If you’re blaming mining you’ve got rocks in your head

Adam Diver says:

08:08am | 18/10/11

“fair share” are you advocating a flat rate of tax? Whilst I would like to see an increase in taxes/royalties (that remain competitive internationally), I see no point is such action whilst government is so inefficient and ineffective.

Peter says:

09:19am | 18/10/11

More royalties the better! We own the resources and should own more of the revenue it generates.

RyaN says:

09:23am | 18/10/11

@acotrel: Count me in for a flat tax rate, everyone should pay the same amount of money that way paying their “fair share”.

acotrel says:

09:23am | 18/10/11

@Adam Diver
’ I see no point is such action whilst government is so inefficient and ineffective. ‘

The performance of our economy during the current recession gives a different recognition of the reality about the Gillard government.
Repeating lies, doesn’t make them the truth !  Even the devious Tony Abbott knows that, he just gives the impression that he doesn’t !

acotrel says:

09:25am | 18/10/11

@Adam Diver
The mining companies should be asked what they believe is a fair thing.  Then let’s work from there !

Adam Diver says:

10:05am | 18/10/11

“The performance of our economy during the current recession gives a different recognition of the reality about the Gillard government.”

Ironically its the mining industry (or at least chinese consumption) that impacted on our economies performance during the current “recession”. That being said, it wasn’t a partisan attack on my part, the Liberals will be inefficient and ineffective as well, but hopefully not to the same scale.

This talk of mining companies and fair share, ignores the fact that the Australian government could purchase shares of the company and legally and morally reap the benefits of “super-profits” whilst encourahging future investments.

RyaN says:

10:07am | 18/10/11

@acotrel: “The performance of our economy during the current recession gives a different recognition of the reality about the Gillard government.” I find myself agreeing with you quite a bit today, especially on this comment.

I mean lets face it, with the unprecedented mining boom and the tax dollars being taken from it you would have thought that a competent government would have been able to return a surplus, at least once.

Dissident says:

10:34am | 18/10/11

Peter, we normally disagree, but this time you are bang on the money. If the Federal Government feels that we aren’t getting enough value for the resources then they should simply ask their State counterparts to increase the royalty rates that the miners are already paying. It is simple and elegant. It also means that if 100 tonnes of ore are extracted, the miners pay for 100 tonnes of ore. Unswervingly fair as well.

On the contrary, a Mining Super Profits Tax or Rent Resouce Tax is a croc. There are so many ways that a company could contrive to make a ‘loss’ (particularly if they are vertically integrated) that the Australian government would end up subsidising profitable mining ventures and getting no more money for the resources that they are extracting. Disaggregation of business units, selling the product at a price that only allows you to break even, etc. This is the reason that a profit stake (MSPT / MRRT) is silly - it doesn’t reimburse the government for the minerals themselves.

The Federal Government should simply call this what it is - another attempt to rip funds out of the States to add it to Commonwealth coffers. Don’t expect it to ever come back either - personal income tax was formerly a State assessed tax but the Federal Government took control of it as a war-time measure. Is WWII still going, then?

Peter says:

11:25am | 18/10/11

Dissident

The increase in royalties should see a reduction in grants to the states from the federal government as well, it needs to be balanced so that all states prosper from the boom.

persephone says:

02:03pm | 18/10/11

The trouble with increasing royalties is that it applies to mines even when they’re not making a profit.

It thus provides a disincentive to new ventures, where it might take many years and a lot of money before the investors even KNOW that they’re going to be making money some day.

Royalties also apply to a lot of little enterprises -  shire gravel pits, for example - which often aren’t profit making enterprises, or are simply scrapping by.

The cost of royalties are also built into the end price, whereas a super profit (by definition) cannot be.

So raising royalties means that the customers pay more, which makes mines less competitive.

A tax on super profits only comes once a mine is well and truly up and running, and cannot be passed on to consumers. It thus does not affect the competitiveness of the product on the international market.

acotrel says:

05:43pm | 18/10/11

@Adam Diver
‘the Liberals will be inefficient and ineffective as well, but hopefully not to the same scale’
FAT CHANCE ! - get real ! We could get another 12 years of do-nothing luddites sitting on their hands while the rest of the world passes us by !

Dissident says:

07:42pm | 18/10/11

That is true, Persephone. The royalty is paid irrrespective of the profit. That is why it is good. If a mine is making a loss - but dug up 1,000,000 tonnes of ore - the ore is still gone.

