I get really annoyed when journos and biz types refer to mining companies as “miners”. Miners are not companies, but workers; the workers who actually generate the windfall profits a portion of which the Rudd government is planning to redirect to facilitating higher super for workers.
The business lobby’s response has been typically over the top and no doubt we’re going to hear the cute phrase about golden gooses from a bunch of geese over and over again.
The claim, typical of business rhetoric in a globalised world, that operations will be moved offshore is particularly egregious in this context. The resources are in the ground. What they mean, what they can only mean, is capital, and in any case the threat is almost certainly an empty one.
It should not be forgotten, aside from all the analysis about an ageing population, that women in particular, and many younger workers in general, are very inadequately served by super, and have little other opportunity to accumulate wealth because they’re not in secure full time work. This sort of reform, to the degree that it addresses these sorts of persistent inequalities, can only be a good thing. Kudos to Wayne Swan.
Elsewhere: Guy Beres.
Update: [by Kim] New post on the media coverage of the Resources Super Profits Tax.
The main inequality being addressed is between the amount the Commonwealth would like to piss away in marginal seats in NSW and Victoria, and the amount it obtains from the personal and corporate income taxes.
The main inequality being addressed is between the amount the Commonwealth would like to piss away in marginal seats in NSW and Victoria, and the amount it obtains from the personal and corporate income taxes.
Good post, Mark. My sentiments exactly.
Good post, Mark. My sentiments exactly.
I share your annoyance at the misuse of the wor ‘miner’. Also had a bit of giggle about the empty threats – of course they would say that.
I share your annoyance at the misuse of the wor ‘miner’. Also had a bit of giggle about the empty threats – of course they would say that.
Back in the 60′s mining boom people like Charlie Court and Joh managed to paint themselves as the champions of the mining industry while making sure that they actually got some benefits from the mining industry. Charlie court, for example set rather nice royalty rates and insisted on pellet plants, beneficiation plants as a condition of being allowed to mine iron ore. Joh also had the sense to charge nice royalties and set coal haulage prices high enough to help the state coffers along nicely. (Also insisted that the miners pay for the coal waggons so that state capital funds weren’t wasted on things that were unlikely to buy many votes.)
Unfortunately Joh was followed by that idiot Goss who actually cut the coal haulage rate!! Then there is Anna Bligh who actually wants to privatize the coal haul business to solve budget problems instead of using her noggin and jacking up haulage rates like any sensible Qld premier would do.
I am delighted that Rudd has finally seen the sense of expecting something serious in return for permission to export our non-renewable resources.
Back in the 60′s mining boom people like Charlie Court and Joh managed to paint themselves as the champions of the mining industry while making sure that they actually got some benefits from the mining industry. Charlie court, for example set rather nice royalty rates and insisted on pellet plants, beneficiation plants as a condition of being allowed to mine iron ore. Joh also had the sense to charge nice royalties and set coal haulage prices high enough to help the state coffers along nicely. (Also insisted that the miners pay for the coal waggons so that state capital funds weren’t wasted on things that were unlikely to buy many votes.)
Unfortunately Joh was followed by that idiot Goss who actually cut the coal haulage rate!! Then there is Anna Bligh who actually wants to privatize the coal haul business to solve budget problems instead of using her noggin and jacking up haulage rates like any sensible Qld premier would do.
I am delighted that Rudd has finally seen the sense of expecting something serious in return for permission to export our non-renewable resources.
How much money was “pissed away in marginal seats in NSW and Victoria” after Mark Vaile in 2006 suddenly discovered “the worst drought in history, OMG, OMG we’ll all be rooned” and became Minister for Transport and Regional Services?
How much money was “pissed away in marginal seats in NSW and Victoria” after Mark Vaile in 2006 suddenly discovered “the worst drought in history, OMG, OMG we’ll all be rooned” and became Minister for Transport and Regional Services?
Nice post, Mark. The histrionics from Big Mining Companies are ridiculous. As you say, this is where the mineables are, so it’s not as though they are going to stalk off elsewhere. Other aspects on how this particular industry could and should be integrated into the broader economy to the greater benefit of us all are touched on by my posts in the Henry Review thread.
Nice post, Mark. The histrionics from Big Mining Companies are ridiculous. As you say, this is where the mineables are, so it’s not as though they are going to stalk off elsewhere. Other aspects on how this particular industry could and should be integrated into the broader economy to the greater benefit of us all are touched on by my posts in the Henry Review thread.
Of course one would expect the misleading “miners” meme from News Ltd’s tappers. It’s the ABC’s wholesale adoption of the descriptor (at least online) that is irksomely Orwellian.
The miners who do the hard yakka and get their clobber soiled would be well advised through their media liason personel to re-claim their name unsullied, lest some citizens assume that it’s the miners who are objecting to Oz workers getting their fair share of the national bonanza.
Of course one would expect the misleading “miners” meme from News Ltd’s tappers. It’s the ABC’s wholesale adoption of the descriptor (at least online) that is irksomely Orwellian.
The miners who do the hard yakka and get their clobber soiled would be well advised through their media liason personel to re-claim their name unsullied, lest some citizens assume that it’s the miners who are objecting to Oz workers getting their fair share of the national bonanza.
Fortunately, your insistence that they stop use a common idiom of discussion because it doesn’t match your political views isn’t newspeak. Let’s call it Speak2.0.
Fortunately, your insistence that they stop use a common idiom of discussion because it doesn’t match your political views isn’t newspeak. Let’s call it Speak2.0.
Since when has it become “a common idiom of discussion”, Jacques? I read the Fin Review daily and I’ve never seen it used in this context until this year. “Miner” has always signified a worker.
Since when has it become “a common idiom of discussion”, Jacques? I read the Fin Review daily and I’ve never seen it used in this context until this year. “Miner” has always signified a worker.
I’ve seen it used in both contexts — corporate and coalface — for as long as I can remember. Fortunately English has the property that words can mean more than one thing, depending on context.
I’ve seen it used in both contexts — corporate and coalface — for as long as I can remember. Fortunately English has the property that words can mean more than one thing, depending on context.
Well, it’s news to me, Jacques. In any case, there’s significant ambiguity – on SBS news a second ago, we had a report about “Unions say miners are” blah blah with a guy from the CFMEU, who is presumably also a miner.
In addition, it’s been interesting to see the opposition and the mining industry flaks articulating identical rhetoric – “golden goose” etc.
Well, it’s news to me, Jacques. In any case, there’s significant ambiguity – on SBS news a second ago, we had a report about “Unions say miners are” blah blah with a guy from the CFMEU, who is presumably also a miner.
In addition, it’s been interesting to see the opposition and the mining industry flaks articulating identical rhetoric – “golden goose” etc.
not sure about the idea that miners refers to workers. In the ATO when dealing with miners we were always referring to the companies. But aside from that minor comment (bad pun intended) I agree with you and have expressed the same thoughts on my blog.
These complaints are standard fare for business when they might have to pay tax. They plug in the usual bullshit – investment will move offshore, jobs will be lost, the golden egg of the golden goose of the golden age or whatever it is will be cracked, die whatever. In fact, as I argue on my blog, if there is an attempt at a capital strike workers should take over running the mines or force Rudd Labor to nationalise them under workers’ control. We make their profits.
not sure about the idea that miners refers to workers. In the ATO when dealing with miners we were always referring to the companies. But aside from that minor comment (bad pun intended) I agree with you and have expressed the same thoughts on my blog.
These complaints are standard fare for business when they might have to pay tax. They plug in the usual bullshit – investment will move offshore, jobs will be lost, the golden egg of the golden goose of the golden age or whatever it is will be cracked, die whatever. In fact, as I argue on my blog, if there is an attempt at a capital strike workers should take over running the mines or force Rudd Labor to nationalise them under workers’ control. We make their profits.
I worked as a miner for some time in days gone past, and my father was a miner before me.
It has never to my knowledge been associated with the corporate suits.
Quite the opposite.
Only those that go underground and get dirty and face danger have earned the title.
I worked as a miner for some time in days gone past, and my father was a miner before me.
It has never to my knowledge been associated with the corporate suits.
Quite the opposite.
Only those that go underground and get dirty and face danger have earned the title.
@12, John, maybe it’s common in some specific contexts. But I did my honours thesis ten years ago on the political strategy of the miners’ union, and in Queensland at least, I think miners in common speech has meant workers. The CFMEU (Mining Division) is usually called the Miners or the miners’ union as shorthand.
@12, John, maybe it’s common in some specific contexts. But I did my honours thesis ten years ago on the political strategy of the miners’ union, and in Queensland at least, I think miners in common speech has meant workers. The CFMEU (Mining Division) is usually called the Miners or the miners’ union as shorthand.
Maybe so, Jacques at 10, although hadn’t noticed it myself either. “Mining Company” would be without ambiguity. It’s important to be precise on policy.
