Wednesday 12 May 2010

Jan McLucas on the extraordinary mining tax

In yesterday's Senate debate, Liberal Senator from WA Michaelia Cash said that Senator Carr's answers to questions bordered on absolutely delusional, whilst Cairns-based Queensland Senator Jan McLucas defended the massive new mining tax.

"They demonstrated to the people of Australia just how out of touch and just how disconnected the Labor Party are with both the domestic and the international reaction to Rudd Labor’s supertax. The minister had the gall to call us on this side economic—what was it?—‘knuckle draggers’," Michaelia Cash said.

"I have to say the only economic knuckle dragger in this place is the minister. This proposed tax is economic vandalism; it is economic lunacy from a dangerous government that does not have a clue about economic management. Even the Labor premiers are now running a mile from Rudd Labor and its proposed supertax. Look at what the Australian says today, under the headline ‘Labor states back big mining companies on resources profits tax’:

  • South Australia’s Labor Treasurer, Kevin Foley, has declared he plans to travel to Canberra with BHP Billiton to lobby his federal colleagues to change the resources tax, while Queensland Premier Anna Bligh yesterday called on the Rudd government to “get it right” on the tax or it would threaten jobs around the country.

This is the impact of Mr Rudd’s announcement to date. The article continues:

  • Mining investment and exploration continued to be threatened yesterday as $300 million was chopped off the takeover bid for Macarthur Coal in Queensland … Incitec Pivot stopped drilling for phosphate; Xstrata cancelled projects; and Macquarie Bank advised clients Australia was “now seen as being a high sovereign risk destination to invest"

"What an absolute joke! Under this government, Australia’s sovereign risk is now being questioned," Senator Michaelia Cash said.

Jan McLucas (Cairns-based Queensland ALP Senator) said that the debate was characterised "very much in the sorts of contributions we have had from senators across the way."

"It has been extraordinarily hysterical, and it has been littered with misinformation. Unfortunately, Senator Williams, you are leaving the chamber. It would have been an opportunity, potentially, for you to get some clarity on what this tax is about. The government’s tax reforms are about making Australia a more attractive investment destination, including for the resources sector," Jan McLucas said.

"The resource superprofit tax is designed to ensure that Australians get a fair share from valuable non-renewable resources. Resource taxing is a better way to tax resources because it taxes only the profits and it fully recognises the large investments made in mining. A tax such as this rebates state royalties," McLucas said.

"Royalty and excises are based on volume or value and they do not rise with profits. It is important to remember that in 2008-09 the resource sector generated close to $90 billion of superprofits. Superprofits are profits above what a competitive business would normally expect to earn."

"In that same year state royalties and Commonwealth excise returned only $12.3 billion to the Australian budgets. The effect of these proposals is in fact a rebalancing. Ten years ago Australians, through their government, received $1 out of every $3 of profit reaped by the resource sector. Today it is $1 in every $7 of superprofit. Surely that needs some attention."

"I will go back to that, although I did explain. They are profits above what a competitive business would normally expect to return. As I said, 10 years ago $1 in every $3 of profit was returned to Australians from rental on a non-renewable resource. Today it is $1 in $7.
Profit based taxation does work. For example, the 40% petroleum resource rent tax has existed for over 20 years," Jan McLucas said.

"The $50 billion Gorgon project was approved under the 40% petroleum resource rent tax. To say that it does not work is simply a furphy. In fact, I encourage leaders of the large mining companies and LNG producers to work with our government to roll out the delivery of the resource superprofit tax for our community."

"It is important to remember also that there have been many economists who do not oppose the introduction of this tax. I look to Professor John Quiggan’s commentary on this issue. He goes through a range of arguments about why it is a good idea—a sensible, fair and equitable idea—to introduce a profit tax rather than user royalties and excise. I think his most compelling argument is where he says:

  • The political economy argument. Ever since I can remember, and probably before that, mining companies have been threatening to pack their bags and go overseas.

    They’ve made these threats when they were upset about tax policy, about environmental restrictions, about Aboriginal land rights, about union wage demands and work practices and when they were in a bad mood for no particular reason. But, even though lots of Australian industries have disappeared, or contracted drastically for a range of reasons, the miners are still here.

    The reason is obvious. They can leave but they can’t take the minerals with them. It’s precisely this immobility that underlies the case for—
    as he describes it.

"That is, a resource rent tax," Jan McLucas said.


Fed up with one-sided political blogs said...

Perhaps you should change the name of this blog to reflect your political leanings, seeing as there appears to be nothing happening in Cairns worth blogging about.

