So in the end a deal on the mining tax wasn’t that hard. The Government just had to cave in on pretty much everything the miners wanted. And most of all on slashing the tax rate to an effective level of 22.5%, rather than 40%.
But because the Government hadn’t allocated all of the original RSPT funding, the damage to the rest of the package could be contained. The resource exploration rebate was dumped, with the ready agreement of the miners, meaning exploration costs will just have to be offset against tax like normal expenses.
And the rest of the business sector will only get a 1% tax cut, rather than 2%. The other goodies funded by the tax — and most of all the hugely popular increase in the superannuation guarantee — remain.
Business groups are already bleating about the smaller corporate tax cut but the Government will, rightly, have precisely zero sympathy for them. It wasn’t the BCA or ACCI or AIG that was copping a battering over the tax. No CEOs got sacked over this. They instead stood mutely by while some of the biggest companies in the world mugged the Government. In fact, you got the impression they were only too happy to see a Labor Government getting beaten up.
Now they’ve paid a price for their silence. Enjoy. They can send a bill to BHP and Rio and Xstrata and Mitch Hooke and see how far they get.
The revenue changes mean it’s hard to portray this as a spectacular backflip. The big miners will, according to Swan’s calculations, hand over more revenue pa than they currently pay, and it will go to much the same reforms that it would have before.
But the real calculation here is the simple political one, that Julia Gillard committed herself to fixing this the moment she became Prime Minister, and she’s delivered. And she’s delivered at the expense, ultimately, of Kevin Rudd, who might have got to the verge of a deal with the industry last week but who was implicitly damned this morning by Wayne Swan.
Julia Gillard’s “intervention”, as Swan put it — that would be the “intervention” that cost Rudd his job — “changed the tone of the debate… made a great difference.” Neither Gillard, Swan or Ferguson commented on how Rudd had gone about trying to achieve a deal, but the message was clear — sensible people had sat down and negotiated a sensible, balanced outcome. Not like that other bloke.
There’ll still be sections of the mining industry that will complain about the MRRT (naturally we got a new acronym — not all habits of the Rudd era have yet been conquered). Clive Palmer has already launched an attack on the new arrangements — but then Palmer’s interest was always in pushing a political agenda, and Labor will always be happy to see him adopting a high profile, especially if he continues to make claims that are patently untrue.
But in doing a deal with three of the most powerful companies, and managing to get the Minerals Council onside, the Government has squared off its four most powerful enemies, at least until after the election. That should guarantee there’ll be no more ads, no mailout to marginal seats, no constant criticism in the media except from partisans like Palmer.
The numbers suggest the national interest hasn’t wholly been ignored. But it’s now clear — to the extent that it wasn’t before — that this Labor Government can be pushed around by powerful corporate interests, if they’re wealthy enough to run a concerted campaign and can line up the media against it. The rest of corporate Australia will have taken note.
What’s in a name? as ‘Juliet’ has been saying to ‘Romeo’ since Shakespeares’s time.
JULIA:
Is it the name that is your enemy?
Those few words, Resource Super Profits Tax?
Is it ‘profits’ that does not say it well?
Perhaps ‘super’ – or any other part
Put forward by that man? O, choose some other name!
What’s in a name? That which we call a rose
By any other name will smell as sweet;
‘Super Profits’ if not so crudely named
Would keep its dear perfection and still owe,
Without that title, much to us. Change the name!
And for that change still pay a ‘rental’ tax.
Then leave me be!
So we finished up with a somewhat emasculated tax regime, but I can’t help feeling if the Govt had proposed this at the start the miners would have screamed just as loudly. Think of it as the old union tactic of making an ambit claim, asking for more than you expect to get and settle for something less but still a win. Rudd, with no union background would not have understood that. Gillard and Martin Ferguson would have understood it clearly. Having set the benchmark you can always make “minor” changes to the rates and application in the future.
The business groups can look forward to a further 1% cut in company tax a little further down the track. The important thing is to grow the whole pie rather than redistribute slices of one that stays the same size forever.
The government must learn not to waste taxpayers’ dollars. It is time to look at areas of waste and duplication where money can be saved.
“that this Labor Government can be pushed around by powerful corporate interests, if they’re wealthy enough to run a concerted campaign and can line up the media against it.”
I would have thought this applies to not only Labor but also a Coalition govt (although they possibly will have already bent to their will before it gets to a public stoush).
I also suspect it applies in most countries around the world. Vested interest groups with power will always hold more sway than unorganised voters. That is the nature of politics.
Tax rates vary over time, no doubt the same can apply to the MRRT