One of the first things I learned about economics and business is that if your marginal cost of producing something exceeds the marginal revenue - stop the additional production. The un-profitable mine should do exactly that. That way the minerals are still in the ground if we need them later and the company isn’t losing any more money. A decision made to wear a loss now in order to make a larger profit later is entirely different. Just about every new mine loses money at first - that is why investors take a long term view with these kinds of enterprises.

I also contend that the cost of all taxes, no matter how levied, are factored into the cost of a product to customers. Mining companies don’t start digging and then get suprised about their bottom line. They know how much tax they will pay, and they budget and forecast as appropriate. They want to see the folding stuff in their pockets at the end of the day, otherwise what is the point?

Peter - I hear that too. Under the present system there should be some kind of equalisation across the States but we do need to be careful that we don’t end up rewarding inept management. Efficiently run States shouldn’t have their funds cut because another State wasted their money on magic beans. I guess that is the challenge of funds distribution.

Mind you, it is also quite hard to swallow that over here in WA in a few years we are forecast to only get back 33c in every dollar of GST that they contribute to the Commonwealth.

My personal preference would be for the States to levy ALL taxes and pay the Commonwealth for collective services such as the Defence Force. The Founding Fathers intended that it would be that way (we are told) but it seems to have gone a full 180 since then.

Jase says:

07:05am | 18/10/11

The mining industry cannot be blamed for the governments inability to spend its tax and royalties wisely. $121 BILLION dollars as been allocated to welfare in the 2011 federal budget, that is 33% of gross expenditure getting thrown away whist we spend an entire $13 billion on Infrastructure.

If the government spent more on infrastructure and promoting new business opportunities, like they do in the oil rich middle eastern countries, well we would be developing a solution for the future.

Kipling says:

07:27am | 18/10/11

Yes you are absolutely Right Jase. Of course on the other side of that coin the mining industry cannot take credit for making the world a better place, it doesn’t, it just makes holes…
Oh and not to make too fine a point on this, but when you say “Government” I trust you mean successive Governments, because, as the article points out, the mining industry has been very profitable for more than a few decades…

MarkS says:

08:06am | 18/10/11

@Jase
Welfare in not waste. It can be wasted, but is not waste becouse it is welfare. Better that we spend 33% of gross expenditure on welfare then 33% on troops & policing for a vitual civil war between the haves & have nots.

Most societies without welfare spend a hell of a lot more in policing & jails then we do.

Adam Diver says:

08:10am | 18/10/11

@ Jase, wow that is insane. Imagine if those numbers were reversed, we could build an NBN, upgrade a few major highways, improve public transport greatly and have money left over, every year.

Frank says:

08:14am | 18/10/11

so you are saying that the MRRT is a good idea then?

Kipling says:

09:26am | 18/10/11

As to welfare and waste. Our current world view of welfare pretty much equates to “throw money at the problem in the hope it goes away”. Obviously the problem won’t go away by just throwing money at it, but the hand wringing chatterers can always cite the amount wasted on welfare for no specific gains….

Welfare, whilst obviously not free, requires actual services that are well planned and implemented with a clear end goal to work towards that will improve the capacity of recipients to become independent and self sufficient. Clearly, just throwing money at the problem creates dependency issues that fuel much derision and complaint.

acotrel says:

09:32am | 18/10/11

@Jase
‘$121 BILLION dollars as been allocated to welfare in the 2011 federal budget, that is 33% of gross expenditure getting thrown away whist we spend an entire $13 billion on Infrastructure.’

I wouldn’t call it ‘thrown away’ !  The money circulates within the community, and keeps businesses viable and CONFIDENT !  The ALP have intiated most of the major infrastructure projects in our history, including the NBN, which the luddite LNP are desperately trying to derail, in their quest to reclaim their birthright

Jase says:

09:55am | 18/10/11

No the MRRT is not good, these mining companies already pay tax just like everyone else. Why should they be expected to fork out more because they have invested significant money and taken significant risks to get to where they are today.

@ Kipling - What about the countless millions of dollars that they invest voluntarily into the community above and beyond what is forcefully taxed? The thousands of jobs which they provide to people, and the flow of business to small enterprises?

And yes, “governments” its short term vote’s that they chase, at our long term expense. That apply’s to both liberal and labor.