(pardon the cross, but left-leaning honour needed defending
Maybe so, Jacques at 10, although hadn’t noticed it myself either. “Mining Company” would be without ambiguity. It’s important to be precise on policy.
(pardon the cross, but left-leaning honour needed defending
Yeah, have to agree on the (mis)use of the term “miners”. I’d say it probably came out of a mining company’s PR toolbox sometime during the 90′s. Also helps to make the blokes in suits feel s bit more masculine given that most of them are more the manicure and cuff links types. Looks like Jacques got caught by this one or perhaps he’s just being a tad contrarian (can it be so!).
Yeah, have to agree on the (mis)use of the term “miners”. I’d say it probably came out of a mining company’s PR toolbox sometime during the 90′s. Also helps to make the blokes in suits feel s bit more masculine given that most of them are more the manicure and cuff links types. Looks like Jacques got caught by this one or perhaps he’s just being a tad contrarian (can it be so!).
John Passant, the use of the term “miners” in your example was at an in-house industry pow-wow. Now it’s being squarked with abandon by the chooks.
John Passant, the use of the term “miners” in your example was at an in-house industry pow-wow. Now it’s being squarked with abandon by the chooks.
The golden goose analogy is flawed, anyway, as it refers to destroying future income by consuming capital.
I can’t really think of a better one off the top of my head. I think the real key point is that mining is a high risk industry with enormous upfront capital requirements. The large profits are often reinvested, because internally-sourced capital is almost always cheaper than a bank loan.
If I had a lever which settled the issue, I would rather have the money reinvested by Rio Tinto or BHP than sent to Canberra. They pay handsome wages to a sector of the economy which has traditionally lagged — tradies — and they achieve in months and years the construction of infrastructure which take governments years and decades.
Really this argument, as I see it, boils down to two questions.
First, should corporate income tax be ‘progressive’?
Second, should the states or the Commonwealth receive royalties?
The golden goose analogy is flawed, anyway, as it refers to destroying future income by consuming capital.
I can’t really think of a better one off the top of my head. I think the real key point is that mining is a high risk industry with enormous upfront capital requirements. The large profits are often reinvested, because internally-sourced capital is almost always cheaper than a bank loan.
If I had a lever which settled the issue, I would rather have the money reinvested by Rio Tinto or BHP than sent to Canberra. They pay handsome wages to a sector of the economy which has traditionally lagged — tradies — and they achieve in months and years the construction of infrastructure which take governments years and decades.
Really this argument, as I see it, boils down to two questions.
First, should corporate income tax be ‘progressive’?
Second, should the states or the Commonwealth receive royalties?
Elsewhere: Guy Beres.
Elsewhere: Guy Beres.
Mark,
A “resource” is only a resource when it has been found, delimited, the grade assessed, a mine plan developed and the mining commenced. Until then it is not a resource. All of these have to be paid for in the years and months before there is any cashflow, never mind profits, at all.
If a government says that they will take away 40% (plus normal companies tax) of the future income the incentive to pour money into exploration is diminished, if not destroyed.
What this will do is simple – the first step will be to discourage exploration in Australia. This will mean that the next lot of mines are now a lot less likely to be found, hurting not only the employees of the exploration companies but the tax base years from now as the existing mines run out and there is nothing to replace them with.
It will not stop the production in already producing mines (in that, at least, Swan and the PM are correct) as it will only tax them when they are profitable anyway.
Short term this is a rather profitable little tax grab by Swan and friends. Longer term the effects will be simple – less exploration, less development, less employment and lower tax revenues.
Mark,
A “resource” is only a resource when it has been found, delimited, the grade assessed, a mine plan developed and the mining commenced. Until then it is not a resource. All of these have to be paid for in the years and months before there is any cashflow, never mind profits, at all.
If a government says that they will take away 40% (plus normal companies tax) of the future income the incentive to pour money into exploration is diminished, if not destroyed.
What this will do is simple – the first step will be to discourage exploration in Australia. This will mean that the next lot of mines are now a lot less likely to be found, hurting not only the employees of the exploration companies but the tax base years from now as the existing mines run out and there is nothing to replace them with.
It will not stop the production in already producing mines (in that, at least, Swan and the PM are correct) as it will only tax them when they are profitable anyway.
Short term this is a rather profitable little tax grab by Swan and friends. Longer term the effects will be simple – less exploration, less development, less employment and lower tax revenues.
“Miners” in that context sounds more like Stock Market verbal shorthand, and has made it’s way to where it is now via financial & business journos.
Good luck with tucking that particular context genie back into the bottle, I’d say the term is here to stay.
“Miners” in that context sounds more like Stock Market verbal shorthand, and has made it’s way to where it is now via financial & business journos.
Good luck with tucking that particular context genie back into the bottle, I’d say the term is here to stay.
sorry team, I just did a search on “Mabo Miners” in google, figuring all the articles would be from before 1998; everyone on both sides of the fence (even Green Left Weekly) referred to mining companies as “Miners.”
As usual, google pisses on us all from a great height.
sorry team, I just did a search on “Mabo Miners” in google, figuring all the articles would be from before 1998; everyone on both sides of the fence (even Green Left Weekly) referred to mining companies as “Miners.”
As usual, google pisses on us all from a great height.
Hope you are right there Andrew. A little bit of the country might be still left habitable for people to live in for the years to come.
Hope you are right there Andrew. A little bit of the country might be still left habitable for people to live in for the years to come.
Mark, Andrew Reynolds is broadly correct (though the tax will reduce investment in new mines nad exploration, not eliminate it). You should familiarise yourself with the concept of endogenous resource endowments.
That said, the new tax might be worthwhile if it were being put to good use (doing something about fixing vertical fiscal imbalances between the states and commonwealth, being diverted to a Norwegian style sovereign wealth fund, cleaning up the mess that is housing taxation in Australia, reducing effective marginal tax rates for low income workers, etc, etc), but it isn’t.
As an aside, in economics and business it is very common to refer to mining companies as miners, not just the workers…
Mark, Andrew Reynolds is broadly correct (though the tax will reduce investment in new mines nad exploration, not eliminate it). You should familiarise yourself with the concept of endogenous resource endowments.
That said, the new tax might be worthwhile if it were being put to good use (doing something about fixing vertical fiscal imbalances between the states and commonwealth, being diverted to a Norwegian style sovereign wealth fund, cleaning up the mess that is housing taxation in Australia, reducing effective marginal tax rates for low income workers, etc, etc), but it isn’t.
As an aside, in economics and business it is very common to refer to mining companies as miners, not just the workers…
Jacques, I wish I could share your cheery optimism in the keen interest of mining companies in the welfare of their employees and work environments. Must be why the sector’s so heavily unionised, hey?*
*not detracting from the community work some mining companies do, some of the time. But come on, mining companies – like any other company – are there to make money. If their little rehabilitation projects came at a significant cost with only marginal pr benefit, they would drop them immediately.
Jacques, I wish I could share your cheery optimism in the keen interest of mining companies in the welfare of their employees and work environments. Must be why the sector’s so heavily unionised, hey?*
*not detracting from the community work some mining companies do, some of the time. But come on, mining companies – like any other company – are there to make money. If their little rehabilitation projects came at a significant cost with only marginal pr benefit, they would drop them immediately.
“As an aside, in economics and business it is very common to refer to mining companies as miners, not just the workers …”
It may well be.
But when sg cites New Left Weekly reproducing an article by ” This is the abridged text of a speech made in Sydney on August 25 at the launch of the second edition of the author’s book Mabo: A Symbol of Sharing. Sean Flood is the NSW public defender”, the Oz govt and a journo or two that does not mean that miners, the workers who actually work in extracting ores, think of ‘the suits’ as miners.
Words are powerful weapons and what we are seeing here is trhe expropriation of a word and the changing of its meaning to suit a political agenda.
Sorry, but as an ex-miner from a mining family with friends and rellies still involved as ‘miners’ [real ones not the blokes in suits or white overalls with clean white borrowed hard hats], there is no way I can accept or be happy with the word ‘miner’ being used to describe those who wouldn’t know their arse from their elbows outside an office.
Ever been deep underground when the lights went out and the roar of the machinery suddenly, inexplicably, stopped?
“As an aside, in economics and business it is very common to refer to mining companies as miners, not just the workers …”
It may well be.
But when sg cites New Left Weekly reproducing an article by ” This is the abridged text of a speech made in Sydney on August 25 at the launch of the second edition of the author’s book Mabo: A Symbol of Sharing. Sean Flood is the NSW public defender”, the Oz govt and a journo or two that does not mean that miners, the workers who actually work in extracting ores, think of ‘the suits’ as miners.
Words are powerful weapons and what we are seeing here is trhe expropriation of a word and the changing of its meaning to suit a political agenda.
Sorry, but as an ex-miner from a mining family with friends and rellies still involved as ‘miners’ [real ones not the blokes in suits or white overalls with clean white borrowed hard hats], there is no way I can accept or be happy with the word ‘miner’ being used to describe those who wouldn’t know their arse from their elbows outside an office.
