Resource tax deal shows power of advertising and public relations

by | Jul 2, 2010 | Business

How an effective campaign robbed taxpayers.

IT IS a sad indictment of democracy in Australia that a cabal of multinational miners – with nary a vote between them – could see off one prime minister and bring another to her knees.

What sublime validation of the power of advertising and public relations.

BusinessDay’s marketing writer, Julian Lee, estimates the miners only had to spend $7 million of their mooted $100 million advertising war chest to finally mince Kevin Rudd’s prime ministership, and in little more than a month.

The sheer menace of another tranche of ads during an election campaign has brought a quick, though majestic, cave-in by Canberra.

Julia Gillard’s new government – assuming there is no dramatic reversal to the deal revealed yesterday by BusinessDay’s Malcolm Maiden – should have had time on its side. Why rush a settlement? The electoral risk of another barrage of mining ads.

Now that is value for money: $7 million spent to save $7 billion in royalties, which is what the government should have dubbed the resources super-profits tax in the first place.

”Royalties”, the price you pay for digging other people’s stuff out of the ground. ”Royalties”, the rent you stump up via a lease to the owners of the minerals – the taxpayers – is the word the government should have used to sell its case.

We, the taxpayers, can consider ourselves robbed. Not by the miners. It is their fiduciary duty to pay as little tax as possible. Rather, by the government, whose duty it is to manage scarce resources in the interests of the nation – not to mention stand tall for public interest in the face of vested interest.

The government’s ad campaign was feeble. Its entire sale process bumbling, sapping the confidence of markets from the start. Aided by shamefully partisan reportage from sections of the media, the Rudd regime failed to sell its policy from the word go.

This was not merely a win for advertising but a thumping victory for the dark art of public relations.

The miners forked out for the most venally effective PR money could buy. It worked a treat. Some of the coverage from business pundits was more shrill than even the most hysterically indignant press releases emanating from the Minerals Council of Australia.

When its deal with the miners is released, perhaps today as is speculated, the government will lamely spin the outcome as a win, an act of bold and expeditious decision by the new leader. The abject failure of the government in the face of corporate pressure will be evident though in the revisions to budget estimates. There will be a number on it.

For their part, the mining companies – Rio, BHP Billiton and Xstrata in particular – have struck a historic victory with a brutally effective campaign (highly misleading and potentially damaging to the public as it was).

This was the stand they had to make, or else face a prospective domino effect of royalty rises around the world, not to mention the billion-dollar rise in royalty leakage in Australia to kick things off. Should anyone ever ask if advertising works, there could be no more convincing evidence than this campaign against the tax.

The ultimate irony is that taxpayers get hit twice. That $7 million cost of deposing an elected PM is tax deductible.


Michael West

Michael West

Michael West established to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

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