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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

Canberra watch: dividing the miners « Previous | |Next »
July 1, 2010

From the various reports in the mainstream press we know that negotiations between the Gillard Government and the mining industry over the Resource Super Profits Tax (RSPT) are taking place in Canberra. All we know that is the talks have been "constructive and disciplined approach that is being taken by both sides". And that's all. Nobody is talking. No leaks.

What we don't really know is the government's political strategy in dealing with this conflict. Is it one of divide and rule? Where is the in-depth analysis and expert insight that enables us citizens to understand what is happening behind the closed doors and covered windows?

MoirMInersnegotiations.jpg

If you dig around a bit then you discover that the Gillard Government is trying to split the industry eg., changing the RSPT so that it would carve out the prospective coal seam gas-fed export LNG projects in Queensland, which would be covered by something akin to the existing petroleum resource rent tax.

Another strategy is to make concessions to the big miners to show that their hostility to that RSPT is unreasonable and self-interested; say by raise the controversial uplift factor in the tax from the government bond rate of less than 6 per cent to the 11 per cent or so.

Stephen Bartholomeusz in Business Spectator states that a political strategy had been developed by Rudd and Swan before Gillard displaced Rudd:

It was designed to fragment the hitherto united industry opposition to the RSPT, isolating BHP Billiton, Rio Tinto, Xstrata and the other big miners and enabling the government to portray them as obdurate and greedy and absolutely committed to not paying a "fairer" share of tax.The mining industry campaign would lose a lot of its potency if the industry’s solidarity was broken and it was being prosecuted only by a relative handful of the biggest players.

Bartholomeusz adds that such a politically driven strategy would be a breach of Gillard’s promise to negotiate in good faith. He adds that the RSPT:
was a just a naked grab for cash, akin to the partial nationalisation of the big end of the sector, largely without compensation, which would have undermined its stability, frozen new projects, decimated the smaller miners and driven capital offshore.

I'm not persuaded by the argument since politics lies at the very heart of these negotiations. The core issue is who runs the country: a democratically elected government or big multinational corporations concerned with their profitability. This is what the big miners have to accept---that here has to be an industry-specific profits-based tax for the public good ---as they press for concessions in their negotiations.

Update
The ABC is reporting that the Government is willing to water down the original deal put forward by former prime minister Kevin Rudd and The Treasurer, Wayne Swan. It says that is understood a deal could include lifting the rate at which the super profits tax kicks from 6 per cent to about 12 per cent and making the rules more generous for existing mines.

We will have to wait until tomorrow. My fear is that the increase in superannuation contribution (lifting compulsory superannuation contributions from nine to 12 per cent) has gone west. Let's hope the changes are to the company tax rather than superannuation. Business should bear the brunt of the miners desire to keep their profits.

Update
The renamed Minerals Resource Rent Tax (MRRT) will apply only to iron ore and coal in Australia, and will be capped at 30 per cent rather than the original 40 per cent proposed. Oil and gas projects will come under the current Petroleum Resource Rent Tax (PRRT) regime to all Australian onshore and offshore oil and gas projects, including the North West Shelf. The new ''super profits'' tax will only kick in when profit exceeds the long-term bond rate plus 7 per cent.This reduces the expected revenues by $1.5 billion.

The deal builds on that hammered out in the final days of Kevin Rudd. Lifting compulsory superannuation contributions from nine to 12 per cent is an important step.

| Posted by Gary Sauer-Thompson at 9:48 AM | | Comments (18)
Comments

Comments

Yes, I agree completely. Labor supporters should be demanding that the government confront the mining companies in the same way as conservatives confronted unions. But they won't of course - that's the road to socialism! Labor politicians and union leaders got co-opted into the capitalist ruling class a long time ago, despite the efforts of the loopier Australian wingnuts to portray Gillard as some sort of antipodean Hugo Chavz.

"Bartholomeusz adds that a ...politically driven strategy would be...a breach of Gillard's promise to negotiate in good faith".
No, the government's first priority is to Australia and the Australian people. Its already proposed that the tax is perhaps designed to cover increased costs for oil and petrol, if this incidentally limits the power of recalcitrants in the mining industry, that is only incidental and peripheral.
The fact that they have a reason for the tax does not at all mean that Duck and Gillard will try to cheat the miners, or negotiate in bad faith, at least no more than the miners and their owners and shareholders, who certainly AREN'T interested in paying tax, fair or otherwise.
Sauer Thompson is making it clear that the negotiations have a political and economic basis in reality; the government is thus apolitical, rather than political, since the rationale for the tax has a basis in reality denied by miners.
They are not out to detroy the miners, merely place the issue in a context more relevant to miners actual place in civilisation, requiring integration back into society, away from control of it, since the evidence of bad faith from miners, rightly or wrongly, is palpable.

