It’s either a seismic shift in power here, or a farce of Grand Proportions. Either way, if you haven’t heard about the Australian Super-Tax, it’s one of those full-moon-moments in Western Democracy when “one plus one equals minus thirteen”, and the guy earnestly telling you this is also running the country. The sheer Spectacle of Stupid is something to behold.
Guess what the rules will be next year?
For the first time, our government has announced a war against a whole Australian industry: mining (the same sector that rescued us from the global financial crisis and produced 37% of our total exports in 2009).
Australian Prime Minister Rudd desperately needs a big win to go to the next election with, and desperate men are dangerous. He was taken in hook, line and stinker by the Big Carbon Scare — bet his reputation on the big bluff, and crashed and burned. He doesn’t want to look like a complete loser (and who does) so he grabbed the easy wedge; attack the rich foreigners, grab the fast cash, pretend to be Robin Hood. Et Voila! The Resource Super Profits Tax*.
This is not so much about climate (sorry) but it is a story about totalitarian trends in government, grand theft, and dismal reasoning. Like the Big Carbon Scare, there is no polite discussion of the pros and cons — the government reduce the commentary to fake black and white choices, name-calling, and “moral positions”. Oh, and the “evidence” is all based on … modeling.
Dodgy logic — It’s the price stupid
Rudd argues piously that underground resources “belong to all of us”, which is true, but a false front to fight on. The companies already pay royalties to the states, but not the Fed). So we Australians are not giving away our minerals for free, and it’s not a question of charging or not-charging for our resources (as Rudd’s Labor government make out) — it’s a question of the price**.
Rudd wants to charge a higher sovereign price, a tax regime on mining that’s higher than anyone else in the world (the Canadians, Brazilians, etc charge much lower prices). Maybe we should charge more for our minerals. But no one is talking about the real issue: whether we should lead the world at raising prices.
The Minerals Council of Australia estimates miners will move from one of the highest rates in the world — 38% total tax — to a world record breaking 58%. Why would the miners, entrepreneurs and mineral consumers of the world pay extra when they can get their minerals elsewhere? Hasta la vista Australia.
In mining, a bucket load of money really means something. ( This BTW is Bradken Face-Shovel Bucket)
If Australia wants to charge a bucket-load for it’s in-ground minerals, investors and miners will just head for a cheaper country. (I can’t believe someone needs to explain “supply and demand” to our Treasury.)
The Australian dollar fell 6% more than the Canadian and Brazilian currencies since the announcement of the super-tax, as investors began doing just that. The tax isn’t even due to start for a couple of years, but what investor waits for everyone else to sell?
This is theft
Rudd steals from the Australians who were clever enough to analyze the market and risk their money to help companies get goods out of the ground. Some investors have been doing the research, taking some losses, and paying interest on loans for ten or twenty years, but Rudd thinks it’s fair to take a big slab of their profits. If a private corporation threatened to change the contracts ten or twenty years after they were signed, they’d be sued, but the government wants to help itself ad hoc and somehow this criminal madness is a serious election policy.
“Mr Rudd argued everyday Australians deserved a bigger share of returns generated from the nation’s rich mineral resources”
Everyday Australians are of course free to buy shares, and were always “free” to get a bigger share of returns. But why buy shares in the mining companies? Rudd will give you the rewards anyway. (Especially if you are in a marginal seat.)
Why steal from mining shareholders in particular? Why not, say, banking investors or high-tech supporters? It’s random and arbitrary. Hence the tyranny. It’s as if the Politburo sent spies to Australia and they were accidentally elected. (We thought the USSR was defunct. Instead it’s just moved to Canberra.) Did the Rudd government just suggest partially nationalizing our mines?
Rudd claims it will help “super” holders (think 401K in the US). Ironically, if they were invested in mining, these same super holders and self funded retirees have already lost more than they stand to gain. (The market here lost billions in the few weeks since this policy was announced.) This kind of “help” is known as sabotage.
It’s the retrospective nature of the tax that breaks all the rules. It’s like changing the speed limit and then fining people who broke the “new” limit last year. Driving within the law is not enough anymore, you need to guess what the speed limit will be next year. And you thought Australia was a first world country with a low sovereign risk. Which court could we sue our own government in?
Models anyone?
Remember, exactly none of the treasury models correctly predicted the largest global trend in stocks in the last 50 years. Not one predicted the global financial crisis.
Rudd said: “It is important to pay emphasis on the independent modelling of treasury who’s put all the factors together and projects [the mining] industry will grow by 6.5 per cent over five to 10 years,”
Phew. It’ll be alright then eh? “6.5%”
Did the models predict that virtually all the big companies would put billions of dollars of their future projects on hold, move to overseas mines, and then announce all this, knowing it would trash their share price? (Which it did.)
Don’t mention the evidence
Supposedly top notch TV ABC interviewer Kerry O’Brien quizzed our Treasurer Wayne Swan. Swan got away with writing off all the miners complaints with the line “well they would say that wouldn’t they?” Swan pointed out that all the other times new taxes were introduced, the industries always complained, as if that made complaints from all industries always meaningless. If that’s the case, why not tax them 60%, or 80%, why not 100%? They’ll howl, but they would, wouldn’t they? Swan weaseled out of discussing the complaints themselves. Just as with the climate, if the media can’t (or doesn’t want to) force them to actually answer the questions, who can?
The government has actually said that the new tax will increase mining. Soak in that thought for a while. That’s why they bought in a big Alcopops tax last year right — to increase teen-drinking?
If just hitting on big successful industries is such a no-brainer of a good idea, why haven’t all the previous governments done it before? Could it be that there is a quid pro quo, or a pluses and minuses side to this story that the government doesn’t want to mention?
Think you are safe outside Australia?