As for foreign investment and money going overseas, that is a 2 way street. There is nothing stopping us investing in overseas companies, most mining ventures in the exploration stage are considered to risky for investment, so if these companies do not look overseas then the simply would not exist today. That is an entire problem of its own caused by our heavy investment into superannuation, which although is not a bad thing, it does limit the amount of money which is available for risky investments compared with the US etc.

@Marks - No some welfare is not a waste, but 33% of gross expenditure is. If welfare was only offered to those who need it (disabled etc), I would love to see the change in that figure. If half of that budgeted $121 billion was spent elsewhere it would contribute almost 3x what the mining companies contribute in total tax and royalties.

Here is an obvious idea, why does the government start trimming the fat before trying to tax the rest of us more.

Imagine if we spent $60 billion dollars on Infrastructure up from the pathetic $13 billion, we would have world class infrastructure. Spend that same $60 billion on small business investment and economic development and see how as a country we prosper in the coming 10+ years.

By the way the baby bonus alone costs us $1.6 billion dollars a year, 1/8th of our entire infrastructure budget is spent on encouraging people to have babies… Justify that type of welfare, because I cannot. The more I look at the number the more I cringe.

Jase says:

09:55am | 18/10/11

No the MRRT is not good, these mining companies already pay tax just like everyone else. Why should they be expected to fork out more because they have invested significant money and taken significant risks to get to where they are today.

@ Kipling - What about the countless millions of dollars that they invest voluntarily into the community above and beyond what is forcefully taxed? The thousands of jobs which they provide to people, and the flow of business to small enterprises?

And yes, “governments” its short term vote’s that they chase, at our long term expense. That apply’s to both liberal and labor.

As for foreign investment and money going overseas, that is a 2 way street. There is nothing stopping us investing in overseas companies, most mining ventures in the exploration stage are considered to risky for investment, so if these companies do not look overseas then the simply would not exist today. That is an entire problem of its own caused by our heavy investment into superannuation, which although is not a bad thing, it does limit the amount of money which is available for risky investments compared with the US etc.

@Marks - No some welfare is not a waste, but 33% of gross expenditure is. If welfare was only offered to those who need it (disabled etc), I would love to see the change in that figure. If half of that budgeted $121 billion was spent elsewhere it would contribute almost 3x what the mining companies contribute in total tax and royalties.

Here is an obvious idea, why does the government start trimming the fat before trying to tax the rest of us more.

Imagine if we spent $60 billion dollars on Infrastructure up from the pathetic $13 billion, we would have world class infrastructure. Spend that same $60 billion on small business investment and economic development and see how as a country we prosper in the coming 10+ years.

By the way the baby bonus alone costs us $1.6 billion dollars a year, 1/8th of our entire infrastructure budget is spent on encouraging people to have babies… Justify that type of welfare, because I cannot. The more I look at the number the more I cringe.

Kipling says:

06:18am | 19/10/11

@ Jase,

“forcefully taxed”.... I guess we are all forcefully taxed at some level, however, it is generally accepted that taxes raise revenue so that our Governments can function (or malfunction as the case more often is). Mining companies are suppose to pay tax just like everyone else. The question is, do they pay a level of tax commensurate with the profits they reap… This has in no way been demonstrated here or else where. Given that, it seems a reasonable thing to suspect they do not pay their fare share. After all, they can afford to spend significant amounts of money on advertising their cause, that is money which they no doubt can claim back as a tax deduction so that we, the AUSTRALIAN tax payer can foot yet another bill. Forgive me, but big deal about the “countless millions”.... By the way, if it countless, how can you be so certain that it is millions?
As to jobs, given the hours worled by most in the mining industry I am more concerned about the thousands of jobs not created. Two twelve hour shifts worked by one individual in mining equates to one full days work for an unemployed person. Then we have weekend work to consider. Nope, mining is not that great a contributer when we start to take a SOBER and balanced look. This also is a somewhat short sighted view point too. The here and now might be ok (not brilliant, wonderful or secure) for the few who have jobs in mining, but what about after mining when we have all those people unemployed and holes in the ground? Those unemployed people will no doubt exercise their rights to become a tax drain by seeking unemployment benefits, you know, welfare where so much money is already wasted.
Further, I don’t think superannuantion is a brilliant investment, it has been one of the first areas “hit” by global financial problems. It also represents the privatisation of pensions. Just another lame form of privatisation that will have a long term impact and cost for the majority, ironically, who have generally paid their taxes.
I think you may well find that mining companies do pay tax at a lower percentage as this would have been an obvious incentive to take the risks that you allude to. Given those risks have been paying substantial dividends it is not inappropriate to expect said companies to now pay their fare share as opposed to the incentive driven version…
Yes I understand that foreign investment can work both ways. Interstingly enough though, the problem with that logic is that, as you point out, there is not much money in Australia that people are prepared to take that sort of risk with, otherwise, one suspects there would have been more local investment in the first place and this would not have been an issue now.
I personally think that paving the way for excessive foreign investment is the worst form of selling out the country and its citizens. It does not offer any of the bonuses often referred to in any substantial or, more importantly, long term sustainable way and drains money from ALL Australians.

