One of the Hungry Beast’s best shows this week. Rhinehart complains that she can’t afford a Mining Tax when her wealth goes up $7bn in a single year?!!

Thanks to Jan Speed for this excellent clip.

Bryan Kavanagh highlights some of the machinations behind this process.

photo credit: iLoveMountains.org

With this weeks poll showing that many Australians were undecided on the Super Profits Resource Tax, they are effectively saying ‘please sir, tax me’. ‘No I wouldn’t think of ensuring that the privileged pay their fair share, please I emplore you – tax me!’.

With 20 leading economists coming out in favour of the tax (thxs John Quiggan), the muted response by the Australian public really does warrant an education program.

Ross Gittins is on the front foot (watch video in 2nd link above) with the call that what mining supremos like Tom Albanese are really fearing is the global trend this could trigger. They fear the Brazil’s, China’s and South Africa’s following suit. With the Henry Review targeting the pot of gold at the end of every privatisation rainbow – economic rent in land, in minerals, in taxi licenses, in pokie licenses, the business elite are throwing everything they can against this government.

Read some of our responses to this debate and FIRE up – we need you on the comments pages of the Murdoch press:
RPSTing Australians and their Mineral Resources – Bryan Kavanagh’s new piece in Online Opinion
Levelling the Playing Field

With Australia’s reputation as an economic fighting machine in having avoided the worst of the GFC (really?), Wayne Swan’s upcoming visit to the G20 will be a revealing affair.

Will the world’s leaders give support to Swan when the finances of so many countries are decrepit because of their outdated tax system in an age of tax havens and resource scarcity?

This Swan tour to China & the Korean G20 meet will be one the government is hoping will elicit support for the move to untax enterpreneurship and capture some of the naturally increasing scarcity rents that accrue to natural resources and natural monopolies.

In another piece of mining fearmongering, the head of Australia’s largest goldminer, Ian Smith of Newcrest said that the SPRT is ‘a tax on our grandchildren’ (AFR 0306, p5). This is outrageous when considering that he is proposing a lower a tax on NET PROFITS. He is effectively saying tax the working classes more so that we miners can remove these non renewable resources and profit from them at great extent. What will be left for the grandchildren Ian?

For mining to slow down a little would be a good thing, especially with China’s shaky economic outlook.

The mining elite’s hired gun – Opposition leader Tony Abbot – said recently that the SPRT will increase the price of food. The SPRT cannot be passed on because miners in other countries have different cost structures. Competitors can undercut any price that Australian based mining companies offer.

The only place this additional SPRT tax can come from is by taking some of the profits from magnates (like the 2nd richest man in Oz Andrew Twiggy Forrest) and giving them to the government.

Who would want to grow up to be a doctor when so many are making a killing from simply digging up the earth?

We must re-balance the playing field.

photo credit: versageek

The might of the Australian mining industry is throwing everything it can at mainstream Australia at present.

Can Joe 6 pack comprehend the difference between industry that is man-made ie car manufacturing, versus the mining industry, who are ripping up our valuable earth as if they scientifically produced the iron ore?

Apparently, the Rudd Government is largely doing what the mining industry asked for in their submission. Thanks to the ever accurate Peter Martin, we read that the difference between now and the collapsing 2008 economic environment (when the Henry submissions were sent) is that ‘decades of profits to come’ are now expected.

Mining magnates have flipped their view now that they realise how much they will be contributing back to the commonwealth.

Miners had supported the Resource Rent Tax because it included the ability to write off losses.

The ramifications of the earth’s privatisation are rearing their head where ever we look at the moment:

• Greece has run out of money due to a poor taxation system. The bursting of their property bubble has made their pensioners even angrier at having the retirement age raised from 53 to 67.
• Goldman Sachs is facing a raft of fraud cases and is now attempting an out of court settlement. The risky nature of the US property bubble saw the use of dodgy derivatives to offset this risk.
• Aus-Aid has announced a $53m ‘aid’ package to map and value the Pacific’s resources. We know this is code for ‘so we can sell it off to our mates in high places’. Tragically none of this money is being spent in Vanuatu to train local ni-vans on how to value the land (we are not sure about the rest of the Pacific). A hand-out ‘beg-for-aid’ mentality is ensured.
• Indonesia has opened up its property market to foreign investors.
• East Timor desperately needs land reform to move on from the post Indonesian rule and disputes over land title.
• China’s property bubble is on the precipice. Check how land speculators are dodging China’s credit restrictions.
  

Have a listen to our Renegade Economists podcast. The bottom line is that more people need to understand geonomics, an earth based economic system.

You can do this by joining Alanna Hartzok’s Earth Rights course. It takes about 4 hours to arm yourself with knowledge to read between the lines to decipher what the big boys are really up to. Click on the Earth Rights Pacific class to join so we can discuss local issues.

The earth has been sold off and the message in this course is that we can reclaim it, not by force but by redirecting the invisible hand to value and share the earth’s resources on all our behalf, not just for neo-colonising land speculators.

photo credit: s_mestdagh

The gloves are off in the battle between the people and the mining magnates.

Today Swan admitted the 40% Resource Super Profit tax is not set in stone. This was code for ‘come buy me a coffee and let’s see what we can do about it’.