Nowhere is protected, and this cancerous growth of government is coming to a polling booth near you. If our Government gets away with retrospective taxation, which is naked robbery, the idea is bound to catch on. Sure, initially it will benefit all you lucky sods who live in Canada (which charges so much less but reaps so much more mining activity), and it will benefit all of you who own shares in mining sectors outside Australia. But ultimately other countries will raise their prices (after the Australian industry is caned and sold to foreign owners). We all lose in the long run.
The unclaimed moral high ground
The Australian Opposition is missing the chance here (as conservative parties so often do). It’s got the moral high ground. It’s defending the right of Australians to get a fair deal, to spend the money they earn, to look after themselves, and for all industries to be taxed equally and competitively with their international cohort. It’s fighting for mum and dad shareholders, as well as workers in mining. It’s fighting for country towns who struggle against the pull of the big-cities. It’s fighting for our constitutional rights. Australian shareholders have a contract with the mine, and with the government. The Government is trying to renege on its side of the deal.
But wait! It’s a National Emergency!
Rudd declared a National Emergency (!) Things are so bad that he has to spend $38 million to advertise a party policy, and it isn’t even law yet. The government thinks it’s an emergency because their polls are falling. Somehow the solution is to spend millions on adverts to tell us the same things the government already say for free at press conferences which are repeated on prime time TV every day. There is a national emergency, but it is the government itself. Could they be more fickle, more arrogant, or less in touch with reality?
What would I know?
Few people know that I’m partly supported through our own self-sufficient entrepreneurial investments. Yes, we (the other half and I) are Jo citizen shareholders. We study the numbers, research the big global strategic economic moves, and put our money where our reasoning takes us. So, naturally I’ve got strong feelings about the Resources Super Tax, even if it doesn’t hit our favorite sector as much as others. Just as I stood up for Peter Spencer’s land rights, I stand up for all Australian’s shareholder rights. Mostly I just stand for common sense.
* The RSPT for those who don’t know: It’s a new tax rearrangement where the government takes 40% of all profits after the first 6%. It applies to all projects, not just new ones. The government “pays” 40% on all the projects which lose money, which will be a big help eh, for all the projects that are already up and profitable and well past the failure stage. The latest talk suggests they might raise the level they call a profit “super” from 6% to 12% (and drop the irrelevant 40% of all loses coverage). There’s more info here.
** Strictly the owners of the mineral resources are the States rather than the Commonwealth, according to the Australian Constitution. So as well as upping “the price” this is just another uncorporate takeover. It’s Bigger-Government snitching some power from Smaller-Governments.
It seems your Carbon Socialistic Labor Party in Australia now is growing to be closer and closer to the former National Socialistic Labor Party in Germany in the 30th and 40th. Mr. Cháves of Venezueala as well as Rober Mugabe in Zimbabwe are happy there is a new member in their club. I wish you to survive the age of darkness in your country and to get rid of it soon.
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It was no surprise to me that within a Week of Krudd announcing the “Shelving” of the ETS, Dear Leader announced 3 new taxes – this being one of them.
But, but weren’t they saying the ETS revenue would be fed back into the local community… What a load of BS. It’s just another attempt at raising revenue to pay for a massively over burdensome bunch of desk jockeys.
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We’re fighting it here too: crap-and-trade, oh, scuse the typo, cap-and-ruin — well nuts, I can’t seem to get it quite right anymore. My fingers are refusing to be politically correct today.
The fight never seems to end.
But there is one court in which you can sue your government, the court of public opinion. If I’m not mistaken this could be self defeating once people begin to realize the consequences. You not only lose the mining industry but also all the economic activity that depends on it. Just get the word out any way you can.
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Rudd and his gang of incompetents become more dangerous every day. For three years they have stumbled from one disaster to the next. Big Announcement is followed by Total Inaction or (more often) Disastrous Revelation. Final phase: Abandonment, and a Skulking Departure in search of the next great issue. And we the citizens are treated as morons who have the memory span of a goldfish.
We do not forget, Kevin.
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Michael Costa and Maurice Iemma have just stuck it up Rudd on Alan Jones’ morning show on 2GB.
It’s all over a recently released book – “Betrayal – The Underbelly of Labor” – by The Daily Telegraph’s Chief political reporter Simon Benson.
http://www.couriermail.com.au/news/national/betrayal-by-simon-benson-exclusive-book-extract/story-e6freooo-1225873213807
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Federal & State Governments follow on from unconstitutional locking up of farms as carbon sinks, now conspire to destroy agriculture on the darling by further restrictions on water allocations.
Landline ABC TV 30th May 2010
Our Penny
WrongWong puts her bit in.10
And the CSIRO also now is attacking our land rights with their fraudulent sea level rise regulations and bureaucracy. All this is about is big government, big bureaucracy and another incremental step towards global socialism. It seems K Rudd is just a UN minion as Obama and other western leaders are. The rise of Non Government and Global Governance organisations are currently happening at an alarming rate and all they promise is a global nanny government where we will have very little if any rights and it seems even less democracy.
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the UK government demolished the pensions industry by stealing £5b per annum for all the years they were in power. This had a knock on effect of destroying the pensions of ordinary people like me
australia will be the same soon
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Jo wrote the post isn’t relevant to climate. But she is wrong. AGW isn’t relevant to the real climate. But the problem of politics mastering the economy is the same problem as the AGW – it is the problem of socialism and corporativism, which is just trying to take over the word again. The attempt in the first half of the 20th century has been spoiled in 1940th by the democratic victory in the WW2. The old National Socialistic Labor Party was Brown the current Carbon Socialistic Labor Parties are Green.
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Perhaps they could get rid of the Dept of Climate Change – that’s good for a saving of $90 million a year. Votes I YES!
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These are worrying times. Not only do we have thought bubbles for policy in the Government, we also have the destroyer of the alternative (Liberal National Coalition)party, Malcom Turnball, (who almost sold us down the drain with his support of the ETS) sniping at the Opposition Leader, Tony Abbott.
