Some mining CEOs commenting on the Resource Rent Tax
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Author
Andrew Sheldon
Resource Rent Tax Australia
Applied Critical Thinking | www.SheldonThinks.com
Showing posts with label Elections. Show all posts
Showing posts with label Elections. Show all posts
Wednesday, August 18, 2010
Thursday, August 5, 2010
Labor makes false claims about resource rent tax
Some actual mistakes here:
1. Public information package: That must be a euphemism for propaganda. The government is justified in spending $38 million on TV advertising. That is $2 per person. Why doesn't the government spend half as much sending out detailed material along with the mining industry. Would that not be a fair way to go. Reason as the standard of value, and save tax payers $17 million. Australia Post could even make a profit.
2. The Australian people own mineral resources so they are entitled to a share of the profit from those resources. They already get a 'risk-free' share from those resources through income tax, mineral royalties, state taxes, infrastructure, social spending,
In addition, these resources have 'in effect' been sub-leased to the mining industry. i.e. The government is bringing into question the viability and undermining the wealth of Australians by taking a 'second take' at an opportune time, when prices are high. Those prices will not always be high. It is not as simple as Australians owning these resources.
3. Labour suggests that the mining industries advertising is unfair, and yet it is using taxpayers money to achieve the same. They have previously attacked such use of taxpayers funds.
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Author
Andrew Sheldon
Friday, July 30, 2010
Misconceptions about the resource rent tax
Quote from Royd Bogan:
"The fairness thing eludes me. A tax is a tax, it's not an issue of morality. The rate of the tax is an economic and political matter, using "fairness" on either side simply distorts the discussion".
Oh, a pragmatist. Well you know we are close to fascism when the popular consensus is that 'morality is not an issue', that a 'tax is a tax'. Great logic. Bogan has descended to the cognitive level of a common house pet. Oh, hang on, he is talking economics. Hell, he has gone off the monitor..warning! Warning! Back to pragmatism. Well, you know economics actually acknowledges moral issues. i.e. It is based on the concept of 'rational man'. It assumes in fact that we are all rational. Which means...if you introduce some psychology, we like to be appreciated or validated for good, not punished for it with high taxes, or worse resented/hated. Hating millionaires might become popular next. Vulgar materialism anyone? It also means we like to avoid sovereign risks, so with little property rights in Australia, we might be better off investing in Ethiopia, where they have greater respect for wealth creation because they have none. The next thing is industry moves offshore, Australia is no longer a centre of mining industry, so we all live in South Africa or Brunei instead. Brain drain 20 years off. Is that enough economics for you; even tossed in some psychology and tourism for dessert.
Quoted from Adultmale
"I forgot to say that the mining companies already pay the same tax as all other companies (as well as royalties). You have to ask yourself why Kev and Julia aren't putting a 'super profits' tax on banks. They post obscene profits every year while they are actively reducing their work force and closing branches". Source: Political Forum.com
The reason is simply that the banks and media always support the government, and the govt always support them. The banks and media are bipartisan supporters of govt, and the feeling is mutual. Look at how the govt obstructed the IMF, which is suing the banks to get them to repay their unfair fees. How long did it take the govt to reduce interest rates on credit cards.
Apart from these vested interest groups, there are also partisan groups like the unions (Labor) and business (Liberals). The banks and media are the 'untouchables'. Google is also untouchable for strategic reasons....it only pays 0.5% tax on its Australian income. Lucky guys!
Quote from Royd Bogan:
"As for the economic benefit of mining, yes it's there but it's sad to have to acknowledge that we don't have the wherewithal to actually produce something from the minerals we dig up and export. That's the bloody annoying part, the cargo cult mentality of the Howard government has apparently been continued by Labor. If we actually used the stuff ourselves we'd have a stronger economy, but it's easier to dig it up and sell it to China then buy back the goods. Some things never change". Source: Political Forum.com.
More commentary by people who don't understand commerce or economics. The reason why we don't process iron ore is because we cannot compete with China. Now, if you think about it, the reason is that we have minimum wages in part (because of Socialist Labor), geopolitical and geographic issues, and also because we can get greater productivity from placing our labour elsewhere. i.e. IT sector.
The reason we don't use iron ore is because we consume very little. Few countries can compete with China on processing costs. That will be true for another 2 decades, then Vietnam and India will be cheapest, then probably Africa I guess. Iron ore needs deep water ports.
