With high iron ore prices, driven by Chinese demand and continuing supply problems in Brazil, and the government racking up half a trillion dollars in deficit spending to keep the economy afloat, the case for an iron ore super profits tax has never been stronger.
And for the reason why, we can turn to none other than Scott Morrison.
It was Morrison himself who, as treasurer, slapped a $6 billion extra tax on the banks in the 2017 budget. His rationale? It was “an additional and fair contribution from our major banks” to “support budget repair”.
Morrison then made it permanent, on the basis that not merely was it required to help repair the budget, it was required to keep the budget in surplus. “Tell them you will pony up and help fix the budget”, Morrison lectured the banks when selling the budget.
The major banks had jointly notched up over $30 billion in profits the previous financial year and just over $25 billion the following year. Despite warnings that the tax would undermine the financial system, the banks survived it and survived the impact of the pandemic in 2020, emerging in the final quarter in top condition, backed with over $100 billion in extra deposits and nearly US$26 billion in provisions made last year to help defend themselves against any rise in bad debts this year. The decision of Malcolm Turnbull and Scott Morrison to impose the tax has been borne out.
The banks’ profits back then were around what BHP by itself is expected to earn this year — around $27 billion (despite writing down a billion dollars on thermal coal in NSW), with Rio Tinto and Fortescue — which Andrew Forrest says is making nearly one billion a month — likely to add tens of billions to that figure.
The results will put the focus on Australia’s trade tensions with China in perspective: for yet another year, China has proved a source of huge income for Australia, not through any particular genius of Australian business, but because of China’s capacity to defeat COVID and the lack of alternative iron ore supplies.
The big miners might cry “sovereign risk”, as they did in response to Labor’s resources super profits tax, but this is not a government that has any concern about sovereign risk. There was no talk of sovereign risk when Morrison imposed the banking tax, or when the Turnbull government threatened to block gas exports if gas prices didn’t come down, or when Morrison, at the behest of News Corp, proposed to force Google and Facebook to pay billions to Australia’s failing media companies.
“An additional and fair contribution” to the long, slow recovery in the nation’s finances would be a far better use of the iron ore sector’s windfall profits than handing it to foreign shareholders and Australia’s hyper wealthy. Alternatively, it could be handed to the Future Fund, which might do more with it for taxpayers, given current low interest rates.
Morrison has done it before and should do it again.
Scott Morrison! Telling the Big Miners to pay their fair share of taxes? That’s like a serf giving the finger to the lord and lady of the Manor. Scott is a loyal peasant to his betters, and would never contemplate such an unseemly act of lese-majeste.
Bernard, I just saw a pig flying by through the trees as I read your item.
Maybe Bernie “was having a laugh”?
PS After all, we seem to be living in a universe where you can only laugh or cry.
The fundamental issue is that the tax system needs a major re write to address issues in the world as it is today. Resources taxes, Firms manipulating figures to minimise/avoid taxes, Internet business etc etc.
With leadership this can all be addressed and the country much stronger for it.
The country gets poorer by the day , due to lack of political leadership and commitment.
Maybe, BW – or the country’s majority of citizens gets poorer, whilst the wealth is scooped by the top 10%? This what the “K- shaped recovery” is supposed to describe.
Maybe, just maybe, it’s time for labor to step up its game and get tough on tax reform. We know there’s a world of hurt coming down the pipeline in terms of joblessness. For a UBI to be meaningful in any way there need to be at least four basic requirements a roof over your head, food on the table, medical care and dental care.
In Australia we have 2 out of 4. It’s high time labor put social housing and free dental care on their agenda in conjunction with higher corporate taxes. Let’s see which way the Australians will vote if those two items are in play. I doubt anything Murdoch’s media and the mining lobby says will make a difference.
True, Bref. Mark Blyth suggests the need for a “reset” – similar to those after WW1 and the FDR’s post depression “new deal”. The natives are restless again, big time, so Blyth claims the necessary reset of capitalism after the GFC – that didn’t happen – but should be an urgent priority for Biden and co.
PS After all, we are currently living in a universe where you can only laugh or cry.
And also one in which, were they even slightly better read, the Canxers would excommunicate anyone using the colonial phrase “the natives are restless” – from seemingly every Great White Hunter/Tarzan movie ever made when the drums were a’beating.
Fortunately they regard last year as ancient history, of which they have little knowledge & less awareness so language is safe(r), for the moment.
Some Symes, sooner or later, is going to work out a NewSpeek algorithm to remove from the public sphere all troublesome phrases, words – and possibly even letters – to protect the vulnerable.
Don’t laugh, after all it was only a generation ago that the filthiest, most obscene letter in the alphabet was ‘X‘, to judge from how often it appeared in text (ie inky marks on pounded & dried wood pulp, for the kiddies) to indicate expurgated words.
Government control of the means of production, distribution and exchange . Wasn’t that Labor policy once?