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May 6, 2010

Then and Now – self interested backflips on resource taxes.

Following on from this mornings effort of Th

Possum Comitatus — Editor of Pollytics

Possum Comitatus

Editor of Pollytics

Following on from this mornings effort of The Oz being played like a violin by the resources companies, an exercise in why most of the bitching and moaning you’ll hear about the resource tax is a lobbying exercise to cut the best deal.

Clive Palmer:

Then – February 22nd 2010

Support for Mr Henry has also come from some surprising quarters, including the Queensland mining magnate Clive Palmer. He dismissed other miners’ threats to leave Australia for lower tax regimes such as Brazil, saying they were ”whingers”.

”They can go offshore, but the minerals are onshore,” he said.

”I don’t think it’s unfair that members of the community contribute … to society as best we can.”

Now:

“You’ve got this 40 per cent plus your 30 per cent corporate tax – 70 per cent tax – and it’s going to limit what people do in the future,” he told reporters on the Gold Coast.

Mr Palmer, who said he was speaking as an Australian, not a mining developer or political affiliate, said he would consider taking projects such as coal developments offshore to places such as Indonesia where he would be taxed at only 20 per cent.

“When I was taxed at 30 per cent I might have done it in Queensland, but now I’m going to be taxed at 70 per cent I’ll go ahead and do it in Indonesia.

“So the Treasurer is just a fool; that money he thinks he’s getting, he’s not going to get more money – he’s going to get less money.

“The Treasurer has lost the plot, but I don’t think it’ll happen”.

Minerals Council of Australia:
HT to an excellent article from Peter Martin:

Then: MCA Submission to the Henry Tax Review:

There is a strong argument to reform the basis of determining royalty payments to a profits based criteria from a revenue one. Royalties define the revenue sharing arrangements in the joint venture between the State and the company in the conversion of natural capital to societal capital. Thus a profits based system with an appropriate rate and base better takes account of the sharing of the risk in the joint venture arrangement. Royalties are a charge on cost of doing business, hence could be struck on a capacity to pay basis as a share of profits, thereby taking account of all of the matters affecting the profitability of the business.

Now:

The Federal Government’s plan to introduce a 40 per cent national mining tax can only be described as a revenue grab not taxation reform. It is an unprecedented double-tax that will hit the industry’s workforce, the millions of Australians with shares in superannuation or minerals companies and the thousands of small businesses that service the industry.

What’s changed since then and now?

The fact that a move to a resource taxation regime based on profit has evolved from simple theory to likely practice – meaning it’s now all about lobbying for the best deal.

What’s the most effective way to lobby?

Applying pressure to the government by getting the weight of public opinion to take your side.

What’s the best way to move public opinion?

Scaring the bejesus out of the population by using compliant media outlets like The Australian.

Get used to it, there will be much more to come – all of it a nest of hypocrisy mind you, but that’s what this business is all about.

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16 comments

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16 thoughts on “Then and Now – self interested backflips on resource taxes.

  1. David Richards

    Barking – I’m with you on the 100% tax for over 1M.

    Maybe we need a salary cap to be applied to the maximum salary payable to an individual, with safeguards against Storm-like book fiddling.

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  3. Barking

    Its just this attitude that they invented capitalism, they invented the market, they invented free trade, they have no historical knowledge, they steal and they call it business, they are a disgraceful group and personally I’d go a few steps further and bring in public floggings.
    And why oh why don’t the ALP bring in a 100% tax on income over 1M. They seem to be able to tax 65% of the population with no trouble.

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  5. John Passant

    Surelysimon@3, the threat is to invest offshore. I’m with Barking. Rather than nationalise them in effect to 40% (which means by the way we fund every failed mining project to 40%) why not nationalise them 100%. As I point out on my blog arguing for this, under workers’ control, nt Rudd’s, Henry actually raises this as a theoretical option.

    I think possum may be right. The real battle is not over the 40% rate or the tax itself but what the 40% is applied to. At the moment profits above the long term bond rate (ie above 6% return on capital) are super profits under the RSPT. Under the currently existing petroleum resource rent tax the figure is the long term bond rate plus 5%. So I think Rudd will adjust that 6% figure to somewhere towards $11%.

