Mining and the Greens

[The_Brown_Hornet]

Hell, I'll go further than that. When I live in the US, our apartment was less than 50 miles from a nuclear plant. Never bothered me in the slightest.

The petro chemical plants were a far bigger risk to peoples health.

 

[Scotty]

Lies lies and more lies. Should we trust the word of the government or the word of the three big miners? The integrity of this government is going further downhill.

http://www.theaustralian.com.au/bus...t-in-translation/story-e6frg9px-1225941402833

This new level of mistrust is so fundamental it is hard to understand how it could have happened. Canberra was "obviously" aware of the companies' grievances over the original tax, particularly the damaging interaction of state royalties with the imposition of a new federal tax. The companies were also "obviously" aware of the federal government's desire not to give the states carte blanche to raise royalties at its expense.

The issue was discussed at length in the private meetings as Gillard frantically tried to negotiate a settlement on an issue that was threatening Labor electorally.

Somehow all this got lost in translation.

But according to government sources as well as the companies' views, the commonwealth really did give the impression that this would be a matter for the commonwealth to work out with the states in future.

Until now, the big three have been discreet in their comments about the impact of the revised mining tax. It wasn't in their interests to acknowledge they didn't believe the government was going to raise anything like the $10.5 billion it was budgeting from the tax for the first two years of operation.

These optimistic Treasury figures are seen by most industry players as more designed to plug a political hole than a fiscal one.

Wayne Swan couldn't afford to concede that the drastic changes to the resource super-profits tax would slice many billions of dollars off his revenue targets.

But as the policy transition group holds its hearings around the country, it's no longer possible to be so conveniently vague.

The dubious maths of the tax makes even more evident the extent to which the commonwealth budget is exposed to the states raising royalties. Yet coming to any agreement with the states on this is going to be more difficult and quite possibly more expensive than Canberra had planned.

 

[The_Brown_Hornet]

In order to not derail the election thread, I've put my response here.

The MRRT tax is a fair tax. I may remind us all it is a super profits tax, all it will affect is Gina Rienhart, and Clive Palmer's television ads against the tax. Why not have a tax on an industry that is incredibly bad for carbon emissions, and destroys the environment. I'll sleep fine tonight knowing Palmer and Rienhart, from hopefully next year have to pay for a Carbon tax, and an MRRT. It's a fair game they were originally Australia's (Aboriginal's) land, and they should receive the profits. My beef with the MRRT, is that it's paying off a surplus when the surplus could be simply cut by abandoning basic services.

I choose not to listen to the Greens on many "serious" things, basically only the environment I listen to them. I don't want to make this a rant on The Greens, but they are incompetent on issues such as the economy, education, defence. This "free" education rubbish is not sustainable, and the MRRT isn't the way to go about it.

Chief, with the greatest respect, some of what you wrote above reads like populist class warfare. I know the bigger players in the mining industry aren't the most sympathetic of characters and that they probably don't have a lot of support in the broader community. However, our Australian attitude of pouring scorn on anyone who makes a buck or two is an ugly thing in our society. So, I am going to attempt to defend the indefensible.

Firstly, you are going to have to define a couple of things for me: what do you define as "fair" in this situation and secondly what "destroys the environment"?

As far as the MRRT is concerned, my thoughts were outlined in the election thread and I'll post them again here. They are as follows:

1, Mineral resources belong to the states and thus should be their right to tax or not. The Federal government should stay out of it.
2, The mining companies already pay company taxes, like everyone else does. Why should they be singled out for extra taxation?
3, Once the federal government goes after the resources industries, what's to stop them from gouging other industries they don't like? Watch out anyone who works for a bank, you'll be next.
4, Taxes should be equitable and as broad based as possible, this tax is neither.
5, Even though the feds say they would refund state based royalties, what's to stop them from changing their minds?
6, This whole process was done without any kind of consultation beforehand. Not acceptable in my opinion. If you're going to do it, do it like the Hawke/Keating government did with the petroleum companies in the 1980's.
7, The rate and threshold of the tax coming in runs the very real risk of making our regime internationally uncompetitive. The rates are higher than many other countries who have a similar royalties setup.
8, This whole tax seems to be based on an emotional premise, rather than any kind of sound economic analysis. By that I mean, this whole business of "fair" share and the furphy of foreign ownership of mining companies. Taxation, in my humble opinion, is not to be used as the baseball bat of social engineering to penalise things that the government of the day either doesn't approve or is envious of.
9, The original construction of the 40% underwriting of non-performing projects is a form of corporate welfare, something I am vehemently against.

