$10.6 billion profit leaves plenty to go round

Matt says:

07:24am | 17/02/11

But jb all sectors aren’t the same - you can farm the same land over and over (within reason), a health company can run a nursing home forever, a bank can keep borrowing/lending money, but resources are finite, and once shipped overseas are lost forever.  That is why an industry-specific tax to adequately compensate Australians for signing away their finite resources is completely reasonable.

Damo says:

07:40am | 17/02/11

I think Australians feel that if a company is making Billions from our Natural Resources, we want a share of it.
At least these chipmunks are trying to get some money off them, unlike Mr Abbott and co.

Ian Campbell says:

07:43am | 17/02/11

“..hoarding the acorns..” they don’t look past how to get re-elected. As a result the only future plans Governments make are just hot air.

Steve says:

08:24am | 17/02/11

But Matt, isn’t that what the state royalties are payment for? Because the same ore can’t be mined twice.

The RSPT and the MRRT attempt to bring the royalities into the federal system, so the federal ALP can tap any growth in that money for its own purposes, not leave it just for the states.

Adam Diver says:

08:41am | 17/02/11

@ Matt - There is such a thing already, its called royalties. Its an extra tax on a non-renewable resource, if it is being set to low than that is another issue.

Tim says:

08:58am | 17/02/11

Yes all finite, non renewable, resource based industries should be treated the same and that is exactly what the Super Profits Tax was going to do.
People who didn’t have a clue about the Tax were the main reason it was squashed. Egg on their faces today.

Gregg says:

09:54am | 17/02/11

@ Matt
And your thinking is as about as bright as that of the Union Hack Maher for it is not just Australia here and now but how many new operations will be commenced or existing ones started if the taxation rate of resource companies here in Australia disadvantages them compared to what can occur in other countries.

There are billions upon billions of Australian and Internation funds invested in resource development and those investors, including our own superannuation funds will be looking for a return on $$$ invested.
If there is no financial benefit to developing resources in Australia, what do you reckon will happen?
It will not be developed and than who is the biggest loser?

Dissident says:

11:04am | 17/02/11

Matt, there is no reasonable argument whatsoever for an additional profits based tax on the mining industry. Today I will counter every point you raise until about 4:00pm WST. Anybody else who wants to join the fun can do so as well.

For those of you that want to claim bias (rather than argue the merits of the case…) I have no involvement in the resources industry whatsoever. If I have mining shares, they are in my super and I didn’t pick them.

To start with… (and we will probably come back to this a couple times)

The MRRT or RSPT or whatever you want to call it is fundamentally unfair. Nobody likes tax, but we all pay it because we appreciate that the rules (by and large) are the same for everybody. If you want to tax super profit, you should put the tax on EVERYBODY’S super profits, not just the sections of the economy that are doing well at the moment.

The way the industry is currently taxed is exactly the way it should be.

1) The mining companies pay a fixed percentage of their profits (30%) in company tax. Just like everybody else.
2) The mining companies pay for the resources they dig up with royalties.

Everything is fair. Tax is paid on the profit by the company tax rate and they pay for the resources directly with royalties. Royalties is hardly even a tax in the classic sense of the term, it is more a cost of goods sold. Like JB’s has to buy the DVD’s that you, in turn, buy from them. The DVD’s are a cost of goods sold.

If you are worried that we aren’t getting value for money for the sale of the resources - write a letter to Normal Moore MLA (the relevant Minister in WA) or his other State counterparts and tell them to put up the price on the royalties.

By the way, Matt, it is funny that you mention the health industry. Take a look at Pharmaceutical company profits if you want to see a real gouge. Life - like resources - is finite. Maybe a Pharmaceutical Super Profit Tax is called for?

Tim says:

11:41am | 17/02/11

Dissident,
Why would a Resource Rent Tax be fundamentally unfair?
The State’s own the resources, surely it’s far more efficient to tax windfall profits that resource sector companies earn as a direct result of resource price volatility and differences in extraction costs. It’s far better than state royalties in extracting fair revenue for resources the states own.
The exact % and cut in rate should be what we are arguing, not the implementation of a Rent tax. The tax as set out in the Henry review should be implemented.

Dissident says:

12:08pm | 17/02/11

G’day Tim

The MRRT and the RSPT are taxes on profit in excess of the tax that everybody else pays on their profit. A super profit tax in and of itself is not unfair, it is only unfair if it is only applied to a single industry. A super profit tax on everybody would be fair - but only if it doesn’t elect a nominal amount (say $100mil) that you have to reach before you qualify. Setting a minimum $$$ on what qualifies as a super profit means that you eliminate industries that a relatively small scale but make super profits. Anyone making a better return on capital than (say 50%) would be required to pay a super profits tax under a fair scheme, though perhaps it is not desirable to slug a small corner store or manufacturer with a super profit tax.

My rambling aside, selecting one industry to pay a higher tax burden is fundamentally discriminatory.

Also, resources should be paid for irrespective of whether the company makes a profit or not. A mining company could make a loss - not pay any tax - and the resources would still be gone. Then the State gets no payment despite the fact that the resources are gone.

Getting rid of the Royalties in their present state also acts as an impediment to proper commercial decision making. For instance, you could have a foreign national company with vertical integration (ie, they are the end users of the resources that they dig up) who contrives to ‘sell’ the resources for low cost. That effectively puts all the profit in the other section of the company (so they are moving the profit, not making any less of it) and they will not need to pay the super profits tax. In the meantime, the resources are gone, but they didn’t pay any tax for them.

The simplest and most effective way to have the State recompensed for the loss of finite resources is to pay for them directly.

Further, the differences in extraction costs are the mining companies profits. If the state ends up reimbursing the inefficient operators by only charging them tax on the profits (rather than the lost resources) you actually end up disincentivising process improvements. Companies with a competitive advantage in extraction both deserve and should make a bigger profit.

Tubesteak says:

12:19pm | 17/02/11

Dissident
The mining sector asked for the profits based tax in the Henry Tax Review. They wanted it instead of the sketchy State system. It is meant to kick in at a certain percentage above the bond rate.

The point of it is to tax an input that wasn’t initially paid for. Only the extraction process was paid for but not the raw materials. All manufacturing businesses pay for their raw materials, so should mining.

It’s not about taxing super profits, that’s just the unfortunate (and quite frankly, idiotic, name applied to it by Rudd and Swan at the time no doubt to garner support for it)

Dissident says:

01:16pm | 17/02/11

Tubesteak, just because the mining companies wanted it, doesn’t make it fair. I don’t know who would want any extra tax burden (unless they see a long term benefit with the profit based tax increasing slower than the royalties would have?) but am happy enough to take your statement at face value.

I agree with your statement that all businesses should pay for their raw materials, and that is what the Royalties are.

If you dig up, say 1mil tonnes of ore, you should be charged $1mil multiplied by the tonnage rate.

Maybe I have missed the point of your post? I don’t understand what you mean when you say “The point of it is to tax an input that wasn’t initially paid for.” What is the input you are referring to?

My understanding is that Royalties are charged based on the tonnage dug up, not a flat fee for the right to extract resources.

Tim says:

02:34pm | 17/02/11

Dissident,
the mining sector is not the same as other industries. The States own the resources and they can only be dug up once.
Your attempt to deflect the issue to other industries is a red herring and you know it.
Rent taxes for non-renewable resources that the State owns is the most efficient way of getting a fair reture for our minerals. Allowing windfall gains to be wholly taken by the mining companies makes no sense.
No company is going to deliberately make a loss to avoid this cost and we have a foreign investments board to ensure that foreign national companies can’t do what you suggest. Manipulation of global resource markets to a specific country’s advantage would be very hard if not impossible to achieve.

Muttley says:

03:23pm | 17/02/11

Gregg, no one has a problem with a profit being made. but the “responsibility to the shareholder” excuse only washes so far. Reduced investment?? Are you serious?? So a company makes 5 billion instead of 10 billion. Yeah, they’ll turn their nose up at that. They grown used to massive profits instead of just taking a profit.

Tubesteak says:

04:11pm | 17/02/11

Dissident
You are mistaken on the application of the tax. It only becomes relevant when the price of raw materials means that profits are earned above a certain amount. It doesn’t just kick in at any rate. This is sort of how royalties are priced now. But the royalties are state based and all over the place. That is what the mining companies what cleaned up and the Cth taking over.

The extra tax burden (to take your POV) is meant to compensate the fact that the mining companies never paid for the input, being what they have “manufactured” (to borrow a term from another industry) in the extraction process in order to sell it. They paid for extraction (ie all the equipment and related services) but not the input (being the resources they use). While mining companies will pay for the rights these rights are based on tonnage. Hence the RSPT or MRRT is meant to overcome a sketchy state based system.

Essentially, mining companies get a free kick because they never had to manufacture or purchase the resources themselves. Therefore, we attach royalties to the rights to mine. Now we are merely handing that over to the Cth to administer because the States are useless (they are an irrelevant leftover from colonial days)

Dissident says:

04:26pm | 17/02/11

Tim, I disagree with you. Though I do like that you think you know what I know (since I apparently knew that other industries are a red herring). Except that evidently you don’t know.

I have included other industries in the debate with good reason. Other industries are not a red herring at all. Fairness requires that everybody be treated the same. This is why my original post said that the MRRT and the RSPT are unfair.

Other industries is absolutely not a red herring. A less charitable person might suggest that you have said it is a red herring because you don’t want to debate the point.

I notice that you said the reason the mining industry is different is because it is digging up a finite resource. That is a fair call - they are indeed a different industry - but it is not justification for treating mining any differently to any other industry. They should pay a cost per tonne of the product that they dig up the same way as anyone else pays their supplier.

To simplify the matter, consider mining like a regular retail company. A company that sells novelty toys has to acquire them from a supplier and pay them for it. If they make a nice profit on the resale of the products, well done to them - that is why they are in business. If they make a loss, too bad, but the supplier still got paid.

