I like mining. It’s a speculative game and takes a particular chutzpah to succeed. Sadly that same bravado translates into an absolute disaster at the policy level for the country in which it takes place.
Witness yesterday. On one single day we had RIO announcing a handsome new profit complete with all sorts of capital management initiatives to spend its surplus cash upon, bonus dividends and buying back shares among them. There was no new investment, just basic financial engineering 80% which benefits foreigners, illustrating clearly that the firm has bundles of cash to waste on, well, nothing.
Yet that did not translate into a happy contribution to Australia via taxes. Instead the surplus profits – which economists like to call “economic rents” or excess profits – were boosted by tax avoidance schemes in Singapore and an openly seditious campaign against a more than reasonable tax hike proposed by the WA National Party.
Next up we had Twiggy Forrest, a man made wonderfully rich by the red dirt of the Pilbara, demanded a tax cut:
The billionaire Fortescue Mining boss says Australia has one of the highest business tax rates in the world and MPs who resist a decrease should be kicked out of parliament.
“If you set up with rotten, populist government policies which make us uncompetitive, then we’re all going to do it tough,” he told News Corp on Thursday.
The Australian Treasury’s own modelling showed minimal benefits to either jobs or growth from the Coalition’s company tax cut plan and would cost the Budget a lot: literally tens-of-billions of dollars. This money would need to be made up somehow, such as by raising personal income taxes, cutting government investment in infrastructure, or slashing welfare expenditure. Such cuts would necessarily reduce jobs and growth. Moreover, because of Australia’s unique dividend imputation system, the lion’s share of the benefits from cutting company taxes would flow to foreign owners/shareholders, thus representing a direct fiscal transfer from Australian taxpayers to foreigners, and lowering national income in the process. I could go on.
Next up, Woodside whined about its tax reform:
Woodside Petroleum’s next generation of big liquefied natural gas projects could struggle to get off the ground if the federal government changes the tax regime for Australia’s oil and gas sector.
That was the warning from Perth-based Woodside in its submission to Treasury’s review of the petroleum resource rent tax (PRRT), with the company noting that any changes could reduce the competitiveness of Australia as a destination for oil and gas investment. The company said its three large undeveloped gas projects in Australian waters — the Browse, Greater Sunrise and Scarborough fields — could be “jeopardised” by the introduction of any additional taxation barriers.
“With these three major potential LNG projects in our portfolio, Woodside is materially exposed to any change in PRRT, perhaps more so than any other LNG project participant operating in Australia,” Woodside’s submission said. “These projects are already challenging in the current economic climate and any adverse PRRT changes would only stifle continued progress.”
There are no more LNG projects because the existing glut is so enormous. Likewise there is no tax because prices have crashed owing to over-investment. The argument makes no sense.
But that doesn’t matter. Mining has so successfully colonised policy that it can say just about anything and get away with it and get support. Yesterday we had the WA Treasurer, whose only charge is look after the financial well-being of the folks of WA, threatening to resign if the iron ore tax got up, just as he announced his forecasts for revenue were going to miss again. Please explain how that makes sense?
Moreover, it was revealed that the campaign of mining sedition run on behalf of RIO and others by the Minerals Chamber has spent a lousy $2m yet that was enough to destabilise the entire premise of the tax. Indeed, when this post goes to air, it will instantly have comments from paid mining astroturfers to ensure that the colonisation of the Australian mind sees no crack of light at all.
But wait, there’s more. Given the history of wildly successful mining sedition, dirt stooges now go right to the top. That’s why Do-nothing Malcolm is in part hysterically accusing SA of ruining its electricity grid when the real culprit is that three-quarters of east coast gas reserves are now tied up in the mining firms that operate the Curtis Island LNG plants and they are starving the nation of its own gas, rendering it uneconomic as a base load backup for renewable power:
And guess what Do-nothing Malcolm’s only answer is? To build coal-fired power stations that are more expensive even than the ripped off gas.
That’s just one day of mining in Australia.