 

[Scotty]

Taking up BH's lead to repost here.

Originally Posted by chief:

The MRRT tax is a fair tax. I may remind us all it is a super profits tax, all it will affect is Gina Rienhart, and Clive Palmer's television ads against the tax. Why not have a tax on an industry that is incredibly bad for carbon emissions, and destroys the environment. I'll sleep fine tonight knowing Palmer and Rienhart, from hopefully next year have to pay for a Carbon tax, and an MRRT. It's a fair game they were originally Australia's (Aboriginal's) land, and they should receive the profits. My beef with the MRRT, is that it's paying off a surplus when the surplus could be simply cut by abandoning basic services.

I choose not to listen to the Greens on many "serious" things, basically only the environment I listen to them. I don't want to make this a rant on The Greens, but they are incompetent on issues such as the economy, education, defence. This "free" education rubbish is not sustainable, and the MRRT isn't the way to go about it.

If you want to tax emissions, then tax them. That is not a reason to implement a MRRT.

And by the way, how do you define 'super profits'? Don't forget that the government is defining them as a number, not a percentage. Surely you need to define super profits as a percentage, otherwise it doesn't mean anything (eg if I invest 10 billion and get a profit of 100 million is that a super profit at 1%?). And they only affect Rienhart and Palmer? Please, are you telling me that you or anyone you know doesn't have any shares in BHP or RIO etc? Are they super rich people that should have their investments into these companies taxed further?

The only real reason for a resource tax is the same reason for the state royalties, and that is that mining is a finite resource, and that once gone we aren't going to get it back (therefore you need to use additional funds raised from this tax for investment into the future). If you want to add a resource tax, then you need to remove state royalties, but the feds don't have the power to do this and the states won't agree to it.

 

[chief]

Taking up BH's lead to repost here.

Originally Posted by chief:



If you want to tax emissions, then tax them. That is not a reason to implement a MRRT.

And by the way, how do you define 'super profits'? Don't forget that the government is defining them as a number, not a percentage. Surely you need to define super profits as a percentage, otherwise it doesn't mean anything (eg if I invest 10 billion and get a profit of 100 million is that a super profit at 1%?). And they only affect Rienhart and Palmer? Please, are you telling me that you or anyone you know doesn't have any shares in BHP or RIO etc? Are they super rich people that should have their investments into these companies taxed further?

The only real reason for a resource tax is the same reason for the state royalties, and that is that mining is a finite resource, and that once gone we aren't going to get it back (therefore you need to use additional funds raised from this tax for investment into the future). If you want to add a resource tax, then you need to remove state royalties, but the feds don't have the power to do this and the states won't agree to it.

Okay, personally I support a Carbon Tax, and I also support this "Great big tax" on mining, as you're all aware. I'll keep the response brief.

From what I understand about mining, I've lived in major cities my whole life, so please excuse the lack of knowledge. I can admit that at least. A tax on mining, to be honest I really don't have a clue how you do it, but it should be on the profits, and solely the profits. From what I believe, a lot of these companies have started taking their business overseas as well, like BHP and Rio Tinto. They are making a very large profit, and a lot of the profits, aren't even going back to Australian mining. So why not tax them? Why not make a tax that is going to raise superannuation? A cut in company tax?

I'm sticking by this opinion but what I will say is that I 100% understand TBH, and Scotty's point of view here. Just because my comments are making me seem very socialist like. I do understand the argument against the tax, I simply don't agree with it.

Also I do think a 30% tax is a little extreme though.

 

[Scotty]

My point is if you are going to levy a tax based on the theory that the resources are finite and the money should be used to ensure our future as a nation, why just direct it at large companies (that have many small shareholders). From a theoretical standpoint, the tax should be levied against anyone that is using a finite resource.

And why levy it just because a company makes profit out of it? It should be done on a volume basis, so that you get charged x dollars per tonne mined of gas/gold/coal/iron ore/stone/sand anything. They are all finite resources, therefore on this basis if one is taxed, then all should be taxed.

