Mining giants win ALP backdown

July 3, 2010
The big mining companies’ main method of struggle was to pay for a multi-million dollar advertising campaign. They could also

From the standpoint of conventional political analysis, Julia Gillard has had a spectacular start to her reign as prime minister.

She wrested the position from Kevin Rudd with minimal bloodshed, announced she was going to neutralise the mining tax controversy by negotiating with the mining billionaires and was rewarded with a dramatic turnaround in the opinion polls.

On July 2, her deal with the three biggest multinational corporations in the mining industry — BHP Billiton, Rio Tinto and Xstrata — was revealed. This deal gave enough compromises to these corporations for them to call off their advertising war against the government.

However, the deal will still result in $10.5 billion in extra revenue for the government (compared to $12 billion expected from the original proposal), meaning the government doesn’t have a huge budget black hole to contend with.

On the face of it, this is a win-win deal for everybody, except the Liberal Party whose chances of winning the coming election now appear to have fallen.

However, Gillard’s (and the ALP’s) folding before the mining bosses is nothing more than a continuation of a “business as usual” which is not in the interests of the working-class majority in Australia.

It’s not that Rudd’s original mining tax proposal was particularly radical. At best, it was a modest reform — although in this era where counter-reform is much more common, a modest step forward is not to be sneezed at.

Rudd launched his proposed tax under the banner of attacking super profits in the mining industry. However, in addition to returning the federal budget to surplus, the proceeds of the tax were to be spent on reducing the already low corporate tax rate from 30% to 28% and funding a range of new subsidies to the mining industry itself.

Rudd was apparently gambling that a public stoush with the extremely rich billionaires in the mining industry would enhance his election prospects by creating an image of a reformer who stood up against big business.

He expected the new subsidies for the mining industry would neutralise the opposition of the smaller mining corporations and the cut in company tax rate would be lauded by bosses in other industries.

It is also clear that Rudd’s strategy always included the plan to compromise on some aspects of the tax. Having appeared willing to take on the big corporations with the initial headline announcements, he would cut a deal that would not be too taxing for the big end of town.

The surprise revelation on July 2 that treasury made a “mistake” in calculating how much money the original tax proposal would have generated ($15-$20 billion instead of treasury’s forecast of $12 billion) is possibly nothing more than an indication of the amount of “wriggle room” that Rudd was always planning to deal away to the bosses. (Alternatively, it could just reflect that the mining bosses control even more billions than previously thought and should be made to pay more tax!)

Public comments by Fortescue Minerals boss, billionaire Andrew Forrest, reveal that Rudd himself was on the verge of reaching an acceptable deal with the mining bosses before he was unceremoniously dumped by the ALP machine. Forrest told the June 30 Sydney Morning Herald that a discussion paper outlining significant compromises by Rudd was “24 hours” from being publicly released at the time of his ousting.

There is a substantial similarity between the compromises that Forrest negotiated with Rudd and the compromise deal released by Gillard. This reveals that the dumping of Rudd was more about an image change than a policy change for the ALP government.

Forrest may now be complaining that Gillard only negotiated with the big three multinational mining corporations, but this is a sideshow from the main issue — Australian workers aren’t getting much out of the tax in either its original or amended versions.

Much is made of the fact that Gillard has retained the increase from 9% to 12% in the “superannuation guarantee” that is to be funded by the tax. This does mean that Australian workers will get increased superannuation, even under Gillard’s deal.

However, this superannuation measure was never expected to cost more than $240 million. In other words, it is spare change in the context of a tax expected to raise more than $10 billion (barely 2%). The inclusion of this measure is more about selling the tax to the public than sharing the wealth currently monopolised by the corporate elite.

It has also been predicted that this increase in superannuation will actually reduce government expenditure over time as less government money will be spent on pensions.

Many people will be breathing a sigh of relief that the worrying prospect of a Tony Abbott Liberal government seems less likely than it did before.

However, we should be less impressed with the “clever” manoeuvres by the parliamentary ALP than by the public campaign by the mining billionaires when it looked like they weren’t going to get everything they wanted.

Mining company heads, like others in the corporate elite, are used to having an open door to government ministers. The parliamentary system is rigged to be more responsive to the big end of town than to ordinary people, even if the executives periodically have to pay $5000 or so to attend fundraising dinners with ministers.

Who can forget Forrest’s lament that the prime minister wasn’t returning his calls? He expects a direct line to the PM!

When the mining corporations didn’t get what they want, they launched a public, political campaign to try to change the balance of forces in their favour. Their main method of struggle was to pay for a multi-million dollar advertising campaign and they could count on sympathetic coverage in the corporate-owned media.

Our side can’t afford multi-million dollar advertising campaigns, so our methods of struggle have to be different. If we want to see a genuinely progressive taxation reform — or any other progressive reform for that matter — we need our own public political campaign: public demonstrations, industrial action and civil disobedience.

If the ALP were truly a workers’ party, they would help us wage campaigns like that. Since they’re not, we need to build a party of our own.

[Alex Bainbridge is the Socialist Alliance candidate for Perth.]

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