Mining companies sell resources that they acquire from their ‘supplier,’ being the State governments who Constitutionally are entitled to the benefits of the minerals. (that is a whole other argument against the tax there as well!) The royalties are the money they pay for their stock. If the mining company makes a loss (a lot of them do in their first years of operation) then at least the State has still been paid for the resource that was extracted.

Though it runs counter to my free-market philosophical bent, I do agree that it is a bit galling to have mineral companies making windfall gains. That is why the State government needs to stay on its game and keep pushing up the price of the royalties. Maybe they can set up a formula to decide what the price should be based on the market price of the resources. Perhaps they already do. I am not privy to the intracacies of royalty pricing.

And though it isn’t key to this debate, I think you will find that international price manipulation is not as difficult as you think. Take a look at the diamond industry. That particular industry keeps artificial constraints on the supply side (ie. warehousing enough diamonds to make your eyes pop out) to keep the price high.

Or consider OPEC - they routinely manipulate the price of petroleum products. Maybe that is a solution too. The International Organisation of Iron Ore Exporting Countries could be set up to co-ordinate royalties pricing internationally.

Finally, correct me if I am wrong, but aren’t precious metals excluded from the new MRRT? Gold and platinum are a damn sight more finite than iron ore - shouldn’t they be included too?

Dissident says:

07:40pm | 17/02/11

Sorry Tubesteak, I missed your response beforehand.

As far as the payment of the MRRT, I understand that the price of the minerals they are digging up is irrelevant in the tax calculation. Naturally, the higher the price, the higher you would expect the companies profit to be (everything else remaining constant) but the tax kicks in when the percentage profit goes a predetermined amount above the deemed risk free rate (ie. the Government bond rate).

As discussed elsewhere, the problem this creates is that inefficiency is rewarded with lower tax. If two companies dig up the same amount of ore, but company A makes a 20% profit and company B makes a 10% profit as a result of an inferior mining process (or a worse minesite). Company A would have to pay the super profit tax, and company B would not. This is patently unsuitable for purpose, because both companies have dug up the same amount of minerals but only company A has to pay for them.

I don’t agree with your logic about the cost of inputs. Under the current Royalty scheme, if they pull 1,000 tonnes of ore from the ground, they pay royalties for 1,000 tonnes worth. That is what the royalties are. The royalties is the cost of goods sold.

Correct me if i’m wrong, but is your point that nobody manufactured the ore in the first place and therefore nobody was taxed on the manufacture? The counterpoint to that is that the product chain has to start somewhere, and you shouldn’t tax the guy who commences the chain twice because there wasn’t a manufacturer to tax before him. Though I could have missed your point altogether…

Finally, the States aren’t useless. I am a big proponent of States rights and the reason they seem inefficient is because the Federal Government has progressively been taking their taxing capacity away. States used to levy personal income tax until it was federalised to help the War effort during WW2. They never got the money back. If you hobble somebody first, you can’t expect them to run effectively afterwards. I think that if we were to send the power back to the States (as our founding fathers wanted it at Federation), then we would see much better government outcomes all across Australia.

Pete says:

12:33am | 18/02/11

I am utterly tired of people referring to the MRRT as a ‘tax’. It’s a PRICE people: the price of an input owned by the supplier: the Australian people. As such, we (the govt.) have the right to increase it, just as the miners have the right to reject that price and go elsewhere for their suppliers. That’s capitalism. It’s disgusting that the price of the raw materials were lowered by the government to keep some very rich mining companies happy via an emotive and dishonest campaign by these same companies.
ps. Note to government: start referring to the resource rent tax as the price of raw materials and you might get somewhere with it.

Bloggs says:

08:33am | 18/02/11

Agree with jb.  For BHP to continue to grow and employ thousands of Australians they must invest mega millions in new projects and in new research and exploration. Their new infrastructure also costs mega amounts and if these two ALP peanuts take an unfair share of the profits then they limit the investment and do mor eharm than good.

Tim says:

08:44am | 18/02/11

I apologise Dissident,
I didn’t think anyone would be stupid enough to use the “every industry should be treated equally” argument unless they were trying to be misleading.
If we take your argument as correct, why should mining companies pay royalties? I mean no other industry has to pay the government royalties right?
Oh wait, that’s because the mining industry is different and the States actually own the product that the mining companies are digging up and selling. The whole idea of a Resource Rent Tax is to get a better, fairer and more efficient price for minerals owned by the States.
Your retail example is not the same because the the miners haven’t bought the minerals they have bought the rights to dig them up and sell them for us. The States are the owners.
A better example would be a retail store obtaining the rights to sell that novelty item for the maker/owner of the item. Say, at first the retail store gives the owner $10 per item and onsells for $20.
However, suddenly these novelty items become extremely popular and the retailer can now sell them for $40. Surely the owner would be a little bit annoyed at only receiving $10 for his product when the retailer is making a killing.
Wouldn’t a system where the owner gets a % of the profits made by the retailer be a much fairer system? It also allows the retailer more flexibility in his operations because he knows during the bad times he won’t have to pay as much and smooths out his business.

JoelB says:

05:49am | 17/02/11

Not hard to negotiate when you give them whatever they want.

Joan says:

07:02am | 17/02/11

The same Gillard now leads the cheer squad for AWU leader Paul Howes who is promising to take Australian mining back to last century with English style mining strikes against Rio Tinto.  Swan… member of AWU 29 years and backstabber Gillard whose rise to leadership is courtesy of Howes sing praise of Howes in unison .... Gillard and Swan are pathetic Howes lapdogs.  Gillard, Swan and Howes will lead Australia and mining industry to ruin….. with their red Hammer and Sickle style.

TChong says:

07:40am | 17/02/11

The Red Hammer and sickle.? You say ? Sign me up.
Hey, wait a minute, Joan!  you’ re just teasing , again.

Wayne says:

07:51am | 17/02/11

Abbott has been the one crying foul stating that he would never consider a mining tax, looks like he was suckered in as well.

Rosie says:

10:10am | 17/02/11

Joan you beat me to it. Well said but can I add a descriptive word for the disreputable Paul Howes - “thug”

Another historic deal by Gillard that has come back to bite her on that butt of hers.

Gregg says:

10:28am | 17/02/11

And you know exactly when the shot was take do you Mike and what question he may have been asked do you?
Nothing like in context is there!
Another Union hack like Maher I imagine.

Muttley says:

03:25pm | 17/02/11

another liberal lackey supporting their fat mates eh Gregg?

Tubesteak says:

07:49am | 17/02/11

That’s kind of the point.

Spend it on building train stations, train lines, roads, hospitals, schools etc

No point leaving money in the bank while our infrastructure rots.

Not a Liberal Nut says:

09:19am | 17/02/11

Exactly Tubesteak, something Liberal voters dont seem to get. What is the point of having billions in surplus when schools and infrastructure are left to rot (like it was for the 11 years Howard was in power).

John Jones says:

09:57am | 17/02/11

Tubesteak and not a liberal nut, read the article, the idea of the tax is to have a pool of money available when the minerals run out not to spend now. Labor reminds me of the story of the grasshopper and the ant- labor being the grasshopper - spend, spend, spend, rack up billions of debt, have no clear idea of how to save for a rainy day and end up with nothing, except the ability to raise taxes, when times get hard. Infrastructure maintenance and expansion is supposed to be funded out of existing revenue not extra taxes that are placed to save for the future when the resources run out.

Tubesteak says:

11:56am | 17/02/11

The problem with having a pool was the tax base was eroded by Howard’s tax cuts and middle class welfare.

Instead of giving people baby bonuses and $6 per week tax cuts why couldn’t he spend it on infrastructure. Oops, forgot. That’s the States responsibility under the Constitution. Even though the Fed collects most of the taxes.

Dash says:

01:04pm | 17/02/11

@ Not a Liberal Nut,, Ah 100% of the GST went to the states. State Hospitals, State transport and State education!!!! Tell me what the ALP did in Victoria, NSW, SA, NT, Tassie and Qld with all of that revenue.

The fact they got booted in Vic, and look set to get destroyed in NSW, may answer the question for you! The ALP are crap!

The Howard government built the Darwin to Adelaide rail link. The ALP can’t even build one from Parrammatta to Epping! Talk to me about infrustructure again.

The Howard government also spent $96billion repaying ALP debt and restoring our AAA credit rating.

Wake up to yourself!

@Tubespeak - Bullshit! The Howard government balanced the budget fool! The tax base needs to be expanded by increasing the GST to 12.5%, and removing the exemptions. The Howard government, after paying off the ALPs debt and balancing the budget, gave something back to the people who had been paying all the taxes. Compare that to this rable who are wasting our taxes and putting their hand back into the pockets of the biggest taxpayers! They never give anything back to the people! The five consecutive years of tax cuts came from the LNP. I’m still waiting for Keatings L.A.W ones!

Tim says:

03:11pm | 17/02/11

Dash,
please explain to me how middle class welfare is
“giving back to the people who had been paying all the taxes”
It was vote buying plain and simple.

Dash says:

04:44pm | 17/02/11

@ Tim, the point is that the Howard government was able to balance the books and still provide money back to the taxpayer.

I’d much prefer to see families given taxes back for raising children than to see the money handed to ALP backed builders with their noses in the taxpayer trough under the school halls rorts. Or to see it pissed away putting right the joke of an insulation fiasco. Or wasted on not delivering fuelwatch or not delivering grocery choice! Or pissed away on 2020 summit talk fests or increased consultancy costs for stacked ALP committees!

I’d also prefer to see the government give back to the tax paying middle class than to buy votes with hollow promises and lies of cheaper groceries, cheaper fuel, 260 childcare centres, coastguards etc etc! this government lied it’s way into office at two elections and spent 11billion in taxpayer funded bribes to independents. That’s what you support!

When this ALP government manages to balance the budget, stop wasting our taxes and pays back it’s own debt, you may have a leg to stand on!

Tubesteak says:

07:47am | 17/02/11

Actually, the mining industry only represents about 7% of GDP and they culled a lot of their workforce during the GFC. So they don’t really add that much.

Plus, that well-paid workforce is grossly overpaid. Truck drivers on 6 figures means it pushes up wages in other areas because all truck drivers want the same amount or they’ll go and work in the mines.