acotrel says:

09:38am | 18/10/11

@Joan
‘How easy for Gillard to blame mining and snatch a few more tax dollars from mining, easier to do that than working out policies and creating masses of cheap power energy and technology for growth in manufacturing. Gillard sits on pile of coal and uranium counting CO2 molecules in the air ,making energy more expensive for all. Nuts.’

You cannot extrapolate the industrial revolution to infinity, it is not sustainable without change.

Sarah says:

11:59am | 18/10/11

Rock on Joan!
Good comment in my opinion

Joan says:

12:32pm | 18/10/11

Only country making real money is China making real product - products will always be needed( predicted world pop growth 7 billion by 2050)  manufacturing dead in Australia today .- Australia saved by natural resources - digging pot-holes - Gillard taking Australia back to pre industrial times,  Gillard waiting for wind to blow and sun to shine for Australia`s future power base- while China roars through 21st century producing product to satisfy 7 billion extra on this planet.

acotrel says:

05:48pm | 18/10/11

@Joan
The Japanese seem a bit unhappy with the Kyushu Electricity company, and their nukes ?

Peter says:

09:29am | 18/10/11

Well said, every Australia owns our resources and should get a share of its profit.

acotrel says:

09:41am | 18/10/11

Perhaps we should ‘value add’ ?  At least there would be a few jobs in it.

Aitch B says:

10:16am | 18/10/11

@Peter

We do already share in the profit through royalties and taxes. You just want more, right?

Mike says:

10:33am | 18/10/11

“Well said, every Australia owns our resources and should get a share of its profit.”

Did you read the article or are you just not particularly intelligent?

Peter says:

11:28am | 18/10/11

@Mike

No need to get personal.

As i outlined above the states own the royalties and deserve a bigger share of this once off sale.

I am against sending massive profits overseas for resources Australia owns, and can only sell once.

Too hard to understand?

natweeza says:

11:53am | 18/10/11

@ Peter

I don’t know why you keep saying Australia owns the resources.

The states own the resources that are within them. It’s in the Constitution.

acotrel says:

03:02am | 19/10/11

@natweeza
The people of Australia own the resources !  And we are now a federation !

Jodie says:

09:21am | 19/10/11

Actually that’s not always the case…some companies (most, rather) only sell the ‘excess’ overseas, putting Australia first.  I’m from the Darling Downs where there is a lot of CoalGas mining - it’s not surprising that nearly every household here has a gas stove & hot water system, including my own!  These mining companies sell the resources wholesale to local power/gas/petrol etc companies first and whatever is leftover, is converted, sold, & shipped overseas. As for profits, a large chunk of it is put back into the community - there are so many community groups and even schools that have benefited from rather large donations.

And of course we own the resources - why do you think the government sells it, rather than give it away for free??  Despite all the cost for equipment, permits, taxes, human resources and everything, the companies still have to buy what they have mined from the govt.

Yes, the companies are foreign, but they are the one’s with the equipment to be able to mine. It’s like how you can’t really buy kitchenware manufactored in Australia - we just don’t have the factories to do so - but it doesn’t stop you from buying a wooden spoon, does it?

John Smythe says:

08:56am | 18/10/11

Interesting that point. I was out the other day with a mate and he was talking about China is getting ready for its own GFC like implosion. Banks giving out huge loans on the basis of (not yet built) projects as capital.

The use of a future project as capital was quite common place and people are starting to default on their loans. I don’t have the whole story, but even China is going to take a tumble by the looks!

Aitch B says:

10:14am | 18/10/11

@Super-Profits, etc.

No different to Ged spruiking her pro-ALP stuff or Malcolm Farr gunning for Abbott or Mirabella talking rubbish or any one of the other politicians who submit articles here pushing the party line.

