The mining monopolies are taxing Australia!

Vanguard July 2011 p. 3
Max O.

Australia’s politicians have been falling over themselves to please and appease their mining corporation masters.

Such servile politicians are needed to provide the smoke and mirrors that these multinational conglomerates need to obfuscate the super profits they make.

The first in this game of chicanery came when Western Australian Premier Barrett signalled an increase in the royalties on iron ore fines from 5.625% to 7.5% by 2014. This was a deliberate attempt to undermine Prime Minister Gillard’s negotiations with the mining companies over the revamped resources rent tax. Barrett was essentially doing the bidding for the mining multinationals.

Next in this game of pretense was the South Australian Mineral Resources Minister Tom Koutsantonis, who accused the Barnett government of taking its miners for granted. The SA government campaign, through newspaper and billboard advertising, aimed at capitalising on the so-called discontent with the WA government’s recent increase in royalty rates, claiming, “…it doesn’t take much exploration to discover South Australia is the best place to mine”, and spruiked the state’s reduced royalty rate for start-up mines.

Then PM Gillard goes to dinner literally with the mining corporations! At the Minerals Council of Australia’s annual dinner in Canberra there was nothing but praise from PM Gillard, over the handling of negotiations with the mining industry on the revamped mineral rent resources tax.

This was reciprocated by Minerals Council Chief Executive Mitch Hooke, who stated: “It gives us great heart, great heart, to hear that our Prime Minister - we think we’re pretty special - but it really does a lot for our spirits to know that we figure so much in your day and so much in the government’s economic policy thinking,” he said.

The nauseating obeisance to the multinational mining corporations demonstrates the stranglehold and power they wield over our political minders. One would be forgiven thinking that the mining companies are doing it tough, that they pay enough tax and that their profits are hard to come by.

The Financial Review reported that, “… in 2009- 10 found profitability in mining remained three times the national average, despite a 43% plunge in commodity prices in the 12 months to October 2009.” The figures show that, although profit margins in mining fell 9% between 2008-09 and 2009- 10 as the GFC (capitalist economic and financial crisis) sent commodity markets briefly into reverse, at 33.4% they were still well ahead of the next most profitable sector, rental, hiring and real estate services, where the profit margin was 28.2%.

“The findings show why the mining industry barely missed a beat during the financial crisis and, given the subsequent 50% rebound in global commodity prices, is now investing so heavily.”

The Financial Review also revealed that, “The Australian Bureau of Statistics report shows that mining employees generated an average $1.063million in sales and service income each in 2009-10, almost four times the national average of $242,000, while they earned on average $117,500.” By comparison in manufacturing, sales per worker dropped below $400,000, while average income climbed to $57,000; and in retail each employee generated on average $275,000 in earnings, while costing $29,400 in wages.”

The figures point towards an enormous quantity of value being created by mining workers. The mining companies pocket the largest portion through depriving mining workers and the rest of the Australian population of what rightfully belongs to them.

The mining monopolies demonstrate that capitalist development is always ruled by the search for super profits (above-average returns). The expansion of capitalism is shaped by the quest for super profits in monopolistic markets, in which a small number of large corporations dominate supply. These dominant corporations utilise mergers, fusions, take-overs, government-sanctioned licensing etc. to protect their cartel-like gains and obstruct potential competitors. The mining corporations use their monopoly position to obtain advantage over competitors. They do this by lowering relative labour costs and achieving a greater gap between the value of what they sell and the price that they charge.

Mining monopolies have the best opportunity to gain capital depreciation from their taxes. Permitting mining companies to depreciate again and again is not to reflect their economic burdens, but to save big investors from having to declare taxable company earnings profit.

Therefore, the oil and mining sectors have operated on the basis of paying little income taxation for many decades. The function of these giveaways is to shift the financial burden off the mineral, oil and gas industry and place it on the PAYE (pay as you earn) workers.

Therefore Rudd’s Super Profits Mining Tax of 40% or Gillard’s Mineral Rent Resources Tax of 20% and the various state government mining royalties of 7.5% in WA or 5% in SA, are substantially weak in their impact (due to numerous concessions) and will not hurt the multinational mining monopolies in the least.

It is time they were made to pay the rent! And not treat Australia as a convenient hole in the ground to plunder for their sole benefit. But this is unlikely to happen under capitalism.