Same with all other tradies. We’ll soon see the gouging by them in the reconstruction of Queensland and Victoria. Why go and build a family home in Qld and be paid $60k when you can go and work in a mine for 3 times that.

Moreover, miners don’t create anything. They use resources sitting in the ground to sell at whatever price they can. Those resources don’t come back. They’re creating Dutch Disease in our economy and fuelling interest rate rises which don’t truly reflect the level of economic growth and inflation in our economy.

It would be much better to take some of that money as a reasonable cost of using our resources and build roads, hospitals, train stations and train lines with them so that EVERYONE in our economy can benefit now AND in the future.

If this means reducing their profits or putting a cap on their growth then so be it. That helps us in the short term and long term.

Grumpy says:

07:49am | 17/02/11

Australian spending kept Australia out of recession. Not mining profits that go overseas.

Grumpy says:

08:00am | 17/02/11

You could also argue the finance sector kept Australia out of recession, which is far more likely given they help to control Australian spending through the finance they provide. Losing mining jobs is an empty threat. Why would any company with the ability and flexibility of accounting pull up operations and sack people when in reality their profit would have been about 2-4 billion less with a 40% tax for profits ONLY over a certain amount. In perspective that isn’t much. Profit is profit, smart businesses find a way. The fact remains that mining companies are ripping off Australians, NOT helping them bar a select few who work in the industry and hold shares with the companies (most of which are other mining firms and overseas residents), but when the company you work for is increasing profits by 74% in one year, how much of that goes to increased wages?...im betting none.

AFR says:

08:10am | 17/02/11

“The mining industry has kept Australia out of recession”

Really? During the GFC, the mining sector laid off workers at an alarming rate. I would almost argue that the mining sector almost dragged us INTO recession.

christian says:

08:33am | 17/02/11

Jade - those projects were not scrapped, it was the mining companies trying to bluff people like you into believing them.  All mining projects will continue to go ahead ,sooner or later, tax or no tax, because demand is outstripping supply.  The fact is, the government should never have backed down to the propaganda spreading mining companies.  And as far as “biting the hand that feeds you gets you nowhere” - that is the whole point, we weren’t and aren’t biting hard enough, that was what the tax is for.

Jade says:

09:34am | 17/02/11

As I said, my partner works in the Mining industry and they were all concerned as to how the company would go when and if the tax was brought in.

Working in mines isn’t easy work, they people that do it earn their money even if they are just driving trucks..

Why not instead of picking on one sector pick at them all… lets make it so that no companies in Australia strive for profits! That will keep everyone happy right?

David C says:

10:24am | 17/02/11

Tubesteak we take our share of the profits for infrastructure etc in the form of company taxation, We also charge royalties on the resources.
All this argument is about BHP et al making “too much”. Its the typical political point, so if any industry starts making “too much” do we tax them as well?
If you rent out your house and the cost of living goes up, house values go up etc you are more than entitled to charge more rent. If you sell that house and 2 years later the value of that house has doubled you cant go back and ask for more money.
Charge more royalties/ resouirce tax by all means to reflect the increase in value etc but a super tax? thats just too much like socialism for mine

Gregg says:

11:14am | 17/02/11

@Tubey
I suppose you may have caught some of that Dutch disease if your double dutch is amything to go by.
Whatever %of what the mining industry is, resources sector income to governments and to employees who go on to spend would have contributed to not going into recession just as the govrnment and subsequently some people splurging would have.
Regardless of what people in mining or other industries are paid, it is more often than not a supply and demand situation that will determine wages and activities and if resources are not mined here in Australia because of over taxation compared to the international scene they will be getting mined first elsewhere.
When the difficulty/cost of getting them elsewhere matches that in Australia, they may return.
As for miners creating nothing, have a think about all the products and services that everybody about the globe uses day in day out and where do you reckon the material comes from?
From mines to smelters to metal producers and onto manufacturers and products shipped internationally in ships that also started out from being in the ground.
Along the way, the mines are also using many products and services as well as creating employment for many and revenue for even union superannuation funds.
The former government had created a futures fund and a surplus and if you had wanted that spent on infrastructure and services, it is the current government that wasted so much money that needs its performance reviewed.
And you excel in double speak when you claim reducing their profits or a cap on their growth will help us short term and long term.
I suppose you would like a communist government in power to resume everything in the country to have it state owned and we can see how well that has worked in communist countries either adopting capitalism or left on the junk heap.

And then with Bush Greg you state ” anf flog it off at the prevailing market price for a profit “
So the only way for reducing their profits would be more taxation and taxing an industry out of existence.
We are part of a planet if you had not realised.

LauraBoBaura says:

11:49am | 17/02/11

TubeSteak - I would like to raise the point that mining actually creates quite a bit, entire communities benefit from a mine opening there.
What do you think there would be in places like Kalgoorlie/Port Hedland/Bendigo/Ballarat /Broken Hill if there wasn’t mines? Bugger all.

I personally grew up in a mining town, I saw the place boom from 100 permanent residents to 300 permanent residents, locals profited, not just companies.

A mine in Broken HIll where my partner works, employes over 450 people, all locals, all buy their groceries from the local stores, their kids attend the local schools etc. I think you can see my point. Broken Hill isn’t exactly a cultural hub, if the mine wasn’t there, the local economy would hurt.

Mining gives skills to young people who want to work & the big wages that they earn are well deserved. Not many people would be willing to spend weeks away from their family, work public holidays, Christmas & 12 hour days without feeling like they should be compensated for it.

Tubesteak says:

12:11pm | 17/02/11

DavidC
The idea of the mining tax was that resources that are earning above a base rate will be taxed. Not an excessive tax on all mining profits. This is what mining companies requested as part of the Henry Tax Review.

It’s not about “too much” (although I admit this is the simplistic language of many commentators).

Mining companies do not make the raw materials. The raw materials are sitting in the ground and all they do is dig it up. They don’t add any value in the production process and they send it overseas so other companies can turn it into something and sell it back to us. Not really doing us any favours.

Gregg
There is a far more important macroeconomic situation to acknowledge. If the mining sector is driving up wages throughout the economy by creating a supply/demand situation then that hurts all other sectors. It would be best to put the brakes on the mining sector a bit and use that money earned to build something in our economy (eg infrastructure).

The RSPT while inappropriately named won’t be driving mining companies out of Australia. It’s not like they’ll just go to some tinpot African country instead of the stable well-skilled nation that is Australia. Even if they do (it won’t but this is very hypothetical) then once they mine all those resources the price of resources will be so high that we’ll make an even bigger profit out of it from the taxes we collect.

As I said to DavidC, miners don’t create the raw materials. They were sitting in the ground. I think you misunderstood.

An no, I didn’t want a future fund hoarding money while leaving infrastructure, schools and hospitals to rot. I want them improved.

Tim says:

12:55pm | 17/02/11

LauraBoBaura,
You actually argue for why there should be a mining tax.
You say:
“If the mine wasn’t there, then the local economy would hurt.
What happens to the small town when the mine closes because the mine is exhausted not enough has been spent on other infrastructure in the town?
The town will die and the mining company will be long gone.
We should be using this money to provide infrastructure for these towns and wealth for our nation.

LauraBoBaura says:

02:11pm | 17/02/11

@Tim - I was never arguing against the mining tax, I was only trying to point out that mines aren’t just big evil faceless corporations that rape & pillage & then bugger off when they’re done. They do good for communities. They teach local people skills that they can take elsewhere & earn good money from. .

I don’t know about Broken Hill to tell you the truth. But I do know that where I lived, the mine spent a LOT of money on the community, tarring roads, building a school hall. paying for excursions, planting trees etc.

But yes, when the mine goes, the town goes back to what it was before, it doesn’t die, people just go back to what they did before, or they leave.

I don’t know if you are from regional Australia but creating infastructure in these places would only create jobs short term whilst the infastructure is being built, if there is no constant industry, there are no jobs.
There is no point in putting in a railway or another school, or a hospital for a town with only 100 people.

Steve Putnam says:

07:23pm | 17/02/11

You’re a real sucker aren’t you? Do you really believe that mining companies would walk away from potential profits like these just announced because they may have to pay a bit more tax? At present they are paying tax at less than half the base rate of personal income tax while the government has to go cap in hand and beg for money to rebuild the country after the greatest peacetime disaster this country has ever experienced.
The budget papers for 08/09 show that mining contributed a mere 0.2% to GDP growth while stimulus spending contributed 3.1%, so please enough of the mining saved Australia crap.
As for the jobs argument,  mining is only a small piece of the pie compared other sectors of the economy such as tourism & hospitality, building, transport, retail and education. I’m glad your bloke likes his job and good luck to him but there are many many more people to consider than just those employed in mining.

Tubesteak says:

07:55am | 17/02/11

Miners don’t create anything. They dig stuff up out of the ground anf flog it off at the prevailing market price for a profit.

These resources are finite.

As for super funds, yes, great if they are making money. But there’s no point having a super fund make money if schools are crumbling, you can’t access decent medical service because there aren’t enough hospital beds and doctors, the roads are hopeless and the only train station near you is 25 minutes away by car on said hopeless road and you have to wait 30 minutes for a train because there isn’t enough services.

There’s a difference between wealth and rich. We’d be better off making our nation wealthy and getting a better standard of living.

Grumpy says:

08:06am | 17/02/11

Im all for taxing all companies at 40% who make excess billions of dollars profit.. Their employees get taxed at 40-50%, so why not the company who still has the ability to distort figures in their accounting. I dont know why people stick up for these firms. The benefits they provide for Australia is overstated hugely.

Tim says:

09:04am | 17/02/11

The majority of shares in these mining companies are owned by overseas investors so the majority of these profits goes overseas. The mum and dad superannuation argument is a red herring.
There are vast differences between mining and other industries.
Why should one company digging up resources (that we own) that are easily extracted, be taxed the same as another company digging up resources that are much more difficult to extract? The idea of a Resource Rent tax as proposed in the Henry review is the only way to go. Unfortunately too many ignorant Australians are willing to be fed horseshit by billionaires against their own country’s best interests.