We used a great deal of coal....but I guess many of you are not too happy about that. I love the mentality though...love what you do for the country...but do you mind if we screw the industry and investors. Why would you want to invest in mines or downstream industry if you as an investor are treated this way. Have some empathy or proclaim your parasitic souls.
Quote from Royd Bogan
"The miners can stop work on a site if the price of metals beomes unprofitable. They sack the workforce, install a maintenance and security workforce at lesser cost and mothball everything until the price goes up". Source: Political Forum.com
You mean investors should take a loss (as opposed to making a profit) in order to support those parasites whom think the world owes them a living.
Let me understand this, you want the cash, but not to support stable jobs? Clearly you are advocating shutting mines. So I guess you are just a cynical leach, as opposed to an idealistic one.
Rest assured there will be millions of you trying to grab a buck from the miners. Rest assured exploration spending will evaporate in new projects. It will continue in developmental projects for 6-10 years, but that will be the end of the mining industry. Maybe the Chinese will not even fund developments, opting for safer West African countries like 'Angola' instead. Hard to believe we could 'out' Angola in the sovereign risk stakes, but clearly that is what the standards of parliamentary conduct have descended to....and I don't like the Liberals either. I suggest not voting or voting for a minority like the Liberal Democratic Party. They don't have much on policy or principles, but I think that's because they have no money. Mind you, when they do, they will probably become liberals. Ok, so I'm all you've got, and I'm not running or even voting...so there you go. Go buy a house or drown your repressed memories of this conversation.
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Author
Andrew Sheldon
Wednesday, July 28, 2010
Foreign criticism of Australian tax policy
It is interesting how elections draw out all types of personal commentaries. Consider the latest criticism from Nobel Prize-winning US economist Joseph Stiglitz - which strikes me as self-defeating. He is critical of the "mining industry having too much influence on the political debate on Australia's mining tax". Why then should he seek any influence at all, and why did he take any position at all when he is not an Australian citizen, and clearly does not understand mining. I always knew how the Nobel Prize went to the undeserved...this is a case in point. Lack of critical insight being his problem.
He makes a comparison between the mining industry and regulation of the financial industry. Firstly, if one is having wealth expropriated from you, who else has a legitimate interest in the outcome other than the victim. The mining industry lives according to the rules. Is it fair and reasonable than shareholders and miners loose out because the government decides to change the rules in the middle of the game? Shareholders invested in mining projects based on a certain tax regime. The government has decided near the top of the boom to steal the upside in the stock price, which can only impose losses on shareholders in a specific sector of the economy. Its not even broad-based. It is grossly discriminatory.
He adopts the idea that 'resources were public' property. True enough, some years ago, the government adopted another arbitrary law saying all resources are govt owned. It then entered into mining title on certain terms, and now it wants to arbitrarily change them AGAIN. If it wants to do that it ought to do it to any new title applied after the law is enacted, not 'effectively' retrospectively applying to existing mining title.
There is a big difference also between public ownership of resources and public ownership of 'mineable reserves'. These companies have spent a lot of money proving up these resources, and the government wants to come in and take the 'value-add'. Rest assured if they thought mineral prices would collapse for the next 3 decades, they would drop the tax proposition because it was always about the money. It is utterly self-serving, unprincipled and unjust.
How can you compare that with regulation of the mining industry. Regulation ought to be about protecting citizens. This resource rent tax is utter and blatant extortion and expropriation. The fact that it is supported by a former 'paid' bureaucrat ('grim reeper') in the World Bank, is reason for questioning his ethical pretext.
He also said that "to date the windfall gain from the rise in iron ore had gone disproportionately to the companies, while a disproportionately small fraction had gone to Australian citizens".
The reality is that Australians have the opportunity to benefit from the mining industry if they so desire....they ought to invest, not support expropriation. I might add the people who made the 'windfall' are not necessarily the existing shareholders. Shareholders chage. In any respect, any wealth was 'made' by these companies and shareholders in accordance with the law. The law is to protect, not to sanction abuse.
His next argument is that: ''The natural resources belong to the people".
That's right, under some prior imposition government forcibly assumed ownership to all mineral resources. It has since sub-leased those lands to the mining industry, and the industry has acted in good faith with those laws, which were adopted by the government. Those resources are now 'mineral reserves', upgraded by the definition of valuable metal through drilling, geological and geophysical surveys. They are a value proposition, and these people saw the value, and the government wants to take it away, even though it defined the rules. If anything it is a testimony to the fact that governments can't see 'value', so why ought they be controlling it? They cab only result in the Australian people losing value. Expect all future exploration to go abroad. The trend was already there as it becomes much more difficult and expensive to find minerals (other than iron ore and coal) in Australia.