I am afraid Turnball is positioning himself for leadership again, his ego is a bit like the prince in Shreck – you know mirror mirror on the wall – who would be the best Prime Minister of all -Tony Abbott needs support to win, not disunity to loose the next election.
I have emailed the Liberal Party via their suggest an idea site http://www.liberal.org.au/Get-Involved/Have-Your-Say.aspx (for want of an email adrees to do otherwise) addressing my concerns, but I am concerned also that the general public in Australia might not be so vocal about this as they were the ETS.
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Canadia imposed a doubling of the minerals severence tax in the early 80’s. The immediate and largest export was investment capital.
The investors fled.
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I don’t actually have a problem with the idea of a Resources Rent Tax. These things have been done before and are done elsewhere.
I have a few of problems with the implementation:
1. The rate seems, on the face of it, excessive.
2. The declaration of a super profit as being above a 6% rate of return is obviously based on some economists dream – being that anything above the long term govt bond rate is a “super” profit. So what industry will be next. Businesses that return less than 15% on invested capital are generally not worth being involved in (in my opinion)… so does this mean EVERY industry in future that earns more than the bond rate will be slugged?
3. The easy ability to use transfer pricing to allow a foreign owner to run a mine at a loss (and get PAID USING MY TAX MONEY FOR IT!) and ship the dirt overseas. We’ll all be the losers for that. And yes I know its illegal and can be audited, yada yada, transfer pricing is a difficult complex shambles where only the accountants, economists and lawyers win.
4. The money raised by the tax goes into general revenue. And governments always spend what comes in. The countries that handle this better place the money into a fund which can be used for the benefit of the citizens into the future (the sovereign wealth funds of Singapore, Norway, etc spring to mind). The idea here is that the citizens get the benefit of the tax FOR EVER by not placing it into the recurrent government expenditure, but instead investing it carefully and using the earnings to fund the future work of government (and tax the citizens less).
Rudd could easily back off or drop this and smell of roses. Drop the refunds part, and cut the rate to between 10% and 20% on a windfall return greater than (the long term bond rate + 5%) and there would be muted grumbling if any. As it is he now has his own side and the union movement against him.
Blind Freddy coulda seen all this coming. You have to wonder what they were thinking.
Oh, thats right… it was all fed to them as an economists wet dream. Nuff said.
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Jo, I am so happy that you have taken this on. No-one cuts to the heart of an issue like you do.
Virtually all of our political commentators seem either unable or unwilling to apply the modest amount of logic required to cut to the key issues (as you have done so clinically). The smokescreens and untruths go unchallenged; context and motive go unexamined; and ‘commentary’ focuses on political outcomes rather than matters of principle and real world consequences. And the apathetic masses sleepwalk on.
I think you just moved up a few more places on their totalitarian inspired internet filter hit list!
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We should celebrate the Mining Tax — it is deeply un-Australian and will be seen by the Australian public as such.
Abbott should stand four-square against this tax, make it an election issue, and consign the revolting Rudd to his deserved place in the political dustbin.
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In response to Harry the Hacker @ 13. There is already a rent tax on the minerals. As Jo explains in her post, under the Australian Federation, the minerals are owned by the States and the State Governments all charge a royalty for the minerals. If you add on all on the other state and federal taxes such as Payroll tax and local government rates ect, and then a 30% corporate rates tax you will probably get the effective tax rate, as provided by the ATO, of 40+% and not the 13 to 17% that Swan got out of some students paper from the USA. How much “sharing” do you think is approriate. And would you be happy if you were the one doing all of this “sharing”. This debate is just like the CAGW debate where the enemies of freedom are quite prepared to cherrypick and manipulate data to get their socialist authoritarian agendas up. This is all consistent with the Nazi Big Lie approach to propaganda. The totally inadequate response by the Lame Stream Media is the mot worrying about both of these debates.
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Watch this interview of Rio Tinto CEO Tom Albanese….. It’s very enlightening.
http://www.abc.net.au/insidebusiness/
I like the way Albanese repeats that their objections are about principles as well as economics….
Having a government take over 40 percent of a private business is the road to National Socialism. It is what Mussolini and Hitler did within their modern societies…. Except Albanese was too polite to put it like that… He just said a “Silent Partnership” between a mining industry, which had done all the hard development work and risk, and government…. was a bad idea.
He’s not wrong there.
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the mining super tax is misguided on so many counts. if it is necessary to impose some new tax, it should be in line with our competitors. however, first and foremost the retrospective nature of the tax must go.
how seriously might super funds be affected by the super tax?
btw check the loaded question in this lowy institute poll, with a dollop of ageism ‘detected’ by crikey:
31 May: Crikey: Lowy Poll – climate change and public hypocrisy
The first global warming question asks:
“There is a controversy over what the countries of the world, including Australia, should do about the problem of global warming. I’m going to read you three statements. Please tell me which statement comes closest to your own point of view”…
The older a person is, the more likely they are to not only be not prepared to pay higher electricity prices, but over the last two years, the older a person is the more likely they were to increase their opposition to paying higher prices…
In fact, only 29% of the people that believed in action involving significant costs were willing to pay significant costs themselves in terms of paying $21 or more a month for their electricity.
This is like those standard polling results that show a large majority wanting more government services, and the same sized majority wanting lower taxes. Climate change, like so many other areas of public policy in Australia, is an exercise in rank public hypocrisy – oh yes, we all want X,Y and Z, but someone else can pay for it.
http://blogs.crikey.com.au/pollytics/2010/05/31/lowy-poll-climate-change-and-public-hypocrisy/
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Excellent article Jo….. You write a damn clear summery of the situation.