Gazman says:

09:54am | 17/02/11

@Tim. You obviously have no idea. It is not easy to extract resources from the ground. if it was everyone would be doing it. It take expertise and millions to billions of dollars of investment.

You people all sound like communists. go live in china you red pigs!!!

Chewy says:

10:02am | 17/02/11

@ Tim
“The majority of shares in these mining companies are owned by overseas investors so the majority of these profits goes overseas”
How? BHP pays 30% company tax pure and simple. They also pay royalties on all the resources they extract. 
Who said the majority of mining companys are owned by foreign investors?Today Tonight? ACA? The Socialist Alliance?  I keep seeing it getting parrotted around. Clearly Gina Rinehart and Twiggy Forrest are Australians. The fact is any Australian who wants to own these stocks can call their broker and buy them. They are also free to buy foreign stocks and probably already have holdings in their superfund along with these mining companies.

Tim says:

10:04am | 17/02/11

Gazman,
I meant easier than other resources.
This is the basis of a Resource Rent Tax.
Do you even know what that is?
And ohh look you called me a Communist. Funny.

Chewy says:

10:12am | 17/02/11

@Gazman you can tell from all the posts who has never been in business and taken risks. Who as never invested and taken risks.
Any business is taking a risk, more often than not they stuggle or fail. Those who succeed should not have Union leaders who have Never taken a risk in their life and those that lack capacity to understand try and tear them down.
Blogs like this make me worry deeply about the financial literacy of Australians and their union leaders.

Tim says:

10:43am | 17/02/11

Um Chewy,
just the two biggest.
BHP is 40% foreign owned
Rio is 70% foreign owned.

I’d think anyone who knows anything about business and this issue would know that.
Minus Alan Jones listeners and Today Tonight/ACA viewers of course.

Chewy says:

11:47am | 17/02/11

Tim unless your source is the share register I would take it with a grain of salt. The media have a poor habit of parroting misinformation.
Perhaps you are talking about the UK listed shares? Yes its true both companies are listed in the UK and there is also ADRs traded in New York but the ADRs are a tiny fraction of the overall stock. The UK shares are the result of mergers, increased foreign shareholders is completely neutralized by the increase in foreign assetts. But the UK listing doesnt mean the Australian listed RIO Tinto is 70% foreign owned its just its a smaller component of much larger company.
Plenty of AMPs, Queensland investment corps, Argos, Australian foundation, UBS wealth management Australia in RIOs top 20 shareholdings.  They dont sound too foreign to me.
As I stated in the thread below it doesnt matter who owns the shares all australians benifit from the 30% company tax and royalties.

Tim says:

02:48pm | 17/02/11

Chewy,
here’s a speech from the global head of strategy of Rio Tinto:
http://www.riotinto.com/documents/Doug_Ritchie_CEDA_7May09_handout.pdf
In it he says:
said “The major mining companies – BHPB, Rio Tinto, Anglo, Xstrata – are now majority foreign owned, and that ownership has allowed Australia access to the global capital it needs to develop its resources. The stock of foreign investment in Australia at 31 December 2007 totalled $1.6 trillion. And mining companies, most of which are foreign owned or controlled, produced 8 per cent of our national GDP in 2008.”

I think i’ll take his word for it.

And this from Former PM KRudd.

http://www.theage.com.au/business/rudd-riles-bhp-as-new-tax-hits-shares-20100503-u3un.html

“Mr Rudd said BHP Billiton was 40 per cent foreign owned and Rio Tinto more than 70 per cent, which meant ‘‘these massively increased profits … built on Australian resources are mostly in fact going overseas’‘.”

The exact amounts may change but there is no doubt that overall the mining companies are majority foreighn owned.

I know we all benefit from company tax and royalties, but the royalty system is severly flawed.
Why should these companies be able to take windfall gains, giving none of them of them back to the owner of the resource?

VVS says:

09:25am | 17/02/11

The question is whether they can make these profits mining somewhere else.

No good taxing the mining companies to the point where they take all future operations elsewhere, therefore sacrificing future employment.

Sure tax them some more if possible, just not to the point where countires like Canada become more attractive to them. Cause we know they have no loyalty to Australia, they will go where they can make the most coin.

So ultimately it is a balancing act.

Grumpy says:

09:32am | 17/02/11

What about non Australian companies that are mining here too?

Sir Ronald Bradnam says:

11:23am | 17/02/11

Non Australian companies have to pay tax on earnings so no issue there. More to the point is how much a government thinks they are entitled to why do they think that it is OK to dip into anyones pocket and wallet whenever they feel the need, Rent resources tax, flood levy, disaster levy.
How much as a maximum percentage of GDP is enough for a government to run a country and how much as a maximum percentage of income tax should a taxpayer pay. Ask any politician and they will spin around it because to them the only maximum they have is how much is enough to take and redistribute to get themselves re-elected.

undertow says:

08:38am | 17/02/11

You could argue that a nation’s natural resources are a form of capital. A capital that is being risked not for the profit of the investor but for the profit of all the other investors.

If we are not, as a nation, shareholders in our own sovereign capital, then we are not much of a nation.

john says:

09:00am | 17/02/11

@Practical, what your forgetting is the majority of mining shareholders are foreigners.
The average Australian can’t afford ~$45-50 a share, the average Australians might have the capacity to own cheap telstra or similar.

Majority of Australians face economic eviction from becoming blue chip holders.

Chewy says:

09:44am | 17/02/11

John @ 9.00 am
My farther used to tell me better to keep your mouth shut and be thought a fool than to open it an proven a fool.
“The majorty of mining shares are owned by foreigners” REALLY? Did you see that on Today tonight or ACA? Tell that to Gina Rinehart or Twiggy Forrest.
Any Australian who has a minimum of $500 to invest can buy any company traded on the asx they can buy 10 BHPs or 250 Telstras.
The price of a share is only be relevant to the underlying earnings per share. The market capitilisation is the sum value of total shares company. Did you know Cochlear @ $80 a share is worth less than Telstra @ $3 ? Its true because Telstras market capitilisation is 36 Billion (total sum of all shares) and Cochlears market capitilisation is 4 Billion.
Schools out John now drop the ordinary Aussies are losing out to foreign investor violin and go invest!

Tim says:

10:08am | 17/02/11

Chewy,
BHP is 40% overseas owned.
Rio is 70% overseas owned.
The majority of shares in mining companies are owned by overseas investors.

Chewy says:

10:41am | 17/02/11

Well Tim I tried to check their register without sucess but if thats the case go buy some back mate. Nobody is stopping you or any other Australians from buying the stock. To be quite frank it doesnt even matter who owns the shares(sorry Pauline) as long as the company pays local coporate tax 30% and royalties. All Australians still benifit.
Actualy Tim you too are free to invest in foreign companys yourself if you wish to actually take a ri$k hopefully you will be rewarded appropriately if successfull sans hindrance from union leaders and green eyed monsters.

Tim says:

11:45am | 17/02/11

Don’t worry Chewy,
I have plenty of mining stocks in my share portfolio and no doubt in my superannuation account.
That doesn’t actually counter the main premise of a Resource Rent tax.
It’s far more efficient in extracting fair value for state owned minerals.

john says:

02:13pm | 17/02/11

@Chewy, What rubbish,“The price of a share is only be relevant to the underlying earnings per share.” , I certainly hope your not a financial adviser, and glad that your not mine.

The real fool has truly been exposed.

Furthermore you said “Any Australian who has a minimum of $500 to invest can buy any company traded on the asx they can buy 10 BHPs or 250 Telstras.”  And do what with such a pathetic investment proposal?

Any amount considered as a ‘reasonable’ investment, as I stated before is beyond most Australians.

Chewy says:

05:03pm | 17/02/11

Sorry John I know for a fact I am correct.
You think telstra is cheap and bhp is expensive because you dont understand BHP could have a stock split (google that) of 50 for 1 and the value or price of the company would be the same shareholders would just have more shares but Earnings per shares would be 50 x less. I am sorry you are financial illiterate as you post indicates. Go read stock market for dummys and come back and tell us what a PE ratio is.

Taxman says:

10:30am | 18/02/11

I am sure that some of you are unaware of the tax/franking arrangements for dividends that are paid to foreign shareholders.

Otherwise, you’d realise that dividends paid overseas are ‘taxed’ at a lower rate courtesy of our International treaties (withholding tax), and that it is a credit against foreign tax paid on that dividend. In other words, even the tax goes offshore.

Michael N says:

10:54am | 17/02/11

Very well said Super D. You are 100% correct.

Mr Maher - how much money do Unions generate for the Australian Economy?

Red says:

08:34am | 17/02/11

Ever heard of Ravensthorpe Nickel Dave?

Nigel says:

10:04am | 17/02/11

or the briquette plant at Port Headland?

Steve Putnam says:

07:40pm | 17/02/11

‘Australia look(s) like a banana republic’ alright because it is foregoing billions in tax revenue to appease multi-national corporations as it is doing with the mining giants. In fact that is the defining characteristic of banana republics far and wide. Have a look at the real world please.

Grumpy says:

08:20am | 17/02/11

Exactly. If a company is a legal entity, we shouldnt discriminate who gets taxed at 30% and who gets taxed at 40% or 50%. Why should the burden of taxed be placed solely on the employee’s. Mining workers would be taxed at atleast 40% in the majority. The minerals they dig out of the ground, they do not own. Its all of ours, not these firms.

Syl says:

08:50am | 17/02/11

“We need to make the big boys accountable”

Accountable for what?  Running a successful business?

Adam Diver says:

09:50am | 17/02/11

Funny that you all argue that we should increase the tax burdon of companies to the same as individuals.

Why do you not argue that our taxes should be reduced to the same level as company tax?

Tom says:

10:29am | 17/02/11

deb, ever wondered how “America the great” became “America the great”? Are you sure America is broke, deb?

@grumpy, if “its ours”, go and dig it up then comrade. Grab that shovel. You have inspired me.

TimB says:

07:50am | 17/02/11

Sorry which “supporters of the Opposition” are complaining that we don’t have money from a mining tax to spend?

