It’s over you idiots!

Time to buy with both hands! The Pascometer has written off the mining boom thereby ensuring its shift to an altogether unimagined high. But seriously, now that BHP has outflanked yesterday’s rousing chorus of “sell ’em dirt” insiders by itself declaring the commodity super cycle dead, it’s going to be immensely entertaining to watch the rusted-on indignation of former commodity uber-bulls transform into commodity gloom told-you-soism (sadly, the reality of it won’t be so much fun). Over to you, Pascometer! (h/t the SMH for getting an embed function!)

Houses and Holes
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    • +1
      Also you guys at MB need to make a “Pascoemeter” an actual picture to show where the economy is at according to Pascoe and where it is according to reality.

  1. Nothing’s over until the execs who he brownnoses tell him to say it’s over.

    Credibility’s not an issue when you MC events like Fidelity’s ‘battle of the asset classes’ for the majority of your income.

  2. The mining industry has had a “cargo cult” aura about it and purportedly good to support other parts of the economy……

    Best I heard was three years ago on ABC’s 3LO where Jon Faine interviewed Australia’s “best demographer” Dr. Bob Birrell (according to Bob Carr, of course nothing to do with fact that he seems able to conduct research and reach findings that show immigration as a negative).

    Birrell proposed that Australia should stop or reduce immigration, temp workers and international students a lot….. and then just focus upon mining with jobs for “Australians” (whoever they are?).

  3. ceteris paribus

    You gotta love big miners. They form the smartest and best welfare lobby Australia has ever seen.

    The “beg and bovver” routine on tax concessions has Prime Ministers rushing to the table with bagfuls of money to sue for peace.

    True to their welfare dependency,they serve up a great mix of hostility and crying poor to open Treasury coffers.

    What a performance.

  4. ceteris paribus

    Please allow me to be a bit more specific.

    I thought mining comments delivered this week were blunt and tendentious at best.

    Point One
    If we are to look at the true drivers of most of BHP’s wealth, I suggest we will find a lot of “public goods”- 1. a great education and training system, 2. excellent population health and a good health system (except for teeth), 3. political stability, 4. a good legal framework and solid law and order, 4. research and technolgy 5. serviceable to good communication and transport infrastructure 5. a culture of low corruption comparatively, 6. a civil and a cooperative society, 7. a framework of fiscal solidarity, and 8. last but not least, rich sovereign mineral resources.

    It amazes me that many people still don’t recognize the role of public goods in economic development. (Have a look at Singapore on its little bit of dirt).

    Yes, BHP does the exploration, digging and freighting and these play a role in wealth creation.

    Point Two
    Fair tax collection, currently at its lowest level of a proportion of GDP for yonks, is the foundation of civil society- it is not a system to be disredited through PR.

    In the context of the recent Federal Budget, it was clear that there was not enough tax to:
    -treat the rotten and painful teeth of hundreds of thousand of people who can’t afford a dentist.
    -to keep our foreign aid promise to malnourished people in the third world
    -to continue to provide single parents and their children with a level of subsistence that enables both eating and shelter.
    I could go on- but you get the point.

    I don’t care what political colour you are, the begging and bluster of the mining sector this week was totally out of place in a country that once prided itself on being inclusive and fair.

    • Alex Heyworth

      ” there was not enough tax to:
      -treat the rotten and painful teeth of hundreds of thousand of people who can’t afford a dentist.”

      But can afford all the sweet rubbish that rotted their teeth in the first place.

      BTW, all those things you say BHP depends on, are they true of Chile as well? A lot of their profit comes from Escondida, you know.

      And while you are right about the tax take being at its lowest for some time, this is mainly because governments (both federal and state) have become too heavily dependent on taxes that are highly cyclical in nature, like capital gains tax, GST and stamp duty. The budget papers do also comment on the expected company tax from mining companies being lower than earlier anticipated, but point out that this is because of historically high levels of capital investment – the budget papers say 9% of GDP. After BHP’s midweek announcement, that seems unlikely. Maybe they’ll get a bit more tax from the mining companies than the forecasts.

