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The great rock ‘n’ coal swindle

22 Feb 2011

First published on The Drum: 22/02/2011

If there is any silver lining from the mining industry’s 20,800 per cent return on investment for knocking over the Rudd Government’s Resource Rent Tax, it’s that the punters are beginning to wise up.

As interest groups around the nation hone their scare campaigns in expectation of a price on carbon, this week’s Essential Report suggests the mining industry has dealt themselves out of any credible role in the debate.

With record profits the size of many sovereign nation’s GDPs and ongoing plans to extract even more of the national wealth, a majority of the public say they support forcing the mining industry to pay a greater share of their profits in tax.

Q: Would you approve or disapprove of higher taxes on the profits of large mining companies?

Total Vote
Total approve 56% 75% 36% 83%
Total disapprove 27% 13% 49% 6%
Strongly approve 21% 32% 6% 46%
Approve 35% 43% 30% 37%
Disapprove 20% 11% 35% 4%
Strongly disapprove 7% 2% 14% 2%
Don’t know 17% 13% 15% 11%

There is no denying the mining industry’s campaign against the tax last year was effective. It was textbook negative political campaigning, creating the impression of a movement, utilising new media and sticking to a well-researched message.

Driven by the advertising company that ran the Kevin 07 election for the ALP with the help of an online campaigner they poached from the ACTU, it was the typical outsider campaign.

They were first to market to define the issue; identifying the fears of the ill-informed, using the carefully scripted voices of “real people” and tying in with real world events, such as the infamous billionaires’ rally in Perth.

The only difference was whereas socially progressive organisations scrimp to come up with the dollars to run multi-platform campaigns, the mining industry found $20 million in small change and invested it to make themselves look like battlers.

Just like John Howard when confronted with the Rights at Work campaign, the Federal Government was caught flat-footed and limited by the tight parameters of how taxpayer money can be used to present a case for policy change. The ‘power point’ ads were dull and clunky and while Rudd may have had the will to take on the miners, he never had the smarts to develop the arguments to turn the tide.

The tragedy, not just for Rudd but for the nation, was that the arguments were there. Indeed, EMC were engaged by the Miners Union to explore the industry’s claims. Tragically, the government had folded before the counter-punch could be launched – but it’s worth revisiting those findings now a bit of time has passed.

We went around mining communities – to Karrartha in the Pilbara, to Gladstone and Mackay in Queensland – and got their read on the claims that a tax would strangle the industry. But as we found the problem out here was not fear the industry would pack up and leave (the implication in all the advertising) but the deeper fear that the boom would continue in an unsustainable way.

These were communities originally built in partnership with the mining companies; who over the years had walked away from their side of the deal as they attempted to maximise profits. Instead of investing in new infrastructure to support their workers and families, they had let things run down while indulging in the community-busting practise of flying workers in and out for intense periods of shift work. The impact was stark – roads in remote areas of the nation clogged from 6am, property more expensive than Sydney Harbour, lack of facilities for kids and family.

The message from the mining communities was clear – the mining companies had been taking for too long, it was time to put something back; and to the extent that the mining tax created the funds to invest in much-needed roads, rail and other facilities, the mining communities were all for it.

In fact, the fear about the tax was greatest away from the hubs of industry – in capital cities where mining companies were prepared to spread porkies, to scare people that the boom would just up and end if they so much as asked them for a little more.

Here there needed to be a broader engagement on who is winning from the economic boom – and especially the shift in wage-to-profit ratio of recent decades. Driving mining profits into national savings, especially a sovereign fund, plus enhancing Australia’s insufficient retirement provisions through increasing super were debates if, constructed properly, were sustainable.

But before these arguments rolled out the deal was done, and it was back to business as usual: massive profits and nothing in place to manage the impact of that growth in the mining communities, just a recommitment to trickle-down economics despite all the evidence to the contrary.

And now we must grapple with a price on carbon and fear will again became a trade-able commodity, something to be distilled and distributed by any industry that wants to dodge their responsibility. They will stick to the script jobs lost, investment offshore, national prosperity compromised. And it will be utter and self-serving rubbish.

There is a bigger scare campaign of course – for those with the fortitude to mount it.

That’s the cost of inaction on moving to price carbon – higher energy prices as we fail to adapt our energy base, industries damaged by extreme weather – agriculture, tourism and, pointedly insurance.

And the even greater cost, the cost of refusing to move fast and lead the transition to a sustainable energy base with all the flow-on benefits to our economy in the long-term.

These are the real risks of inaction, that trump with spades the bleating of the miners who every time they open their mouths should be reminded of the great rock’n’coal swindle of 2010.

As the old adage goes: fool me once, shame on you. Fool me twice, shame on me.

– Peter Lewis: Director, EMC