Issue 12, August 2010 | Sarah Burnside

 

Illustrating that this is an era of globalised politics, the ill-fated resources super profits tax (RSPT) is now invoked as a warning to other countries against ‘resource nationalism’. In a recent speech to mining executives in London, Rio Tinto chief executive Tom Albanese suggested that ‘policymakers around the world can learn a lesson when considering a new tax to plug a revenue gap, or play to local politics’[1]. Australia, presumably, has learned its lesson. However, debates over the amended minerals rent resource tax (MRRT) continue. Discussions regarding the proposed tax over the past few months have demonstrated not only the overabundance of acronyms in public life, but some of the inconsistencies in the Australian political discourse.

The proposed tax, derived from the Henry Tax Review, was controversial from the outset. In June, The Australian’s editorial warned then Prime Minister Kevin Rudd that ‘political leaders who appeal to noisy activists lose elections’[2]. The editorial criticised the RSPT, urging Rudd to ignore unions and environmentalists and embrace ‘the sensible centre’. The timing was somewhat ironic; mere days earlier West Australians had been treated to ‘noisy activists’ of another political stripe. The ‘billionaires’ rally’ on 8 June, organised by the Association of Mining and Exploration Companies (AMEC), saw magnates Gina Rhinehart and Andrew Forrest join other protesters in filling the Perth Esplanade with cries of ‘axe the tax’. There seemed to be some cognitive dissonance on the part of the national newspaper: those who were heckling Government ministers, taking to the streets and engaging in public protest (albeit with neat, correctly spelled placards) were not from the left.

It is generally acknowledged that the Rudd Government’s handling of the RSPT verged on the woeful. That said, the furore about Rudd’s alleged failure properly to consult with the mining industry suggests an inability on the part of the executives to appreciate that tax decisions are made by elected representatives. A cynical observer might suggest that the companies share the conservatives’ old ‘born to rule’ mentality. Mining magnate Clive Palmer declared that Rudd had been undone by a ‘civil campaign of anger’, but the campaign could more aptly be classed as a distinctly uncivil reminder of just who runs the show around here.

Julia Gillard and her ministers reached a compromise (the MRRT) with the industry within days of her ascension to the Prime Ministership and have committed themselves to ongoing consultation via the mining tax transition committee, but the rumblings from the sector continue. During this election campaign, ‘junior miners’ represented by AMEC have re-launched their advertisements against the Government’s amended tax proposal. The key players maintain that their stance is ‘apolitical’[3], but the ad campaign has been welcomed[4] by the Coalition, which is loathe to lose the election narrative it gained in opposing the RSPT. Accordingly, Tony Abbott has declared his opposition to any ‘big new taxes’ and the Coalition is encouraging a perception that the ‘big three’ miners with whom the Government hammered out a deal – BHP Billiton, Rio Rinto and Xstrata – secretly dislike the MRRT compromise but have kept silent in the hope of avoiding a worse alternative. Never fear: Abbott has cast himself as the industry’s rescuer. ‘Reject labor’s massive new mining tax and other taxes that hurt productivity’ constitutes clause three in the Liberal Party’s ‘Action Contract’.

Abbott classes the MRRT as an ‘economic version of the tall poppy syndrome’, praising the miners and implying that Labor has an irrational hatred of their economic success. The Liberals’ stance – and indeed, the thrust of the debate thus far – also demonstrates the ‘quarry vision’ discerned by Guy Pearse in his 2009 Quarterly Essay [5]. Donald Horne’s ‘lucky country’, it seems, remains convinced that its continuing fortunes depend on nurturing the resource industry at all costs. The Coalition is also doing its best to cast the Labor-Greens preference deal in a sinister light, suggesting that undue influence from the Greens would see the more moderate MRRT replaced by the 50% tax mooted by Bob Brown but rejected by Labor. Deputy Opposition leader Julie Bishop recently characterised the preference deal as ‘one of the greatest risks to the mining sector’[6], (after workplace regulation, native title and other such ALP bogeymen, one assumes) asking ‘what was it that Labor promised the Greens in return for preferences?’. WA Liberals have been particularly assiduous in hitching their wagons to the miners’ star. Bishop attended the recent Diggers and Dealers resources conference in Kalgoorlie to ‘listen to the miners’ and has previously pledged to ‘do everything in my power to ensure that our…economy is not stunted by Labor’s poorly considered tax burden on Australian based companies’.

