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By Loz Lawrey Dear Minister Giles, Since my previous emails to you of 14…


Give us our cut

We went about the mining tax the wrong way. Not because we let the mining companies write it. Not because we allowed accelerated depreciation during their construction phase effectively making the early revenue returns insignificant. Not because we attached expenditure to money we had not yet received. And not because we removed the tax just as they were moving into production phase which would have ramped up returns.

It was wrong to ask the mining companies for money. Despite the billions in profit they make each year, these companies invest a very large amount of money employing accountants to minimise their tax through various legal, if unethical, methods. We seem either unable or unwilling to close these loopholes and make companies pay the appropriate level of taxation on their profits so we need a new approach.

As we have discussed many times here, we are not constrained by money. Government spending and taxation are merely tools to control the amount of money in circulation, offering a stimulus or brake as needed to boost employment or dampen inflation. Talk of debt and deficit is largely irrelevant.

More importantly we need to ask what sort of society do we want? Do we have the physical resources to support that society?

East coast gas prices are expected to rise sharply from 2016-17, as Queensland gas exports link domestic prices to the international market. Demand from overseas is far greater than the domestic market and prices are much higher on the international market. Without a carbon price (and possible changes to the renewable energy target), if the gas price increases, coal-fired electricity will be more economic and our emissions will almost certainly rise.

In any mining venture we, the people of Australia, are the major shareholder. We own the resources and our government sets the conditions for approval to develop them. We need to remember that and use it to our advantage.

Rather than see our finite resources lost forever with the profits lining the pockets of foreign shareholders, we should be given a percentage of all production – not in money but in mined resources.

If we are given a proportion of the iron ore, coal, oil and gas mined here it would significantly reduce the cost to build things like the high speed rail or to provide power to hospitals and schools. Silica is used in many things from concrete to computer chips to solar panels and water filtration. If we kept some of the aluminium and all the other resources that are mined here we could save so much money building infrastructure and employing people in the process.

Forget taxation. Accountants can play their shenanigans with tax havens and profit shifting and company restructuring and accelerated depreciation all they like. If we kept, say, 10% of the production of any mine it would be far more valuable than numbers on any fiscal statement.

We have the power, let’s use it.


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  1. Phi

    I really like your ‘lateral thinking’ perspective Kaye Lee – new ways to look at the old issues – it says “there are other ways to achieve the goals”. Pity we cannot elect a government of lateral thinkers.

  2. Matters Not

    If we are given a proportion of the iron ore, coal, oil and gas mined here it would significantly reduce the cost to

    The irony is that we already have a ‘Resource Rent Tax’ on Petroleum’ products. Generally, it flies below the radar.

    The Petroleum Resource Rent Tax (PRRT) is a profit-based tax which is levied on a petroleum project.

    PRRT is currently applied to the recovery of all petroleum products from Australian Government waters (including crude oil, natural gas, liquid petroleum gas (LPG) condensate and ethane), except for petroleum products extracted from the North West Shelf project and the Joint Petroleum Development Area, and value added products such as liquefied natural gas (LNG).

    From 1 July 2012, the PRRT became a compulsory tax applied to all Australian onshore and offshore oil and gas projects, including the North West Shelf, oil shale and coal seam gas projects.

    The PRRT provides a fiscal regime that encourages the exploration and production of petroleum while ensuring an adequate return to the community


    Perhaps we should scrap that ‘tax’ as well, given that these ‘taxes’ discourage ‘investment’. LOL

    Think how much we would all be better off if we scrapped this tax. Hilarious.

  3. Wally

    The method is irrelevant BUT we must keep something for the people, our natural resources will eventually be depleted and we need more than 2 fat people (Palmer and Rinehart) becoming richer to show for it. Ensuring that a percentage of resources exported had substantial local content is another method of getting some return by the way of employment for the country. Do we have any steel mills still operating in Australia?

  4. Catriona Thoolen

    An interesting concept, but we would need investment in latest technology smelters & processors. To my mind, this is where we have been stuck, exporting our resources as raw materials, rather than processing here and exporting the more valuable product.

    I know Clive Palmer has suggested legislation that ensures 10% of all Australian Superannuation is invested in Australia. We certainly need someone to invest in the latest processing/manufacturing technologies and they need to be Australian owned for the greatest benefit to our economy.

  5. Matters Not

    coal-fired electricity will be more economic and our emissions will almost certainly rise

    We need to change the way we define ‘economic’ to include the downside of such activities. So many areas need to be included in the calculations. Try ‘health’ cost as a starter.

  6. townsvilleblog

    There should have been no concessions after all they have gotten away scott free for 30 years, that should have been enough, once solar has been installed the cost of electricity is zero, zilch. We have a 3 kW panel system and a Solarhart water heater and with air conditioners flat out for the last quarter we had a $57 credit. Granted we would like another 3kW of solar power and enough money to store the electricity so we could go off the grid completely. At least we feel that we are making our contribution to our children’s future by not producing hazardous green house gases that come for burning dirty coal the old, old fashioned way.