Ever been deep underground when the lights went out and the roar of the machinery suddenly, inexplicably, stopped?
Just saw Clive Palmer on Lateline ranting about Wayne Swan being a communist. Not sure he’s the best spruiker for the mining companies’ line.
Just saw Clive Palmer on Lateline ranting about Wayne Swan being a communist. Not sure he’s the best spruiker for the mining companies’ line.
sorry Hannah’s Dad, not trying to say it’s right or wrong, just contradicting the claim that the media never used to use the phrase (I remember the Oppo Organ always used it, along with “blacks” for Aborigines).
That’s me, all about the truth…
sorry Hannah’s Dad, not trying to say it’s right or wrong, just contradicting the claim that the media never used to use the phrase (I remember the Oppo Organ always used it, along with “blacks” for Aborigines).
That’s me, all about the truth…
Suspect within a few days apart from the new resources tax, the whole Henry Tax Review thing is going to produce glazed eyes in the electorate. The resource tax is good politics – most people will gain from it or think that they will gain from it. Mining companies will have to give some of their profits back to the country. The electorate will like that. Rudd Labor will bore everybody shitless talking about tax and super and what people will get from it is that mostly they’ll all get something from it. That;s also good politics. This is not Rudd’s Achilles’ heel. Dumping the ETS is, im political terms, and I don’t think the mining tax and the Henry Review will change people’s ideas on that. Its not an election loser because the Libs ‘ud be worse.
The best the mining tax and the Henry Review can do is slow the dive to the bottom.
Suspect within a few days apart from the new resources tax, the whole Henry Tax Review thing is going to produce glazed eyes in the electorate. The resource tax is good politics – most people will gain from it or think that they will gain from it. Mining companies will have to give some of their profits back to the country. The electorate will like that. Rudd Labor will bore everybody shitless talking about tax and super and what people will get from it is that mostly they’ll all get something from it. That;s also good politics. This is not Rudd’s Achilles’ heel. Dumping the ETS is, im political terms, and I don’t think the mining tax and the Henry Review will change people’s ideas on that. Its not an election loser because the Libs ‘ud be worse.
The best the mining tax and the Henry Review can do is slow the dive to the bottom.
It varies from company to company. Some mining companies are as grasping as any cliche. But most of them have worked out that it is cheaper not to have unions active on site, and the way to do that is to pay your staff well and treat them reasonably. So in a sense the unions can do a good job, by doing a terrible job.
Rio is probably the better of the two majors — they have a much better safety record. BHP is next. Woodside have shot their foot off with the donga rotation debacle. Xstrata have a peculiar talent for being rude to traditional owners.
It’s hard to stereotype — but all mining companies are capital intensive and face high risks. This tax will prevent a lot of mining exploration and development from going ahead, because now you can’t recoup your costs and have free cashflow to invest in the next project.
I think a lot of misunderstanding about businesses come because people don’t understand that profit, as it is meant by accountants and annual reports, does not always represent cash. If the Acme Mining Co. makes $X billion profit, that does not mean that their bank balance has increased by $X billion.
Rio in particular are already pinched on cashflow because of the huge loans they took to by Alcoa. But that doesn’t show up as clearly in the profit & loss statement because they measure the same activity in different ways.
It varies from company to company. Some mining companies are as grasping as any cliche. But most of them have worked out that it is cheaper not to have unions active on site, and the way to do that is to pay your staff well and treat them reasonably. So in a sense the unions can do a good job, by doing a terrible job.
Rio is probably the better of the two majors — they have a much better safety record. BHP is next. Woodside have shot their foot off with the donga rotation debacle. Xstrata have a peculiar talent for being rude to traditional owners.
It’s hard to stereotype — but all mining companies are capital intensive and face high risks. This tax will prevent a lot of mining exploration and development from going ahead, because now you can’t recoup your costs and have free cashflow to invest in the next project.
I think a lot of misunderstanding about businesses come because people don’t understand that profit, as it is meant by accountants and annual reports, does not always represent cash. If the Acme Mining Co. makes $X billion profit, that does not mean that their bank balance has increased by $X billion.
Rio in particular are already pinched on cashflow because of the huge loans they took to by Alcoa. But that doesn’t show up as clearly in the profit & loss statement because they measure the same activity in different ways.
s/by/buy/
s/by/buy/
From my reading it is going to be used to reduce the rate of companies tax by 2%. Hopefully I am wrong as the net result will be that a highly profitable industry is reduced greatly over the long term, in exchange for a slightly increased incentive for sole traders and partnerships to incorporate rather than pay personal tax. For larger companies the difference between 30% and 28% is negligible.
Wonderful result for a “review” of the tax system. Is this what we pay them for?
From my reading it is going to be used to reduce the rate of companies tax by 2%. Hopefully I am wrong as the net result will be that a highly profitable industry is reduced greatly over the long term, in exchange for a slightly increased incentive for sole traders and partnerships to incorporate rather than pay personal tax. For larger companies the difference between 30% and 28% is negligible.
Wonderful result for a “review” of the tax system. Is this what we pay them for?
On reflection the tax review should have looked at cashflow impacts of taxes as well as profit impact. I’m not very experienced in this area so I don’t have much to suggest.
One thing that would be a boon is faster payment of bills by the government. Something slightly better than ordinary business terms — 25 days say.
On reflection the tax review should have looked at cashflow impacts of taxes as well as profit impact. I’m not very experienced in this area so I don’t have much to suggest.
One thing that would be a boon is faster payment of bills by the government. Something slightly better than ordinary business terms — 25 days say.
“Ever been deep underground when the lights went out and the roar of the machinery suddenly, inexplicably, stopped?”
No, but unfortunately, you don’t get to decide how the english language evolves over time. Common usage is ever changing. This is just another example of that.
“Ever been deep underground when the lights went out and the roar of the machinery suddenly, inexplicably, stopped?”
No, but unfortunately, you don’t get to decide how the english language evolves over time. Common usage is ever changing. This is just another example of that.
@32 – Andrew, to be fair, the claim from the government is that this is an initial response (though some stuff is ruled out) and that the Review provides the basis for a further debate over the next few years.
@32 – Andrew, to be fair, the claim from the government is that this is an initial response (though some stuff is ruled out) and that the Review provides the basis for a further debate over the next few years.
@33 – Jacques, don’t quote me on this, but I thought they’d already shortened the turnaround for bills, I think as part of measures to assist small biz with cashflow during the GFC.
@33 – Jacques, don’t quote me on this, but I thought they’d already shortened the turnaround for bills, I think as part of measures to assist small biz with cashflow during the GFC.
Kim,
They have had it for four months and the guy that wrote it (and his whole team) have been available to the government for all of that period. It would also be a fair bet that they had copies of the drafts as they were written.
I am not sure if it is worse that they do or do not know what to do with all of this by now.
Sorry, Kim, but either way they look like they are waiting for a report on what the report said before they put it to a subcommittee to decide on whether it should go before a focus group to gauge the reaction before they leak it to selected reporters to “test the water” before it becomes a substantive policy proposal in a white paper preparatory to writing actual legislation and having these proposals wend their way through Parliament.
All that should take at least as long as the election after this one. Meanwhile they will be hammered in WA and Queensland – not that it really matters as the seats are in NSW and Victoria.
[/end dummy spit]
I was no great fan of Howard, but I maintain I was right to preference the Libs ahead of the ALP and I will be doing it again – even though I like Abbott even less than Howard.
Kim,
They have had it for four months and the guy that wrote it (and his whole team) have been available to the government for all of that period. It would also be a fair bet that they had copies of the drafts as they were written.
I am not sure if it is worse that they do or do not know what to do with all of this by now.
Sorry, Kim, but either way they look like they are waiting for a report on what the report said before they put it to a subcommittee to decide on whether it should go before a focus group to gauge the reaction before they leak it to selected reporters to “test the water” before it becomes a substantive policy proposal in a white paper preparatory to writing actual legislation and having these proposals wend their way through Parliament.
All that should take at least as long as the election after this one. Meanwhile they will be hammered in WA and Queensland – not that it really matters as the seats are in NSW and Victoria.
[/end dummy spit]
I was no great fan of Howard, but I maintain I was right to preference the Libs ahead of the ALP and I will be doing it again – even though I like Abbott even less than Howard.
@37 – Andrew, I think it’s the timing that’s the problem. They only belatedly woke up to the fact that it would come out in an election year. I think they had the idea that when Turnbull was Oppo Leader, he might have supported a lot of it, or at least debated it sensibly. Abbott’s unprincipled scare campaign tactics have to some degree dictated the response from the Government to Henry. But, then, maybe they were naive to think that things would ever result in a sensible debate.