I used to enjoy coming in here every day but now I can hardly be bothered, if I want one-sided political crap I can get it from the newspapers, or from blogs who are up-front with their agendas.

Jamie Doyle said...

what the?

It's merely a quote from the Senator....

surely you should debate the ISSUE (whoever you are)

Johnno of Edmonton said...

actually I was pleased to see the entire comments by our Senator McLucas.

Was a fair and honest explanation.

What's the problem "Fed up with one-sided political blogs" ????

Fed up with one-sided political blogs said...

You can't see the agenda here? Are you blind?

Bryan Law said...

Fed Up, you old trough-jockey you. I bet you’re the type of Labor thug with a hat, a scarf, and a full set of stubby coolers as you barrack for “your team” come election time. As the ALP leadership builds a stronger and more intrusive corporate state and screws the worker. As they tax and spend on making their banker mates rich, and support US military adventurism around the world. As they continue to privatise health and education while policing welfare recipients...they are able to count on idiots like you who trash decency, attack common-sense, and glorify the possible “victories” of your tribe.

You have to be mentally defective to believe Wayne Swan or Jan McLucas. My agenda is crystal clear. Get rid of Jim Turnour for the personal satisfaction it will bring, and the message it will send.

tuite sshhhh said...

please jim ,desley pittiful,noballs,redwine what do you mean everyone of us is sick to death of you lot? and we are labor voters!

How sad I am said...

How sad it has all become for us Labor supporters. I have just witnessed the end of Mr Rudd via the 7.30 report. Kerry O'Brien exposed him for what he has become. Brand Rudd 2007 is what we Labor people voted for, today it is in tatters, he has no identity. What does he stand for? At least with Abbott his colours are painted to the mast. Like him or not, but you know what he stands for!! Politics is all about perception and sadly I do not like what I see.

KitchenSlut said...

This is a very confusing thread. First we have accustaions that parliamentary statements by a local senate representative on an important regional industry have no relevance to Cairns? These are unlikely to be reported in the Cairns Post?

This leads to the conclusion apparently that there may be a biased agenda by Cairnsblog? Maybe there is, however this is after all a blog and I didn't see the same people complaining when Cairnsblog has quite rightly run hard on local guvmint issues?

I have personal respect for Senator McLucas having previously had a very constructive meeting with her on other aspects of financial services, however there is typically much Ruddian spin in her argument here. Particularly the mining industry has NOT objected to an RRT as advocated. In fact they supported this in principle in submissions to the Henry tax review.

They have objected to the particular structure of THIS tax as have many observers. There are mischievous comments by Jan, especially the comparison with the petroleum RRT which cuts in at returns substantially above that proposed for miners and unlike this tax was instituted only on new projects when introduced.

Thats just one observation on several genuine concerns on this tax and misrepresentation of stats and wild spinning from all directions.

Laughing said...

"How sad I am"
I doubt you are a labor supporter, what I witnessed was Kevin Rudd telling O'Brien what the truth of the situation is, media seems to have trouble understanding all this, it surprises me that O'Brien can't get it, he normally shows more intelligence than the rest of the journo's.
There has been plenty of times the Gov has stated the reasons re ETS & Health but the media just wants to carry on with it.
Good on you Rudd and lift your game O'Brien.

my abc said...

'How Sad I am' may not be a labour supporter but ....

Isn't 'Red Kerry' O'Brien of the ABC a notorious Labour supporter?

Jude Johnston said...

Resource tax makes as much sense to me as payroll tax. I have never been able to understand why you would tax an employer for employing staff.
"Fed up with......." would you just take your potty mouth somewhere else.

Thomas Cottesloe said...

Oh my God, yes you are right 'How said I am'. I checked out the 7.30 Report and what I saw was the image of Rudd as if he was talking to his Office staff. What an impostor and a poser, how he has been found out for what he is a thug and not for real.Thank you Kerry O'Brien for flushing Rudd out.

Frank said...

It’s always disheartening to read in these comments personal attacks on people. It is for this reason that I am reluctant to post comments, or, if I do, I rarely return to see what others have said in reply. Please let’s keep the debate civilised and attack a person’s argument, but never the person (I know politicians don’t set a very good example in this regard!).

Cendso said...

