseas projects as significantly more profitable….

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