@37 – Andrew, I think it’s the timing that’s the problem. They only belatedly woke up to the fact that it would come out in an election year. I think they had the idea that when Turnbull was Oppo Leader, he might have supported a lot of it, or at least debated it sensibly. Abbott’s unprincipled scare campaign tactics have to some degree dictated the response from the Government to Henry. But, then, maybe they were naive to think that things would ever result in a sensible debate.
Kim,
The GST didn’t either, did it – or, for that matter, Fightback!
That said, the two items that they have chosen to campaign on are probably the two most headline grabbing. Whose fault is that?
If they wanted a reasoned debate they could have chosen almost any of the other 138 recommendations, most of which (from my brief look) make some real sense. No – big new headline grabbing tax on those evil mining companies.
Kim,
The GST didn’t either, did it – or, for that matter, Fightback!
That said, the two items that they have chosen to campaign on are probably the two most headline grabbing. Whose fault is that?
If they wanted a reasoned debate they could have chosen almost any of the other 138 recommendations, most of which (from my brief look) make some real sense. No – big new headline grabbing tax on those evil mining companies.
I’m not seeking to defend them, Andrew, though I do like the idea of increasing super.
I’m not seeking to defend them, Andrew, though I do like the idea of increasing super.
Kim,
…which was one idea that Henry did not mention in the review. In fact I think he may have recommended against it.
The banks will like it, though.
Kim,
…which was one idea that Henry did not mention in the review. In fact I think he may have recommended against it.
The banks will like it, though.
And whathisname, the former NSW Opposition Leader.
Politically, at the moment, Andrew, it would be hard for a resources tax to go into general revenue, because Abbott et al have had some success with the “tax and spend, wasteful spending” meme.
And whathisname, the former NSW Opposition Leader.
Politically, at the moment, Andrew, it would be hard for a resources tax to go into general revenue, because Abbott et al have had some success with the “tax and spend, wasteful spending” meme.
“They only belatedly woke up to the fact that it would come out in an election year.”
Kim, you don’t really believe this do you? It was always known that it would come out in an election year. What they possibly didn’t predict is that their poll position wouldn’t look so good going into that election. But good governments that are effective in arguing their case can win elections by confronting scare campaigns. You turn the opposition’s lack of ideas to your advantage. FFS, Howard took the GST to the 1998 election and won. There were a lot of ideas in Henry that could have been taken on board and implemented that need not have had bad political ramifications. As it is, the review feeds into the perception that the government lacks courage and a plan for the future.
“They only belatedly woke up to the fact that it would come out in an election year.”
Kim, you don’t really believe this do you? It was always known that it would come out in an election year. What they possibly didn’t predict is that their poll position wouldn’t look so good going into that election. But good governments that are effective in arguing their case can win elections by confronting scare campaigns. You turn the opposition’s lack of ideas to your advantage. FFS, Howard took the GST to the 1998 election and won. There were a lot of ideas in Henry that could have been taken on board and implemented that need not have had bad political ramifications. As it is, the review feeds into the perception that the government lacks courage and a plan for the future.
Kim,
Perhaps with some justification. The insulation and BER programs, for example, do not seem to have been exactly paragons of responsible, controlled spending.
Kim,
Perhaps with some justification. The insulation and BER programs, for example, do not seem to have been exactly paragons of responsible, controlled spending.
LO @ #34
“No, but unfortunately, you don’t get to decide how the english language evolves over time. Common usage is ever changing. This is just another example of that”
No.
It is not.
Its not ‘common”.
Quite the opposite.
Its a specific group, “journos and biz types ” in Mark’s words, who are changing the meaning of a word by their propaganda and spin usage.
It is not compulsory to accept such you know and if you join in the derision of their usage then it becames just a little bit less acceptable and we can both, plus others, have a say in how words are used rather than just accepting the spin merchant’s version.
LO @ #34
“No, but unfortunately, you don’t get to decide how the english language evolves over time. Common usage is ever changing. This is just another example of that”
No.
It is not.
Its not ‘common”.
Quite the opposite.
Its a specific group, “journos and biz types ” in Mark’s words, who are changing the meaning of a word by their propaganda and spin usage.
It is not compulsory to accept such you know and if you join in the derision of their usage then it becames just a little bit less acceptable and we can both, plus others, have a say in how words are used rather than just accepting the spin merchant’s version.
It’s worked a treat though. I’ve already had arguements with some of my friends who are outraged that Rudd is “taxing the people who do the hardest most dangerous work in the country.”
A lefty mate of mine is fuming on Rudd attacking workers this way.
It’s worked a treat though. I’ve already had arguements with some of my friends who are outraged that Rudd is “taxing the people who do the hardest most dangerous work in the country.”
A lefty mate of mine is fuming on Rudd attacking workers this way.
@43 – yeah, sorry, LO, expressed myself badly. That’s what I meant. I’m fully in agreement that good governments can prevail over scare campaigns by arguing their case forcefully. Doesn’t appear to be Rudd’s approach, though.
@43 – yeah, sorry, LO, expressed myself badly. That’s what I meant. I’m fully in agreement that good governments can prevail over scare campaigns by arguing their case forcefully. Doesn’t appear to be Rudd’s approach, though.
Kim,
This could be for three possible reasons:
1. They are not arguing forcefully;
2. They do not have a good case; or
3. They are not a good government.
I think my preceding make my position clear on this.
Kim,
This could be for three possible reasons:
1. They are not arguing forcefully;
2. They do not have a good case; or
3. They are not a good government.
I think my preceding make my position clear on this.
According to this story, the resource royalty regimes of the states are already deeply enmired in historical compromises:
So any claims by Year Zero lefties or from neo-libs that the proposed changes represent some sort of fall from or return to a utopian state of nature seem to fly in the face of the results of generations of old-fashioned jawboning and pork-barrelling.
According to this story, the resource royalty regimes of the states are already deeply enmired in historical compromises:
So any claims by Year Zero lefties or from neo-libs that the proposed changes represent some sort of fall from or return to a utopian state of nature seem to fly in the face of the results of generations of old-fashioned jawboning and pork-barrelling.
Katz,
This one makes the position plain. WA is by far the biggest contributor per head of population, and the NT is the biggest receiver, also by far. The full details are here.
Katz,
This one makes the position plain. WA is by far the biggest contributor per head of population, and the NT is the biggest receiver, also by far. The full details are here.
#40 Kim, when you mention increasing super, are you referring to the benefit of having your own super contribution increased?
#40 Kim, when you mention increasing super, are you referring to the benefit of having your own super contribution increased?
I grew up in a “mining town” in the Pilbara and worked for a “mining company”. Dad worked in management, while I worked as a sparky. I can’t recall anyone referring to themselves as “miners”. Nor do I recall the media referring to the companies – Cliffs Robe River, Hammersley, Newman, etc – as “miners”. Individuals were referred to by what they did: drillers, riggers, sparkies, fitters, train drivers, etc. Companies were referred to as “the mining companies”. Away from the Pilbara you might get asked what you do “up there” (to non-Pilbara people it is a strange far off place), and reply “I’m a sparky at Robe.” But I also worked in Kalgoorlie where you “worked down the mines” with a lamp on your helmet. I think of people who work down a shaft as “miners”, not the open cut iron ore companies of the Pilbara. Suppose it’s because no one up there is actually a “miner” in the old fashioned shovel, pick and shaft days of canaries, Davey lamps, lung disease and Harold Larwood’s dad.
I grew up in a “mining town” in the Pilbara and worked for a “mining company”. Dad worked in management, while I worked as a sparky. I can’t recall anyone referring to themselves as “miners”. Nor do I recall the media referring to the companies – Cliffs Robe River, Hammersley, Newman, etc – as “miners”. Individuals were referred to by what they did: drillers, riggers, sparkies, fitters, train drivers, etc. Companies were referred to as “the mining companies”. Away from the Pilbara you might get asked what you do “up there” (to non-Pilbara people it is a strange far off place), and reply “I’m a sparky at Robe.” But I also worked in Kalgoorlie where you “worked down the mines” with a lamp on your helmet. I think of people who work down a shaft as “miners”, not the open cut iron ore companies of the Pilbara. Suppose it’s because no one up there is actually a “miner” in the old fashioned shovel, pick and shaft days of canaries, Davey lamps, lung disease and Harold Larwood’s dad.
@ 30
Jacques Chester – and others sharing this view – I am not so sure this notion of not being able to recoup your costs is completely correct. The resource rent tax (RRT) is applied to an individual project’s net profit after deducting an allowance for capital employed. It is not applied to what would ordinarily be viewed as a company’s net profit (from which income tax is calculated).
Where a non-renewable project does not result in the recovery of costs, it will not be subject to the RRT! A profitable project will still go ahead if it meets the company’s return requirements, having appropriately adjusted for the project’s after-tax cashflows. Moreover, accumulated losses on projects will be able to be carried forward and applied to other profitable projects – thereby lowering a project’s net profit and the impact of the RRT!
