Mining tax spreads wealth to 1% but Bolivia shows different path

For companies to receive their share of the profits, they will have to fulfill their legal roles as "service providers". In Glencore’s case, this means investing at least US$100 million over the next five years.

This move follows similar measures that the government has taken in the gas sector. Before the government’s 2006 decision to nationalise Bolivia’s gas reserves, transnational companies took 82% of the wealth generated. Under the new regime, the state retains 80% to 90% of gas rents.

Total gas revenue received by the state during the first six years of the Morales government was about seven times more than revenue for the five previous years. Last year, the state received almost as much revenue as it did when the gas sector was privatised between 1996 and 2005.

When gas companies have failed to comply with their contracts, the government has not been afraid to nationalise them. In January, the government took over Pan American Energy’s 25% stake in one the country’s most important gas fields for failing to comply with investment targets.

Rather than using this wealth to fund tax cuts for the rich, the Bolivian government has focused on investment into productive sectors such as manufacturing and agriculture, while raising social spending.

The results are clear: record economic growth, almost half a million jobs created between 2006 and 2010, and a fall in unemployment from 8.2% in 2005 to 5.7% in 2010.

By 2010, the level of poverty had fallen from 60% to 49.6%, while extreme poverty had dropped from 38% to 25%. The gap between the richest 10% and poorest 10% has shrunk from 128 times more wealth to 60 times.

Of course, Bolivia’s wealthy 1% did not take this lying down. Rather than wasting time with a meager advertising campaign, they tried to organise a military coup. Unlike Swan, Gillard and the rest of the ALP leadership, the Morales government did not back down. Together with the country’s social movements, it defeated the offensive by mobilising popular support in the streets.

This is what a government of and for the 99% could do in Australia, something the ALP government clearly is not.

Instead it has backed down to the mining companies, worked to shift some wealth from the 0.01% to the rest of the 1% and tried to portray the fact that the 99% will have to pay for our increased superannuation with wage cuts as "ensuring all Australians share in the benefits of the mining boom".