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I make it 6.34% over 0.6 to 20.2 years. I must be wrong. I used Neumann boundary conditions at the SA/WA and NT/WA borders. Probably thinking about Mount Newman. I’ll try it again using Dirichlet or Cauchy.
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This is one area that has always bewildered me. The ETS was never designed to reduce the amount of coal dug up/sold/used by this country as all the costs were passed on to third parties. The government(s) for many years have given the mining industries very lenient concessions on the fuel (a green house gas source) they use to mine etc.
Would it have been better for Rudd to have removed some/all of these concessions rather than impose another tax? Surely Rudd could have held the moral high ground a bit longer with this approach.
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Jo touched on the point briefly, but it bears emphasis. This tax will so lower the equity value of Australian owned and operated mining outfits that they will become easy take over targets for the Chinese who have long shown an unhealthy interest in controlling Australia’s resource development and pricing, at whatever the cost. What the tax really does is move the goal posts about a 40 metres back in the middle of the game. It’s un-Australian. The tax stuffs any business and development plans that have already been implemented in the last 15 years under the existing tax regime. With profit margins underwater and capital now impossible to raise in an already tight market, Australian owned companies will have no choice but to let Chinese front men largely funded with PRC government money to buy controlling shares in the developments that are now worth much less than then they were 30 days ago.
Rudd has put the whole Australian mining industry up on the auction block. The Chinese, flush with cash, can’t believe their good luck. It’s a brilliant example of unintended consequences caused by blindly ideologically driven taxation. Hey, but don’t worry the Chinese will happily pay the 40% tax. Too bad once they control the industry they’ll also be able to adjust pricing downward to benefit the Chinese economy, thus a profits tax won’t collect nearly what is advertised today.
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Your arguments regarding a AGW are most coherent. This is just one-sided babble.
Unfollow.
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Wes,
I agree completely. One of the greatest transfer pricing opportunities ever.
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Many people with UK investments, e.g. pensions or ISAs, will be directly affected by this, because BHP Billiton and RTZ are both listed in London, too, and are members of the FT100. This measure, if implemented, will confiscate their profits and hammer their share price.
As Jo said, it will also be emulated by other governments, with South Africa, I expect, at the front of the queue. If the South African government had introduced such a measure before now, it would rightly have been accused of following the example of Zimbabwe. Now, however, South Africa can point to the Australian example, instead.
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The parallels with global warming policy are astounding. Assume for a minute that AGW is true (humour me I know I’m on my own here on this site).
Well Rudd gets a guru Mr Garnaut to write a great report… Rudd then pretty much ignores it and brings out a CPRS that is a dog’s breakfast the no one likes, tries to force it through, fails, ditches it.l
Rudd gets a guru Mr Henry to write a great report… Rudd pretty much ignores it and brings out a super tax that is more absurd than his CPRS (even if you are a warmist like me) and again no one likes it, tries to force it through, fails, … what comes next who knows. (Note a resource Rent tax… well there is nothing wrong with it in principle, like an ETS, but this is not what Mr Henry intended at all).
Unfortunately the alternative government is a rabble – we essentially are at an all time low in terms of possible governments at next election. Yeah yeah some of you like Abbott as he got rid of the CPRS, but his carbon alternative is terrible policy, for some reason he is reverting to Howard’s worst immigration solutions, and the party seems to be at the beck and call of the extreme right and religious whackos.
Where for art thou Democrats?
The greens are looking good for a big swing… but they are not (and I concede as a greens supporter) in the frame of forming a government.
Fingers crossed Gillard gets a run soon and brings some much needed sense to the table. If only Turnbull had recognised that the govt’s CPRS was a sham even if you believed in AGW.
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This is not completely fair on Rudd, you need to also list his positive achievements in nearly 3 years as well…
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sorry, still thinking
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no, I cant come up with anything
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SUBJECT: Rebel scientists force Royal Society to accept climate change scepticism
http://www.timesonline.co.uk/tol/news/environment/article7139407.ece
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Nice summary of the situation Jo.
One thing overlooked is the possiblity of Chinese (and other country -eg Russia) state owned companies buying resources to force down prices so that that in effect they are operating a transfer price system. They can particularly do that with resources where Australia is an important world supplier eg Minerals sands -zircon, titanium or rare earths such as Lithium. With low prices the mines in Australia could even make a loss so that the Australian taxpayers will subsidise the mines while the profit is taken overseas. The ATO does not have the competence to investigate transfer pricing and I am sure the Labour (socialist) government would not be willing to tackle the books of Chinese State owned companies.
There are examples of transfer pricing in the past. One was the Savage River Iron ore mining in Tasmania where the ore was converted to iron pellets suitable for electric furnaces (but did pay state royalties). There was no other similar process on which the tax office could base costs. The company made a loss and got subsidies from government. The shipping company and selling agents made good profits on which they paid little tax.
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Julia Gillard is EVEN WORSE THAN CHAIRMAN RUDD!
Anyone who is deluded enough to think that she offers Australians salvation from Chairman Rudd better do some research on her!
Julia Gillard Tells Fabians of Labor’s Plans
http://newzeal.blogspot.com/2007/11/julia-gillard-tells-fabians-of-labors.html
Why hasn’t Gillard been honest?
http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/why_hasnt_gillard_been_honest
That’s 100 failures by Julia Gillard’s logic
http://blogs.news.com.au/dailytelegraph/piersakerman/index.php/dailytelegraph/comments/thats_100_failures_by_julias_logic/
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MORE ON THE NEFARIOUS JULIA GILLARD…..
Principals may be angrier at Gillard’s waste than you were told
http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/principals_may_be_angrier_at_gillards_waste_than_you_were_told/
Rudd and Gillard Lie to our Children!
http://agmates.ning.com/group/climatscepticsparty/forum/topics/rudd-and-gillard-lie-to-our?commentId=3535428%3AComment%3A78276&groupId=3535428%3AGroup%3A4207
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Throwing petrol on resource super-profits fire
http://www.theaustralian.com.au/business/throwing-petrol-on-resource-super-profits-fire/story-e6frg8zx-1225867007731
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Ronnell – how about you go and start your own blog?