There’s a fair bit of misinformation flying around at the minute: the easy-to-understand version of the RRT being spouted by the brain-dead autocue readers is promoting this tax as slicing off 40 per cent of a business’ annual result. It’s just not the case. And I’ve just heard a bit on ABC NewsRadio spouting on about some Pilbara mining company having decided to pull the pin on exploration as a result of the “uncertainty due to the proposed tax”. This is bullshit. (The tax is not even legislation yet for fuck sake!) As you say, Jacques, mining is inherently risky and subject to many uncertainties that go way beyond just the tax regime.
Yes, prima facie higher tax will reduce the cashflows of a particular project. But we need to remind ourselves of the context within which the impost arises: an environment of continuing high commodity prices and buoyant terms of trade. If these fail to enventuate, then the “super profits” do not enventuate and the tax is moot!
@ 30
Jacques Chester – and others sharing this view – I am not so sure this notion of not being able to recoup your costs is completely correct. The resource rent tax (RRT) is applied to an individual project’s net profit after deducting an allowance for capital employed. It is not applied to what would ordinarily be viewed as a company’s net profit (from which income tax is calculated).
Where a non-renewable project does not result in the recovery of costs, it will not be subject to the RRT! A profitable project will still go ahead if it meets the company’s return requirements, having appropriately adjusted for the project’s after-tax cashflows. Moreover, accumulated losses on projects will be able to be carried forward and applied to other profitable projects – thereby lowering a project’s net profit and the impact of the RRT!
There’s a fair bit of misinformation flying around at the minute: the easy-to-understand version of the RRT being spouted by the brain-dead autocue readers is promoting this tax as slicing off 40 per cent of a business’ annual result. It’s just not the case. And I’ve just heard a bit on ABC NewsRadio spouting on about some Pilbara mining company having decided to pull the pin on exploration as a result of the “uncertainty due to the proposed tax”. This is bullshit. (The tax is not even legislation yet for fuck sake!) As you say, Jacques, mining is inherently risky and subject to many uncertainties that go way beyond just the tax regime.
Yes, prima facie higher tax will reduce the cashflows of a particular project. But we need to remind ourselves of the context within which the impost arises: an environment of continuing high commodity prices and buoyant terms of trade. If these fail to enventuate, then the “super profits” do not enventuate and the tax is moot!
And here’s a thought: If, for purely argument’s sake, the “Super Profits tax” did cause deferral of a substantial number of new mining projects or the abandonment of others, would this be _a_bad_thing right now?
Right now, we are again facing capacity constraints. Right now, we are attempting to use the blunt instrument of monetary policy to keep a lid on things. And Right now, at least some resource projects raise some very serious enviornmental questions. Clearly, the resources to be extracted are not going anywhere.
A few years from now miners can still dig them up and flog them off, perhaps in circumstances where the capacity constraints aren’t as strong and when the economy is more diversified. I don’t see the problem.
And here’s a thought: If, for purely argument’s sake, the “Super Profits tax” did cause deferral of a substantial number of new mining projects or the abandonment of others, would this be _a_bad_thing right now?
Right now, we are again facing capacity constraints. Right now, we are attempting to use the blunt instrument of monetary policy to keep a lid on things. And Right now, at least some resource projects raise some very serious enviornmental questions. Clearly, the resources to be extracted are not going anywhere.
A few years from now miners can still dig them up and flog them off, perhaps in circumstances where the capacity constraints aren’t as strong and when the economy is more diversified. I don’t see the problem.
Mark: “The business lobby’s response has been typically over the top and no doubt we’re going to hear the cute phrase about golden gooses from a bunch of geese over and over again.”
I don’t know whether to laugh or groan sometimes!
The mining geese aren’t in danger of anything more than loss of a few feathers.
An impressive lot of squawking, flapping of wings, and snapping of extended beaks though…
Mark: “The business lobby’s response has been typically over the top and no doubt we’re going to hear the cute phrase about golden gooses from a bunch of geese over and over again.”
I don’t know whether to laugh or groan sometimes!
The mining geese aren’t in danger of anything more than loss of a few feathers.
An impressive lot of squawking, flapping of wings, and snapping of extended beaks though…
Fran@54 – delayed gratification is ALWAYS a good thing, we’re told, on multiple levels, a mining hiatus surely included.
Fran@54 – delayed gratification is ALWAYS a good thing, we’re told, on multiple levels, a mining hiatus surely included.
Rob,
Assuming we actually want workers to be out there working (pace Fran) then they need to have resources to work on digging out of the ground.
If this RRT was a straight, revenue neutral replacement for royalties paid to the States then I, for one, would support it. It is better to tax mining firms out of profits rather than just on units of production.
The likelihood of this happening, though, is remote. Rudd’s populist rhetoric on this is simply silly. He has no chance of getting WA or Queensland (OTOH the ALP in Qld may roll over to him) to give up their royalties and, on the record with the GST, I cannot blame them. Both have been repeatedly stiffed by federal governments of both stripes for a long time.
This is obviously just another impost to fill a growing budget hole left by the profligate spending of the current government and it is likely (as I have said above) to be at the expense of future exploration and development.
More tax now, less jobs later. Wonderful.
Rob,
Assuming we actually want workers to be out there working (pace Fran) then they need to have resources to work on digging out of the ground.
If this RRT was a straight, revenue neutral replacement for royalties paid to the States then I, for one, would support it. It is better to tax mining firms out of profits rather than just on units of production.
The likelihood of this happening, though, is remote. Rudd’s populist rhetoric on this is simply silly. He has no chance of getting WA or Queensland (OTOH the ALP in Qld may roll over to him) to give up their royalties and, on the record with the GST, I cannot blame them. Both have been repeatedly stiffed by federal governments of both stripes for a long time.
This is obviously just another impost to fill a growing budget hole left by the profligate spending of the current government and it is likely (as I have said above) to be at the expense of future exploration and development.
More tax now, less jobs later. Wonderful.
Fran – yes and would give other industries a bit of breathing room if it relieves pressure on the dollar rising further. Probably the only resource that may fall in value in the future is coal and only if a world wide effective carbon trading scheme emerges.
Fran – yes and would give other industries a bit of breathing room if it relieves pressure on the dollar rising further. Probably the only resource that may fall in value in the future is coal and only if a world wide effective carbon trading scheme emerges.
My guess is that the provenance is Nicholas Gruen. He’s spruiked the basic idea at Troppo several times.
Politics is besides the point. All taxes are placed into Consolidated Revenue. The constitution essentially prevents the legal enforcement of hypothecation.
My guess is that the provenance is Nicholas Gruen. He’s spruiked the basic idea at Troppo several times.
Politics is besides the point. All taxes are placed into Consolidated Revenue. The constitution essentially prevents the legal enforcement of hypothecation.
Rob;
Well then there’s two problems.
The first is that the free cashflow generated once you’ve settled your capital investment isn’t just being turned into tophats and monocles. It’s being used to finance future projects.
My understanding is that the tax applies when a project’s profit, in an accounting sense, exceeds some fixed percentage over a Treasury bond, then you get slugged the extra amount. This effectively reduces the “Return on Investment”, or ROI, of a project.
Now your average large mining company has exploration continuing in many countries, and clients in many countries. They sell to the highest bidder and source from the cheapest mines. Each mine project has a ROI based on how much it cost to build and how much is made from selling resources sourced from that site.
The RRT reduces the ROI. Now Rio and BHP, among others, can get their raw resources from many different sites. So when time comes to decide on whether to expand iron ore production in WA or Brazil, where will they go? Copper from SA or Chile? Gold from Australia or Russia and South Africa? And so on and so forth. The RRT makes Australian mines less profitable.
The second problem is that if the super profits tax is based on a per-project scheme, it is even more like a royalty than the autocue version. This introduces constitutional complexities that regretfully I am not qualified to even begin to talk about (it having been a long time since I took Constitutional Law with Ken Parish).
Rob;
Well then there’s two problems.
The first is that the free cashflow generated once you’ve settled your capital investment isn’t just being turned into tophats and monocles. It’s being used to finance future projects.
My understanding is that the tax applies when a project’s profit, in an accounting sense, exceeds some fixed percentage over a Treasury bond, then you get slugged the extra amount. This effectively reduces the “Return on Investment”, or ROI, of a project.
Now your average large mining company has exploration continuing in many countries, and clients in many countries. They sell to the highest bidder and source from the cheapest mines. Each mine project has a ROI based on how much it cost to build and how much is made from selling resources sourced from that site.
The RRT reduces the ROI. Now Rio and BHP, among others, can get their raw resources from many different sites. So when time comes to decide on whether to expand iron ore production in WA or Brazil, where will they go? Copper from SA or Chile? Gold from Australia or Russia and South Africa? And so on and so forth. The RRT makes Australian mines less profitable.
The second problem is that if the super profits tax is based on a per-project scheme, it is even more like a royalty than the autocue version. This introduces constitutional complexities that regretfully I am not qualified to even begin to talk about (it having been a long time since I took Constitutional Law with Ken Parish).
