BHP are digging up our mineral wealth and Aussies deserve their fair share of it.
Australia's mineral wealth belongs to all Australians. Yet it is the big miners who take the money and put some of it into tax havens. Good for investors, sure, but is it good for all Australians? Not by a long shot. Unless we ensure that there is a direct link between what is being dug up from the ground and the profits it makes, we are simply pandering to the greed of miners at the expense of the Australian people. BHP don't like paying the tax and you can understand it. But do not be fooled into thinking it will cost jobs and kill the company. In the first half of 2011, BHP has reported a net profit growth of 71.5%.
It is argued that taxing the mining companies will push up the cost of living for anyone who pays electricity bills. This is true, but it is only true because for too long successive Australian governments have skewed our tax system and infrastructure towards big mining. It has now become apparent just how costly this is for ordinary Australians.
Because of the increasing costs of building community infrastructure in the deserts of Western Australia and Queensland, those of use who live in Sydney, Melbourne and Adelaide (that's most of us) lose out federal funding. Yet every time a new mine is opened in a town with a settled population of around 200 and a mobile population of thousands, someone has to fund a new ring road for semi-trailers. New schools are built and sometimes a railway. The government have to fund GP clinics because it is otherwise impossible to coax doctors out into the middle of nowhere. The local council must build parks, childcare services and other amenities. All this infrastructure is usually in use for less than twenty years. In the case of Nickel mines in Beaconsfield and Ravensthorpe the infrastructure was used for less than five years because the Nickel price fell through the floor. But it doesn't cost any less to build. For these reasons, the government has been forced to take hundreds of millions in GST revenue from New South Wales, Victoria and South Australia to put into Queensland and Western Australia. Victorian Premier Ted Baillieu was right to complain that Victorians should feel let down. After all, the logic for building the ring road and upgrading the Princes to Geelong was that it would build economic ties between these two ports, help to deal with population pressure in Melbourne while stimulating the local Geelong economy. Building ring roads and railways to mines have none of these long term effects.
Another way it affects most Australians is by spoiling employment growth in any sector that is not related to mining and transport. A mechanic just out of his apprenticeship can earn $58 an hour in the Pilbara, whereas according to the Australian Bureau of Statistics, the national average is between $12 and $18. A mechanic in Sydney will pay his best few mechanics as much as he can afford to keep them on. This cuts down the small business' margins and makes it almost impossible for them to employ more mechanics. As their newly qualified apprentices struggle to find work, they are lost to the mining communities in WA. What is Tony Abbott's response to this? Move to Western Australia. But we can't all move our lives to dig from the ground. Moreover, BHP is Australia's largest company and as such will do fine without so many taxation concessions.
Given the pressure that mining puts on business growth in our major cities, governments ponder the challenges of a patchwork economy. How does Australia transition from an economy dependant on transport and oil (already fat on highways and lean on rail) to move raw mining goods sold overseas to an economy that plays to our strong education base? Australia is well placed to build an economy based on knowledge services such as accounting, engineering, consultancy, education, entertainment and the arts and medical expertise. It has the requisite knowledge, although the high Australian dollar makes this a difficult business plan to execute at present. Likewise, Australia is well positioned to manufacture high end, high return products like electronics, medical equipment and pharmaceutical goods. There is no reason why Australia should not be able produce a company like Siemens to help manufacture clean energy. Instead, infrastructure, tax structures and trade conditions that would help develop these industries have been sacrificed to the needs of big miners. A tax wont go all the way to addressing this, but it will help.
I'm not saying that mining is a bad thing that hurts us all. I'm simply saying that given the pressure it puts on our tax dollars, it needs to contribute more to the federal government's budget bottom line – no matter which major party finds itself in power. The balance is currently out of whack but when Rudd tried to fix it, it cost him his job. Australians need to be more awake to the logic of the mining tax instead of allowing themselves to be scared of cost of living increases which are in large part driven by the rising cost of oil. It's true that the tax will contribute to them, but in the long term it will help drive them down and make the whole of Australia more properous. After all, with the rise of the Indian, Chinese, Indonesian and Brazilian economies also dependant on oil for transport (and, in China's case, the communist government's relentless economic stimulus), petrol prices will only continue to rise.
