Mining, taxation & the National Interest

The Gillard’s Government’s mining tax, or more correctly the Minerals Resources Rent Tax (MRRT), has been in the news a bit lately. This week, the High Court of Australia has been hearing a case that argues the tax is unconstitutional and just a couple of weeks ago the tax made headlines revelations that in its first six months of operation it has raised just a fraction amount forecast.

Indeed, Tax Office figures show that in the first half of the 2012/2013 fiscal year the MMRT raised just $126 million of the two or three billion dollars that Treasury had forecast as recently as last October.

With that revelation came predictable calls from the Greens and cross-bench MPs to redesign the tax to ensure that it meets it’s original goal and further promises from the Opposition that, should it win the election, the tax will be scrapped.

Not to be left out, the mining lobby group the Minerals Council of Australia (MCA)also entered the fray, taking out newspaper advertisements warning the Government against changing the design of the tax. Should the Government proceed, the miners suggested, the advertising campaign that precipitated the downfall of then Prime Minister, Kevin Rudd would be revived.

In an election year the headlines such news garners are, at the very least, politically embarrassing. To a government already staring into the electoral abyss, they’re seriously damaging. Especially when the person responsible for the both the MMRT and its poorly received and politically doomed predecessor the Resources Super Profits Tax (RSPT) remains the Treasurer and Deputy Prime Minister.

Yet despite the failures of Government, the tax remains extraordinarily popular amongst the voting public. A fact that shows that arguments for its continued existence and further refinement remain, for now, the Government’s to be lost. This popularity also raises the question of why an alternative Government, in search of income from which to fund its promises, would continue to pledge its speedy demise.

While proving an important background, the poor performance of the MMRT and its effect on the electoral prospects of the Gillard government are not the subject of this post. Neither is considerable ineptitude shown by the Treasurer, Wayne Swan, in negotiating, implementing and selling both versions of the tax. Nor will I further discuss the Coalition’s ever expanding list of policy commitments and shrinking income from which to fund them.

Instead, what I would like to consider the advertising campaign run by the mining lobby against Rudd, Swan and the RSPT in 2010. A campaign eerily similar to another run in the 1980s against national land rights legislation, another initiative of the federal ALP.

What, you ask, does a long dead campaign against an already implemented tax have to do with the 2013 federal election? Especially, if as is expected, an incoming Coalition soon consigns the tax to a footnote in the economic history of the nation.

Plenty, is the answer to that rhetorical turn.

If, for example, we see the ALP returned then the MMRT is here to stay and with, it remains the threat of a fresh MCA advertising offensive. That is, a lobby group funded by some of the largest and richest of international conglomerates has promised to once again turn its collective wealth against an elected Australian government. Should it, that is, not continue to bow to its demands. Hardly the democratic process our nation deserves.

If, on the other hand, we find ourselves faced with an Abbott Coalition, the MMRT is likely to be repealed, taking with it the threat of a new round of advertising. Yet, even if this is the scenario we face, the message the industry is selling is unlikely to change. The difference will be one of governmental persuasion and distance. No longer will miners need resort to the megaphone, when a governmental ear into which to speak is on offer.

So what then, does the mining industry want us to believe? And just how would this benefit them over the combined national interest of the Australian nation?

Advertising campaigns like the one employed by the MCA against the Rudd Government’s RSPT have precedent; indeed, they have antecedent too. A brief look at these might just give a clue.

In 2011 the MCA followed its 2010 campaign by joining with the coal, transport and plastics industry associations to form the Australian Trade and Industry Alliance, a body whose sole purpose was to advertise against the Government’s carbon pricing regime. A campaign, that while selling a similar message, was far less successful than the effort directed toward Rudd and the RSPT.

More successful, and for our purposes instructive, was the campaign launched by the Chamber of Mines Western Australia (CMWA) and the Australian Mining Industry Council (AMIC), against Aboriginal land rights in the mid 1980s.

The first of its kind, this campaign was extraordinarily successful, ultimately leading to both federal and Western Australian ALP governments abandoning their respective commitments to the implementation of legislated land rights. It was this campaign that became the blueprint for much that would follow, including the advertising launched against Rudd and the RSPT. Another extraordinary successful venture.

A juxtaposition of the two is telling, not just the similarities in style and message but also for how the lobby presents its members, and their interests, to the Australian public.