Fran;
Right now we are living during the most stupendous economic period in history. Approximately one third of the world population — 2 and a half billion people — are sprinting out of agrarianism into modern, developed economies. They need minerals and they need them yesterday.
By not selling our minerals now, we drive up their price and hurt all consumers of minerals, but China and India in particular. Now I understand some people on this site like to think of justice in terms of groups of people. How just is it to delay the advancement of the Chinese peasant who wants a better life for her family?
Fran;
Right now we are living during the most stupendous economic period in history. Approximately one third of the world population — 2 and a half billion people — are sprinting out of agrarianism into modern, developed economies. They need minerals and they need them yesterday.
By not selling our minerals now, we drive up their price and hurt all consumers of minerals, but China and India in particular. Now I understand some people on this site like to think of justice in terms of groups of people. How just is it to delay the advancement of the Chinese peasant who wants a better life for her family?
@ 57
Andrew, to be honest, I don’t really get your point, save for you don’t like taxation … and predictably you slag-off the current government in your tailend remarks.
As I said above, the RRT is ONLY an impost when specific projects are considered profitable by mining companies. You seem to be focusing on possible double-counting as regards the State royalties. My understanding is that such payments to the States are considered capital, and as such will be deductible as part of the capital allowance when determining an individual project’s net profit to be subject to RRT.
Your “profligate” remarks are pretty cheap given the global environment over the last 3 years.
@ 57
Andrew, to be honest, I don’t really get your point, save for you don’t like taxation … and predictably you slag-off the current government in your tailend remarks.
As I said above, the RRT is ONLY an impost when specific projects are considered profitable by mining companies. You seem to be focusing on possible double-counting as regards the State royalties. My understanding is that such payments to the States are considered capital, and as such will be deductible as part of the capital allowance when determining an individual project’s net profit to be subject to RRT.
Your “profligate” remarks are pretty cheap given the global environment over the last 3 years.
@ 60
Jacques … I don’t doubt it: ROI goes down; after-tax cashflows reduced, etc. But that’s ceteris paribus. Do you really believe commodity prices will be static over the medium/long term? The arguments that the RRT will suddenly make mining unprofitable, and companies will reduce investment, threaten to take their bat and their balls elsewhere is pretty short-sighted. Especially when every economist, analyst and third-rate commentator continues to laud the industry: how great it’s been in driving the Asia-Pacific economy and how its propects are virtually unbreakable.
@ 60
Jacques … I don’t doubt it: ROI goes down; after-tax cashflows reduced, etc. But that’s ceteris paribus. Do you really believe commodity prices will be static over the medium/long term? The arguments that the RRT will suddenly make mining unprofitable, and companies will reduce investment, threaten to take their bat and their balls elsewhere is pretty short-sighted. Especially when every economist, analyst and third-rate commentator continues to laud the industry: how great it’s been in driving the Asia-Pacific economy and how its propects are virtually unbreakable.
Jacques @61: “Right now we are living during the most stupendous economic period in history.”
Not wanting to rain on your parade or anything, but I think people said the same thing about the Dot.com bubble too. Every time people start saying “this time is different…a new paradigm…” we seem to get a bubble of overinvestment.
If you read about the growing tensions in China, you might not be so inclined to predict a nice smooth “stupendous” trajectory?
Australia seems to be putting nearly all its eggs in one basket. It might not be wise to assume that this basket is infinately large and sustainable on all timescales.
Jacques @61: “Right now we are living during the most stupendous economic period in history.”
Not wanting to rain on your parade or anything, but I think people said the same thing about the Dot.com bubble too. Every time people start saying “this time is different…a new paradigm…” we seem to get a bubble of overinvestment.
If you read about the growing tensions in China, you might not be so inclined to predict a nice smooth “stupendous” trajectory?
Australia seems to be putting nearly all its eggs in one basket. It might not be wise to assume that this basket is infinately large and sustainable on all timescales.
Andrew Reynolds @20: “Longer term the effects will be simple – less exploration, less development, less employment and lower tax revenues.”
Must be what happened in Norway.
No wonder they are broke?
Andrew Reynolds @20: “Longer term the effects will be simple – less exploration, less development, less employment and lower tax revenues.”
Must be what happened in Norway.
No wonder they are broke?
Jacques Chester tried
Model the impact on the cost of minerals caused by the momentary deferral of some maginal mining projects in Australia and the likely end usage differential in the goods withing which they are embedded … Explain the extent to which ceteris paribus applies.
Then explain why this objection isn’t a try at winning by a tendentious slippery slope argument.
Sorry Jacques, you may have the initials, but it doesn’t get you a pass on leapos of faith in this place.
Jacques Chester tried
Model the impact on the cost of minerals caused by the momentary deferral of some maginal mining projects in Australia and the likely end usage differential in the goods withing which they are embedded … Explain the extent to which ceteris paribus applies.
Then explain why this objection isn’t a try at winning by a tendentious slippery slope argument.
Sorry Jacques, you may have the initials, but it doesn’t get you a pass on leapos of faith in this place.
Yes, Elise – the Norwegians used all of the money to cut taxes. That’s right, isn’t it?
BTW – oil is different to hard rock mining.
.
Rob,
I accept the need for taxation. I just would like it to be efficient and to try to get the required revenue in a way that least hurts those actually making the money. Adding an additional 40% tax (on top of the 30% they are already paying in normal corporate tax) would tend to dissuade others from even putting investment in in the first place.
That hurts us all in the long run as investment does not then flow to where it would be most useful.
Yes, Elise – the Norwegians used all of the money to cut taxes. That’s right, isn’t it?
BTW – oil is different to hard rock mining.
.
Rob,
I accept the need for taxation. I just would like it to be efficient and to try to get the required revenue in a way that least hurts those actually making the money. Adding an additional 40% tax (on top of the 30% they are already paying in normal corporate tax) would tend to dissuade others from even putting investment in in the first place.
That hurts us all in the long run as investment does not then flow to where it would be most useful.
Jacques @ 61: I believe that it is the business of the Chinese government to look after the interests of Chinese peasants, and of the Australian government to look after those of Australian peasants.
apart from that…
No-one seems to have linked to Stephen Mayne’s Crikey article on the extent to which the Mining Cos are foreign-owned. Said article, and the link from it, are informative, depressing, and provide yet more justification for this tax.
Jacques @ 61: I believe that it is the business of the Chinese government to look after the interests of Chinese peasants, and of the Australian government to look after those of Australian peasants.
apart from that…
No-one seems to have linked to Stephen Mayne’s Crikey article on the extent to which the Mining Cos are foreign-owned. Said article, and the link from it, are informative, depressing, and provide yet more justification for this tax.
Update: [by Kim] New post on the media coverage of the Resources Super Profits Tax.
Update: [by Kim] New post on the media coverage of the Resources Super Profits Tax.
So, Andyc, is “stiff them coz they is foreign” now an acceptable attitude here? Is it really OK to discriminate on the basis that because there are many foreigners investing in mining therefore the whole mining industry is fair game?
I thought that sort of attitude had been dealt with in the context of the Cronulla riots.
So, Andyc, is “stiff them coz they is foreign” now an acceptable attitude here? Is it really OK to discriminate on the basis that because there are many foreigners investing in mining therefore the whole mining industry is fair game?
I thought that sort of attitude had been dealt with in the context of the Cronulla riots.
Andrew@70, I am disconcerted by your conflation of:
1. Natural individuals and corporations.
2. Different sovereign governments.
3. Foreign and Australian citizens, of whatever ethnicity.
4. Violent conflict between individuals, and taxation of a corporation.
Andrew@70, I am disconcerted by your conflation of:
1. Natural individuals and corporations.
2. Different sovereign governments.
3. Foreign and Australian citizens, of whatever ethnicity.
4. Violent conflict between individuals, and taxation of a corporation.
Agreed. Why go for xenophobia when comparatively common leftist economic illiteracy is on offer?
BBB
Agreed. Why go for xenophobia when comparatively common leftist economic illiteracy is on offer?
BBB
@ 67
Andrew Reynolds, any RRT paid is to be an allowable deduction from the company’s income tax liability. Your claim that it is “on top of” their existing income tax is not totally accurate.
@ 67
Andrew Reynolds, any RRT paid is to be an allowable deduction from the company’s income tax liability. Your claim that it is “on top of” their existing income tax is not totally accurate.
Is one way to resolve this to not apply the tax to profits which can be shown to be reinvested either in exploration or capital development?
Is one way to resolve this to not apply the tax to profits which can be shown to be reinvested either in exploration or capital development?
@ 74
Chris, I’m not so sure that that is the point of the tax: to discriminate between companies that reinvest their profits (good) and those that pay it out in (offshore?) dividends (bad).
The aim of the tax is to recover a share of “pay dirt” more generally. The intention of management whether to reinvest earnings in the business or reward the shareholders is neither here nor there as far as the Henry recommendation is concerned.