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@Owen Morgan#25
Pretty unlikely that RSA would do this. They know what happened in Zambia – effectively the mining industry died stone dead when Zambia brought a high mining tax in, and the state owned mines suffered from poor management and also shrivelled away. Now Zambia has reversed policy completely and their mining industry is showing reasonable signs of life.
RSA has so many poor people employed in their mining industry they can’t afford to scare the companies away. There would be riots. Also the mining industry is already somewhat sickly due to the power problems and the BEE policy, which was more or less a 25% nationalisation.
This is what is so bad about Rudd and Henry’s proposed tax. It will cause the industry to flee, and the cost to Australia will be vastly more than it would ever raise.
***
Farmer Kevin says to Farmer Ken, I need some more pillows. Farmer Ken says, well Gertie the goose has lots of feathers, she could spare a few. She doesn’t need all of them to lay golden eggs after all. So off they go and pull some feathers out of Gertie and stuff a pillow. Several days later, nonplussed, they notice she is laying fewer golden eggs. Farmer Kevin turns on Farmer Ken and says accusingly ‘You told me she didn’t need all her feathers to lay golden eggs! I could have bought lots of pillows with even ONE golden egg!’. Farmer Ken says ‘Well there is nothing wrong with the economic theory, it says she can still lay golden eggs even if you pluck 95% of her feathers. I even did the computer modelling to prove this!’.
I say to Farmer Ken and Farmer Kevin: DOH, YOU IDIOTS!
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wes george
Maybe making the mining companies open to Chinese takeovers is a feature not a bug as far as Kevvie is concerned?
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MattB:
how about you do the same!
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Janama my I introduce you to the blog rules:
“Comments may be deleted or edited if they are: Unnecessarily repetitive, rude, lazy or mindless.
…People who ’substantiate’ one liners with generic links to large sites (with hundreds of pages) walk a thin line…”
There are 4 posts from Ronnell here all just pretty much random clap trap only vaguely related to the topic.
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I like Joanne’s Blog as it helps to expose TROLLS like “MattB”, who support the global warming FRAUD!
Maybe he should join some Leftist Subversive blog where he would feel more at home….
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“MattB” is that your RANDOM BRAIN CELL kicking in again?
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mattB – so you don’t think “Ronnell – how about you go and start your own blog?” is rude, lazy and mindless?
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No I think it is honest and to the point:)
Here is a random thread on this site:
http://joannenova.com.au/2010/05/the-smell-of-money/
Ronnell has no fewer than 10 posts ALL of which are just a glib line and a link. In fact one of them was the same Gillard/Fabians link used today.
Seriously they are just random links… in fact until he/she just replied I’d thought there was a fair chance “Ronnell” was a random neo-con auto-spam virus.
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It seems that this kind of political madness is ALREADY contagious. How else can you describe the destructive policies tearing apart the US, UK and Europe? :0(
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The most insulting thing about this whole new episode of Rudd Government ineptitude is just how stupid they think we are.
In February Swan and Rudd raised the tax on cigarettes and told us it was all about creating a disincentive to smoke. Fine. Now less than 90 days later they want to slap a massive tax on mining, but oh, no worries, this tax is NOT a disincentive to mining development in Australia. Try saying that with a straight face. That’s how good they are. They totally disrespect us as thinking, intelligent citizens.
Rudd told us that he was too fair dinkum to use tax payer money to promote partisan policy. Now Swan is using your money to promote a tax that will damage the Australian economy. Again, they so disrespect the Australian public that they steal our tax money to fund their party line propaganda. And they think we won’t notice or remember come election time?
Rudd told us that the ETS and climate change were the greatest moral challenge of our age. Oh, well, whoops, misspoke. forget it. Whatever.
Rudd and the rock star manage to burn down houses and kill people while trying to install ceiling insulation, but want us to believe they’re competent to “reform” the hospital system and legislate fine weather from parliament. If only we would cough up more taxes and submit to further regulations!
Gillard is the wealthy but senile aunt off her leash at a house auction, paying 100 to 1000 percent above the going price for school building renovations and additions, but, hey we’re suppose to believe it was money well spent rather than a conveniently blind eye to union led corruption. And Julia is the clever one of the mob! Their great hope for the post-Rudd future. heh!
Rudd, and his rich union cronies are right to disrespect us in one sense. We were stupid enough to elect them in the first place. If we re-elect these kleptocratic fools again, we’ll get all that we deserve and more.
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It is obvious Rudd has run out of other peoples money. The future funds have been raided and are almost empty. Where did all the billions go?
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To quote Richard North on EURefurendum:
Can we all rise up and slaughter them now, please?
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Well it’s simple. The consequences will be increased hurdle rate for every investment in Australia (not only in the mining industry), followed by decreased investment rate which will bring about economic grow curbing as well as unemployment rate raise.
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A much easier scheme would be for the states to float the price of volume-based royalty payments and implement a period of approx 3 months after a mining lease where the terms of that particular lease are published openly and anyone else can come along and offer a higher rate for the same lease. Whoever offers the highest rate at the end of the time period gets that lease — exactly like RF spectrum is auctioned.
The terms of the least should be such that prices get re-negotiated after around 10 years and if a newcomer can beat the existing leaseholder’s bid by maybe 20% or better then they get the mine for the next 10 years. Revenue would go to the states just like it always has (as per the Constitution of Australia). No need for complex “super profit” determination and stupidly non-linear schemes that open themselves up to transfer pricing, profit sharing, accounting shuffles, etc. With volume-based royalty it makes no difference whether the company is foreign owned or Australian owned.