    This tax will raise $9 billion. But my understanding is it will wipe out the burden of $7 billion of state royalty taxes. And the government will spend close to $1 billion of the proceeds on infrastructure for the miners. And the RSPT will benefit start up exploration and new mines.

  6. gtpfb13

    If Clive Palmer on Lateline was the best the miners can do, they will get nil support from the public.

    I can’t remember seeing such a ridiculously self serving performance. It was basically an ad for the Liberals and an attack on the government. Whenever he was pinned down to provide details, he couldn’t. He really sounded like he was making up most of it on the spot.

    Well worth reading the transcript. Or even better, watch the interview. And was it just me or does he sound rather porcine when he breathes.

    Adds a whole new slant to “snouts in the trough”.

  7. skink

    ABC World Today has former MCA chief David Buckingham saying that the response by the mining industry is ‘hysterical’, ‘apoplectic’ and ‘self-serving’ and that the super tax is in the national interest and will lead to an escalation in exploration and new jobs.

    http://www.abc.net.au/worldtoday/content/2010/s2893238.htm

    and I just heard Andrew Forrest saying that the supertax will result in fewer jobs for aboriginal workers, which is a nice angle.

  8. Barking

    Palmer was whingeing saying its 40% nationalisation. I vote for 100% nationalisation of the resources sector. Just what is it that allows those appalling group of individuals to think that they are creating wealth, that they are entitled to billions of Dollars of priviledge. I found myself laughing in a slightly bizzare tone listening to the ridiculous comments of the pie eater last night. Somewhere between a squeal and a painful moan.

  9. rosa

    Jillian, if you’ve got your money in the share market there are a lot of people stealing it before the government takes its cut.

    The so-called “tax revolt” of the mining companies on TV last night was hilarious. The 10 “big gun” mining chiefs were a bunch of 50-year-old fat white guys in expensive suits whining about the injustices of life. You could almost hear the limos idling outside. Rudds on a winner. Keep going Kev.

  10. David Richards

    Isn’t the vehement opposition by the mining companies a tacit admission that they have been robbing Australia blind for decades?

    Just like they do to some tin-pot African country where they dig the stuff up for next to nothing, making billions, while the bulk of said tin-pot country’s populace lives in squalor and deprivation?

  11. Jillian Blackall

    What about the share prices of the resource companies? A lot of shareholders lost money after the announcement of this tax. Will the prices go back up to where they were? Seems unlikely.

  12. Possum Comitatus

    Thanks skink, I’ve updated the “How Rio Tinto played The Australian for fools” with this latest funny ditty!

    http://blogs.crikey.com.au/pollytics/2010/05/06/how-rio-tinto-played-the-australian-for-fools/

  13. skink

    I like that even after Rio denying that they were ‘shelving’ any projects the Oz has reinforced its story with “Rio Tinto reaffirms reviewing iron ore projects”

    the article includes a dictionary definition of ‘to shelve’, just in case you misunderestimated them

  14. surlysimon

    The Miners keep talking of going off shore, what are they going to do mine Western Australia’s iron ore with a long shovel? If they go fine, there will be someone else to dig up our resources, and if no one comes along maybe the Government can do it and we will all benifit from a 100% resource tax.

  15. thewetmale

    Nice work on your last three posts Poss. I’m especially impressed by Peter’s get on the Minerals Council. It’s one thing for Clive Palmer to be exposed as a partisan goose, another thing for Minerals Mitch Hooke to be caught with his pants down.

  16. Barking

    “Mr Palmer, who said he was speaking as an Australian, not a mining developer or political affiliate,”
    Ha Ha HA Ha Ha HA HAAAAAAAAAAAAAAAAAAAAAAAA
    Ha Ha HA .
    That is one of the great lines. Gold, in future I suggest that we all preface our comments with, ” Now in the past people have considered that I’m a barking mad Greens member, however, as an Australian, it is clear to me that the mining industry should be taxed even more, the fat cat directors should be taxed at 100% after the first 1M and any company that doesn’t want to work in Australia and pay the taxes of the land have one choice. Piss Off.” Now as a Green I say that I disagree with everything I said as an Australian. WTF is going on.