Gina Rinehart, Australia’s richest and most mendacious mining magnate, spoke to the Australian Miners and Metals Conference last week.
In her speech, she accused the greedy government of treating the mining sector like an ATM. When she wasn’t throwing stones in glass houses, Gina was arguing that Australians had gotten too big for their boots and should “not be too proud to admit that we’re really just a large island with a small population with record debt.”
If Gina were speaking at a conference in 1946, she would be undeniably correct. Australia’s gross government debt exploded to a record peak of 104% of GDP right after the conclusion of World War II. At the end of 2012 public debt was 16% of GDP. Her economic figures are as old as the minerals she unearths.
In this year’s federal budget a deficit of about $19 billion was announced. While Ms Rinehart seems very concerned about government largess on the one hand, she fails to mention that her wealth alone could help bridge the budget shortfall, even when accounting for her $7 billion personal losses last year.
So what’s all the noise about? Rumours have been circulating of the mining industry’s imminent demise for quite some time and it’s getting tiresome.
Former Resource Minister Martin Ferguson said, “You’ve got to understand that the resources boom is over.”
Our soon-to-be Glorious Leader Tony Abbott said, “The whole point of the Carbon Tax is to eliminate the use of coal and that spells death for the coal industry.”
Senator Eggleston said, “Many mining companies said they will no longer do business in Australia once this tax and the subsequent emissions trading scheme are introduced.”
Research from the think-tank the Australia Institute seems to suggest the opposite. Since the carbon tax was first proposed in 2010, investment into mines and equipment has grown more than $15 billion dollars. Indeed, over the last 9 years mining investment in Australia has grown 12 fold. Since the Mining Resource Rent Tax was proposed investment has more than doubled.
“Claims that the carbon price and mining tax will destroy the mining industry in Australia are at odds with the level of investment that the industry is making. To invest billions of dollars every year you must be confident that your industry has a positive future,” writes the Australia Institute.
This level of infrastructure spending not only contradicts the mining industry’s cries of oppressive and exorbitant government taxation, it is also their own worst enemy. Although demand for minerals has dropped globally since recent record highs, with the slowdown in the global economy, Australia’s export volume has increased.
That is to say that so much money has been confidently invested into improving mining efficiency that the industry produces much more than is wanted. Export volume, of what is mainly iron ore and coal, grew 3.3% in the last quarter – far outstripping growth in demand. The mining magnates’ eagerness to squeeze the egg from the golden goose has led to their own undoing.
And it is this drop in prices that has in turn led to the measly returns on the Mining Tax. The government has seen about $200 million dollars of the $2 billion that the MRRT was designed to recoup. If the government is treating the mining industry as an ATM, as Gina would like us to believe, we’re not withdrawing very much money.
Ms Rinehart said that we should learn from Singapore too, using low taxes to encourage investment and development because we had the natural resources that Singapore lacks. What Gina failed to mention was that Australia has something much more valuable than resources, and that Singapore also lacks: Democracy. It was a democratically elected government that legislated the MRRT.
The Coalition is arguing to have the Mining Tax repealed to ease the burden on the mining industry, while the Greens are arguing that it should be enhanced to raise more revenue. The minerals are owned by the Crown, which means that everything under the ground is owned ultimately by the citizenry. We should enhance the tax to raise revenue for the sale of resources that we own. However, we need to think about how to better spend this revenue.
Rather than the business as usual, vote buying, cash splashing and middle class welfare that is indicative of how the Howard Government squandered the revenue from the first wave of the resources boom, we should use the money to address real inequality.
Andrew ‘Twiggy’ Forrest of Fortescue Metals, being the lesser of three magnate evils (the others being Rinehart and Clive Palmer of Rio Tinto), leads the field in trying to offset the damage of the two-speed economy that the mining boom has produced, especially in indigenous communities.
As prominent indigenous academic Marcia Langton wrote in the Resource Curse, state governments have continually shirked their responsibilities of putting revenue back into the northern towns where minerals are sourced. Instead, rent-seeking state governments spend big in southern cities while ignoring the electorally insignificant aboriginal communities in the north.
“Anyone who lives in a mining province but does not work for a mining company is disadvantaged in important ways: their income is much lower, yet they must pay the same exorbitant housing, food and services costs, thanks to the localised inflation brought about by the boom,” writes Langton.
Andrew Forrest is aiming to get 50,000 indigenous people in mining jobs with his Australian Employment Covenant. It’s a start. Australia needs to ignore the lies of the self-interested in the mining community and put our resources to good use.
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