Mining profits reveal true greed

March 5, 2011

Mining company BHP Billiton’s whopping $10.5 billion profit for the second half of 2010 highlights the shameless greed of those making a fortune out of Australia’s valuable resources.

Remember the tantrum thrown by BHP, Rio Tinto and Xstrata less than a year ago after then-PM Kevin Rudd proposed the Resource Super Profits Tax (RSPT)?

The RSPT wasn’t a radical proposal. Part of the revenue from the modest 40% tax would have been returned to the corporate sector, helping to fund a cut in the already low corporate tax rate and various subsidies to mining.

But if we believed the scare campaign by the mining giants, the RSPT was going to cripple the mining industry, and force these poor companies to take their capital and invest it elsewhere, at the expense of Australian jobs.

Now BHP is on track to break an Australian record. Its profit for this financial year will likely be more than $20 billion. Rio Tinto and Xstrata have also announced huge profits.

The mining companies’ multimillion-dollar advertising campaign against the RSPT was one big con job.

After the ALP machine ditched Rudd and installed Julia Gillard as PM, Gillard dropped the RSPT and gave the big mining companies a better deal.

Recent Treasury estimates indicate the watered down Minerals Resource Rent Tax (MRRT), which will reduce the RSPT’s 40% tax to just 30%, will bring in well under half the revenue.

The original tax was supposed to raise about $99 billion starting from the 2012-13 financial year until 2020-21. But it now looks like this figure will be only $38.5 billion.

That’s $60.5 billion that could have been spent on health care, education or the shift to renewable energy.

Greens leader Bob Brown has called for the original 40% tax to be restored. But Gillard insisted the MRRT would not be renegotiated, telling media on February 16: “We will deliver through the Australian parliament that tax as I agreed it with Australia's biggest mining companies.”

Even the paltry corporate tax rate is too high for the corporate elite.

The February 28 Sydney Morning Herald said tax department research revealed a higher gap between expected and collected corporate tax revenue, which taxation commissioner Michael D'Ascenzo suggested could be attributed to the mining sector.

This is nothing new; creative tax avoidance is a part of Australian corporate culture.

The big corporations are always trying to convince us that high profits are good for everyone. The argument goes that the more they make, the more they’ll share around. But as the mining giants have shown, the more they make, the more they line their pockets.

It’s true that some mining workers earn relatively high wages. But these wages, often for dangerous and difficult work, are peanuts compared with mining super-profits.

The Australian Council of Trade Unions pointed out in June 2010 that over the past decade, mining profits grew by 530%. This was more than eight times the rate of increase in mining workers’ wages. The recent hike in profits would make the gap even larger.

We can also forget any idea that that the mining giants might voluntarily raise their contribution to social spending. The corporate elite’s response to the recent floods was indicative.

Graham Bradley, president of the Business Council of Australia (which represents the CEOs of Australia’s 100 biggest companies), told ABC Radio on February 14 that the government should consider cutting disability pensions and foreign aid to fund flood reconstruction in the eastern states.

The massive super-profits in the hands of the already filthy rich are especially sickening considering how Australia’s natural resources could be put to the common good.

Just half of BHP’s expected $20 billion annual profit over a decade would be enough to bring the level of Indigenous health, education and housing in line with the rest of the population. BHP would surely manage with the remaining $10 billion a year!

But to carry out such a measure, the government would actually have to take on the mining giants.

If these companies cry poor, they should be made to open their books. If they threaten to take their operations offshore, the government should offer the mining companies a simple choice: continue to operate here and make substantial profits while paying a meaningful tax, or the mining sector will be placed in public hands.

But clearly this isn’t going to happen — under an ALP or a Coalition government.

The only real solution to the rampant greed of the mining giants is nationalisation of the mining sector. Bringing this industry — Australia’s most profitable sector — under public control would raise huge funds that could be put towards vital projects such as the shift to renewable energy.

Destructive, dangerous and unsustainable mining could be phased out and workers retrained in other areas.

Placing mining in public hands would require a determined and large-scale struggle by mining workers and the community.

As we move closer each day to major climate catastrophe, and the Gillard government wastes precious time with false solutions like the carbon tax, such a move becomes increasingly necessary.


hello i am thetrureal: The mining industry, taking our resources and our government handing out upper class welfare to these minorities. We should back tax them from 10 years back and put in place a 60% full profits tax and if they kick up a stink we should take over the mining and see how fast they will crawl back because the very rich will do anything and I mean anything for money and let’s be honest, if they were going to go overseas for minerals they would have years ago but people fail to know that they can’t because even with slave labour from these countries, Australia has most of the minerals and plenty more where it comes from so every day we don’t tax them is every day we lose money.
This week it was announced that the profits to mining companies had reached the highest profits in the history of Australian mining! If so, then why have Blue Scope Steel (biggest manufacturer of iron ore products) just sacked 8,000 workers!! Can someone please explain this outrage before I fire a molotov cocktail down Ziggy's hallway! Kate Gargett
Hi Kate.....Bluescope is not a mining company and do not benefit from the high prices companies are currently paying for iron ore and other minerals that we (for the large part) export, in fact that is one of the problems - Bluescope have to buy the iron ore at exorbitant prices. The other factor is that the rising dollar has eroded Bluescope's profit to the tune of $1b dollars so, as awful as it is, workers have to be retrenched so the majority survive. Once the carbon tax comes in to play and energy costs go through the roof for all of us, that will likely spell the death of making anything at all in Australia but...that's what the Greens seem to want so as the old saying goes, "Ye reap what ye sow !"

You need Green Left, and we need you!

Green Left is funded by contributions from readers and supporters. Help us reach our funding target.

Make a One-off Donation or choose from one of our Monthly Donation options.

Become a supporter to get the digital edition for $5 per month or the print edition for $10 per month. One-time payment options are available.

You can also call 1800 634 206 to make a donation or to become a supporter. Thank you.