The Miners' tax

The following is possibly the best overview I've seen so far.
A commenter on Bolt's blog:
[quote]Am I missing something here?

In the first instance, how can Rudd build a Budget on a hypothetical amount of tax to be raised by the mining tax? The tax amount received would surely be open to wild fluctuations which would imperil all projects which are reliant on that money.

In the second instance, how can Rudd then make an about face and claim to have saved money in the Budget by not going ahead with the hypothetical provision of money to failed ventures? This hypothetically saved amount would be dependant on how many companies would hypothetically have to be bailed out. This is so far from ever being able to be assessed that it is ludicrous to even come up with any sort of figure.


A budget built like a house of cards which has been designed by a government which is clearly incompetent!

Welcome to the reality that is Labor.[/quote]
Now of course it appears another backflip is on the way as a result of the enormous backlash, plus the uncertainty that is having drastic effects on the markets.

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Here is a view from Richard Court.

And he makes the point most have missed in this debate including the ALP.

The states own the Crown Land within their state.

The PRRT was for offshore petroleum and we have all been caught up in the comparison but no journalist has pointed this out and why is that?

States must stop Canberra stealing wealth

* Richard Court

* From: The Australian

* May 28, 2010 12:00AM

HERE we go again, another back-door attempt by the central government to put a bigger tap into the resource sector's revenue vein at the expense of the states and the companies.

This time it is with a more sophisticated plan than R.F.X. Connor's old soviet style model in the 1970s. This approach held back the North West Shelf Project for some years but fortunately the Australian people were allowed to have their say at the ballot box.

Fast forward more than three decades and I find myself saying, "When is enough enough?"

After nearly 110 years, there is now a serious imbalance within the federation. The Howard government was able to retire the nation's debt, build a Future Fund and still have money to throw into the air before elections, courtesy of a strong commodity cycle. Doesn't that tell us something?

At the same time, at the federal level, both the main political parties malign the states for not doing enough to deliver the essential services that are their constitutional responsibility.

No wonder the states are angry watching Canberra hand out an increasing percentage of our nation's tax collections under its terms as the states deal with a severely mauled revenue base.

The resource super-profits tax is the last straw and all premiers should unite against this money grab.

It is for all intents and purposes a resource rent tax with one small hurdle for the central government: it does not have any onshore resources, hence this RSPT that makes even tax accountants and lawyers blush at its audacity in vaulting constitutional hurdles.

This debate highlights the lack of understanding of some of even our most senior corporate leaders about how the royalties collected in Western Australia and Queensland are redistributed to the other states.

The more successful WA and Queensland are with their resource sectors, the better off all states are courtesy of the redistribution through the Commonwealth Grants Commission.

That's why WA receives only 68c in the dollar out of the GST revenues.

The irony of the workings of the Commonwealth Grants Commission is that it rewards inefficient states. If a state bans mining, it can have green credentials and receive an even greater share of the revenues generated in Queensland and WA.

When BHP Billiton and Rio Tinto make strong profits, they pay significant royalties, company tax and a wage bill that fills the central government's coffers with income tax.

Under our federation we have sovereign states with the minerals in those states belonging to the crown. It is the states' constitutional responsibility to properly manage those resources and it is up to them whether they charge an ad valorem royalty or a profits-based royalty. If the royalty levels happen to be low, the federal government collects more in company tax and vice versa.

This system is fair and works well, so why change it? Because Canberra wants a bigger slice of the pie.

I have a quiet chuckle about the new interest in the resource sector. Just 10 short years ago, when I was the WA premier and treasurer, on countless occasions the wise men and women from the east dismissed the resource sector as yesterday's story. The experts in Canberra explained resources were the old economy and told us that as a nation we had matured beyond living off wool and digging up rocks. The new world was one of hi-tech industries and modern financial centres. Oil was about $12 a barrel and iron ore, nickel and other commodity prices were flat. Even the emerging China story was treated with scepticism.

Today, after the remarkable China growth story has become a reality, we see the appearance of an RSPT designed by the very same people.

We have heard about the need to extract the correct pound of flesh from the people exploiting finite resources, yet there is no mention of the extra money being saved in a sovereign wealth fund for when these resources are depleted. Instead, the funds are already incorporated in recurrent expenditure.

Andrew Forrest does not exaggerate when he says the difference between Australia and Greece is the resource sector. It is wonderful to have middle-class welfare but you need to generate wealth somewhere in the economy to pay for it.

We are being told by the gurus at the centre that industry must give more analytical input to this fraudulently named consultation committee. You don't have to be too smart to know that if the tax starts raising $9 billion extra a year it is an added burden on an industry that needs to raise large amounts of capital to make these projects happen. If Treasury estimates $9bn, in my experience, that figure will be a very conservative one.

continued in next post with link

Richard Court continued.