You can guarantee than any scheme cooked up by Federal Treasury is going to claim that whatever the states do is inefficient and the money should be collected by the feds. Of course they will promise to give it all straight back to the states — until the day when they don’t, or when they get involved in formula shuffling to use this bit of money here as an excuse to take that bit of money there and suddenly now you see it, now you don’t.
Not arbitrary at all, it is Willie Sutton’s Rule.
The banks are a special case, having served as indirect government tax collectors for many centuries, a truce has been established. The mining industry would do well to learn from this, and should right now be rushing to negotiate, not with Kevin Rudd (complete waste of time) but with their respective State governments, offering to pay a little more in mining royalties in return for the Premiers digging in and defending our Constitution.
Joanne, by Labor Party logic, people who live on investments do not work for their living, and thus don’t deserve to live. They regard your research to be worthless, and they regard Peter Spencer’s entrepreneurial projects to be similarly worthless. I’m not saying I agree with this logic, but demonstrating that you are hurt by this tax will not discourage them.
By believing in Capitalism, you must also believe that many individuals all looking after their own interests will aggregate into something that efficiently looks after the national interest. So, the ALP are just another group of people looking after their own interests (and the interests of their supporters, who in turn look after the party). Since you are not part of their group, they don’t care what happens to you. Simple as that. Selfish but efficient.
Sadly, politics is mostly about who can grab what and how clever they are about grabbing. I doubt any party is exempt from this tendency — the Democrats demonstrated a willingness to sacrifice their principles when it came to getting a bit more power for themselves, so did Peter Garratt, and the Greens were so very happy that AGW theory supported their inner hatred of technology that they cheerfully switched off their brains. I very much expect that Tony Abbott will win the coming election and probably he will find subtle ways to channel a bit of extra support to his Catholic Church, and probably some of the big business backing the Liberal Party (no doubt Abbott will be more subtle than anything Kevin Rudd has done, which says nothing).
Any good governance happens merely as a side effect of the grabbity grab game.
I would much rather see the Federal Senate become a gridlock of minor parties that never agree on anything so nothing whatsoever gets done in Canberra and thus everything gets done in the rest of Australia. My preferences go small parties first, big parties last.
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Kevin Rudd and Gordon Brown – cast from the same cloth, both so out of touch with reality and always ready to put a spin on it (at our expense, of course) so we have the chance to be properly ‘informed’.
The Ministry of Truth, at it again.
I came here two years ago and was expecting a bit more class from the Aussie government, based on the fact that you’re a nation of straight talkers and no nonsense attitudes for the most part, but have found government to be worse than the UK – petty squabbling, name calling, so many u-turns and 360’s I’m surprised they haven’t impounded themselves under their own stupid ‘hoon’ laws. I want a government with balls that is in touch with the country and willing to think things through properly and, if necessary, change their policies and direction in line with what Australia really thinks. Instead I find a bunch of self-serving, petty, self obsessed idiots who couldn’t be more out of touch with reality if they tried.
*sigh*
Listen up, Gen Y – only you can save us now..
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Doesn’t basic market economics already say superprofits are competed away in the market over time.
Amazing how the feds can ignore all of the Henry Tax review’s 138 recommendations except the one about taxing the miners for all they’re worth. Scariest part is that with voters generally in favour of giving first term governments a go, it could get reelected and the superprofits tax could become real.
Please can we ban *all* political advertising as a waste of resources???
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Why is Rudd still in power?
Have the voters become stupid enough to let him stay?
How about the voters rising up in howls of protest over the stupid actions of the government.Surely they grew from being a criminal colony to a modern rational nation,no?
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News Flash!
Kevin Rudd wins Masterchef with his unique recipe for cooking the goose that lays the golden egg; “The Resource Super Profits Tax”
Wayne Swan assisted with the stuffing.
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surely Wayne Swan ‘was’ the stuffing.
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If what Mr. Rudd argues is true–to wit underground resources “belong to all of us”–then the next time you fill your car with gasoline, politely thank the gas station attendant for storing “your” gasoline and drive off without paying. After all, who has to pay for what is already his? Wait, apparently Mr. Rudd’s answer to that question is: EVERYONE.
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Read the whole thing:
http://online.wsj.com/article/SB10001424052748703703704575277473827983454.html
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That’d be right… you post my favourite topic of the moment when I am stuck in a meeting all day :p
As noted by others here and myself on the following thread (at the end):
http://joannenova.com.au/2010/05/this-is-so-not-over/
resources do not belong to all Australians. This is another case of the language being hijacked by one side of the debate. Just like accepting that “climate change” means AGW (as it does for the politicians), the concept that resources belong to all Australians is flawed and wrong in (legal) fact.
Resources, according to the Constitution, belong to the states in which they occur. There is absolutely no debate on this fact. Hence it is up to the states to determine what price they are sold at (a tax we call a “royalty” or a “resource rent tax”). This is not for the Feds to decide. Consequently all the Government’s arguments couched in terms that these resources belong to all Australians is wrong legally and nullifies anything they claim to be fair as a consequence.
Interestingly the Government has said to the petroleum sector that they can choose between the PRRT (Petroleum Resource Rent Tax) or the RSPT*. Well hang on one darn minute! Either this thing is a royalty or it isn’t. The PRRT is is a royalty… end of story. To say that the RSPT is substitutable for the PRRT means it is also a royalty tax, no?
Any economist with half a brain** will acknowledge that a resource rent tax is a more efficient tax than a royalty… I have neither the time or inclination to go into the detail here, but trust me that it is so. The key point is that you have one or the other… not both. What the Feds are proposing is that the mining industry will pay state royalties, then the RSPT and then normal corporate taxes on top of that. That simply will not work out well for anyone concerned… including the Australian economy.
