The mining super-profits tax debate - an analysis

Veteran Fairfax journalist Tim Colebatch has also made a number of interesting points in a recent opinion piece. The title of this piece is perhaps misleading: “Resource Tax amounts to 50% nationalisation of the mines”. The tax no more represents nationalisation than does company tax considered more broadly. In any case, the land belongs to the Australian people already. And even though Colebatch is dubious of Treasury claims that “the community's share of mining profits has shrunk from 55 per cent over the five years to 2003-04 to 27 per cent in 2008-09”, he nevertheless recognises that the government has a genuine case for reform.

A crucial point, as Colebatch recognises is that:

The Bureau of Statistics' recent round-up of industry data for 2008-09 estimates the profit margin in mining that year was 37.1 per cent. That's three times the industry average of 11.2 per cent … They're doing well.

In fact mining profits are sometimes even higher than this. Colebatch also observes that:

Analysts believe the mining boom is the main driver of the dollar's rise, which has wiped out sales and profits for industries lacking its huge profit margin as a cushion.

The point of this is that with the robust dollar, some industries such as tourism and manufacturing are becoming less competitive. Restructuring the tax mix as Rudd Labor is attempting to do is one way of redressing this situation. But cutting overall tax as a proportion of GDP is not an acceptable alternative as there remains a need to provide for welfare and services; including education and infrastructure from which business clearly benefits (and therefore must pay its fair share to support).

As the debate on the proposed mining tax has developed the fragility of Australian democracy has in some ways become apparent. While the mining giants have a war-chest of billions to draw upon in pushing fear and disinformation, no political party, NGO or social movement can possibly compete.

Much of the Australian media have also apparently abandoned any pretence to inclusiveness and objectivity; throwing themselves head-first into what could honestly be described as a “campaign”. Somewhere, we must assume, there is a convergence of interests. The Herald Sun, a Melbourne newspaper, for instance carried the headline “Bloody amateurs! Harvey Norman chief blasts Kevin Rudd, Wayne Swan over mining tax”.

But excluded entirely from this article was recognition that elsewhere Gerry Harvey, the CEO of major retail chain Harvey-Norman, had actually stated that he did not oppose the tax.

Meanwhile, amid the fear and disinformation, Labor’s implementation of paid parental leave - a landmark reform - received minimal attention from significant sections of the Australian media.

And Chief Executive of the Australian Industry Group (AIG), Heather Ridout, after stating her support for mining tax reform by focusing on “super-normal” profits in The Age, was ignored by much of the Australian media. (The AIG is a significant and important employer peak body.)

Finally, sections of the media have constantly referred to the “mining super profits tax” instead as the “super tax”, with an obviously altered connotation.