I’ve seen nothing of the sort.

David C says:

02:39pm | 17/02/11

er yeh ... the tax wasnt implemented ... der?

Tom says:

04:36pm | 17/02/11

You blinkered idealog. If your lot hadn’t wasted the tax on their granstanding spendathon, it would not be necessary to look for another target to steal from.

Garry says:

08:00am | 17/02/11

The point is this was the Governments baby, not the Coalitions. And Gillard and crew made a big fanfare, with media shows and congratulations Julia everywhere in the MSM. Julia the negotiator, Julia the hero!
Well as you can see she didn’t negotiate her baby very well at all. She just gave them what ever they wanted.  Kevin must be in hysterics.

simon says:

08:25am | 17/02/11

Rob, I was one of those righties howling down the mining tax. I can assure I am not snivelling now beacuse we missed the revenue. You are just making up rubbish, in fact the opposite, the money is BHPB and their shareholders, do you get that mate, It is not the governments, what don’t you understand? BHPB are a private company and this is not a communist country that rips profits off private companies. Good on BHPB, they are the worlds fifth largest company and should be making huge profits, if they didn’t they would go bust. They are only getting around 4% return on assets, that is not a super profit. Money hungry, greedy people like you make me sick!!!

Ryan says:

08:35am | 17/02/11

But Rob, it was Julia that did the deal with them was it not?

Dash says:

10:54am | 17/02/11

Ah Rob, what revenue loss?.

More profit means BHP are paying more tax! When will socialist lefties bring themselves into this century and stop believing that we should penalise hardworking successful people and corporates and reward the wealth destroyers in our society.

This is the tall poppy syndrome gone mad. The union movement is way out of touch. This whole idea of “he’s doing well, making lots of money therefore we should increase his tax rate” is just crazy! Particularly when you consider increased profits mean you pay increased taxes and increased dividends to mum and dad investors and self funded retired people.

Where is the incentive for people to work hard and be successful in this country? The flood levy taxes those that already pay the most in tax. The profits tax does the same. It’s socialism gone mad and it seems to be driven by the ALPs union masters.

Think of this scenario. If BHP make a huge loss next year, will you be happy for them to carry a tax benefit forward greater than 30% of the loss? Or do the goal posts suddenly move in that situation?

Why do the ALP and the unions want to complicate the tax system further? Why do they want to take away people’s incentive to work hard and be successful? It’s holding us back and penalising the people who already contribute the most in tax to our society.

I’m sick of the union movement. They add absolutely no value and treat us all like clones.

Either we support a free, open market economy or some North Korean style socialist state.

Does anyone else here think the union movement is becoming less and less relevant and basically a waste of space?

Mahhrat says:

11:41am | 17/02/11

@Simon: Let me put this into Supply101 then.  The Australian People (Pty Ltd) own a large “stock” of non-replaceable resources.

We “sell” the stock to companies (in the form of taxes), who are happy to pay said amounts because they have the nouse to on-sell that stock at a profit.

If my “stock” can generate that amount of profit, and if my “stock” is not readily available anywhere else, then surely I am quite within my rights to charge more for said “stock”? 

The mechanisms by which we charge for our stock can be debated, sure, but the fact remains that we appear to be selling our resources for a lot less than they’re actually worth.

jf says:

12:09pm | 17/02/11

Jolly good Rob. A compelling argument old chum.

Macon Paine says:

09:52am | 17/02/11

“While the inner socialist in me, despises the size of the profits and the system that requires an entity to grow exponentially I have a few concerns with your piece.”
Interesting comments Adam. Why exactly do you decry the size of the profits? This is a very large company operating in a mostly free market system, one would expect them to make very large profits. And further to that what would be an (arbitrarily) acceptable profit in the eyes of a socialist? 

“Speaking of which. You attack the company (doing what it is legally required to do) and somehow fail to mention the incompetance of a government unable to implement the tax. If its so bad, won’t cost jobs or investment, won’t involve double taxation with refunds, accounts for future increases in resource tax then why the hell didn’t the government implement it.”
Actually this is a good point. You highlight the economic incompetance of a left leaning government.

Adam Diver says:

11:14am | 17/02/11

@ Macon - Speaking purely philosophically I find it hard to comprehend 10 billion profit, whilst people are starving in the world.

The inner socialist in me is just that, a socialist with no comprehension of reality. There profit is actually quite small (much like the banks) as a percentage of there assets, and all the money goes into investment or shareholders anyway so the realist in me sees no issues at all.

If the government wants a piece of that pie, it is free to buy shares in the company.

I am just a split personality I emphathise with the left and understand the moral and philisophical basis of there thoughts. But I understand the right and the fact that whilst somewhat unpalatable the tbasis of the thoughts is the reality in which we are presented.

Tom says:

07:07pm | 17/02/11

Adam, I appreciate your dilemna about unequal wealth. I think it bugs us all a bit. Just as a matter of balance:
Capitalist countries have delivered less starving people than socialist countries. Whereas they do not share the pie as well as they might, the key is that they have something of a pie to share.

Capitalist countries usually give more aid to starving countries (yes they can afford more).

Socialism probably works when it is not used as a front for power hungry homocidal maniacs. Probably less people starved under Stalin than did under the Czar.

Finally, Rudd’s blind arrogance probably had a lot to do with the failure of the tax. Large companies would probably have been more inclined to listen to someone other than a pompous little squeak shrieking at them.

craig says:

08:20am | 17/02/11

what do think the call royalties paid to state governments are, BHP pays billions alone in Queensland, in fact I recall more than the annual state education budget

Paddy says:

08:37am | 17/02/11

Mike, its called Mongolia!

Gazman says:

10:30am | 17/02/11

Actually Mike, the main reason third world countrys are poor, but remain resources rich is because the country is either dangerous to work in or their govt cant be trusted to keep their hands off the project once its built.

Have a look at Guinea, who has announced they plan to double the govt’s share in all mining projects. Most of these countrys dont pay directly into the project, but reinvest the cashflows to pay their share once it is built. No risk

These countrys are just greedy and stupid, which is where Australia is heading with this stupid tax

Tator says:

10:02am | 17/02/11

Iansand,
BHP market cap $263 billion
revenues for H1 were $34 billion
and EBIT of $14 billion
for a profit of $10 billion
dividend being paid for a $46 share is 46 cents -  massive profit for the share holders isn’t it.  But then again, this article is by the National President of the CFMEU Mining and Energy Division so is definitely biased against the mining companies

Dash says:

12:46pm | 17/02/11

So they will pay $4billion to the government in tax! I wonder what Gillard and Swan will waste it on?

Jim says:

09:30am | 17/02/11

Very very true…and since BHP’s Australian component of that profit was only 14%, even less for Rio and XStrata…there is nothing stopping them pulling up stumps for a year or two if the tax goes ahead, and waiting for this disgraceful government to be voted out.

Good opportunity to clear the last remaining union thugs out of the industry too!

Tim says:

09:37am | 17/02/11

Wow,
that gets even better on the thousandth time seeing it.
Oh wait no it doesn’t, and it’s not really relevant to this debate anyway.
The mining tax was meant to more efficiently tax miners and get a fairer result from our resources than the current state royalty system does.

Jade says:

09:47am | 17/02/11

Now thats something everyone should be able to understand!! Nicely put!

Shane From Melbourne says:

10:10am | 17/02/11

Your analogy is BS. If any mining company wants to pull out of Australia, I’m sure the Chinese would gladly take over AND pay the super profits tax just to own a secure supply of mineral resources.

The simple fact is that the mining companies screwed over the Labor Party and Australia in general during the last election with the help of the Liberal Party. I consider the Liberal Party absolute traitors for betraying the national interests of Australia in favor of mostly non Australian owned multinational mining corporations

StefanR says:

10:23am | 17/02/11

One big flaw in this analogy is that it is based on the assumption that everyone benefits the same from the meal. When looking at a meal this holds, but that which government provides doesn’t have the same value to each person.

One of the functions of government is the protection and enforcement of property rights. This benefits the wealthy far more than it does the poor and it is only right that they pay more for this service through a progressive tax system.

99 year lease says:

10:34am | 17/02/11

@shane I thought these mining companies hold leases over these minerals deposits?  Legally binding leases. If these companies walk away, the stuff stays in the ground.

Now correct me if I’m wrong, but no one, including the chinese, will “gladly take over AND pay the super profits tax just to own a secure supply of mineral resources”. These lease will just sit vacant until this government is removed.

Jim says:

11:23am | 17/02/11

That’s right…no one will take over. What’s a year or two in care and maintenance against continuity under an LNP government without a mine tax? There would be massive unemployment, and the people who have been faffing around saying “it’s OUR resources they are digging up” will maybe get an appreciation of the flow on effect mines have in the economy.

jf says:

11:58am | 17/02/11

StefanR

Fair point and I agree - to a point. Like most analolgies, it is necessarily simplistic.

Most fair-minded and educated people don’t mind paying taxes and most don’t even mind paying progressive taxes.

I also agree that the miners should pay some sort of compensation (over and above the company tax) for access to the minerals. Given that they are already paying state based loyalties, it is reasonable to assume that the miners by and large are ok with this.

However, I think that there is a point at which the productive elements of society are no longer being fairly rewarded for the capital that they are putting to work, for their productivity and for the risk that they are prepared to take on. It is at that point that they decide that their capital can be better utilised elsewhere. And that is the purpose of the analogy.

So Tim, it is absolutely relevant to this debate. Most people don’t mind the idea of the mining companies paying for access to their resources in some way (they are now). However, clearly, the way that this Government has gone about it has clearly got them off-side.

I am sorry that this, not-so-subtle, analogy is a touch to subtle for you Tim. However, like most analogies, it is not meant to be literal. It is not meant to suggest that we shouldn’t pay taxes. It is not even meant to say that miners shouldn’t pay a resource tax of some sort; as they do now. It is just meant to say that if you go to far you end up punishing industry, risk and productivity and then everyone loses. Including the workers that the author apparently is paid to represent.

