The best way to bludgeon your ideological and commercial adversaries in the corporate world is to get your peak body to do it for you.
This way, you can abuse people with gay abandon, shrug away any responsibility for your actions and leave your marque intact, your brand untarnished, even while financing the entire caper.
Our favourite peak body, and we confess to an especial fondness for this organisation, is the union which represents the interests of large foreign-controlled mining companies: the Minerals Council of Australia.
For this peak body, no depth is too low to plumb, no truth too sacred to be stretched. Were you to ask one of its main backers, say BHP Billiton, how much their shareholders are paying to bankroll its activities, or even whether the board and executive stand behind its latest ad hominem spray, you will hear the sounds of silence.
Conflating royalties with tax is one of the specialties of the Minerals Council for big foreign miners in Australia. Pretending, with the paid collaboration of selected independent experts, that foreign mining companies are entitled to extract minerals from the soils of this country scot-free, without paying a royalty, and ship them overseas, is a ruse for which they display considerable flair.
The belittling of its critics reached fever point in recent weeks. In June, the NSW Minerals Council – the NSW branch of the big foreign mining companies’ union – responded with extraordinary spite to a piece written by left-leaning think tank the Australia Institute (TAI).
Stopping a smidgen short of Queensland MP George Christiansen – who dubbed green activists “terrorists” this week – they circulated caricatures of TAI economists Richard Denniss and Ben Oquist as puppets of the Greens political party.
Never mind that there are no formal ties, financial or otherwise, between TAI and any political party. The lobbyists played the man as usual, not the ball.
TAI had the cheek to ruffle through thousands of pages of state budget papers and tote up the subsidies to the mining industry in Australia. The figure came to $17.6 billion over six years. The mining lobby didn’t respond with its own figure; it simply issued abusive press releases claiming “gross deception” and propaganda on behalf of TAI, saying that this think tank was hell bent on destroying the mining industry and ruining the lives of hard-working Australians.
The $17.6 billion put on subsidies was not so much a matter of interpretation – as the Minerals Council’s independent expert framed it – but more one of addition.
The subsidies are not fabricated. They are real. They can be added up. And there is no doubt that many of the projects subsidised by taxpayers have delivered a worthwhile economic benefit. Some subsidies have been worth it, others not.
The key points in the report commissioned to respond to TAI were:
- infrastructure spending for miners by state governments is not “assistance” as it is usually on a commercial basis;
- the mining sector enjoys no preferential access to infrastructure; and,
- spending on mining does not come at the expense of social infrastructure.
These key points, however, are contradicted by state submissions to the Commonwealth Grants Commission. This is the body the states go to – cap in one hand, violin in the other – to complain about how poor they are and therefore demand as much in GST revenues as they possibly can.
The submission from the Queensland Treasury is particularly revealing. Bear in mind that Queensland shells out the bulk of mining subsidies.
Let’s compare the Minerals Council claims with Queensland Treasury submissions.
The bulk of the expenditure claimed by the Institute as a subsidy is associated with the provision of services through rail, port, water and electricity infrastructure investments by government-owned business or Public Trading Enterprises (PTEs). Consistent with national competition policy and the state-based legal and policy arrangements that govern these entities, these services are provided on a commercial, cost recovery basis through user charges levied equally on all users, including the mining and resources sector. (pi)
One view expressed during the GST Distribution Review submission process was that infrastructure costs borne by government in support of the mining industry should not be recognised in the HFE process because the majority of these expenditures are cost recovered from industry. However, little evidence has been presented to support this assertion, and Queensland has substantial costs that are not recovered from industry, particularly in the area of roads construction. It seems likely that other mining states have similar expenditures. (p16)
Finally, while all state and territory governments have finite limits on their ability to borrow, investment in infrastructure recovered by user charges does not impact on a government’s ability to borrow for social infrastructure. This is because any such borrowings are supported by that user charge income – that is, the higher the potential income, the higher the borrowing capacity of the government.
In this respect, the Institute is just plain wrong in its assertion that mining and resources sector related capital investment comes at the expense of investment in social infrastructure. In fact, the opposite is true; a sizeable portion of the profits of government businesses that provide such services as rail, ports and electricity flow back to Treasury coffers as dividends, and are used to fund the provision of additional social infrastructure and services. (pi-ii)
Some costs may also be recovered by the government over time if they are directly industry related. However, there is a real opportunity cost for governments in undertaking the initial capital expenditure. Governments face budget constraints and spending on mining-related infrastructure means less infrastructure spending in other areas, including social infrastructure such as hospitals and schools. For many projects directly related to assisting mining industry development, such as land acquisitions for state development areas, the expected timeframes for cost recovery are extremely long (sometimes decades). The opportunity cost of this use of limited funds is a real cost to government and the community. (p15)
People should be able to have the real debate in this country about industry contributions without being bullied by lobby groups and their ideological allies in the blogosphere. “The lowest form of human filth” was the line in one recent post about TAI.
Never mind that that is a ludicrous thing to say about a bloke in Canberra with a spreadsheet; this sort of thing is probably on the rise. As mining profits subside, the debate over industry entitlements and contributions to society is likely to get more strident. Then there’s the environment.