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  • Jun, 2012

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    Rolling in Dough

    As Gina continues on her “I, Gina” self-absorbed stomp, it’s always useful to keep in mind that a society always has the ultimate option: if rich people, or mining barons, don’t care about the national interest, they can just move somewhere else. And what is pretty clear is that most don’t, and won’t, because they have it good where they are–which brings us to the whinging about resources taxes.

    Gina and her ilk–Clive Palmer and Twiggy Forrest come most quickly to mind–bring up the usual fiction heard around the world whenever higher taxes on the wealthy are pushed as a way of making sure a society sustains itself: it’s anti-business and hurts “us” from being competitive.

    Well, to focus on just mining, that’s pure rubbish, as we learn from a pithy summary from Peter Colley, National Research Director at the Construction, Forestry, Mining and Energy Union (we don’t have a link to a place it might be posted–we’re just privileged to get such gripping, novelistic American Idol-like fare sent our way…). As Peter writes:

    One would think the mining companies were losing money when the overall picture for the mining industry globally is one of rude good health.

    PriceWaterhouseCoopers, one of the global Big 4 accounting firms, in their annual survey of the mining industry summarised the good news for big mining companies:

    “In 2011, the financial results for the Top 40 hit new heights”, it said, listing the following facts:

    • Revenues increased 26% to over $700 billion

    • Net profit was up 21% to $133 billion

    • Operating cash flows grew 34% to $174 billion

    • Investing cash flows grew 92%

    • The Top 40 returned 156% more to shareholders than in 2010

    • Total assets remained above $1 trillion and grew a further 13%.

    Imagine that. They are rolling in dough. And it isn’t the case that the local barons, Gina and The Gang, would have it so much better in another place on the planet. Back to Peter:

    At least 25 countries increased taxes and royalties on their mining industries, or announced intentions to do so. These include all the major mining nations – Canada, the USA, South Africa, Indonesia, Chile, Brazil, Colombia and even China and India.

    These taxes and royalties are often far higher than in Australia – in Colombia they can reach 81% of coal mining profit, while in the oil and gas sector it is well known that Norway taxes almost all the profit of the North Sea oil industry – but what remains is still enough to keep the investors coming.

    So, the proper response to “we’ll take our business elsewhere” should be, “what flight can we book you on?” The truth is that what Gina and The Gang are really up to is a extortion–but they aren’t holding much of a weapon. The resources are in the ground. You can’t take it with you. But, by all means, if life is so cruel for Gina and The Gang, the country should organize a collective farewell party, wave goodbye and invite others to do their business here.


    And we neglected to mention that Fortescue is out there whinging about the mining tax and, per the SMH, taking the government to court:

    While large miners Rio Tinto and BHP were able to strike a deal with the federal government over the final scope of the tax, smaller miners including Fortescue and Gina Rinehart’s Hancock Prospecting have waged a fierce battle against the tax.

    Fortescue has been threatening to challenge the MRRT in the High Court for months, arguing it is unfair and was been stitched up by the government in conjunction with the big miners.

    A spokesman for the acting prime minister and Treasurer Wayne Swan said the challenge had not come as a surprise.

    ”Mr Forrest has made it clear that he is staunchly opposed to the government spreading the benefits of the mining boom to millions of households and small businesses who aren’t in the fast lane,” he said.

    “The Gillard government believes Australia’s non-renewable natural resources belong to all Australians, not just to a handful of mining billionaires, and is determined to deliver the MRRT to ensure the Australian community shares in the benefits and opportunities of the mining boom.” [emphasis added]

    To which we say: good on the government, and the Swanster for saying what needed to be said.