Tim says:

01:10pm | 17/02/11

JF,
Resource Rent taxes are much better at taxing these industries than the current Royalty system.
It’s not a matter of not paying tax or punishing miners, it’s what type of system should we be using to get the fairest return to the owners of the minerals (the states). The Australian people should get a share of windfall gains earned by the mining industry.
Thus this analogy in the original comment doesn’t hold.
A better joke is the people thinking miners will shut up shop for a few years to teach us a lesson (which they can’t do anyway). Yeah, id like to see these mining companies explain to shareholders why they were forgoing billions in profits.

jf says:

01:40pm | 17/02/11

Tim says:01:10pm | 17/02/11

“Resource Rent taxes are much better at taxing these industries than the current Royalty system.”

Maybe so Tim. I am sure that the mining companies don’t really give a stuff how they pay for access to the minerals, and they have said as much. In fact, if it is a better and more efficient way, surely they would be in support of it.

Therefore, it begs the question of why they are so against it. Presumably, had they been involved in the process from the start and if it was fair, they would support it. 

Thus, the analogy holds.

“A better joke is the people thinking miners will shut up shop for a few years to teach us a lesson (which they can’t do anyway). Yeah, id like to see these mining companies explain to shareholders why they were forgoing billions in profits.”

I’m not sure that anyone truly believes that the miners will shut up shop for a few years. However, they have capital to invest. If they can get a get a better return elsehwere I’m sure they will lest shareholders why they continued to invest in one are when, by investing elsewhere they could get a better return. Sadly, it won’t be Australians working on those projects.

Tim says:

03:25pm | 17/02/11

JF,
in all the work through the Henry Review the miners supported and actually wanted a Resource Rent tax.
What the main squabble was about when the government released the detail was the amount to be paid and when it kicked in.
Naming it the Super Profits Tax was stupid, designed to fool stupid people into supporting it.
It backfired when other stupid people thought that it was just a cash grab without reading the detail.

The best thing about the tax was that it would even out our economy by extending but curtailing the height of booms thus protecting the rest of the economy whilst earning the country a better return over a longer period.

jf says:

07:21pm | 17/02/11

Tim says: 03:25pm | 17/02/11

But the Government did call it the Super Profits Tax when they first proposed it. Why would they do that? Surely you are not suggesting that the Labor Parties contempt for their electorate so deep, their need to spin apparently good policy so ingrained that they resort to something like this.

Had the miners been involved (they may have been involved in Henry but they weren’t involved in the ultimate structure and implementation) and the structure and implementation been fair and reasonable and it had been called what it was I reckon that it might well have got over the line without to much trouble and Kevin Rudd would still be PM.

Instead so ingrained is Wayne Swan’s hatred of industry and success, so miniscule is understanding of reward for risk and so cynical is his view of the electorate that he took a reasonable suggestion and distorted in a way to appeal to the envy and bitterness that he clearly thinks the everyone else shares with him.

If you think that this is a good idea and that is an efficient and effective way for Australia to be compensated by the big miners for the resources, blame the Government who poisoned what was potentially a very good idea. It was their twisted view of commerce, politics and human nature that brought down a PM and prevented an efficient, effective way of raising Government Revenue being implemented in a timely and collaborative manner.

LeonT says:

10:25am | 17/02/11

I think Howard perfected that art.

Tator says:

10:09am | 17/02/11

Jim,
sorry but your figures are incorrect
Revenue was $34 billion
EBIT was actually $14 billion
Net Profit was $10 billion
figures reported http://news.smh.com.au/breaking-news-business/bhp-h1-profit-soars-72-outlook-strong-20110216-1avku.html

Jim says:

11:18am | 17/02/11

Right you are Tator…was pulling my numbers from the wrong row. That pushes the Australian component of the $10.6bn up to $2.6bn…still well below the headlines!

Steve says:

10:32am | 17/02/11

yeah, well incpmpetence can be fatal to your political career.

Mattb says:

10:46am | 17/02/11

@John, 
This is is good point, profit tax or not the result of last years hissy fit from the mining companies played a part in the dismissal of a prime minister. At the time I read an article by a fellow named Peter Menadue that I believe nailed this point perfectly. I can’t remember the exact link but the substance of the article was as follows-

“Many external factors undermined Rudd. But one, surely, was the massive advertising blitz that the Mining Council launched against the proposed mining tax.

The blitz was long, loud and hysterical until Rudd was deposed and the Mining Council had an “oops” moment and suspended it. However, some miners like Andrew Forrest and Clive Palmer lingered at the scene of the crime and crowed about the industry’s role in removing the prime minister.

So perhaps it’s time to ask why multinational mining corporations (or indeed any corporations) should be allowed to run political advertising campaigns in this country.

After all, corporations are not flesh and blood citizens like you and me: Mr BHP and Ms Rio Tinto do not go down to a polling station and cast a vote. They are soulless legal entities created to confer economic privileges (especially limited liability) on shareholders. Indeed, if forced to describe them in human terms, I would say they are deeply anti-social and chronically selfish.

The mining companies may pretend, in their advertising, to care about the welfare of average Australians. But that is a grotesque masquerade. They only care about their bottom lines. For that reason alone, they should have no political rights. Certainly, the notion that they are entitled to freedom of expression is nonsensical.

Of course, major corporations argue they should be allowed to represent their shareholders in political debate. But why? Why should these soulless entities be allowed to leverage their massive balance sheets to distort political debate in this country and effectively trample the rights of true citizens? Indeed, many of their shareholders are not even Australian citizens. Rio Tinto for instance is 75 per cent foreign owned. Presumably, many shareholders are sovereign wealth funds controlled by foreign governments.

Corporations also argue that, if unions are allowed to run political advertising campaigns against government policies like WorkChoices, they should too. They have a point. But I am not arguing that the Mining Council’s advertising campaign (or similar campaigns) should be banned. Rather, only Australian citizens (including any shareholders of BHP and Rio Tinto who are Australian citizens) should be allowed to fund them. That would connect these campaigns with the citizenry and enhance our democracy.

The government should also tighten the application of s52 of the Trade Practices Act (Cth) to such advertising campaigns. Many commentators have claimed the mining industry’s ads contain lies and distortions. Normally, a corporation which engages in misleading and deceptive conduct is liable for a breach of s52. However, if any mining corporations (or the Mining Council) were sued for breach of s52 they would, presumably, argue that it does not apply because they engaged in political discourse. So s52 stops corporations misleading about products they sell to customers but not major government policies. Very strange indeed.

Major mining multinationals have invaded the political debate in this country. Unless something is done soon, real power may slip from our elected leaders into the hands of those multinationals and like corporations. Maybe it already has. The mining corporations have already threatened to return for a drive-by advertising blitz on Julia Gillard.

The danger these corporations pose is real. As the prominent English judge, Lord Lane, once famously warned: “Loss of freedom seldom happens overnight … oppression does not stand on the doorstep with a toothbrush and a swastika armband. It creeps up step by step, and all of a sudden the unfortunate citizen realises that freedom has gone.”

The Labor caucus was very effective in dispatching Kevin Rudd. I trust it will be just as decisive dealing with this crucial issue. Time is running short.”

Peter Menadue is a barrister who practices commercial law in Sydney.

Makes you wonder just how much of a say you really have a the ballot box…

JT says:

12:23pm | 17/02/11

It only took this line ‘‘I would say they are deeply anti-social and chronically selfish.’’ to see that you are a world class dingbat. If you truly wish to speak about special interest groups having an impact on an election then the one and only true case of this would be the campaign by Unions et al in 2007 against John Howard and the Coalition over workchoices.

Mattb says:

01:59pm | 17/02/11

@JT

“it only took this line ‘I would say they are deeply anti-social and chronically selfish’ to see that your a world class dingbat. If you truly wish to speak about special interest groups having an impact on an election then the one and only true case of this would be the unions et al in 2007 against John Howard and the coalition over work choices”

Umm, JT, did you actually read the article?, I think for starters you’ll find that I didn’t write it. Peter menadue a barrister who practices commercial law in Sydney did, so call him the ‘world class dingbat’ if you must.

And I think you’ll find he brings up the unions work choices campaign against Howard too and questions it’s validity. The point I believe he’s making there though is that unions are representing Australian’s when pushing political agendas, that’s a lot different to mining companies that have massive foreign ownership believing they should have any political influence in Australian politics.

I think after you read the article (a few times if you need to, if that’s what it’ll take for you to grasp it) you might want to go to the nearest mirror and take a good, long hard look, see what a real ‘world class dingbat’ looks like…

Jim says:

10:13am | 17/02/11

$34.2bn EBIT…..$10.6bn after taxes.

More than 2/3 of the earnings taken in tax and royalties already.

Tim says:

10:56am | 17/02/11

Jim,
your figures are wrong.
EBIT was $14.8B
Profit was $10.5B.
Doesn’t sound so good now does it?

Mattb says:

11:15am | 17/02/11

@ chewy
“this whole debate ignores the risk that miners take for example look what happened to Pike River Coal after the tragedy. Shareholders lost everything and the company is in the hands of administrators”

Gee, I see your point mate, the real tragedy was the shareholders losing everything and the company going into administration. Thats the real crux of the tragedy eh, not the workers who lost their lives or their families having to live with that loss.

I sincerely hope I’ve taken your comment out of context…..

Rev says:

11:26am | 17/02/11

Tim - care to break down what % of the 10.5b profit is from Australian operations?  But I guess it wouldn’t sound so good…

Chewy says:

11:57am | 17/02/11

Yes Matt B you have taken me out of context. I said AFTER the tragedy.
It was a tragedy. It tells us that mining is dangerous and risky.
I was pointing out that mining investment is not a one way road to riches.

craig says:

12:48pm | 17/02/11

i am reasonable sure royalties and payroll tax are tax deductible and accordingly included in expenses prior to EBIT accordingly the EBIT of 14 Billion and Net Profit of 10 billion is after payment of royalties and payroll tax. I am certain the annaul BHP royalty and payroll tax payment to the QLd government is alreadry around 3 billion a year

Mattb says:

01:02pm | 17/02/11

@chewy

Thanks for clearing that up

Yes, mining is a dangerous and risky business. So is truck driving, deep sea fishing, civil and building construction, and the list goes on and on, there’s hundreds of risky and dangerous professions/industries. But the discussion here is about super profits and how they should be taxed, maybe thats why the whole debate is ignoring the risk miners take….

simon says:

03:21pm | 17/02/11

Actually Richard, the media did a good job, that is they highlighted the communist/socialist leanings of this inept Labor government!! And you are the only one crying crocodile tears over lost revenue. Maybe the government should become more efficient and accountable and think of ways of lowering the tax burden in Australia instead of always trying to cook up ways to screw more out of people!!