I have been on both sides of these issues. I have chaired an Australian engineering company whose core business has been designing and building mineral processing plants in Australia, Africa and South America.

If Canberra took the time to sit inside these engineering businesses for a few weeks it would find that, even before the tax was announced, Australian companies were finding Africa and South America very attractive locations in which to invest. .

There is nothing new in big-spending central governments latching on to someone else's profits while failing to understand the realities behind creating those profits.

My message to Canberra is: take your fair share of profits through company tax, income tax, and allow the states to determine the fairest arrangements for accessing these resources.

The North West Shelf Project is a great model. It has Australian equity alongside foreign capital, it is operated by an Australian company and all states share in the royalties, with about 70 per cent initially going to WA, then being redistributed to the other states through the grants commission. Instead of following this example, the resources sector is on the road to being nationalised; confidence has been destroyed simply by announcing this change to our fiscal regime with zero consultation with industry; and it is a further attack on the states' revenue-raising abilities via a de facto expropriation of states' property rights.

It is 77 years since 68 per cent of West Australians voted to leave the federation. Secession, however, is not the answer. Strengthening the federation by strengthening the states is the answer. The first political party that starts reversing this trend will be politically very successful and it will subject the wise men and women attached to our central government and stoking the Canberra power grab to long overdue scrutiny. Remember, the states created our federation, not the other way around.

Richard Court was the premier and treasurer of Western Australia from 1993 to 2001.


Government's mining tax ads 'outrageous'


Good article BigVal.

Clay on the advertising...the blatant hypocrisy of this govt is beyond anything I've seen in my lifetime.

Here is what Rudd said in 2007.

On the nature of promise and the undertaking we have given, it's for the auditor General of the Commonwealth to certify whether individual advertisements contain legitimate public information or not. But here's something further, here's a challenge to Mr Howard. Whoever wins this next election, why not have a system whereby three months prior to when an election is due, whenever this election is due, three months prior to the election being due, for there to be a ban on publicly funded advertising unless explicitly agreed between the Leader of the Government and the Leader of the Opposition.

KERRY O'BRIEN: Is that what you will promise to do in a Labor Government?

KEVIN RUDD: That is an absolute undertaking from us. I believe this is a sick cancer within our system. It's a cancer on democracy. [ /quote]

Today we read:

Events are such that the Rudd Government has decided to suspend its own flimsy guidelines for policing taxpayer funded advertising in order to get $38.5 million worth of ads praising its tax reforms on the air. Pronto.

Like tomorrow. And the day after. The new tax ads start tomorrow. Newspapers first. TV to come.

These ads have not been cleared by the independent committee now charged with ensuring government ads contain necessary information rather than thinly disguised partisan propaganda.

They have been cleared by the government. No one else.

Let’s recap the whole sequence for a second.

Kevin Rudd comes to office in 2007 promising he will not abuse the process of government funded advertising like the Howard government did so egregiously.

If climate change was the "great moral challenge of our time" government advertising, according to Rudd in 2007, was "a long term cancer on our democracy."

He wins. He appoints the Auditor-General to police government ads.

The Auditor-General runs a ruler over everything, thinking he’s doing his job (given the cancer and all that). He asks lots of questions.

The government gets annoyed


and bones him.

The government installs a new independent committee of former public servants to play the auditors’ role.

These public servants report to the government, (unlike the Auditor-General, who is independent from Government and reports to the Parliament.)

To cap off the backflip, it amends it own guidelines to give itself more discretion to bypass even the new watered down process to respond in cases where someone in the government decides there is a ‘‘compelling reason’’ to — how can I put this delicately — go for broke at the taxpayers expense. Then, today, it fulfils its own disappointing prophesy.

It takes advantage of its new ‘‘flexibility’’.

It decides it won’t even bother with its new watered down accountability process and just whacks ads on the air.


I say again...more made of Tony Abbott and a throwaway line where he actually tells the truth, , than the dishonesty and hypocrisy of this, the worst govt in decades.

I brought this up under another heading yesterday & it was ignored. In

defence of the Rudd hypocricy, you must admit that this money has been

allocated outside the 3 months period & it is an emergency. (for Rudd)

I brought this up under another heading yesterday & it was ignored. In

defence of the Rudd hypocricy, you must admit that this money has been

allocated outside the 3 months period & it is an emergency. (for Rudd)

Apologies from me, Innes. The format of the forum sometimes makes it difficult to see new posts.

Yes the emergency for Rudd is that people are starting to see him for what he is.

Also, the advertising of their health policy as well as this miners'tax, is dishonest and wasteful as neither have gone before the Parliament yet.

Why are you all so upset about the mine tax?