@ 74
Chris, I’m not so sure that that is the point of the tax: to discriminate between companies that reinvest their profits (good) and those that pay it out in (offshore?) dividends (bad).
The aim of the tax is to recover a share of “pay dirt” more generally. The intention of management whether to reinvest earnings in the business or reward the shareholders is neither here nor there as far as the Henry recommendation is concerned.
Perhaps Rob, but thats how its being sold – that its money which goes to multinationals and we don’t benefit from it. If they are reinvesting the money back into future projects or to improve infrastructure then we do directly benefit through more jobs (more income tax) and the improved infrastructure (govt gets GST cut).
Perhaps Rob, but thats how its being sold – that its money which goes to multinationals and we don’t benefit from it. If they are reinvesting the money back into future projects or to improve infrastructure then we do directly benefit through more jobs (more income tax) and the improved infrastructure (govt gets GST cut).
Andyc,
Individuals invest in corporations. Ultimately, individuals benefit from their activities. You have clearly supported a view that it is OK to treat foreigners differently from Australians.
How is this, in any way that really matters, not xenophobic? Or should I say, with a slightly nasal voice “Please Explain?”
.
Rob,
So, this will not result in additional tax of mining corporations? What is the point of it then?
Andyc,
Individuals invest in corporations. Ultimately, individuals benefit from their activities. You have clearly supported a view that it is OK to treat foreigners differently from Australians.
How is this, in any way that really matters, not xenophobic? Or should I say, with a slightly nasal voice “Please Explain?”
.
Rob,
So, this will not result in additional tax of mining corporations? What is the point of it then?
The RRT is an attempt, either sensible or otherwise, to identify and to tax “super profits” whatever they may be.
The RRT is an attempt, either sensible or otherwise, to identify and to tax “super profits” whatever they may be.
BBB,
Xenophobia is much easier to prove and much uglier.
BBB,
Xenophobia is much easier to prove and much uglier.
Katz,
Yeah – 5% over the government bond rate. Using the rate that applies to a corporation with a strong, reliable cash flow (like, say, Woolies) earns and then trying to apply that to the highly speculative mining industry.
And people wonder why we shake our heads. This is very, very basic finance that Rudd and friends have got wrong.
Katz,
Yeah – 5% over the government bond rate. Using the rate that applies to a corporation with a strong, reliable cash flow (like, say, Woolies) earns and then trying to apply that to the highly speculative mining industry.
And people wonder why we shake our heads. This is very, very basic finance that Rudd and friends have got wrong.
@ 77
Andrew, no never said that or implied it; of course there is an additional tax! I said there is an income tax benefit associated with RRT payments.
And the profit subject to RRT is not 5 per cent over Govt bonds … where on earth did you get that from??
@ 77
Andrew, no never said that or implied it; of course there is an additional tax! I said there is an income tax benefit associated with RRT payments.
And the profit subject to RRT is not 5 per cent over Govt bonds … where on earth did you get that from??
Andrew Reynolds @67: “BTW – oil is different to hard rock mining.”
Yes Andrew. You don’t say. I have worked in both resource sectors.
We are not talking about unit operations here; we are talking about profits from national resources.
Andrew Reynolds @67: “BTW – oil is different to hard rock mining.”
Yes Andrew. You don’t say. I have worked in both resource sectors.
We are not talking about unit operations here; we are talking about profits from national resources.
Rob,
The 5% over the government bond rate is from the PM. Is he wrong on that?
.
Elise,
The financial risks that arise from their operations are very different. The capital load to drill a wildcat well is several orders of magnitude different to a hard rock operation. The pollution risks (as BP are currently showing) are also very different. I thought that, if you had worked in the sector, you would know that.
Rob,
The 5% over the government bond rate is from the PM. Is he wrong on that?
.
Elise,
The financial risks that arise from their operations are very different. The capital load to drill a wildcat well is several orders of magnitude different to a hard rock operation. The pollution risks (as BP are currently showing) are also very different. I thought that, if you had worked in the sector, you would know that.
Andrew Reynolds @ 77: “Andyc,Individuals invest in corporations. Ultimately, individuals benefit from their activities.”
The decisions made by managers of corporations are not made by all those shareholders, most of whom will be oblivious to the details involved in their payments appearing. The prioritisation of maximised profit and dividends may benefit shareholders, but in the case of resource exploitation it can also result in opportunity costs for the inhabitants of the country where the resources were found. The two groups of individuals may overlap, but they are not synonymous, and their interests may differ. If large, powerful companies are going to dig up irreplaceable Australian resources and ship them out of the country without giving Australians much opportunity to add value to those resources, then we, as a nation, are losing not just the resources but much of the wealth that could have been generated. Taxing the profits is partial compensation for that. Where said companies are based matters, in that the more their ownership and interests are overseas, the less accountable they are to us and the less vested interets they have in our well-being (“we” being the people of Australia,not the shareholders of the company).
“You have clearly supported a view that it is OK to treat foreigners differently from Australians”.
You may have noticed that Australian Law actually differentiates between citizens, permanent and temporary residents, and others. So do the laws of other countires. Do you find anything wrong about that?
“How is this, in any way that really matters, not xenophobic? Or should I say, with a slightly nasal voice “Please Explain?””
What is with this conflation of the individual and the corporate, and, for that matter, the ad hominem? I’ve been on the receiving end of real xenophobia myself, and it’s not funny. So can the crap, please.
In a world that is carved up into 200 sovereign states, the government of one such state prioritising its national interest over those of others is hardly “xenophobic”. Representing the nation against competing interests is exactly what we employ them to do. While I have no problem with any individual human being that arises specifically from their nationality or ethnicity, I do have problems with powerful and unaccountable corporate entities, that have no long-term vested interest in the well-being of Australia, short-changing us in exchange for the natural capital that they remove.
Andrew Reynolds @ 77: “Andyc,Individuals invest in corporations. Ultimately, individuals benefit from their activities.”
The decisions made by managers of corporations are not made by all those shareholders, most of whom will be oblivious to the details involved in their payments appearing. The prioritisation of maximised profit and dividends may benefit shareholders, but in the case of resource exploitation it can also result in opportunity costs for the inhabitants of the country where the resources were found. The two groups of individuals may overlap, but they are not synonymous, and their interests may differ. If large, powerful companies are going to dig up irreplaceable Australian resources and ship them out of the country without giving Australians much opportunity to add value to those resources, then we, as a nation, are losing not just the resources but much of the wealth that could have been generated. Taxing the profits is partial compensation for that. Where said companies are based matters, in that the more their ownership and interests are overseas, the less accountable they are to us and the less vested interets they have in our well-being (“we” being the people of Australia,not the shareholders of the company).
“You have clearly supported a view that it is OK to treat foreigners differently from Australians”.
You may have noticed that Australian Law actually differentiates between citizens, permanent and temporary residents, and others. So do the laws of other countires. Do you find anything wrong about that?
“How is this, in any way that really matters, not xenophobic? Or should I say, with a slightly nasal voice “Please Explain?””
What is with this conflation of the individual and the corporate, and, for that matter, the ad hominem? I’ve been on the receiving end of real xenophobia myself, and it’s not funny. So can the crap, please.
In a world that is carved up into 200 sovereign states, the government of one such state prioritising its national interest over those of others is hardly “xenophobic”. Representing the nation against competing interests is exactly what we employ them to do. While I have no problem with any individual human being that arises specifically from their nationality or ethnicity, I do have problems with powerful and unaccountable corporate entities, that have no long-term vested interest in the well-being of Australia, short-changing us in exchange for the natural capital that they remove.
So, Andyc, you then are entirely comfortable with the idea that foreigners, in undertaking entirely lawful activities in Australia should be treated differently to Australians simply on the basis that they are foreign? Is that the case?
So, Andyc, you then are entirely comfortable with the idea that foreigners, in undertaking entirely lawful activities in Australia should be treated differently to Australians simply on the basis that they are foreign? Is that the case?
@ 83
Andrew, I’ll take your word for it. However, the Review does not provide for 5 per cent – not least because any long-term government bond rate changes on a daily basis! And anyway, the bond rate is used to determine the allowance which is to be deducted from a project’s net income.
@ 57 you were slagging off Rudd – so why do you believe everything he might say? Dig into the detail … it won’t hurt. Also: I know they can be hipnotizing – especially the blonde ones – but don’t believe everything that the autocue readers say either.
@ 83
Andrew, I’ll take your word for it. However, the Review does not provide for 5 per cent – not least because any long-term government bond rate changes on a daily basis! And anyway, the bond rate is used to determine the allowance which is to be deducted from a project’s net income.
@ 57 you were slagging off Rudd – so why do you believe everything he might say? Dig into the detail … it won’t hurt. Also: I know they can be hipnotizing – especially the blonde ones – but don’t believe everything that the autocue readers say either.
Rob,
I “slag him off” for his manifest policy errors. If he also makes a mistake in understanding his own policy, then…
.