Jo – I honestly think you should tweak the line which reads:
It is a misleading line, and Australian politicians should be cut down at the knees for uttering it. Constitutional law says otherwise.
Having said all that… another factoid that one should be aware of is the fact that states may collect resource royalties, but they are indirectly redistributed to the rest of the country through the CGS (Commonwealth Grants Scheme). WA loses about one third of its GST collection to the other states because we collect so much in mining royalties. So, in effect, the Feds have a mechanism from stealing royalties from the states anyway… they don’t need the RSPT.
Finally, and this is the biggie that should appease all political persuasions… there is a simple one line policy that would knock all this debate on the head. It would increase the Federal Government’s corporate tax take from the mining industry, be a simple legislative change and leave the states’s royalty systems untouched:
Think about it. That is how you do simple tax reform.
PS> to see how important the resources industry is to WA, look at some of the stats here:
http://www.dmp.wa.gov.au/1518.aspx
* Protip: no one in the petroleum sector is opting to change to the RSPT… they know it is vastly inferior to the PRRT.
** Economists quoted as saying the RSPT is a good thing are being selectively quoted out of context. The economists claiming the RSPT is a good tax change mean that it is superior to an ad valorem royalty as currently charged by the states. i.e. they are saying you should replace the state royalties with resource rent taxes – this is the states’ decision to make, not the Feds.
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BTW in a clear demonstration of how the whole ad campaign to combat “mining lies” was orchestrated in advance:
http://au.news.yahoo.com/thewest/a/-/newshome/7322961/tax-campaign-ready-in-advance/
Lest we forget, the $38 million wasted on the disinformation ad campaign was allocated in the Federal Budget weeks ago. Rudd gets caught up in his lies once again.
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Actually, I believe Wayne Swan needs stuffing.
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<emThe PRRT is is a royalty… end of story.
Another major difference between the PRRT and this new RSPT is the retrospective part. Also, the PRRT was only introduced after a Govt. Green Paper, followed by a White Paper, after about two years of consultation. This mob just presented this as a fait accompli, qith zero consultation, and then had the hide to look surprised when the mining sector recoiled in disbelief. Cue the ‘class envy’ crocodile tears. These guys are channelling the ’70’s, and it’s all because of the ETS sour grapes, oh, and the resulting Budget black hole.
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In its simplest presentation this question comes down to comparing the proper/fair value to Australia of the natural resources being extracted by miners versus the amount miners are paying at present.
While the former is one of those issues that would generate as many answers as there are participants in the debate,the latter should have been fairly readily estimated by the Henry review team.
Are they going to release such data?
Who decides that Australian resources should fuel a 2010 boom? Would they be more valuable in the 20N0 boom? If the resources do belong to Australians shouldn’t Australians be making such decisions? Who makes such decisions now? Are Australia’s long term interests best served by the current decisions?
The BP debacle in the Gulf of Mexico highlights the risks of natural resource extraction. BP clearly risked its capital in setting up the failing wells but it also took a risk with the environment. If the environment belongs to all of us who gives a resource extractor permission to take this risk on our behalf? A financially weakened BP is not going to pay for the damage it has unleashed. (Shades of James Hardie?)
A current Qld debate on extraction of coal seam methane and its impact on existing agricultural and grazing land has similar elements.
The only thing clearly emerging from the above is a need for caution when consuming non-renewable resources. There are going to be an on-going series of future booms. Ideally the earnings from these booms should fairly reward the miners’ risks, compensate Australians for natural resource depletion and rectify inevitable environmental damage.
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When you say retrospective, Jaytee, well many tax changes are retrospective in Australia.
When cigarette taxes go up, when the alco-pops tax came in, both examples that every time a rule is changed there are companies out there who have pre-committed investment in existing infrastructure that was planned under a different tax regime for whom a change could significantly change their profit situation.
Miners have known that a resource rent was on the cards for months and months. I knew it just reading the paper so there is no way they didn’t know about it. There was no outrage until Rudd’s final plan was brought out.. because it is a pretty crappy plan. The “concept” of a resources rent tax is sound and the murmurings were that the miners were going to accept it – they just expected maybe some consultation and common sense, wrongly unfortunately.
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tel !@47…
Hallelujah, Hallelujah! Amen, brother, the wisest words ever uttered!
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So. what’s your point here, MattB. Areytou really saying that the tobacco and alcohol industries can be compared with mining and exploration? Are you kidding?? Smokers, drinkers and motorists are well established milch cows for governments, because they are all addicted ( generalisation, I know, but the point is valid, in my view. I get two out of three here. ). The audience is a captive one, because people won’t/can’t make the choice. But, every cent raised here is a tax on choice. Tobacco/alcohol companies have paid their start-up costs years ago. It’s just pure profit for them.
Mining/exploration is essential investment in our future. Everything we do, use or live in depends on it. It requires huge investment, often years or even decades prior to any hope of a return. While the potential returns are great, the risks are commensurate. The costs of starting up a mine are incredible. They pay every time. WD & HO Wills, or whatever they call themselves these days, just run a different package ( fresh off their own printing press) down the line, and hey presto, another billion.
I could go on, but I can’t be bothered at this hour. You won’t understand anyway.
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For those still interested in following this, here is the KPMG paper released on 1 June 2010 by the MCA (Minerals Council of Australia):
http://www.minerals.org.au/__data/assets/pdf_file/MCA_News/RSPT%20Report%20FINAL.pdf
Ironic that KPMG was also doing research for the government on the same tax… much like AGW… there is the theory that is debated between the scientists and then there is the spin advocates and politicians put on the theory… often they travel in completely different spheres of reality and fantasy.
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No Jaytee, I’m just saying that it is not uncommon for a change in the tax system to have an impact on projects that are established.
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One small comment on an otherwise excellent article.
The Minerals in the ground do not “belong to all of us”.
