Fund renewables, tax mining

Cartoon by Kevin Shaffer

Writing in the May 27 West Australian, Paul Murray said WA Labor senators facing election will have to “explain to voters why they intend to support a tax that is so palpably against WA’s best interests”.

For Murray, who was referring to the Rudd government's proposed Resource Super Profits Tax (RSPT), it is simply a given that the interests of the people of Western Australia coincide with the interests of the big mining companies that operate in the state.

His article assumed WA Labor candidates have been “hung out to dry” by the federal ALP and even sitting members will struggle to win seats in WA.

Murray is one of many media commentators chiming in to support the shrill opposition of the billionaire mine owners to Labor's proposed new tax. They are trying to tell us that we're all in the same boat with the mining executives.

But is it really the case that ordinary people lie awake at night worrying about the profitability of the big mining companies? And should we?

On the same day Murray's column was printed, the West Australian also published parts of the Business Review Weekly’s Rich 200 list. Gina Reinhart and Andrew Forrest headed the list from WA. Both have mining fortunes.

The WA Today website reported on May 26 that those with mining fortunes are “still worth a combined $7.9 billion more than they were a year ago” despite the announcement about the new tax.

Mining company shares have certainly (but also temporarily) taken a hit. Forrest, who was headed towards the number one spot on the BRW list, had to settle for number four. In the weeks before the list was published the value of his shares went down because of the tax announcement. Nevertheless, he was still credited with a fortune of $4.24 billion.

Overall, the 200 people on the list increased their wealth by more than $20 billion — an average of more than $100 million each. Just ask yourself how many people in your street increased their personal wealth by $100 million in the past year?

Contrast this thought with the May 23 revelations by deputy prime minister Julia Gillard that domestic mining companies pay an effective company tax rate of only 17%, and that the big multinationals like Rio Tinto and BHP pay only 13%. These are lower tax rates than an average worker.

There is nothing remotely unreasonable about raising taxes on big business in general and the mining companies in particular.

The biggest problem with the Rudd government's proposed tax is that it doesn't go far enough. It is limited to the mining industry for a start (arguably there is a case for a “super profits” tax on the big banks and other industries) and will be used to fund company tax cuts.

But corporate profits have risen dramatically in recent years and the big companies already pay too little tax. Between 2005 and 2008, 40% of the biggest companies in Australia paid no tax at all.

Further, Rudd's tax is likely to be watered down in “negotiations” with the mining companies.

When compared with the corporate welfare that the mining companies already get, Rudd's tax looks decidedly modest.

Charles Berger from the Australian Conservation Foundation pointed out in the May 11 Age that mining companies are already given between $4 billion and $5 billion a year from the public purse.

This annual subsidy includes $1.7 billion in subsidised fuel, more than $1 billion in tax rebates, about a billion worth of greenhouse pollution that isn't paid for and several hundred million dollars of subsidised science.

“And that's before we've even begun to talk about government-provided roads, rail, ports, electricity networks and other infrastructure”, Berger said.

“The government plans to return far too much of the revenue raised by the resources tax to the mining industry in the form of additional exploration rebates and mining industry infrastructure, when we should be using the additional revenue to help us build a clean, sustainable economy, including investment in renewable energy and clean transport.”

This latter comment reveals the real elephant in the room — the fact that governments and corporations are acting as if there is no climate change crisis.

Take for instance the recent WA state budget, which earmarked more than $100 million towards the development of a polluting liquid natural gas processing plant on the Kimberley coast. Piers Verstegen from the WA Conservation Council said on May 27 “this development [alone] would be responsible for increasing WA's greenhouse emissions by 25%” should it go ahead.

The real challenge we face is to urgently turn around the increases of carbon emissions and towards completely de-carbonising our economy. Climate change campaign group Beyond Zero Emissions (BZE) has already released a detailed plan to move to 100% renewable energy by 2020 at a cost of less than $40 billion a year.

In one sense this is a lot of money. However, it is only an eighth of the gross operating surplus of private corporations in Australia in the past financial year. A quarter of it could be obtained simply by ending funding to fossil fuel industries, which an April 30 University of Technology Sydney report calculated at $10 billion a year. Moreover, the measures promoted by BZE are job-rich.

To avert the looming global warming crisis, money must be invested in public transport, retrofitting buildings and renewable energy, among other things. However, in tandem with this, fossil fuel industries need to be phased out. This means mechanisms are needed to give society the power to determine not only how profits are distributed, but how they are made.

The mining companies squeal about what they will lose from Rudd’s moderate tax, but a lot more must be taken from them if we are to avert the danger of losing our entire planet.

[Alex Bainbridge is the Socialist Alliance candidate for the seat of Perth. Contact Socialist Alliance to donate or assist the campaign.]