Stand up for the little guys and the economy
Wednesday, 07 July 2010 09:26
The gloss is coming off the new mining deal. We now know the underlying assumptions to cost the revised package were...well...revised and Ken Henry can't vouch for the revenue projections. There is an election in the air after all and Labor's re-election interest trumps the national interest. And we also know the small and medium miners got shafted.
It is clear now that while the small miners with single projects won't get the refunds for losses, the big miners will be able to transfer losses to other projects and, of course, they will get a big upfront deduction for existing mines courtesy of new valuation rules. Those most likely to pay tax in the short term got a rolled gold deal that effectively halved the impact on them - courtesy of trading off the one benefit most likely to benefit the small guys - who didn't get a seat at the table to object.
Whatever the merits or otherwise of the exploration and losses deductions, it seems extraordinary that you wouldn't discuss this with those most likely to lose when genuine negotiations commenced.
Martin Ferguson's claim that the Government had not neglected the small miners by abandoning the exploration incentives - because "the industry did not argue in support of it" - rings hollow. He was, after all, only talking to the big end of town who got less value from those incentives.
The corker is this comment reported in today's AFR. "The industry's point of view, largely from Western Australia, was about knocking over the whole system," Ferguson said. Funny, but wasn't the Government line about keeping the whole system. And weren't the big guys actually paying for the advertising that argued against the whole tax? That didn't stop the Government talking to them.
Then when the Government promised negotiation, it didn't happen except between the narrow interests of the Government and three global players.
Once the signal was made that everything was on the table, then shouldn't the small and medium miners been able to discuss everything on the table? Not according to Ferguson, who seems more intent in punishing every small and medium miner and the swag of service providers they draw on, because the Government is paying back Twiggy Forrest and the West Australians in droves - with small miners caught in the cross fire.
It is a fallacious and cruel argument to suggest everything was on the table for the selected few, and nothing was on the table for the little guys. I day say the fact the little guys couldn't pay for a multi-million advertising campaign during a Federal election played a small role in the Government's divide and conquer strategy. The problem is, the rest of us - the community at large - still get stiffed by a tax which was flawed from its inception - and now even Ken Henry argues it's even worse. It gets less revenue (which is probably good except the Government is spending more), it shifts the burden from big miners to small miners who will find it even harder to finance their projects (which is the feeder for the big guys later on), it complicates the tax system and all those small engineering, retail and service companies who support the exploration industry will be the worse for it.
Oh, and of course every other business is worse off because they will pay an extra 3% in Superannuation Guarantee charges, for a 1% trade off in Company tax. In one way or another, everyone loses except Julia Gillard who will claim she can return the budget to surplus by 2012-13. That is something we can't really vouch for because the legislation for the tax isn't drafted, the numbers are dodgy and the true impact of the tax and other forecasts won't be published at least until after an election. But she wins politically nonetheless.
Mr Ferguson says there will be no further concessions before the election. Funny that. the "E" word seems to be coming up a lot in the context of negotiating this super tax. This whole strategy was about the election from the outset. You can bet that there won't be too many concessions the day after Labor wins the next election and needs to fund its next swag of promises.
This fight must move from the big miners - who have opportunities to reduce exposure in spades - and now to the general community, the service providers, the retailers, the small and medium players and the Senate.
You can play a role. Of course you can vote, but you can also sign our petition to the Senate. Only the community and the Senate stand between this insidious tax, ad hoc tax policy on the run and its detrimental impacts on the wider economy.
ComeOn Editor