Legally the minerals in the ground belong to the “Crown” in other words to each of the individual States, whose sovereignty it should be pointed out pre-dated the Federation. In so many words the Commonwealth government is a creation of the States. The minerals below to the individual states not to the Commonwealth nor did they ever “belong to all of us”
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Steve,
While the minerals belong to the states it is one of the few supportable facts in this debate that the states have been receiving an ever-diminishing proportion of what the miners have been receiving for these minerals. The proposed tax is just one way for the Commonwealth to step in and recover a fairer return for Australians.
John Watt
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regards what the states receive in royalties, this site HERE shows that most of the important ore, i.e. coal, iron ore, oil etc pay royalties based on percentage of value of the ore.
There are sample calculation sheets in excel at the bottom of the page as well.
I may have misunderstood this, but it seems royalties fluctuate with prices, a fair thing I would have thought.
Discounts are given for local processing and deductions allowed for shipping costs.
As a Queenslander, hence part owner of the stuff in the ground, I would prefer to take a cut off the top at the fair market value and leave the rest to the miner who is free to maximise his returns with best practice, efficiencies etc. IMHO
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This Govt is weird; I don’t remember any other Federal Govt promoting a ‘them and us’ campaign like this Govt is doing; the perception the Govt is promoting is ‘us Aussies who own the resources are not getting a fair share and we need a fair share to boost your super and to generally make you feel warm and cuddled’ against ‘them nasty fat cat miners who are depleting natural resources and aren’t paying nearly enough tax.’ To boost this perception the Govt wants to spend $38 M on advertising because the miners are misinforming the public and their advertising warchest is $100 M; well we heard from the Minerals Council tonight on the news that their warchest is much less than the Govt’s. From all the ridiculous things that Ken Henry has been saying lately – the tax won’t harm investment in Aust and won’t affect prices and profits (check out http://catallaxyfiles.com/2010/05/27/maybe-ken-henry-misspoke/ ) Parts 1 and 2 and Wayne Swan and Rudd misrepresenting the tax that the miners have been paying I would say that all the misinformation is coming from Canberra not the miners
Although the Govt are trying to tie the necessity for the RSPT into ‘the best interest of all Australians’ it’s really a tax grab by the Govt to make its future budget bottom line look better after its wasteful spending in this current term; the Govt have written the hoped for proceeds into recurrent expenditure; just think we are paying about $100 M of borrowed money just to pay the interest on what we have already borrowed and it will take many many years and many many surplusses before we can pay off the debt
The sad state of Australian Govt at the moment; I read today about a superannuant who has lost $138,000 off the value of his super
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further to my previous comment just think we are paying about $100 M of borrowed money just to pay the interest on what we have already borrowed and it will take many many years and many many surplusses before we can pay off the debt
that’s $100 M per day and we’re borrowing more
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Sorry, but I agree with the resources tax.
I live in Perth and the place is tearing itself apart. Fly-in fly-out mining is destroying families, raising house prices beyond anything affordable by a non-mining income, trashing the hospitality and tourism industries as all available staff get sucked into futureless jobs in the mines, trashes any form of community planning as throwaway suburbs get built too quickly, too cheaply, and too badly.
We desperately need to slow down the amount of new mines, and we *really* need to ban Fly-in Fly-Out and form mining communities in the rural areas where the resources are.
Estimates vary, but I’ve heard anywhere between 10 years and 50 years until the iron ore runs out here, and longer for coal. So WA has 50 years to extract every single possible cent from those minerals and use it to build sustainable infrastructure and diverse industries for the future.
We can’t do that if every available worker is working the mines, and we need to tax every single kilogram of iron ore leaving the country to the maximum possible extent to ensure we’ve got enough funding to build the next industry.
Spending it all on cheap, flimsy, unsustainable suburbs like we’re doing at the moment is a really bad idea (see the current state of the Irish housing market for details…they’re busy demolishing 20% of their housing stock because it’s badly built and now empty because their boom ended and the immigrant workers went home).
So what if Canada gets ‘more mines’? You can’t make a mine out of thin air, and Australia’s iron ore isn’t going away. If we don’t dig it up now, we’ll dig it up in 50 years when Canada’s has run out. And we’ll probably get a much better price for it because it’ll be that much more scarce. We have a limited stock of resources, but they last forever. Why sell them cheaply in a huge hurry now? Why not tax them until the pips squeak and maximise the income?
I can see that there’s pressure from over east to dig up every square km of WA and sell it to China to maintain Australia’s economy, but we have to put up with the consequences of that, and it’s not good. Keep it up and there will be hell to pay one way or another. So if taxing 40% of the profits is the price to keep the East happy and the miners off our backs, then please do it, and do it now, because WA can’t take much more of this.
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Jo
I guess the falling dollar is one thing, but when the ratings agencies get round to reviewing Australia & its states we may be on a trip down memory lane to “Argentinian” interest rates.
I pity the mortgagees living the “Home & Away” lifestyle complete with two cars & flat screens then.
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I’d like to know these mining companies how many are owned
by Australia? Or the majority of the interest at least?
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Some time ago a few members/posters at this blog had the pleasure of calls and visits from the police regarding Climategate.
At least, some people believed that a crime had been committed. This morning this story appeared in Wind Concerns Ontario regarding police of The Ontario Provincial Police (OPP) visiting members of Wind Concerns Ontario (WCO) to determine if a crime was being contemplated.
It makes for an interesting morning read over coffee when you realize that you are now likely the target of background searches and criminal investigations for a crime that you might contemplate in the future. I have variously seen this in fantasy and science fiction described as “Future Crime” and “Thought Crime”.
What more could I say?
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As a Libertarian I would cry foul over this tax grab, as it directly conflicts with the fact that the economy works best with less govt intervention not more.
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Test comment.
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