From Domainfax:
While Mr Joyce was a leading critic of federal Labor’s now-defunct mining tax and has close ties to mining magnate Gina Rinehart, he appears to have an open mind on Mr Grylls’ controversial plan.
“Minister Joyce said the proposal was a matter for the state government and he would not run down any proposal that was designed to get a better deal for its constituents,” said a spokesman for Mr Joyce, who is currently acting PM.
It’s not a “tax”, Domainfax, it’s a royalty. I don’t agree with Barnaby on much but this is right and is an obvious case of “civilising capitalism” by putting national equity on a par with international corporate super-profits.
Why? WA is clearly not charging high enough royalties when BHP and RIO are operating their iron ore businesses on margins well north of 100%:
These are “economic rents” 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 and Australia. It’s depleting nature needs to be reflected in the revenue being received for their development.
The Minerals Council was quick to react, at the AFR:
But the chief executive of the Minerals Council of Australia, Brendan Pearson, said the tax would impose a big burden on existing mining operations as well as the communities they operate in and the businesses that supply them.
“The adverse impact of the tax is clearly been underestimated in some quarters. It will not deliver a better deal for Mr Grylls’ constituents.
“A bad idea is always a bad idea. The Grylls tax proposal is a bad idea and should be treated as such.”
It has been overestimated, yes. So, how much more is appropriate? The amount should be calibrated so that BHP’s and RIO’s competitiveness is not adversely impacted causing them to lose volumes (and therefore investment). That level is more like $2.50 per tonne than the proposed $5 which would put them on par with Vale, from UBS:
I would like to see Mr Grylls (and Mr Joyce) also commit to paying down debt with the windfall (or to 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. Sadly what we are getting instead is populist tripe, from Brendan Grylls today via The West Australian:
“Barnaby understands it’s a bit rich for the Prime Minister to steal billions in GST from WA and then complain when we seek to raise a new revenue source to cover the gap,” he said.
The WA Coalition somehow managed to piss away its mining boom revenues and go into huge debt instead. It had nothing to do with the GST which, owing to the lagged nature of its calculus, paid WA too much for the first half of the boom.
