Misconceptions about the resource rent tax

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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

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com

Deal by major miners undermines Australia's smaller miners

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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

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com