Andyc,
Perhaps there are grounds for me to retract. The policy you seem to agree with will probably help some foreigners.
Rob,
I “slag him off” for his manifest policy errors. If he also makes a mistake in understanding his own policy, then…
.
Andyc,
Perhaps there are grounds for me to retract. The policy you seem to agree with will probably help some foreigners.
Did anyone really expect anything other than squelling like stuck pigs from the mining corporations?
Did anyone really expect anything other than squelling like stuck pigs from the mining corporations?
Andrew Reynolds @83: “The financial risks that arise from their operations are very different. The capital load to drill a wildcat well is several orders of magnitude different to a hard rock operation. The pollution risks (as BP are currently showing) are also very different. I thought that, if you had worked in the sector, you would know that.”
Bullshit. Talk about risk and reward, not the one without the other.
An expensive wildcat well would be in the order of tens of millions. Chicken feed compared to the profits from operations. In a well-developed province like the North Sea and the Gulf of Mexico, the strike rate is very high (thus the exploration risk is low), due to well understood geology and geophysics. A decision to develop can be made on the basis of a few wells, depending on well testing and the formation characteristics.
Proving up a large mineral deposit needs a large exploration campaign, a lot of sampling and a much bigger feasibility study for a large-scale mining operation. Developing a large mine can cost billions. It will make plenty of billions in profits too.
As for relative pollution risks, I presume you don’t know about the mess made of the river systems in e.g PNG from tailings of a couple of the large mining operations there? Killed all the fish, and destroyed the agriculture. Luckily for the companies in question, PNG is a developing nation and doesn’t have the nouse and legal muscles to extract compensation for the damage. What about the disaster when the tailings dam collapsed in Spain and poured down the fertile river valley, killing everything in its wake and destroying the agricultural industry of that region? I saw it – a bloody big mess. Doesn’t count huh? Only oil spills count?
Anyway, this has absolutely nothing to do with a resources rent tax argument.
Andrew Reynolds @83: “The financial risks that arise from their operations are very different. The capital load to drill a wildcat well is several orders of magnitude different to a hard rock operation. The pollution risks (as BP are currently showing) are also very different. I thought that, if you had worked in the sector, you would know that.”
Bullshit. Talk about risk and reward, not the one without the other.
An expensive wildcat well would be in the order of tens of millions. Chicken feed compared to the profits from operations. In a well-developed province like the North Sea and the Gulf of Mexico, the strike rate is very high (thus the exploration risk is low), due to well understood geology and geophysics. A decision to develop can be made on the basis of a few wells, depending on well testing and the formation characteristics.
Proving up a large mineral deposit needs a large exploration campaign, a lot of sampling and a much bigger feasibility study for a large-scale mining operation. Developing a large mine can cost billions. It will make plenty of billions in profits too.
As for relative pollution risks, I presume you don’t know about the mess made of the river systems in e.g PNG from tailings of a couple of the large mining operations there? Killed all the fish, and destroyed the agriculture. Luckily for the companies in question, PNG is a developing nation and doesn’t have the nouse and legal muscles to extract compensation for the damage. What about the disaster when the tailings dam collapsed in Spain and poured down the fertile river valley, killing everything in its wake and destroying the agricultural industry of that region? I saw it – a bloody big mess. Doesn’t count huh? Only oil spills count?
Anyway, this has absolutely nothing to do with a resources rent tax argument.
Clearly andyc is not being xenophobic. Just adopting Rudd’s line that foreign investors and their investments are fair game. That odious suggestion ought to be well below an ALP PM but then we are within 12 months of an election…
And by God all this ‘we the people own the resources’ stuff is getting so old. The reality is that dirt is worthless until someone risks the many billions of dollars required to dig it out and ship it off. And no-one is (I don’t think) suggesting an extra tax for ‘super’ profits achieved by farmers who use up ‘the people’s topsoil’. Will there be calls in the (no doubt distant) future for a similar impost on highly profitable solar energy companies who use up ‘the people’s sunshine’?
That said, the idea of taxing resources heavily to prevent or at least offset Dutch Disease is a compelling one and in that context the reduction in the overall company tax rate is a good policy.
BBB
Clearly andyc is not being xenophobic. Just adopting Rudd’s line that foreign investors and their investments are fair game. That odious suggestion ought to be well below an ALP PM but then we are within 12 months of an election…
And by God all this ‘we the people own the resources’ stuff is getting so old. The reality is that dirt is worthless until someone risks the many billions of dollars required to dig it out and ship it off. And no-one is (I don’t think) suggesting an extra tax for ‘super’ profits achieved by farmers who use up ‘the people’s topsoil’. Will there be calls in the (no doubt distant) future for a similar impost on highly profitable solar energy companies who use up ‘the people’s sunshine’?
That said, the idea of taxing resources heavily to prevent or at least offset Dutch Disease is a compelling one and in that context the reduction in the overall company tax rate is a good policy.
BBB
BBB, it’s about one-off resources.
No one is depleting the sun by standing in it.
BBB, it’s about one-off resources.
No one is depleting the sun by standing in it.
Don’t forget coal-fired power plants, which consume The People’s O2. Anyone with a swimming pool, who is a thief of The People’s Rainwater. And so on.
OK, this is actually a poor analogy; insofar as solar radiation is effectively unlimited and rainwater and oxygen are replenished through natural cycles.
However, as has been explained at LP in different contexts, there are more resources in the crust of the earth than can plausibly be used by the human race into the forseeable future. Right now it is uneconomic to extract most of it, so we focus on concentrated ore bodies.
When the price of minerals rises, more difficult ore bodies become attractive. Unless, of course, you tax the hell out of the profits.
If we were at war I might see a reason to put up with this sort of ‘soak the rich’ rubbish. But we’re not. It’s a flat out tax grab.
Don’t forget coal-fired power plants, which consume The People’s O2. Anyone with a swimming pool, who is a thief of The People’s Rainwater. And so on.
OK, this is actually a poor analogy; insofar as solar radiation is effectively unlimited and rainwater and oxygen are replenished through natural cycles.
However, as has been explained at LP in different contexts, there are more resources in the crust of the earth than can plausibly be used by the human race into the forseeable future. Right now it is uneconomic to extract most of it, so we focus on concentrated ore bodies.
When the price of minerals rises, more difficult ore bodies become attractive. Unless, of course, you tax the hell out of the profits.
If we were at war I might see a reason to put up with this sort of ‘soak the rich’ rubbish. But we’re not. It’s a flat out tax grab.
Michael,
Fair point. I concede there is a difference between, say, iron ore and sunshine. But no-one is depleting mineral deposits as things of value. To the contrary, they are in fact creating resources by applying labour and capital to otherwise worthless dirt.
BBB
Michael,
Fair point. I concede there is a difference between, say, iron ore and sunshine. But no-one is depleting mineral deposits as things of value. To the contrary, they are in fact creating resources by applying labour and capital to otherwise worthless dirt.
BBB
Clive Palmer used to work for Joh so he would know as well as I do that Joh would have demanded that Clive build the railroad to his proposed mine and then hand it to the government so that Qld would get some benefit from the coal that was being mined.
Wayne’s Swan’s problem is that he is a softie.
The government should also be making demands for secondary processing so that we get more jobs per tonne mined.
Clive Palmer used to work for Joh so he would know as well as I do that Joh would have demanded that Clive build the railroad to his proposed mine and then hand it to the government so that Qld would get some benefit from the coal that was being mined.
Wayne’s Swan’s problem is that he is a softie.
The government should also be making demands for secondary processing so that we get more jobs per tonne mined.
BBB,
Sure, but once they are extracted, they can’t be mined again.
BBB,
Sure, but once they are extracted, they can’t be mined again.
Michael,
Tell that to the people that are re-processing the old waste dumps around Kalgoorlie and extracting more gold from them. Jacques’ point on the extent of the resources is perfectly correct. Many, if not most, resources are effectively limited only by the technology we use to extract or recycle them.
Putting a super tax on their extraction retards the exploration process, as I said above, but also retards the development of new technology.
Again – wonderful result.
.
Elise,
So – if I give a generic example of a problem and do not encompass all other problems within the same genre I am guilty of understating a problem? What do you expect – a PhD thesis in a blog comment?
Sheesh.
In any case, you are hardly showing why they are the same risks.
Michael,
Tell that to the people that are re-processing the old waste dumps around Kalgoorlie and extracting more gold from them. Jacques’ point on the extent of the resources is perfectly correct. Many, if not most, resources are effectively limited only by the technology we use to extract or recycle them.
Putting a super tax on their extraction retards the exploration process, as I said above, but also retards the development of new technology.
Again – wonderful result.
.
Elise,
So – if I give a generic example of a problem and do not encompass all other problems within the same genre I am guilty of understating a problem? What do you expect – a PhD thesis in a blog comment?
Sheesh.
In any case, you are hardly showing why they are the same risks.