 

[kambah mick]

Scotty, I believe the arguement against a tax on volume rather than profits is that it hinders startups, especially startups by smaller operators. If you are being taxed per ton (as state royalties do now, or at least most states), and you have to pay tax on early ores which may be less valuable than later ores, you are going to be hesitant about mining a site. This was a problem specifically mentioned to the Henry Review Committee hearings by several small miners. It is also one of the reasons the big miners dont like the new tax, it encourages competition.

 

[Scotty]

Eventually the market will sort it out if it is a fair tax. The only reasonable and fair way will be to tax volume, because whatever comes out can't go back.

The market will sort it out in that mining will go for easy to access places first (as always) and move towards the more difficult ones. Let's face there is no such thing as a 'small' miner. They are either big or really big when you compare to other types of companies.

 

[Ash]

TBH; I'll leave a quick reply here. Too busy / tired to talk about it much.

Yeah, the profits from the resource rent tax should largely go into sovereign funds, and other smaller parts should go into subsidising industries hurt by our reliance on mining such that those industries survive until the day comes when mining takes a turn for the worst. The problem is, using it to cut company tax or fund welfare is not a sustainable place for the windfall mining profits to go (just like Howard blowing it on middle class welfare and Costello blowing it on PAYE tax cuts). Of course, the bunch of morons in Canberra (whether it's Peter Costello, or Wayne Swan) can't see the problem with using unsustainable profits to provide permanent tax cuts.

The unfortunate thing is that mining distorts the economy and ultimately a mining boom which will eventually bust or, at least, become a downturn will leave us in a precarious position if we don't plan for it. The mining states of WA, Qld and to a lesser extent NSW will all be in deep trouble once the mining boom ends, and should be the ones to benefit from the sovereign fund and subsidies from the tax.

Of course, Australia hasn't and we will be in trouble.

Regarding state royalties, the way they work is fairly regressive in terms of taxation. A resource rent tax is a more progressive form of taxation. Regarding the mining royalties and them belonging to the state, well, here comes my personal bias: screw the states. Bunch of incompetent self serving muppets with little ability in economic management. I'd support a change to the constitution regarding mineral ownership rights and state v commonwealth.

In summation, I think we're lacking sound economic management of how to best use our windfall mining boom profits (regardless of whether it's Labor or Liberal) and will probably be in a load of shit sooner or later once mining cools.

 

[The_Brown_Hornet]

Ash, I understand the points you are making. A fairly in-depth rebuttal of the mining tax I found here, well after I made my own arguments:

http://www.ipa.org.au/library/publi...010_-_paper_-_australia_s_resource_future.pdf

Julie Novak is a much smarter person than me on these matters, but what she and Alan Moran are saying makes intuitive sense and with some data to back it up.

 

[Scotty]

http://www.theaustralian.com.au/nat...ng-overseas-cash/story-fn59niix-1225986286287

This relates to the Greens but not mining. Seems the hypocrisy extends well past the two major parties.

 

[The_Brown_Hornet]

I saw that on telly the other night. Good to see that they got their big donations in before seeking to cut it off. Do I say, not as I do eh?

 

[Scotty]

I'd like to see Scarfman's view on this, as a Greens supporter.

If they can be two faced about this, what else could they stoop to?

 

[chief]

I'd like to see Scarfman's view on this, as a Greens supporter.

If they can be two faced about this, what else could they stoop to?

The Greens are not so "do good" as many people think they are.

I lost a lot of respect for the Greens and Bob Brown when he hadn't asked for a Defense Force brief of the Afghanistan war since 2001. Pretty poor form, considering he is going around telling everyone that the war should end.

 

[The_Brown_Hornet]

Apropos of this thread, Scott Ludlam, WA Greens senator, has an editorial in the West today about nuclear power.

http://au.news.yahoo.com/thewest/opinion/post/-/blog/theburningissue/post/1794/comment/1/

He's saying that alternative energy sources will be cheaper than nukes by 2020. OK, fine with me, let's just wait until they're cheaper and as efficient as other base load energy production and do nothing further for the moment...

 

[Ash]

I'd like to see Scarfman's view on this, as a Greens supporter.

If they can be two faced about this, what else could they stoop to?

