The mining ads are all spin, and the Budget shows it

So why does this constitute a lie and not simple spin? Simply because the ads are designed to deceive. That’s why.

Two examples are a stand out. First, the ad complaining too little tax is paid by mining companies deliberately deceives by omitting the amount of corporate tax paid (ie income tax paid on profits) paid by mining companies when showing the amount paid.

Second, putting out that the increase in the Superannuation Guarantee Charge from 9% to 12% will be paid for by the Mining Super Tax.

It won’t be. Employers will pay for the increase of 3% as a wage increase but by law it must be paid into a superannuation fund.
The Government justifies its statement that the Mining Super Tax is paying for the increase because the Rudd Government says it will collect less income tax from the 3% increase because a majority of workers would pay a higher marginal rate of tax on income normally received, rather than the 15% concessional rate paid for superannuation contributions.

So Mr Rudd argues they need a new tax to make up the difference. To quote the Prime Minister’s new favourite word: Balderdash!

And what about the much plugged political line “Australians must get their fair share of mining wealth” implying that this is currently not the case. Budget Paper 1 circulated by Treasurer Swan and Finance Minister Tanner tends to cast some light on the truth or the falsity of this statement.

The paper has a section headed “Benefiting from our mineral resources”. Here it clearly states how mining wealth is shared – quote:

Australia’s mining resource production is concentrated in Western Australia and Queensland and is of most importance to the Northern Territory and Western Australian economies. However the benefits of mining production are distributed more broadly. Part of the income gains from the commodity prices accrue to households through their shareholdings in mining companies (directly or indirectly through superannuation funds). Part of the gains also accrue to Government through resource charges or taxes and where these revenue gains accrue disproportionately to particular State Governments, fiscal equalisation arrangements allocate those gains among all State and Territory Governments. The overall tax-transfer system in Australia further acts to spread the gains as does the reallocation of resources within the community.

Mr Rudd’s problem is that state governments own the mineral resources and not him or the Commonwealth Government (except for the Territories). The Commonwealth is entitled to tax mining company profits and it does and it gets a hefty amount. It appears to Mr Rudd that mining companies are an endless source of revenue ripe for raising by the big new mining tax.

Presumably they are either the Magic Pudding or the Golden Goose.

But the gains from mining are not automatic flow. Again I quote Budget Paper 1 – “Benefiting from our mineral resources”:

Not all resource rich countries have been able to translate resource wealth into sustained economic performance ... But while many resource rich countries have at times lagged behind in economic performance, others such as Australia have done relatively well.

The cross-country evidence highlights sound institution and policy responses as key explanations for why some resource rich countries have had better outcomes than others

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The Budget Paper is right. Policy responses are key to Australia’s success. And this new tax is bad policy. We want investment and production in the mining sector to be strong. Mining exports underpinned our economy during the global financial crisis. Had they not been strong we would have gone into recession.

The combination of a debt free nation, with cash in the bank, the Howard (Costello legacy) and a continuing strong mining sector is what allowed us to do better than other nations. Not Mr Rudd plunging us into debt and embarking on a spending binge on failed pink batt installations and bungled school halls, canteens and inadequate classrooms.

Incompetence all round really. No wonder they think they need a taxpayer funded advertising campaign.

But fear of falling off the cliff does not justify trying to dupe and deceive the Australian people.

Mr Rudd did seem to fool all of the people all of the time for some time but in recent times the old adage proves true “you can’t fool them all of the time” even by turning spin into lies.

PS Wasn’t it good to see Mr Steve Bracks get an Order of Australia Award for his services to Victoria. Remember he was the Leader of the Opposition with a preferred Premier rating of 23% to Geoff Kennett’s 55% just three days before Bracks won and Kennett lost. Mr Bracks stayed for ten years. Funny thing that!