Focussed upon Western Australia, the campaign of the 1980s ran under the slogan ‘land rights should be equal rights’. It consisted of full page advertisements printed in major newspapers across the country and, in Western Australia, television advertisements were shown throughout the day.

Fast forward thirty years and following Rudd’s announcement of the RSPT a high profile advertising was again turned against a government policy initiative. Again, the lobby availed itself of wide-scale print and high rotation television advertisements, this time under the catch cry ‘keep mining strong’. The difference, however, was that much of this round was directed squarely at government.

Back in the 1980s, although the miners did not outright oppose the granting of land rights, the campaign’s sole purpose was the destruction of public support for the most important aspects of the land rights regime: an Aboriginal veto over mining and exploration on traditional lands; and legislated access to profits and royalties. In other words, the very provisions that gave Aboriginals a say in the economic future of their communities.

In 2010, miners also didn’t oppose the paying of tax per se, just the tax as it was designed by the Government of the day. In other words, the bits they opposed were ones that made it effective. A fact that became all to clear as the taxable value of resources plummeted amongst revelations they were valued at their boom-time peak.

The campaign conceived in the 1980s, centred around the notion of Crown ownership of mineral rights and the advertising played the politics of envy and fear, setting wealthy sections of the community against those most in need. The government, it was claimed, should retain its traditional rights to mineral deposits, profits and royalties for the benefit of all Australians and not just the few.

To hammer this point, advertising extolled the importance of the mining industry to the economic life of the nation. Taxes, royalties and employment all contributed to the health and wealth of the nation. The inference, was that land rights would grant Aboriginals sole access to wealth that would otherwise benefit every Australian citizen.

Three years ago, the mining campaign revolved around the damage an extra tax would do to the economy. To illustrate the point, advertising highlighted the importance of mining to the economy, and hence to every Australian.

During the 1980s, miners argued that under a system of land rights, Aboriginals would ‘lock up’ the land by charging miners exorbitant royalties for access to mineral deposits. Others would simply exercise their new found right and exclude mining companies indefinitely. This, it was said, would lead to a dramatic fall international investment as, rather than risk the uncertainty represented by land rights, mining companies looked to invest their capital elsewhere.

This, most famously, was illustrated by a television commercial that depicted a black hand building a brick wall dividing Western Australia in two. As the wall rose, an ominous voice-over warned against the dangers of allowing an Indigenous minority to claim ownership over ‘up to fifty percent’ of the State, a development that threatened ‘the future wealth’ of every Australian.

In 2010, miners argued that a new tax would to a massive fall in investment as the industry, looking for certainty, moved its capital investment offshore. Television advertising depicted everyday Australians from miners, to pilots, to retirees who stood lose out as the future wealth of the nation shifted offshore.

In neither case did the predicted collapse in investment transpire. Best not let the truth get in the way of an effective campaign.

In the 1980s, the campaign slogan invoked every Australian’s desire to be treated as equal. Land rights, we were led to believe, risked the very egalitarian foundation of Australian society. As mineral wealth became concentrated within the small Indigenous community, white Australians would lose and inequality and division would become a feature of Australian society. The extreme of the conservative commentariat commentators took this argument to ridiculous lengths, equating land rights with the South African system of apartheid.

Thirty years on and the methods have changed yet the message remains largely the same. Slogans today point to strength of the industry and urge Australians to protect it, should we unnecessarily weaken the nation. From the sidelines, the same commentariat use the same arguments to accuse government of class war and, once again, dividing the nation This time, the ridiculous end of to which they will go is the suggestion that a tax implemented by a democratic elected government represents some from of sovereign risk. Much like the idea that land rights should be equal rights, this is argument that comes directly from the industry itself.

In each cases message being sold to us is clear: mining is in the national interest. And, what is good for mining, is good for Australia.

By aligning self interest with the collective interest of the nation the miners have long been able to persuade Australians to protect their business from government. Any threat to the way they do business, real or perceived, is presented as a threat to the future prosperity of the nation.

When appraising policy from either side of the political fence we need ask ourselves, does the national interest really align that closely to that of a few very large, mostly foreign owned, multi-national corporations? And, in whose interest is this particular policy?

No matter who forms government after September 14, you can bet the miners will be selling them the very same message. It will be interesting to see if they swallow it. My bet is they will, no matter if its delivered through a whisper in the ear or a megaphone pointed at the people.

If it’s one thing that both miners and political parties do well, it’s pretending they care about you, me and the national interest.

This post was originally published on the AusVotes2013 blog, go take a look.


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