The mining sector might have protected us from the harshest winds of the Global Financial Crisis, but according to Kevin Rudd and Wayne Swan it’s no longer just making profits - it’s making “super profits”.
Ergo, these “super profits” can be “super taxed”.
It’s hard to argue with a “super” anything in a rhetorical war, which the Government is well and truly waging right now with the Opposition. By creating the narrative that the miners are so far in the black they qualify for a whole new category all of their own, it’s easier to gouge them.
If you can also stir up a sense that it’s just not fair that helps too.
As Wayne Swan said multiple times yesterday, the “super tax” on the mining industry’s “super profits” is about making sure the rest of us, who have so far missed out on the resource riches, get our “fair share.”
“It will ensure that all Australians get a fairer share and the benefits of the boom are directed where they can make the best impact on jobs, growth and savings,” he said.
Yeah, we can think to ourselves. Where’s my share?
The Government has even made the “super tax” official, by calling the policy containing the 40 per cent tax on windfall mining profits “The Resource Super Profits Tax a fair return to the nation.”
It can be helpfully shorthanded to the “RSPT.” (The banks must be hoping their pretty healthy profits don’t accidentally turn into “super profits” or we could end up with a BSPT.)
Rudd and Swan are not the only ones, however, with a handy acronym. Tony Abbott must have mourned the passing of Kevin Rudd’s ETS, to which he liked to refer as the “Great Big New Tax”*.
Yesterday the Opposition Leader got to trot out the GBNT again. He applied it liberally.
“This is not a plan to grow the economy, it’s Kevin Rudd’s plan to kill the mining boom,” Mr Abbott said.
While no one would argue the mining sector needs a leg up, it does seem a bit counter productive to kill of the industry that’s keeping us afloat.
Shadow finance spokesman Andrew Robb, in a slightly stream-of-consciousness manner yesterday, asked what sounded like some pretty sensible questions of the government about the proposed new tax.
The issue really is how much over the ten years are they relying on this? How much revenue are they expecting to gain over the next ten years? All we saw was a two year estimation of three billion then nine billion. How sensitive is this number and what hangs off it? What is the expenditure that they are anticipating, which is ongoing, which hangs off this tax?
Chances are the prices could come off quickly, the $9 billion could be affected very quickly. How significant is this and how much is the Government relying on it? There’s no indication in the report or in their comments today about that and, secondly, by the time this takes effect the prospect of the new tax may well have meant that a lot of the projects here – or a number of key projects – could be pigeonholed. Olympic Dam could well be put off for ten or twenty years, a number of projects in Queensland I understand are highly sensitive. So for these companies that have got their foot on other resources all around the world, they’ll try and maximise their profits, they’ll develop those mines, mothball these and come back and we will have lost an enormous opportunity to lock in development in this country.
Here’s a wrap up of what the miners themselves had to say:
Rio Tinto warned the RSPT could “severely curtail investment and limit jobs growth.”
“Taxing 40 per cent of profits over the long-term bond rate, together with corporation tax, would make the Australian minerals sector the highest taxed in the world, seriously eroding competitiveness,” said Rio Tinto managing director Australia David Peever.
WA’s Chamber of Minerals and Energy said the RSPT had “added complexity.” “There is a real risk these investors and companies will shift their attention overseas,’’ said CME chief executive Reg Howard-Smith.
The Australian Petroleum Production and Exploration Association said planning of projects could be thrown into chaos. “These include Queensland’s liquefied natural gas projects to be developed from coal seam gas and investments in domestic gas projects for the supply of energy to our capital cities,’’ said APPEA chief executive Belinda Robinson.
The Association of Mining and Exploration Companies said the sector already paid its fair chair. “In the short, medium and longer terms, the result will be a significant loss of wealth creation opportunities for many Australian families, loss of jobs, and a loss of the significant benefits that the sector brings, particularly to regional and remote areas of Australia,’’ said AMEC chief executive Simon Bennison.
And the Minerals Council of Australia said it would make our resources sector the highest taxed in the world. “We are already punching above our weight in terms of tax take,’’ said chief executive Mitch Hooke.
When you boil it all down to them making “super profits”, however, they make an easy target.
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