But the mining magnates have been telling us that THEIR first priority is to Australia and the Australian people...

This is all so confusing!!!

"If you lie down with dogs you will get fleas"... ~Benjamin Franklin, apparently.

As the government continues to walk hand-in-hand with big business, one partner gains legitimacy while the other fritters it away.

How far has the public opinion of politicians fallen, when great slabs of the electorate trust them LESS than they trust billionaire businessmen and multinational corporations?

Will our elected leaders be turning back any time soon?

The Gillard Government is understood to have given ground on three of the industry's key concerns - the retrospective application of the tax, the profit threshold at which the tax took effect and the headline rate of taxation.

How much ground was conceded is unclear.

How much ground was ceded?

I'm betting MORE THAN ENOUGH to get the miner's to play along.

Stephen Bartholomeusz is saying that the big miners have won the day--RSPT has been gutted, along with the massive $9 billion-plus a year of revenues it was supposed to produce. Hoorah for the miners is the subtext. It is what they deserve.

Remember that joke about politicians "Don't vote for them, it only encourages the bastards"?
Same thing about big business, a simple lesson the ALP have never learnt;"Don't surrender to them, it only encourages the bastards".
[Think CRPS/ETS]

Just wait, this is only the first of many jellyback moves from the puppet of the AWU.

No, they just think the continuing accretion of issues during a given news cycle is such that folk will eventually forget the more unsavoury aspects of changing government at this stage in the political cycle.
Anyone still talking about the Gulf oil spill, Gaza, Haitian Earthquake, Afghanistan, Conroy and a half dozen other things, just now?

Paul
the mining tax was a big issue that needed to be cleared away from the decks. It was hurting them. The Gillard Government could not afford to go to an election with a miners publicity campaign against the them.

mars08,
"getting the to get the miner's to play along"--off your back--was the whole point of the compromise. The miners had to be effectually neutralized in the electorate so that their complaints would be seen as greedy and self-intereested.

Has Gillard achieved that? We'll have to wait and see.

john,
the point of politics is to gain and retain power. One person's jelly back is another person's compromise. If the miners are silenced and Gillard wins the election then her compromise on the RSPT will be seen to be clever politics, given Labor's recent fall from grace.

The Coalition has just lost a key issue to effectively hammer Gillard Labor in the run up to the election. The legislation still has to get through the Senate --it will be a Green Senate in July 211 that will strengthen rather than weaken the tax.

Whyalla has been saved says Robert Gottliebsen in Business Spectator:

Whyalla has been saved because the tax cuts off at the mine gate, and not the steel works as proposed under the resource super profits tax. Under the newly proposed minerals resource rent tax (MRRT), One Steel can use market values for the mine. And Olympic Dam is not in the MRRT net because copper and uranium are not in the tax. SA Premier Mike Rann will be over the moon.

It's a yellowcake future in SA.

Whyalla was never in need of being 'saved'.

Gottliebsen is a [insert insults of choice].

I'll be in Whyalla next week and 'people in the know' from them have told me they were never worried in the slightest.
Nary a minor heart palpitation or flicker of anxiety.
A mining company, and cronies, beat-up.

"...the point of politics is to gain and retain power. One person's jelly back is another person's compromise..."

I don't think, even for a second, that these mining magnates will give Labor a fair hearing come next election. They will simply put their weight behind the party which waves the most money in their direction.

So yeah.... maybe they've been "neutralized" for a few months, but they'll still have to be bought-off (as usual) come election time.

Like fred said: "it only encourages the bastards"

And so we take another jump to the right!

Democracy? Fair go? bah!

I would be happy for the mining industry to contribute a percentage of earnings to water infrastructure in the state they mine.

Les,

I'm sure that the mining industry groups will tell you they ARE contributing a percentage of earnings to water infrastructure. After all, they pay quite a bit in tax. Now... what's considered a SUITABLE contribution, given the profits they make?

Oh dear... there's that crazy socialist talk again...!