  5. CP – Agree with much your first point (don’t know what you mean by fiscal solidarity) even if a little “motherhood” for my tastes. The factors you cite are included in criteria for a nation’s success in How Nations Fail. However you relegate the role of the miners (“Yes, BHP does the exploration, digging and freighting and these play …”) in the creation of wealth from our natural resource riches to little more than a bit player. Not correct.

    Many existing mining projects have been developed decades ago when commodity prices were far more moderate and profit was not guaranteed. Miners took the initiative and associated risk. Miners developed our national resource base and have developed some of the most innovative and technologically advanced processes in the world. Australian resource workers are among the best paid with the best conditions in the world. (Unions have nothing to complain about).

    Your second point. Well, where do I start.

    Fair tax collection. FAIR. Which the RSPT was demonstrably not. Even the basis for the MRRT is unsound, unless you believe in a windfall profits tax targeted to one sector only (no banks, no property developers etc). Occasionally the utilisation of finite natural resources is cited, but the ‘rent’ for this falls under the Royalty regime, a State interest.

    A stable, fair, predictive governance and tax regime is an essential basis for business investment – as I think your fourth point above alludes to. This was trashed when the original RSPT was foisted on the resource sector.

    Imagine if a Google, a Facebook, an Apple birthed in this nation – as soon as successful (if able to withstand regulatory onslaught) would be threatened with significant additional tax burden not applicable to any other businesses (ie unfair taxes).

    Google, Facebook and Apple may even be subjected to public ridicule by the most senior members of the government. Continually called upon to ‘share the wealth’, ‘spread the benefit’, support the unsupportable – a bloated bureaucracy and unsustainable welfare system.

    You make the call for funds to cater to a range of needs. Worthy ideals. Perhaps we should scrap the NBN and used the $60-100 billion to build a self-funding national dental scheme, plus a lot more. (Recently there was a report produced on a trial of the National Scheme – 20 or so dentists were found to have “overcharged” or undertaken “unnecessary or inappropriate” treatment to the tune of (I think) $20+million!!) Universal healthcare and dental care is to be treated with great prudency and respect, money pits for taxpayers.

    Single parents: true story, family member, five children, single, the fathers’ (2) are also on welfare unable to contribute, her yearly take $63,000 (this was a year or two ago). Many people work and do not earn this amount post tax. I think the welfare system for supporting parents is adequate.

    Among the many discussions in the recent Foreign Affairs magazine devoted to the question of the end of social democracy was the very real problem of funding welfare programs that have extended well beyond safety net proportions, unsustainable and an increasing taxation burden for the next generations. The system is broke (pun intended). It cannot continue in the way it has over the last couple of decades. Unsustainable.

    Finally, back to the miners and this bizarre expectation that additional revenues should be extracted from them to sustain a range of social programs. Miners pay all required taxes (Nasser citing $6billion last year). The seems very fair. The better question is how government chooses to spend!

    • arthritic kneeMEMBER

      Point 2 of yours is a sad old argument, compare the miners to a sector that doesn’t use up finite resources. The only surprise here is you didn’t use banking as an example.
      Saudi Arabia has a bit of extra coin lying around because they dig stuff out of the ground. We dig stuff out of the ground and struggle to hit a token surplus.
      In a logical world any opposition would be elected by campaigning on a platform of standing up to the mining propaganda bullies for the common good of the voting public. Any government falling for the bluff of ‘don’t tax me or I won’t dig’ deserves to be toast. Miners will dig whenever they make money and if a decent tax delays marginal projects until commodity prices warrant them so be it. Better keeping it in the ground for a rainy day than giving it away in a mad rush.
      Unfortunately Australia has a choice between Dumb and Dumber.

  6. The pilbara and Bowen basins have always had good margins though it looks as though the XR is finally hurting (to much of a good thing). Mining technology is mostly bought in. Don’t think the largest mining company even has labs these days – shut them down a decade ago.

  7. I wish I could shart Michael Pascoe. There are a lot of people in the so-called journalism game who have a lot to answer for. Gittins for one. Verrender certainly. Tolhurst. Chris Vedelago is about the only one who doesn’t deserve a visit from the torch and pitchfork crowd.

    • What’s up with Jessica Irvine? Is she schizophrenic?

      She oscillates from a sensible article one week back to shilling/spruiking another week.