“We’ve outlined the design of the tax, we’ve said within the design of the tax we’re happy to sit down and talk about all of the transitional arrangements.”

With state royalties still to be paid, the Fed – State tradeoff in moving to one resource rent system will in the meantime see some churning in the tax refunds miners in participating states will endure. This opens the negotiating door for the miners.

But will the RSPT tax the miners out of existence?

It can’t possibly do this because the RSPT is based on profits. This allows mining companies and their CEO’s to maintain their bonuses. This deftly meets the ‘political’ in political economy.

With the growth in mining investment in W.A (a royalty rate of 7%) versus S.Australia’s 3.5%, there has been little discernible difference. The higher royalty rate hasn’t scared off investment. Why? Because miners understand their business is much more profitable than mass manufacturing of cars for example.

Scarcity dominates this decision. Natural resources are scarce and so with a Chinese led boom, miners are sure to profit. An RSPT is a way to re-balance the advantage mining companies have with their scarce resource versus car manufacturers, who produce a non-scarce resource.

Regarding China, a Resource Rents system is an assertion of sovereignty (now tagged ‘sovereign risk’ for mining investors). Kevin Rudd reminds us of our sovereignty here: talking up the value of our common-wealth (if only he remembered who his seat is named after and why):

Prime Minister Kevin Rudd said the redistribution of wealth was justified and long overdue, adding that much of the income generated by mining the resources which were owned by the Australian people went offshore.

“Over the last decade the mining companies generated $80 billion in higher profits. At the same time, governments on behalf of the Australian people, received only an additional $9 billion,” Mr Rudd told ABC Radio.

“BHP is 40 per cent foreign owned, Rio Tinto is more than 70 per cent foreign owned. That means these massively increased profits … built on Australian resources are mostly, in fact going overseas.”

Dear Mr Magnate, please note the term Commonwealth!

photo credit: BK59

Last night saw the media highlight two essential points. On the same day that BHP announced it’s fifth consecutive record profit of $17.8 billion for the year, 4 Corners discussed how high land and housing prices in the mining town of Port Headland were strangling the community.

Both media pieces overlooked the fundamental role of the community in creating the value that naturally accrues to natural resources. Over the last 5 years of record profits for BHP, the ratio of royalty related payments to dividends has averaged 50.6%. In 2003 shareholders received 61% more in dividends than all tiers of government from resource rents. It was around this time that BHP CEO Chip Goodyear chided the business community with comments like ‘Our hard work has paid for your tax cuts’. In 2007 the community received 56% of the amount paid to shareholders. Why should shareholders get more than the rest of the community?

We ask here whether so called owners of resources are entrepreneurial geniuses or just extremely privileged to benefit from the gifts of nature? For that reason, Government should have the courage to withstand the criticism to any changes in royalty rates. Since when did mining companies and land developers become royalty? Why should mining companies have the right to demand meetings with government to ‘negotiate’ what it will pay?

Port Headland demonstrates the danger of allowing what is technically known as economic rent to accrue in land prices. Watch 4 Corner’s The Money Pit: A Boom town running on empty and put the 2 + 2 we discuss here together.

Ask yourself – does it make sense for millions to be made in the region and for little to be given back to the community that makes it all possible? Why do land prices appreciate faster than wages? How can we ensure that the fundamental human right, the right to a roof over our head, isn’t subverted by land prices?

Land prices are no longer reflective of what can actually be earnt off the land. Land banking speculators understand this. A quick look on google earth sees that there are vacant blocks of land in Port Headland. Withhold supply, maintain scarcity, push up prices. Builders can afford to drip feed the new buildings to the market, always ensuring that demand is greater than supply.

Enter 2 Monks Pl, Port Headland into google earth and you can see that the capacity is there. Maybe there aren’t enough builders. Surely if houses are going for $1.5 million then their wages could be paid? The problem is the rents. Astute land investors/ speculators understand that demand is high for locations where $100 000 – $200 000 p.a can be earnt. With no other alternative place for the wage earner to live, they must pay the asking price for housing or move to the shanty towns. When no competition is possible, land monopolists are free to charge the exorbitant rents that are chasing locals out of town. This is the Law of Rent in action.

BHP announces record profits, largely earnt in the Port Headland region, but the workers struggle to pay rents. Sound sensible? Land monopolisation of rents ensures this trend continues. Wage earners are guaranteed to never get ahead under the rules of today’s economic system.

If instead the community earnt a share of the land rents, then such speculative power would no longer be possible. Land rents could replace taxation as a revenue source, ensuing the community gets it’s share in the naturally increasing land prices. All land would then be used efficiently. Land hoarding would not be viable, putting downward pressure on prices. Yearly land valuations would see that land rents are charged upon what can be earnt off the site, rather than what one speculator can convince another to pay.

Those households living closer to prime/ new infrastructure would pay comparatively more than those on the periphery. It makes sense for those close by to pay more in respect for this service. The BHP rail yard would obviously pay a larger land rent in respect for the income that such a facility makes possible. Together, these forces give the local government more revenue to finance infrastructure whilst simultaneously providing the ability to keep land prices at earnable, responsible levels.