Of course it is going to be rubbished by the mining companies,

no one wants to pay more tax, didn't henry say the mine co's

shed 19% of their workforce and put a lie to them being the way out

of recession, Of course that is against the belief of those who

close their ey es to facts and rely on bulldust from ex premiers

who have a nut to crack, no mention of all the decades that NSW.

and Vic. carried those states, W.A. Q'ld on there back.

As seniors we all should know that politicians are tarred with the

same brush, making out that tony abbott is an honest man for

not being able to defend himself and making a complete idiot

of himself after blurting out ,but, but, but. not able to think fast get himself out of his own mess.

Remember 'Henry' WAS PUT THERE BY hOWARD.

If you have a mortgage and want to get out of debt,

sell your house, and your out of debt. then pay rent

isnt that what the howard and kennett governments did?

sell and privatise all state and federal owned assets,

came out of debt, and now they were so wonderful .

How many billions for telecom, ?alone.

All politicians should face an inquisition,they all play with truth. seth.

The problem is Seth that most dont understand the Mining Tax but remembering what the Rudd Labor government has failed at so dismally, back flipped on, wasted money on and told blatant lies about, now consider anything that rolls out of Rudd's mouth now as pure unadulterated BS.

They can spend every cent of borrowed money in Treasury in an attempt to get the message across but I like many others have switched off, preferring to wait for the election and dump the worst government this country has ever had.

I understand the distrust in what has happened in the failure

of various undertakings by the government, mainly through lack

of supervision over the projects when the shysters came in.

However the principle behind the stimulus program was right.

{As shown by germany,and japan during the depression}

I have noticed in the debate about the super profit tax,

a similar response to when Chifley proposed nationalising

the banks, a fear campaign by the banks and liberal party

that no ones money was safe and better kept under a mattress.

their campaign was successful, the banks became what we know

today and also make billions by overcharging in fees. seth.

Seth, I think your comments are very good & to the point. There is, however,

one major difference. The banks had nowhere to run & arguably, our greatest

Prime Minister was beaten by a very expensive & extremely well organised

scare campaign. The miners do have somewhere to run, where they will be

given tax breaks & welcomed with open arms, even if they didn't take their

$100Billion with them. I believe that the only reason that Rudd didn't pull this

on the banks is that the miners where an easier target with no voter defence.

As usual, he didn't work out the financial repercussions. I believe that the

miners would have worn a tax increase of 5% without too much hassle, but

a 40% increase; no way.

One of the other things that nobody seems to be talking about, is that only

about 1 in 20 exploration mining ventures is ever successful & part of this

deal is for the Australian taxpayer to have to pay for 40% of the losses of

the unsuccessful mining ventures. Rudd doesn't care about this, because

these new ventures inevitably take 5 or more years to fail & he wont get the

blame, because he will be long gone.


I may be wrong, but in my understanding of the so called 40% new tax

is not an overall 40% taxation increase on all profit, but a 40% tax on

abnormal or super profit.

There is a small article on page 2, todays sunday herald-sun

titled 'Bid may backfire}

I understand Tony Abbott attacking with the scare mongering

wasn't he the one who has in mind a touch of 'slavery'

sending those on the dole to work in the mines.

If you keep repeating a lie you end up believing it yourself..

We may differ in opinion, but thank God we can, without fear. seth.

You are correct seth, it is not on the overall profit, it is only based on

any profit made over & above the 10 year bond rate. (6%) It is, also,

I understand, suppose to replace the royalty payments, But I think

W/A & Queensland may have a word or 2 to add to that. The real

problem is, that unless Rudd is game to call a double dissolution,

& I doubt that he is, the legislation will not get past the Upper House,

so all this angst is for nothing, other than to transfer $100Billion of

investment money to other Countries

Innes, it may be outside the three months allowable, but th deception goes much deeper.

"On Thursday Rudd got up in the parliament swearing black and blue that his great big new tax on mining was not affecting share prices and this assertion was against all the factual data. To say otherwise he thundered was 'wrong, wrong, wrong'.

"We now know that on Monday Joe Ludwig approved Wayne Swan's request for an exemption to Labor's own rules so the government could launch a $38m advertising blitz against the miners. The clinker is in Ludwig's Friday press release where he says 'I have accepted the Treasurer's advice that as the tax reforms involve changes to the value of some capital assets, they impact on financial markets'.

"There it is in black and white. The Treasurer obviously has long had data which supports the Coalition's stating of the obvious: that this tax is adversely impacting on the sharemarket and on the superannuation investments of millions of Australians.

"Rudd knew this and therefore it would appear he has clearly and quite deliberately misled the parliament and he must provide a full explanation such is the seriousness of this issue. His government has approved a panicked advertising blitz on the very basis that he said on Thursday did not exist."


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