Bishop’s reference to ‘Australian based companies’ is another instance of the competing appeals to patriotism that have characterised the debate. Initially, the ALP indulged in some old-fashioned populism. Its emphasis that mineral resources belonged to ‘all Australians’ was underlined by the Australian Workers Union’s declaration that Labor would ensure ‘that all Australians share in the resources boom, not just New York and London suits’. These arguments, reflecting the foreign ownership of many companies commonly thought of as Australian, were damned by shadow resource spokesperson Ian McFarlane as xenophobia. Somewhat ironically, the smaller mining companies have recently recycled the populist line, with BC Iron’s managing director Mike Young stating that ‘the big foreign-owned miners’ had won at the expense of ‘real Australian companies’.[7] Sydney Mining Club chairman Julian Malnic began a recent speech with ‘did you hear the joke about the two South Africans and the American?’.[8]

The mining tax debates have seen references to social class to a degree unusual in Australian politics. The accusations of ‘socialism’ and ‘nationalism’ lobbed in the Government’s direction, and the criticisms of the ALP and unions for engaging in ‘the politics of envy’ have given way to a strange new development: the miners are now acting out a kind of ersatz class war themselves, with the smaller companies cleverly pitting themselves against the big end of town. The juniors also paint themselves as the victims of Government bullying: Young recently compared their plight to ‘the geeks in high school…getting picked on’.[9] A sense that companies are ‘getting picked on’ has also informed some of the wrangling over what it means for such entities to be ‘Australian’. Last month, Jan du Plessis pronounced himself upset by the ‘hurtful’ suggestion that ‘somehow Rio Tinto is after all just a foreign company’.[10] Citing the company’s employment of 17,000 people in Australia, and its status as the largest private sector employer of Indigenous Australians, the Rio chairman asked ‘if that doesn’t make us truly Australian, what will ever make us Australian?’.[11] Others have countered by pointedly asking what could be less patriotic than denying a sovereign nation’s ability to set its own tax rates.

One might wonder, though, whether these debates will soon see us run out of flags for participants to wrap themselves in. As with the unsuccessful republic referendum in 1999, nationalist arguments tend to obscure egalitarian first principles in matters of public policy. Currently, competing narratives are being woven around the fortunes of Labor and its ‘elegant’ tax, the most dominant of which is marked by a sense of crushing inevitability: this is a mining nation and the Government should have known better than to propose a tax opposed by the industry. Many pundits expect the Government to be taught another ‘lesson’ and some in the industry are expecting to ‘knock off’ two Prime Ministers ‘in two months’. Regardless of the electoral outcome, the atmosphere of conservative triumphalism might be somewhat misplaced. Australians are notoriously cynical about politicians, but this outlook does not necessarily entail great respect for the increasingly powerful corporate sector. The occasional farce of the current debates should not blind us to the enduring value that we place on equity.

Sarah Burnside is an editor of The New Critic. She is a Perth-based lawyer and freelance writer.



[1] Tasker, S. (2010, July 9).Bad tax lesson for world leaders: Rio Tinto CEO. The Australian. Retrieved from http://www.theaustralian.com.au/business/mining-energy/bad-tax-lesson-for-world-leaders-rio-tinto-ceo/story-e6frg9df-1225889869362

[2] Rudd must return to the centre. (2010, June 10). The Australian. Retrieved from http://www.theaustralian.com.au/news/opinion/rudd-must-return-to-the-centre/story-e6frg71x-1225877651015

[3] Burrel, A. (2010, August 03) Tax forcing local miners overseas: Andrew Forrest.The Australian. Retreived from: http://www.theaustralian.com.au/business/mining-energy/tax-forcing-local-miners-overseas-andrew-forrest/story-e6frg9df-1225900608662

[4] Hewett,J. (2010, July 27) Big guns silent, but small guns fire anti-tax salvo. The Australian. Retrieved from: http://www.theaustralian.com.au/business/opinion/big-guns-silent-but-small-guns-fire-anti-tax-salvo/story-e6frg9px-1225897190939

[5] Pearse, G. (2009). 'Quarry Vision: Coal, Climate Change and the End of the Resources Boom.' Quarterly Essa,y 33.

[6] Lawson, R. (2010, August 2). Bishop goes solo to mining forum. PerthNow. Retrieved from: http://www.perthnow.com.au/business/news/bishop-goes-solo-to-mining-forum/story-e6frg2qu-1225900132214?source=cmailer

[7] Tasker, S. (2010, July 02). Miners break ranks to attack PM Julia Gillard's new tax plans. The Australian. Retrieved from:

http://www.theaustralian.com.au/business/mining-energy/miners-break-ranks-to-attack-pm-julia-gillards-new-tax-plans/story-e6frg9df-1225887158450

[8] Dyson, N. (2010, July 29). Mining Super Tax: One big snowjob. MiningNewsPremium.net (MNP) Retrieved from: http://www.miningnewspremium.net/storyview.asp?storyid=1138341&sectionsource=s0

[9] Lawson, R. (2010, August 4). Miners 'bullied' by government – Young. PerthNow . Retrieved from: http://www.perthnow.com.au/business/news/miners-bullied-by-government-young/story-e6frg2qu-1225901205215

[10] Husdon, P. (2010, May 27) Door ajar in super profits mining tax details. Herald Sun. Retrieved from: http://www.heraldsun.com.au/business/door-ajar-in-super-profits-mining-tax-details/story-e6frfh4f-1225871785867

[11] ibid