Don’t believe a single word you read in the mainstream media from the mining industry about the impact of the Resource Super Profit Tax.
The mining industry routinely and systematically lies about government policy, with a long-running Chicken Little act about even the smallest policy changes that might affect it. And most of the media uncritically recirculate their lies, either because journalists aren’t sceptical and informed enough to subject their claims to analysis, or because they complement the smear campaigns run by the right-wing media.
Over the weeks and months ahead — for the Government has foolishly left open an extended consultation period in which to develop the RSPT with the states and mining companies — you’ll be able to see the miners crank up their lies. Watch for the predictions of job losses, reduced dividends and abandoned projects. Watch for the dodgy modelling from economic consultancies designed to back up the wild claims. But also watch for what they tell investors, because they tell the public one thing about how disastrous things will be and investors and the ASX quite another.
We saw all this during the CPRS debate. The miners’ favourite trick then was to blame massive “job losses” on the CPRS by comparing industry growth under a rosy “business as usual” scenario with slightly lower growth under a dire “CPRS” scenario and claim the difference as actual job cuts — when they were simply the difference between one very high growth rate and one slightly lower growth rate. They did this three times for the coal industry, with reports by ACIL Tasman and Access Economics, and a report by the now-bust Concept Economics for the Minerals Council. All forecast “job losses” of between 3-9,000.
Unfortunately, the CFMEU was awake to the scam and commissioned its own modelling to use the same data as the coal industry and show that there would actually be an increase of 10-16,000 jobs in the coal industry out to 2020 under the CPRS.
And as I’ve shown previously, and the Grattan Institute confirmed recently in relation to coal mining and LNG, the additional costs faced by the mining sector from a carbon price were so small as to be virtually irrelevant.
Watch for the same trick this time, although it will be harder because the Government has already produced modelling showing the RSPT coupled with the resources exploration rebate will actually increase jobs from the “business as usual” scenario.
The mining industry’s preferred cliché is that any changes will “kill the golden goose”, and that’s been getting a thorough workout already. Back in 2006, the Howard Government, News Limited and the mining industry joined forces to whip up a scare campaign about Labor’s proposed reversal of WorkChoices. Steve Knott of the Australian Mines and Metal Associations said removing AWAs would cost the industry $6.6 billion a year.
John Howard called Labor’s IR policies “a dagger to the throat of the Australian mining industry” and Terry McCrann, ever the wordsmith, warned Labor would “kill the mining goose that promises to lay many more and bigger golden eggs”.
As it turned out, the only thing that came close to killing the goose was the GFC. But the big miners had no trouble slashing employee numbers during the downturn under Labor’s new IR framework. Indeed, Rio Tinto boasted of “record” iron ore production in October.
That might have been because AWAs had little to do with mining industry profitability and productivity. In fact, in 2007 the CFMEU showed that 10-year productivity growth in the coal industry, which features collective agreements and a strongly-unionised workforce, far outstripped that of the Western Australian iron ore industry, and productivity had actually fallen under AWAs in the Western Australian gold mining industry.
The miners also predicted dire consequences from the GST back in 1999. And as the splendidly sensible Peter Martin showed last week, the sky was going to fall in if a gold tax was introduced in the 1990s. I haven’t been able to check, but I’d bet real money they thought compulsory superannuation would destroy the industry as well.
Talk about an exploration and extraction. The Australian mining industry is world-class when it comes to rent-seeking.
The lesson here isn’t so much that the mining industry is a pack of liars. It’s what the media does with the lies. We’ve all been engaged in a collective flagellation of Kevin Rudd and Wayne Swan for the last 48 hours over their cowardice and failure to embrace reform. But as we’re already seeing with the limited reforms they’ve picked up, the media flog them even if they do pursue meaningful change.
The Government will now be criticised for attacking the mining industry, which is dominated by vast multi-nationals generating billions of dollars. The absurd claims of the miners that they’ll move offshore — made even as Newcrest acquires Lihir in a $10 billion deal — will be taken seriously. Dire forecasts of job losses will be run with a straight face, despite previous claims being exposed as blatant falsehoods.
It’s more of the media’s “perpetual present” that I’ve complained about before. If it happened longer than five minutes ago, it never happened.
The media want it both ways, naturally. We’re all high-minded economic purists when it allows us to criticise governments for failing to undertake significant reform. But should a government be so foolish as to attempt something, the media doesn’t take long to get stuck into them, and gleefully provides a platform for critics of reform, no matter how often and how badly the latter have been proven wrong.
Then again, the media’s primary interest is in conflict and contest, rather than good policy outcomes.