Mining tax

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By David Collyer:

Australia is delighted to hear our two world-leading miners, BHP Billiton and Rio Tinto, announce record profits and giant capital investment programs.

Our pleasure ends right there.

Both these titans are majority owned by foreign interests through the London Stock Exchange. They are effectively headquartered out of London. Management wages are spent there. Most of their dividend streams are channelled through there. The majority of capital gains driven by their swollen profits are enjoyed there.

Can you hear the sucking noise as billions of dollars leave our country every year, never to return?

When mining meant grizzled prospectors panning for gold on remote creeks, it made sense to leave their earnings untaxed. Our world is more complex now.

Mining in Australia is a Goliath. The engineering works to dig up, simply process and move the ore to port are staggering. Rio produced 224 million tonnes of Pilbara iron ore last year; BHP shipped ‘only’ 150 million tonnes. Sure they paid company tax like other corporates. But they didn’t pay for the resource, which belongs to you and me, through the Australian government. And the royalties they pay state governments are laughable.

The new mining tax negotiated by the Gillard government weakens again the proposal in the Henry Review, Australia’s Future Tax System. Treasury estimates the government has sacrificed $60.5 billion over the next ten years. This gap in government revenues will be filled by taxes on you and me, and by providing lower services.

Australian citizens would be rioting in the street if they understood this conspiracy.

The weak new tax falls only on iron ore and coal. BHP’s Olympic Dam contains $1.3 trillion in copper, gold and uranium at current prices. None of this will be subject to the mining tax.

We could sack the Gillard government for being such gormless twits, but the Liberal-National opposition are against the mining tax. They prefer the grossly distorted system we currently have.

Money wasted on the school halls program in the middle of the financial crisis drew strident criticism, yet $60.5 billion in uncollected taxes passes without comment.

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