From The West Australian:
Anyone who believes that Brendon Grylls’ $5-a-tonne iron ore tax is never going to happen needs to ask themselves whether the above scenario is completely unbelievable.
And, if it is believable, does anyone reckon Mr Grylls won’t use his bargaining power to force someone to agree to the tax on BHP Billiton and Rio Tinto?
Does anyone believe Colin Barnett and Mark McGowan won’t jump at the chance to make that deal?
Yes, Mr McGowan has categorically ruled out governing with the Nationals.
“Labor stands or falls on its own,” he said last month. “We will govern in our own right or not at all.”
It is a definitive stance. About as definitive as this one: “There will be no carbon tax under the government I lead.”
Picture Mr Grylls and Mr McGowan talking on the phone on election night in March.
Grylls: “Mark, if you agree to this new tax I will support Labor and you will be the 30th premier of Western Australia.”
McGowan: “Brendon, after two decades in politics I have suddenly decided that I was wrong to spend my life trying to be premier and so at the last moment, with my lifelong dream within grasp, I am going to opt for another eight years on the Opposition benches.”
That’s about as likely as this:
Grylls: “Colin, if you agree to legislate this new tax you will be returned as premier of Western Australia. You will have enough money to fix the budget problem, your reputation will be rehabilitated and you can leave politics on your own terms.
Barnett: “Sorry, Brendon. I would prefer to be remembered as the premier who wrecked the books and then consigned WA to four years of the political and economic instability wrought by a minority government.”
Now, how far-fetched in this response byeither Mr Barnettor Mr McGowan to the same question on election night:
“Brendon, politically I can’t agree to a $5-a-tonne tax. I have been too strident in my opposition to it. But I think I can make us both look good if we settle on a $2.50-a-tonne tax. I can tell the miners I have saved them billions and you can still take credit for saving the budget and standing up to the big end of town.”
No politician turns down the chance of being premier. BHP knows it. Rio Tinto knows it. And Mr Grylls knows it.
That would be an excellent outcome.
WA is clearly not charging high enough royalties when BHP and RIO are operating on margins well north of 100%:
These are super profits and the people of Australia are being reamed for the privilege of developing their dirt. Remember that this is a non-renewing natural resource owned by the people of WA. It’s depleting nature needs to be reflected in the revenue being received by them.
But, this debate is about equity and investment. First, the Australian people should be getting more. Second, the amount should be calibrated so that BHP’s and RIO’s competitiveness is not adversely impacted causing them to lose volumes (and investment). That level is more like $2.50 per tonne than the $5 which would put them on par with Vale, from UBS:
I would like to see Mr Grylls also commit to paying down debt with the windfall (or invest it strictly in infrastructure or an SWF). If the debate is about equity over generations then the revenue should be accordingly distributed over time.