Its possible the govt is exposing taxpayers to huge market risk. Who knows. It also raises the spectre of corruption. Rudd/Gillard could have done a backyard deal with Rio Tinto and BHP to get their deal. That is why arbitrary law like this is wrong. It is a recipe for corruption. BHP in recent years has already been caught engaging in corruption...despite it supporting an ethics committee. Might these executives have a Swiss bank account since they met personally with the PM and ministers. Let's have some laws based on defensible principles.
Why does the Australian people have to benefit. They didn't create any value. Let them make their own wealth and not impose on others thrift or initiative.
I accept the argument that there could be a better system for auctioning exploration title, but actually that might only result in the government getting less, and market traders getting more, as it would only attract more speculators. Its not an issue of competition. Competition suggests more players, buyers and sellers, and that can only result in higher prices for title, as it will result in broader recognition of value. That is why Australia is cheaper than overseas markets, because we are a smaller market. But regardless, the benefit will go to speculators, not the government.
The reason why the govt needs to impose on others is because they are not able to efficiently run the economy. Despite miners producing a lot of value, they are unable to motivate the broader population of Australia to work, so they have to burden the mining industry with 40% tax, when Google pays just 0.5% of its income in tax. Why? Its going for the 'cheap shots'. Google can more easily shift its operations abroad than miners can move their mines abroad. Its pure extortion of those who are defenseless from the arbitrary power of government.
Arguments comparing tax expropriation to questions of regulation have no validity, and highlight the bias of this 'red-card' bureaucrat. He was an advisor to Clinton for heavens sake.
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Author
Andrew Sheldon
Monday, July 19, 2010
Deal by major miners undermines Australia's smaller miners
The latest sage of the Resource Rent Tax debate sees the government playing favours with the large miners at the expense of the miners. It is a strange situation. Beyond belief. Here I am arguing principles of justice or political rights with an industry which divides itself into the "haves" and the "have-nots". The Minerals Council of Australia (MCA) represents the big end of town. They fund the bulk of the organisation I guess, and account for the greater number of directors for the organisation, so they essentially control its debate. This has resulted in them 'selling out' smaller mining interests. Democracy is wonderful isn't it.
This has prompted small miners to establish their own body - The Association of Mineral & Exploration Companies (AMEC). This body tends to represent companies capitalised anywhere between $5 million and $500 million dollars, depending on how large and advanced their project is. There are so many of them, that they are not without influence. But they are going to have to get their TV adverts organised because there is just 3 more weeks left. No radio, TV or newspaper advertisements are allowed in the closing week.
They have a legitimate complaint - the government has essentially undermined their wealth. i.e. the government has ripped the profit upside from shareholders for its own use. The government is not even a good spender, so why would anyone want them. People think they will benefit, but governments don't create wealth, and neither do many of the recipients of the money.
The problem of course is that the Liberals are looking so bad with Tony Abbot. The guy is ranking at just 20% for preferred PM, compared to 55% for Labor's Gillard. I think a lot of people are thinking its too early for another Liberal leadership, and they will be thinking Gillard hasn't really had a chance. Women will be thinking the party needs a women for a 'good spring clean'. I've got a better alternative....show your utter contempt for the constitution by not voting at all. It is all rhetoric to legitimatise extortion... in this case from small miners for the sake of Labor interests.
The deal done between Labor and the majors is of course good for the majors. The government has succeeded in dividing the industry. Fortescue, BHP and Rio Tinto get a special deal. You might ask why? Well, some years ago BHP was caught disbersing bribes for the sake of some Iraqi wheat deal. Is there corruption involved here? Who knows? But these people have no moral standing when they do deals at the expense of industry, at the expense of competition. These three companies have sought from the government special conditions, and the government has given it to them, to split the mining industry. The government will sell this as a 'compromise'. Its not - its a betrayal (by the miners) - its extortion (by the government) - its fascism. Its about time the public drew a line and stood for principles or otherwise accept that they caused fascism to develop. Voting for Liberal will not help. Don't vote or vote for smaller government. Libertarianism all the way! Throwing darts is your next best option. Preferably at the government and hard!
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Author
Andrew Sheldon
Saturday, July 17, 2010
Australia - Don't Vote!!
Here is a YouTube video by a guy who presents a very eloquent justification for not voting in the forthcoming Australian election in August 2010.
Author
Andrew Sheldon
Resource Rent Tax Australia
Applied Critical Thinking | www.SheldonThinks.com
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