Steve Putnam says:

07:53pm | 17/02/11

Take it easy Old Clive. Why don’t you take a couple of Bex and have a good lie down!

Old Clive says:

11:35am | 17/02/11

It sounds as if you know the union movement, which union is the worst, Maritime, a real mixture P&D’s, Seaman’s, Wharfies,  then we have,AMWU, not forgetting theBLF,good old Norm bless himself, I have had to deal with all of these mild mannered union officials.

simon says:

01:05pm | 17/02/11

I agree JT, we should ban all union movements in Australia. We wont move forward as a nation until we do!!!

Matt says:

04:05pm | 17/02/11

Gee, JT,
got some really deep seeded issues with the union movement havent you, get stung underpaying employees or something did you?. Gotta hate a movement that cares about workers rights and pushes safety agendas within the workforce don’t you, so nasty of them. In my industry (construction) we work on both unionized and non- unionized job site.

- Average pay on union sites is $400 a week higher than non-union, gotta hate the union for that!

- Union sites are always cleaner sites and provided with clean amenities, gotta hate not having to jump around other contractors trash whilst trying to do the job, gotta hate having clean, working toilets when you feel the need eh

- Safety is paramount on union sites, really bad the unions are for making sure that this is the case

-then you have all the benefits. Income insurance, BERT, BUSS, penalty rates, RDO’s, the list goes on

What’s that JT??, they’ve been sucking workers dry for decades you say. WTF?... Let’s see, pay union fees of around $800 a year, all tax deductible mind you, to get all the benefits plus $400 extra pay a week, gee, they really suck the worker dry don’t they.

Oh, and after 10 years in the industry how many days have I lost due to a strike, ZERO, the days of striking because there is sand in your pie at smoko are over, they went back in the 80’s. I did loose one days pay when a worker on site was killed in an accident, the union asked everyone on site to donate a days pay to his wife and young child, THE ARSEHOLES!!!!

Keep up the liberal party propaganda whinging JT, it’s either falling on deaf ears or giving union members a reason to laugh at how pathetic you are princess…...

StefanR says:

10:33am | 17/02/11

“Where’s the incentive for people to work hard and be successful in this country? The tax system penalises the people creating wealth and driving the economy and rewards those that are destroying it. It’s time this changed.”

Last time I checked, additional taxation never takes more than any additional amount you earn so the incentives are still well in place. Or are you one of those commenters that doesn’t understand marginal tax rates?

Dash says:

11:24am | 17/02/11

Stefan, I’m an accountant that deals with corporate and personal tax every day of the week! I’d suggest I have a fair understanding of the tax system in this country thanks very much.

Additional taxes targeted at corporates and individuals purely because they are successful at what they do, clearly punishes people for being successful! It’s tall poppy syndrome gone mad.

The flood levy is targetted at the people who already pay the most in personal income tax.

The Profits tax is targetted at the corporates who already pay the most in corporate tax.

We have a tax system here that penalises the individuals and the corporates who are creating the nations wealth and we reward the nations wealth destroyers. Sorry but in my mind that’s complete madness.

I would be happy to talk tax with you for hours on end if you wish!

If the top marginal tax rate was aligned to the corporate rate of 30% I think you’d find people would be more prepared to go the extra yard than if they had to give almost 50% of every additional dollar to a wasteful government! And when these new taxes have been introduced, it’s been an exercise in wealth redistribution. It’s a socialist exercise that penalises sucess and rewards laziness and inefficiency.

Don’t even get me started on the disparity between the taxation of corporates vs the PAYG individual in this country!

Anyone who screams about tax injustice when BHP makes a large profit, clearly doesn’t understand the tax regime. The more profit you make, the more tax you pay and the bigger dividend you pay! Would you prefer BHP to make losses? And if they did, would you be happy for them to carry 40% forward as a tax benefit? I bet you’d change your tune then!

StefanR says:

12:34pm | 17/02/11

“We have a tax system here that penalises the individuals and the corporates who are creating the nations wealth and we reward the nations wealth destroyers. Sorry but in my mind that’s complete madness.”

I prefer to think of it a system which taxes most greatly those who benefit most from stable government and the guarantee of property rights it affords.

Additionally, the poorer you are, the higher proportion of your income is utilised on current consumption rather then future consumption (savings). Extra taxes will generally eat into savings before it hits current consumption if there are any savings. The more you tax poor people, the more you depress aggregage demand and no government ever wants to depress AD. Thus, if money is to be raised through taxation (and I’m not saying that this is what needs to be done at all) it is optimal to tax those for whom it will impact current consumption the least, hence a progressive levy.

As for the mining profits/resource rent tax, it is not targeted at the most wealthy so much as those industries which are selling the country’s resources. There are a plethora of economists who support a resource rent tax (perhaps not the one that was agreed on, but the LNP wasn’t exactly willing to budge on its NO TAX stance), I’m not sure what the opposition to it is based on, besides a community distaste of the word “tax”.

The assertion that “It’s a socialist exercise that penalises sucess and rewards laziness and inefficiency” is also very suspect. There seems to be this view out there that you can live comfortably on Australian welfare. It is simply not true and there is every incentive for people to work.

Greg says:

12:37pm | 17/02/11

Stefan, the first dollar you make the government charges you nothing for. The 180,000th dollar they charge you 47.5% (including medicare and flood levy). Which one would you prefer to make? The point Dash makes is absolutely correct.

If you have children and a dependant spouse and earn $100K a year you pay the flood levy. If you have no kids and live with your defacto both earning $50K a year, you don’t pay it!!!

If you’re a corporate, you can split your income, do cash jobs, declare half, put personal expenses through the business and claim benefits! All of the personal tax responsibility rests on the traditional PAYG taxpayer and mainly the sucessful ones. And the PAYG tax base is shrinking in relative terms!

The tax system stinks! And as Dash says, it sends the wrong messages and drives the wrong behaviour.

Ken Henry had one hand tied behind his back because the ALP specifically excluded the GST from the scope of his review. Then they told us it was an independent root and branch review! Shame about the trunk they left out!

If the government reduced the top marginal PAYG rate closer to the corporate rate, removed the GST exemptions and increased the GST to 12.5%, it would be a much fairer system and they wouldn’t have to hide behind mining profits and the environment as excuses to raise taxes! But alas they have no balls!

Dash says:

01:22pm | 17/02/11

Hi Stefan, yes but we already have a progressive tax system for individuals in this country!  And the PAYG taxbase in relative terms is diminishing. The PAYG taxpayer is at a disadvantage compared to corporates who can income split for example. The ageing of the population alone means the PAYG tax system will not be enough.

A higher GST rate more in line with other western nations and a reduction in the top marginal tax rate to better align with the corporate rate would be a fairer system and in fact would generate more revenue for the government. NZ last year increased it’s GST to 15% and reduced the top marginal tax rate to 33%. That’s 13 points lower than ours. You cannot avoid consumption! Broaden the tax base, remove the inequality between corporates and individuals and spead the tax burden.

Unfortunately the ALP specifically excluded the GST from the Henry review. That was neither independant nor a root and branch review. They seem to me only interested in taking more tax from the people creating wealth. That’s not a long term viable solution to our tax challenges!

StefanR says:

03:12pm | 17/02/11

Dash, the problem with a consumption based tax is that it is inherently regressive. This is because the poor spend a greater proportion of their income on immediate consumption. Once you add in your proposed reduction in top marginal rates, your “share the burden” becomes simply transferring the tax burden from the rich and upper middle class to everyone else.

It is one thing to point to the disparity between rich PAYG earners and rich corporates, but quite another to suggest that the poor pay a greater proportion of their income to close that gap.

Tim says:

03:32pm | 17/02/11

Yes,
marginal tax rates and the setting of the GST level are interesting but what do they have to do with a Resource Rent Tax for resources that the State’s already own?

Dash says:

04:18pm | 17/02/11

Stefan, Australia’s consumption tax at 10%, is the lowest of all the western nations! And our corporate tax rate is also either the same or low by comparison.

So everyone paying little or no tax is poor are they Stefan??? What world do you live in?

Actually now that I think about it, I’ll start a company. 2 shareholders, the wife and I. The wife can be a director so I can split the income 50/50. That’s a huge tax saving straight up. I’ll run the company at break even so it pays no tax. I’ll put the family car through it as a business expense and claim back the GST. I might even be able to do quite a few cash in hand jobs. Just enough to be able to claim benefits and rip off the PAYG taxpayer.  Then there’s the home office expenses, the phone rental, the utility costs and the related GST all tax deductible. Wow, I’ll earn the same, have about twice the disposable income and pay next to no tax.

You seem to think that’s a fairer system Stefan. Thanks for the tip!

Rev says:

11:28am | 17/02/11

Few short years?  Care to hang an actual date on it?

dogfather says:

08:41am | 20/02/11

A few short years wil be between 15 and 30 years. Do you dare to dispute this?
Hpoefully Australia and Planet Earth will last a helluva lot longer thaI
Reserves are finite or were you thinking of burrowing into the earth’s crust?

Jim says:

11:50am | 17/02/11

Yes indeed; you have no brain.

Would you honestly trust this government with a ‘sovereign wealth fund’?