  7. Kaye Lee

    In March last year, Rinehart’s mining group, Hancock Prospecting, signed off on a $US7.2 billion debt package for her highly anticipated Roy Hill iron ore project in Western Australia’s Pilbara region. In return for the US government loan, Hancock Prospecting will purchase American mining and rail equipment from Caterpillar, General Electric and Atlas Copco. The Export-Import Bank says their involvement will “support” 3400 US jobs.

    How about we make development approval contingent on using Australian equipment and employees.

  8. mark delmege

    Yes there is a good argument that we should charge the mining companies by volume rather than profit and funnily enough the WA Liberal Premier Barnett (aka Barney Rubble) said as much to African leaders a couple of years ago. (and I have said it here before myself)

  9. Hamish Maccormick.

    Australian manufacturing, now there’s an idea!

  10. John Lord

    Makes sense.

  11. Pingback: Give us our cut – » The Australian Independent Media Network – BY KAYE LEE | winstonclose

  12. Hunter

    I’ve long thought that resources should be subject to export tariffs. Either they pay on export or they value-add in Australia. If business can’t make a profit under those conditions, then let the government do the mining.

  13. Wally

    @townsvilleblog have you considered the gases emitted by batteries? A mix of PV, wind and coal power is probably the best mix we cab hope for but for this to happen governments must stop what is happening in Victoria from occurring in other states.

    The first thing is to stop privatisation, the multinationals send most of the profits offshore as consultancy fees to avoid paying tax. Ask yourself how can power that costs 6-8 cents per Kwh to generate be on-sold to consumers for more than 28 cents? Someone is raking in squillions and consumers are told that it is the costs associated with delivering the power to the premises that increase the price. Funnily we par nearly $100 per quarter in network fees that is supposed to cover the cost of maintaining transmission systems, networking charges such as meter reading and converting to smart meters.

    Why are consumers paying for the roll out of smart meters? Power companies save the cost of visiting premises to read meters (surely this is enough over time to avoid charging consumers for changing the meters) and they get a better return on the power they generate because smart meters read power consumption differently to the old mechanical meters, A smart meter is a Volt Amp hour meter where the old mechanical meters measured Kilowatt hours. Power factor will cause a smart meter to record more units than the old type meter and if you live in an industrial area it will affect you more than someone who lives in a residential area.

    The recently departed LNP government dropped the solar feed in tariff to 8 cents blaming the increase in electricity prices on the cost of paying for solar power. The truth is without solar power Victoria would need at least 2 more dirty coal power stations or a bloody miracle to provide power for peak loads. Before solar became common on homes large areas of the state experienced blackouts because the demand was greater than supply. When the sun is out solar is working and people use their air conditioners so it was worth all of the 66 cents per Kwh to fix the problem. You cannot flick a switch to turn on a coal fired generator they must run continuously wether the power is consumed or not so the capital expenditure, running costs and the maintenance costs would be much more than what was spent to entice people to invest in solar. Solar power has to be worth at least as what the retailers are charging customers for power.

    Within weeks of the LNP forming government in Victoria the cost of a service truck visit was increased from $120 to $460 excluding GST and an electrician needs to make an appointment. When making an appointment to distributor tells the electrician when it will be and there is typically a 3-4 week lag from making a request and the actual appointment. To make matters worse if the distributors workers get called out after hours or they get busy elsewhere the appointment can be cancelled on the day. If a job takes more than an hour the fee is increased in $460 increments even if it is not the customer or the electricians fault/problem. If I am paying someone $460 an hour for a service I expect to dictate when they will be there not be placed on a waiting list.

    This is just the tip of the iceberg; bottom line do not allow your electricity system to be privatised it will increase the cost to consumers significantly in the long run.

  14. stephentardrew

    Completely agree Kaye.

  15. Awabakal

    Here is one skill available to everybody and remember, it is a skill. Turn the hot water system off when the water is hot and turn it back on when the water begins to cool. It may not work for large families but it does work for small families.
    We have gone down to less than a 1 person usage payment by simply remembering to turn the hot water system on and off.

  16. Wally

    @Awabakal if turning off the hot water is saving you a substantial amount of money I suspect that there is a fault in your hot water service. It doesn’t make any substantial difference to the volume of hot water that needs to be heated all you are doing is heating more water in 1 hit instead of smaller volumes multiple times. What will save a substantial amount of money is lowering the temperature setting of the thermostat but if you end up running all hot water without cold mixed in you will use more hot water and have a greater volume of water to heat for each shower. Shorter showers, flow restrictors, washing in cold water and doing the dishes as soon as the basin is filled are proven ways to save money.

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