Why is it that some of the oil rich Arab countries have such high standards of living and the price of fuel is a few cents a litre? Perhaps because they see their natural resources as a finite asset and therefore should have an appropriate price to those who wish to take it. How dare we consider doing that in gravel pit Australia! It is the only asset this country now has thanks to successive sellouts over the years by governments of all colours. We no longer do manufacturing, car making, own public utilities or even iconic businesses. We no longer even make tyres or tin cans and we can't even own our local milk company - sold off to a Japanese brewing company. What is the alternative followers of Mr Rabbit if we don't ask for a super tax?

Monty said...

Frank, this town isn't civilised enough for that to happen. Just read the stupid comments in the online Cairns Post and Courier Mail. Why should this Blog be any different? There are more intelligent blogs to contribute to, but you do have to search for them.

svaens said...

Fact: Mining companies are loaded, made rich from the exploitation of the Australian peoples natural resources.

Fact: So rich are they, that they can afford to spend millions of dollars in "scare-campaign" advertisements on TV.

Fact: They can obviously afford to pay a bit more

I very much hope that our new prime minister (as of 24th of June) doesn't back down on the tax. The Australian people deserve more return for the exploitation of their finite natural, non-renewable resources.

Tax them!

Political Anal-ist said...

Hey Svaens,

These are all "public companies" to which you refer. Managed and operated for the good of the shareholders, i.e. the "public".

These companies aren't "loaded", as they pay virtually all of their profits as dividends to whom? THE PUBLIC, who've invested in them. And these dividends, unfranked as they are, attract more INCOME TAX, quite often at a rate much higher than the corporate rate.

AND these dividends go to many of the self-funded retirees who can afford to be self-funded because of these dividends. Take them away,and you end up with more elderly on the public dole.

KRudd is an idiot. He's a bigger doofus for thinking he can sit on the back bench, waiting for the moment when the public demands he return as PM. Sitting him next to Jim "emptysuit" Turnour? I nice touch.

KitchenSlut said...

Actually both of the above two posts on this thread are pure rubbish entirely ignorant of basic facts in pursuit of their own biased ideology but it's late and i'm off to bed with no time for a detailed reply .......

Alison Alloway said...

Australia needs a hell of a lot of money to fund health and aged care for the rapidly ageing baby-boomers. Don't think money from mining shares is going to be of any use to you when you're sitting in a pool of your own urine and foeces in your dirty macmansion, waiting for some over-worked community worker to visit you for five minutes once a week.

Bryan Outlaw said...

Fed up,

The inlet crocs DID approach Bryan Law during his "publicity swim". They gave him a sniff and decided that they'd never put shit into their mouths.

Leuco Gaster said...

Gee Alison, you paint such a nice picture of retirement, I can hardly wait! Talk about laugh, I nearly died! What about poor old bushies like me? No chance of a MacMansion, just a shed, and an old Tojo that I can't afford to keep roadworthy, but I wouldn't swap with any of the poor bastards stuck in suburbia.

Alison Alloway said...

Hehe Leuco, glad I made you laugh. Sadly, the situation I described is grim reality for a lot of our elderly folk today.
The ageing baby boomer demographic of around 5 million Australians is already exerting unprecedented pressure on our health systems. The reason is of course that we are the first generation to survive middle age in the numbers that we have. We had the benefits of innoculation as children, plentiful food, we had no world war to decimate our numbers.... . Imagine what pressures we will be putting on health systems in 20 years time??
With all Governments maintaining a belief that the elderly should be kept in their homes "for as long as possible", what will be the cost of community care programs??
We are facing huge costs and the money will have to come from somewhere. Will it be mining taxes or a few rises in GST??
As for you "bushies", I would hope that you too can receive some services of care from the community, in your latter years.

KitchenSlut said...

Well I went out on a limb so with a few seconds time will make a few brief comments to justify that ....

Political Anal-ist said...

You seem to indicate that mining companies not paying franked dividends is a virtue? In general companies which cant pay franked dividends do so because they haven't paid company tax so no there is not a resulting higher tax rate most particularly if held through a super fund.

The bulk of Oz super investment in resources will be held in BHP and RIO as the key components (15%?) of the ASX index. Both these actually DO pay fully franked dividends after paying company tax!

svaens ...

Keep the Che Gauvera T-shirt on mate but your ideology is closer to North Korea than the average Cairns citizen!

Are you seriously suggesting than any capability to express a democratic right means that many money so spent needs to be stripped away? On that basis should we see the Rudd overthrow as a democratic coup which has overthrown such an abuse of public funds?

Svaens the mining companies actually expected to" pay a bit more" in their own submissions to the Henry Review but they didnt expect to be banged over the head and raped!

Barracking slogans are useless here and anyone who denies there are nuanced issues should be regarded with scorn?!