And the old “wealth in the ground belongs to all of us” line….I hear shovels and picks are on special at Bunnings. Get a set and go your hardest! It might be a bit hit and miss though, unless of course you want to spend around $500m in exploration to find something worth digging. Then you have to find somewhere to process it all…trucking is expensive so I guess you’ll have to build a concentrator….another $500m to $1bn expense there…best you get a good accountant so you can float some shares! And you could not possibly do it all yourself!! You’d have to hire hundreds of people and probably spend another $100m on EPA stuff, leases, royalties, native title etc….all that before you can even get your shovel dirty.

But you’ll probably run in the red for at least 5 years while you pay back what you borrowed….and with ongoing operating costs you’ll be lucky to reap any kind of profit for at least 7 years.

But yeah, it’s yours so go for it!

craig says:

12:37pm | 17/02/11

The actual legal position is the “wealth” in the ground belongs to the specific state government. Nice words but legally wrong . perhaps you may want to ask the mineral rich states to contribute to your grand kids

simon says:

03:16pm | 17/02/11

Democrat, did you go to school mate??
Anyway, if the government taxes BHPB then their net profit reduces and their dividends reduce. The side effect is your super will reduce by the same amount. Then you say the government will then use this tax to pump back into super through increased contributions. Net effect zero. In fact because Labor government are so loose and inefficient that the net result would be less super. Do you understand that Democrat, or shall i write it in a way so a 4 year old can understand it. Sheesh!!

JT says:

12:25pm | 17/02/11

Wrong. The states own the minerals and they already do charge for their extraction. It is called royalties, they are and always have been free to increase that rate. The mining tax was nothing but a cash grab by Labor from not simply the miners but also the states.

craig says:

12:31pm | 17/02/11

the states own the minerals and charge them royalties for exacting them, if you have a problem with how the royalities are spent move to the specific state and campagin for change. As a queenslander I fail to understand why we should give residents of other states a share of the income stream

BR says:

12:46pm | 17/02/11

“We all own the minerals”, wow very peace, love and happiness there. I dare you to head to your nearest construction site and demand they halt based on this bizarre 60’s throwback notion or maybe a land sale on the weekend?

The fact is state governments already charge a fee for mining and exploration, which these companies presently pay. This is long before they pay all the other fees and taxes associated with mining. Now we are gouging them with another tax for no reason other than they are successful. Anyone who doesn’t believe this is a dangerous precedent to set really needs their head examined (or they have given up on any notion of success and therefore don’t care).

Mining is a risky venture, it costs millions to establish the smallest commercial mine, which has the potential to have lower than expected yield or fail completely. Anyone who has done economics 101 can tell you that Increased Risk = Potential for Higher Return or Loss. The miners (and there backers) own this risk, not the state or federal governments, therefore they should be content with the billions in taxes they are collecting, not holding out there hands like Oliver Twist, begging for more.

John says:

01:09pm | 17/02/11

Couldn’t agree more.

In simple terms, they’ll pay 30% of this $10.6 billion in company tax.  How is that not a fair share?

If you want a share, go and buy BHP shares.  It’s not that hard.  A Comsec account is free.  And you’ll get an actual return for yourself, rather than it being claimed through an inefficient government who’ll just waste it anyway.

The tax is nothing more than a cash grab by a government unable to balance the books.

Ben says:

02:19pm | 17/02/11

Agree 100%

1. The states own the minerals not the commonwealth

2. The government will just waste the proceeds of the tax

3. Extra tax for one sector is unfair

4. BHP pay their fair share of tax

5. BHP derives much of its income from outside Australia

6. BHP is an Australian SUCCESS story on the world stage and should be applauded and supported not over-taxed and defamed

7. The size of BHPs profit is immaterial. Its the size of the profit relative to the size of the company and BHP is a vast company deploying vast amounts of shareholder capital so it should be making profits of this size.

8. Can anyone imagine the US or California enacting a special Apple Computer tax to punish the company for its success and profits?

DarylS says:

07:48pm | 17/02/11

The resources are owned by us, the people of Australia. Our representatives in the State and Commonwealth sphere apportion their share, but they don’t actually own it, we do. Until it is dug up for a pittance and lost for ever. I have lots of shares but agree that miners should pay more than they do now.

Tim says:

12:44pm | 17/02/11

OK, once again the majority of shareholders in these companies are overseas. The “taking your retirement money” argument is plainly false because most of the money goes overseas.

Mattb says:

01:26pm | 17/02/11

@ Wayne

“I have a better idea, why don’t the government buy shares in BHP and get the dividends like other investors do!”

I don’t know Wayne, let’s see, the labor government buys BHP shares. The liberal party-

(1) accuses the government of more ‘wasteful spending’, ‘addiction to spending’

(2) accuses the government of trying to make the mining industry government owned. That’s communism according to them isn’t it?

(3) the liberal party when it eventually gets into power sells all these shares off, probably at a bottom basement price, back to offshore investors, uses the money to gain a budget surplus, claims it’s a great economic manager and all the conservative voters cheer ‘see how good they are’

Still think it’s a good idea for the labor government to buy those shares Wayne?......

Wayne says:

01:36pm | 17/02/11

BHP operates throughout the world. So the shareholding and profits are derived from all over the world. So it is not unusual a multinational has overseas shareholders. The Australian earnings are taxed in Australia and royalties are applied by State governments. Again if the government want more buy some of the shares.

Mattb says:

02:21pm | 17/02/11

@Wayne

I’m not trying to disagree with your ‘government should buy BHP shares’ idea. The point I’m trying to make is that the labor party isn’t in a political/financial position to do this without having the opposition jump all over them. So i guess they figure the other way they can get a better return from Australia’s non renewable resources is through a super profit tax, which predictably, the opposition is jumping all over them about.

Wayne says:

06:20pm | 17/02/11

Mattb, Perhaps you now know how the shareholders feel about their return being eroded. If the government cannot justify buying some shares to get the dividends, then this means they want our money (shareholders money) without the risk of what a shareholder involves and the investment cost the shareholders have outlayed. If the governments expenditure was more measured, there would be no need to fleece the shareholders including my super.

Jim says:

06:38pm | 17/02/11

@Tim…most of the money goes overseas yeah….that’s because most of the company assetts and mines are overseas. Only 14% of BHP’s earnings were derived IN Australia. The percentage is even less for XStrata and Rio.

People are kidding themselves if they think the entire profit could have been taxed by Gillard.

Mattb says:

07:28pm | 17/02/11

@Wayne,

Read my posts again, am I disagreeing with you?, or am I just trying to give you my opinion as to why the government might not look at buying BHP shares?.
And as for your comment

‘perhaps you now know how the shareholders feel about their returns being eroded’.

The stock markets’ a volatile market, people get their fingers burnt all the time, it’s all really a gamble. If your scared of losing your money trying to make a quick buck, maybe stocks and shares aren’t for you. What are you asking for, the government to guarantee your stock market investments/super funds????

Wayne says:

07:35pm | 17/02/11

Tim, If there is such a worry about BHP dividends going overseas, then why don’t the government just put a withholding tax on mining company dividends paid ex Australian earnings going overseas instead of the super profits tax/MRRT or whatever it is called this week. We would then not see Australian shareholders being penalised by a super profits tax.

Wayne says:

08:46am | 18/02/11

Mattb, Sorry perhaps I read too much into your sentence “So i guess they figure the other way they can get a better return from Australia’s non renewable resources is through a super profit tax” even though you agree it seems logical to be a shareholder to get the extra dividends. The issue is shareholders take a risk to earn a return, and have a portfolio of shares and other investments. Some investments will be good others will be bad. The hope is by spreading the portfolio over a number of areas on balance it is positive. Then the government wants to grab part of the good return for no risk without buying shares even though they already get income tax and the states get royalties. So if a company is successful the government sees that as free game to take more of shareholders money, and the share price paid may have already included a premium for good earnings. And if there is an argument about the money going overseas my other comment “why don’t the government just put a withholding tax on mining company dividends paid ex Australian earnings going overseas instead of the super profits tax/MRRT or whatever it is called this week. We would then not see Australian shareholders being penalised by a super profits tax”. But note that BHP earns much of its profit from overseas.

Dash says:

04:32pm | 17/02/11

Andrew, you are absolutely correct! I have been trying to get the same message across on this site for days now.

Yes this place is becoming the Socialist Republic of Australia! But what do you expect from a PM who was an active member of the Socialist Forum right up until 2002!

simon says:

03:25pm | 17/02/11

Not interested in Norway buddy, I am interested in Australia though. Norway is a very different fish mate, they also have a much lower overall tax take than Australia. They don’t get ripped off left, right and centre like we do in Australia, and I am sure the governments over there spend the money much more wisely than this wasteful bunch!!!

Mattb says:

04:37pm | 17/02/11

@Simon
“why are all the lefties looking for more tax money, so they can waste it on pork barreling and buying votes”

John Howard, the coalition and middle class welfare, pork barreling and vote buying, please discuss…...

Shane From Mellbourne says:

04:43pm | 17/02/11

Whaaat? And the Right don’t waste money on money on pork barreling and buying votes? John Howard singlehandedly built the Australian middle class welfare state on pork barrelling and buying votes. Dream on, simple Simon.

Daryl Saal says:

07:40pm | 17/02/11

Words fail me, but wait. You link a courageous service station employee on less than $20 an hour, to a mining company that clears $10.6B profit, and liken the legitimate Australian government that is trying to get a fair return for OUR assets to a drug addicted violent thief. About ten steps too far,  The $60B isn’t being ripped from ordinary Australians, but would have come from bloated international companies that are getting our use once only assets for a pittance. Tell a lie often enough and the thick will start to believe it. The $99B would have led to ordinary Australians having to pay less tax to support the infrastructure that the plutocrats use for nearly free.

Pikey says:

04:06pm | 19/02/11

Your well right Democrat. Don’t anybody be fooled that in making so much money BHPB is doing it in an efficient and effective manner. The large mining companies waste money like its going out of fashion. If the equivalent management team and structure for BHPB was to run say a Woolworths then that business would be out of business within a week. The saving graces for companies like BHPB is the huge margins they enjoy on iron ore and met coal. Well may Mr Kloppers have a good laugh; he knows that he is running a company that a well educated 5 year old could run.