Abbott has made ground by running the line that Labour spending is out of control and the mining tax is a quick political fix. For the good of the Liberal party he is right to do so, but from the perspective of the good of all Australians he's got it wrong. He has caved into the massive political pressure exerted from the mining lobby and the IPA – John Roskam's far right 'think tank' funded by mining and oil concerns. We should not allow investment into Australia's future infrastructure to be dominated by a mining fiefdom.
The reason for this is not simply economic, it is social and environmental. I will leave a discussion of the consequences of taxation on the Australian environment to someone more qualified. But I will quickly make an argument for Australia's mineral wealth to be more evenly distributed through an appeal to history.
This point is ideologically based. But it is the ideology that after all forms the logic of economics in a capital trade based economic system, and is therefore entirely reasonable in the context of economic argumentation: the mineral wealth of the Australian nation belongs to all Australians, not just BHP Billiton, Rio Tinto and Xstrata.
In the time leading up to the 1850s, Australia's colonial administration was dominated by landed aristocracies. Those squatters who managed to survive had bought up the land already cleared by those who had failed around them and moved back into Sydney, Melbourne and Adelaide (Paul Carter's analysis of the spatial dimensions of this process is brilliant if occasionally cumbersome, if you're interested in a good read – Paul Carter, The Road to Botany Bay). The original opportunities afforded to freed convicts to build wealth and social status had disappeared in the space of only sixty years. Now convicts were used by successful squatters for cheap labour and were otherwise considered such a nuisance that colonial governments were asking England to stop sending them.
It is clear that some convicts at least had wanted to come to Australia. Some Irishwomen who were convicted of petty crimes howled openly in the docks when they were not sentenced to deportation. But this dream was over, the petty criminals were treated with a mixture of contempt and derision by squatters and the colonial administration which they influenced alike. Money for building colonial infrastructure such as roads and schools was diverted to cattle and sheep stations. This arrangement maintained the money, education, privilege and power of the wealthy with scant regard for anyone else. In short, it created a class system.
Then, on 15 May 1851, the Sydney Morning Herald announced that gold had been found. Convicts and failed squatters rushed to the New South Welsh goldfields. In August, people had moved to Ballarat. According to Manning Clark, Melbourne and Geelong was empty of men until December of the same year, when some had failed to find their fortune or the fortitude to continue looking for it. The wealth which this gold afforded to individual diggers was the turn of luck which helped to break the squatter's economic and ideological strangle-hold on power.
During the gold rush there was debate about the future make up of colonial constitutions for legislative assemblies. The large landowners wanted “a conservative one – a British... not a Yankee constitution” which would guarantee their position and interests in a British House of Lords arrangement of inherited powers. New South Welsh liberals and Republicans – vocal and large in number – wanted a truly democratic system which safeguarded the weight of each man's vote equally. They didn't get it.
When they were denied it in Victoria, the government tried to move in on miner's profits to safeguard the landed interest against the economic clout of gold money. Diggers were treated as one and the same thing as convicts (especially those without proper licenses). Those who struck it rich were derided and scorned for shopping on Collins Street when they had no prior land or education. Government taxes on individual diggers sought to buoy up the power of the established rich. It famously ended in the Eureka stockade – an event which ran deep into the hearts and minds of that generation and the next, and helped to ensure that our federal system of government instilled the right of each man to have an equal vote. Women, as history tells us, would have to wait.
Now, it could be argued that the Eureka Stockade is a poor example to bring up in favour of taxing miners. But the fact is that the situation is currently similar, only in reverse. Where once the land owners were an Aristocracy in all but name (and they wanted to change even that), now it is the interests of major mining corporations that subverts the legitimate power and potential for social mobility for the majority of Australians. Gina Rinehart and Clive Palmer are the new Wentworth. And where the gold mining tax was in the interests of a few land owners because it dampened the potential for economic growth for everyone else, the gold mines took Australia's mineral wealth and shared it to any individual with the industry to get it. Similarly, the Mining Super Profits Tax takes the mineral wealth of Australia and shares it with us all.