Hold on, isn't that a little unfair? Way to apply the slippery slope fallacy. You were a supporter of John Howard, yes? An example: Howard lying over children overboard - if Howard could do that, imagine what else Howard could/did do!

Call them out on their double standards by all means, but the second part is silly and pointless rhetoric. Whenever I see stuff like that (your second statement), personally I stop considering your argument to begin with as obviously your view is not objective.

Besides, calling any of the political parties hypocritical is probably pretty damn accurate these days.

I will not defend Bob Brown at all though. The Greens need to shift to the right to be a bit closer to centre left. They need to move beyond being a protest party and more towards what the Democrats were. Bob Brown is not the guy for that job at all.

Regarding nuclear power, I'm torn both ways on it. Because the pick up in nuclear power, the technology hasn't advanced as fair as it should have. There are methods which drastically reduces the half life of the nuclear waste, and allows nuclear fission to occur without needing to enrich the fissionable material (preventing the problem with potentially using the material for weapons) (these two points are critical to me for the viability of nuclear fission). However, these methods are not yet ready to really become commercial reactors, and the demand may not be there for them ever to be. (BTW, meltdown is not even possible with some of the new techniques.)

See:
http://en.wikipedia.org/wiki/Generation_IV_reactor
http://en.wikipedia.org/wiki/Pebble_bed_reactors

As far as I am aware, currently the cost to build nuclear power plants is prohibitively expensive.

As far coal plants, I support building ANY type of power plant ahead of more coal power plants in Australia.

 

[matty_k]

I think we all should vote for The Australian Sex party.

 

[Elfster]

Unfortunately as far as coal is concerned, Australia is in a bit of a bind. It is a major source of wealth for us, yet we don't want to use it or think it is bad. We can't really have it both ways.

However Australia does need to have a reliable base load power system if we want to maintain our current lifestyle and if we want to keep on having our current largish immigration policies. (Or we could train/ educate our own people rather than importing them, but that is another thread...). (and as an aside I think we should try to keep our power generation etc in "Australian" hands...I don't think it is a good idea having foreign governments own/ control essential services..)

What I would like to see in Australia is for the country to embrace more fully greater energy efficiency and seriously look at technologies such as "hot rock" thermal power generation and quite an advanced solar industry. There are vast expanses of space out in the country side where large solar farms could produce energy. To ensure a base load - especially overnight, we could use solar thermal energy that "melts" various salts and these are then "stored" and can be used at a slightly later time. Of course there is the issue of having these slar farms too far away from the areas that actually use the energy, but I don't think these are entirely insurmountable.

 

[The_Brown_Hornet]

Coal is a problem if you want to lower CO2 emissions, absolutely. Fortunately, there things we can do with coal seam gas and over here in the West, we have massive amounts of LNG that we are starting to see work its way into the generation system. I see that Santos yesterday announced that the Gladstone project is officially a goer. I would expect that coal fired stations will gradually be phased out in favour of gas fired ones. After that, perhaps the renewables will be cheap enough, but they still won't provide enough base load for the moment.

So we have transition technologies, given that we've decided that Nukes are too hard.

 

[Scotty]

Hold on, isn't that a little unfair? Way to apply the slippery slope fallacy. You were a supporter of John Howard, yes? An example: Howard lying over children overboard - if Howard could do that, imagine what else Howard could/did do!

Call them out on their double standards by all means, but the second part is silly and pointless rhetoric. Whenever I see stuff like that (your second statement), personally I stop considering your argument to begin with as obviously your view is not objective.

Ash,

Sometimes I was a supporter of Howard, sometimes not. I almost voted for Labor at the previous election because I was sick of Howard, but I couldn't believe the bs coming out of Rudds mouth - turns out I was right. I have also previously voted Labor in the state election, so please don't automatically assume that I'm a conservative voter without question.

We all know many politicians lie, and that is why we should also dig deeper whenever they make a statement.

As far as the Greens hyprocrisy goes, this to me does mean a little more than other major party politicians telling porky pies. The Greens have a lot of supporters because of their apparent moral high point standing. They gain many supporters for this very reason, moreso than any other party since the Democrats. This hypocrisy needs to be shown up and talked about so that people that are drawn to them for this reason alone think twice before supporting them.

I hope that explains my rhetoric enough for you to consider my argument further?