Mining tax makes a meal of our future
07-May-2010
It’s becoming apparent that the Rudd Government has slaughtered the goose that laid the golden egg – all for one grand pre-election meal.
It’s not so much the $16 billion that was shaved off the share price of resources stock within the first three days of Rudd’s shameful tax-grab-masquerading-as-reform. That was bad enough and thankfully for the moment stocks have at least stabilised.
Much more significant, however, are the rolling announcements of projects being shelved, expansion plans being abandoned and billions of future investment potentially heading overseas. Of course, we won’t see the effects of these decisions until well after the next election – so hang the long-term consequences for our nation.
The vacuous sales pitch that “Wayne the Treasurer” has made to justify this massive tax hike has disturbing totalitarian overtones.
His overtly populist assertion that “all Australians deserve to share in the wealth of our natural resources” conveniently overlooks the fact that we already do. In spades.
The Mining and Resources sector has been the powerhouse of our economy and more than any other single industry has helped ensure our nation does not slip into recession.
Companies in mining and resources already pay billions in company tax – providing a huge proportion of the funds for our schools, hospitals, roads etc (albeit money not exactly well spent by the Rudd Government, but that’s hardly their fault!)
The sector provides jobs for thousands of Australians – BHP alone employs over 40,000 workers. That’s a pretty fair contribution to our economy.
Very importantly, mining companies like BHP and Rio Tinto are the cornerstone of blue-chip share portfolios in which Mum and Dad investors entrust their savings. Profitability in the mining sector directly boosts the saving of thousands of everyday Australians.
Many self-funded retirees rely on dividends from their share portfolio to fund their retirement. Reduced profits for the resources sector mean less dollars to live off for them.
Most significantly, and ironically of all – Australian superannuation funds have a whopping 9.3% of their assets invested in the mining sector. It’s estimated that a one percent fall in the value of the mining index equates to a $1.1 billion loss in superannuation.
The value of superannuation funds for Australian workers around the country has therefore dropped by $14.5 billion this week alone. And that’s really just the tip of the iceberg…how much in future growth will be robbed from our super funds to, ostensibly, fund other superannuation measures?
The mining sector has also been a significant investor in research and innovation – who will pick up the slack when projects go offshore?
With a decrease in mining activity, what will happen to the manufacturing businesses and their staff who service the mining sector?
It seems to be the same circular, paper-shuffling, pointless sort of decision that Kevin Rudd has become famous for – robbing Peter to pay Paul, and without any sober regard for long term damage to the Australian economy.
And yes, those resources that we “all deserve a share in” will not themselves be heading overseas – but the money to extract them and provide jobs, taxes, and prosperity for our nation WILL head overseas.
Canada has already expressed a desire to attract our mining investment, having also recently lowered their company tax rate. And they managed to do it without putting a “super profits” tax on resources.
How beneficial will those wonderful Aussie resources be when they remain stuck 50 foot under?
Mr Rudd and Mr Swann need to realise that the mining and resources industry is a cornerstone of savings and superannuation in this country – to stunt the growth of this industry is to reduce the future prosperity of all of us. It’s pretty basic stuff.
This is not tax reform – it is just a new tax that will result in smaller nest eggs for thousands of Australians– and there’s no prize for guessing who is acting like a goose.