It’s an opinion piece and he’s entitled to put his opinion forward. If it upsets you so much why don’t you ask the Punch team for the right of reply?

I’m sure that wouldn’t be biased, would it?

acotrel says:

03:09am | 19/10/11

@Mick
You are not wrong !  In a minute we might have to live by actually doing something constructive.  With only a vestige of our manufacturing industry left, and a dumbed down education system, it’s not looking good for Autralia trying to get back into hi-tech, or even labour intensive industries.

NigelC says:

11:03am | 18/10/11

They employ midgits? I never knew!

davo says:

03:07pm | 18/10/11

So that’s what the seven dwarfs do these days.

Tator says:

07:04pm | 18/10/11

Davo,
It is obvious that Michael isn’t Happy, but which one is he - Dopey????

LauraBoBaura says:

03:53pm | 18/10/11

I find this ridiculously offensive. I work for a mining company and I am far from an ‘uneducated dickhead’. You obviously have no idea about the mining industry at all.

It’s not all truck drivers, you know. There are vent engineers, mechanical engineers, mining engineers, geologists, hydrologists, metalurgists, surveyors, database designers and a whole list of people that are far from ‘uneducated dickheads’. Carpenters, fabricators, boiler makers, mechanics, fitters and turners.. all these people are far from ‘unskilled’

These ‘uneducated dickheads’ are paid ‘loads of cash’ because work 12 hours a day for up to 2 weeks straight, away from their families for long periods of time in jobs that are physically/mentally demanding, while you sit on your computer filled with gold & silver & copper & all kinds of things that some ‘uneducated dickhead’ dug out of the ground for you.

Do I hear a tone of jealousy perhaps?

Erick says:

04:40pm | 18/10/11

@Laura BoBaura - Unfortunately, it is a sad fact of life that stupid, ignorant and hateful people like WC exist.

Wynston Cruso says:

04:41pm | 18/10/11

Jealous? Not at all Laura, I live with two mine workers and can tell you now that they wouldn’t be earning 180 grand per year if not for the mining industry. I’m talking about the unskilled people who get the shit kicker jobs that pay more than qualified proffessions in the City.

The guys I know don’t have families, their down time is at least a week with at most 2 weeks work in between, far from stressful, and have no families to be absent from. They aren’t exactly the type of people who would earn thousands of dollars per fortnight for driving trucks and doing slapper jobs in the metro area, and when the boom ends you have to wonder what 90% of the mining work force will do for a living after having pissed away their ‘hard earned’ on holden utes and stubbie shorts.

An exception is my house mate, who has a degree in economics, but isn’t using it as he earns 180 grand a year drilling holes from the comfort of his air conditioned cab with surround sound, free food, accomodation, as well as 1 week on, 1 week off schedule. It’s the easiest job he’s ever done, and having met his mining buddies, I can honestly say not one of them would be earning a fraction of what they do if not for the unskilled, over paid work they perform digging holes in the middle of ass-fuck nowhere.

Wynston Cruso says:

05:11pm | 18/10/11

Far from stupid, ignorant and hateful Erick, I’m quite happy in the well paid proffession I worked hard for. I’m generalising yes, but it’s true, and a sad fact that the mining industry offers employment to the otherwise unemployable. Not only that, but pays them handsomely to undertake menial tasks that a chimp could perform.

LJ Dots says:

06:02pm | 18/10/11

@WC - If what you say is true, I can’t see the problem. So they got lucky and struck gold, good luck to them, I just wish everyone had their luck. Why take it so personally?

Giraffe says:

06:42pm | 18/10/11

Not only that, but pays them handsomely to undertake menial tasks   that a chimp could perform.

Yet, a lot of people like yourself would still rather take the easy job in the city, work the nice hours and be home every night. You get paid less, for a reason. It’s easier to throw insults at the ‘chimps’ than actually go out and earn the big bucks yourself though isn’t it?

Kipling says:

06:07am | 20/10/11

@LauraBoBaura…

So in your world view only “truck drivers” are uneducated idiots? Yep, mining sure employs the upper echelons of social fabric…

Shane From Melbourne says:

09:15pm | 18/10/11

Peak Oil, Peak Coal and Peak everything else. These are finite resources that the mining industry intends to rip out of the ground as fast as possible and to hell with the future in 50 to 100 years time….