Australian Mining Tax

There is widespread concern across a broad spectrum of the Australian community concerning the Rudd Labor Governments Mining Super profits tax.

Unionists have voiced concerns relating to job losses.Industry Giants have shelved hundreds of millions of dollars worth of expansion plans, which by some estimates would have generated 30,000 jobs.

Offshore, investors across a broad spectrum of industries are re-rating Australia as a capital destination, with good reason. The mining industry apparently had no prior warning of the proposed introduction of the Mining Tax. Major mining players were treated like schoolboys by a rather inept Federal Government under the guise of negotiations.

Revelations today (23 May 2010) by Treasurer Wayne Swan that miners in fact pay a concessional tax rate - just half of other businesses, begs the question of why this is so, how this concession came about, and why Miners tax rates should not reflect that of any other business.

There are further issues raised though, than have been widely canvassed.

The vexing issue for us is why this tax is not being applied across all extractive industries. Serial polluter Chevron has announced that it is staking its future on the Northwest Shelf Gorgon Gas deposit. Other energy players are at developmental stages of oil and gas extractive processes in the region. Why are they not taxed similarly? Why not banks, whose excessive profits are generated using methods which do perhaps as much social and environmental harm as extractives.

There is the additional concern that while Rudd Labor is prepared to impose this tax, they insist on giving the proceeds over to benefit the government pampered baby boomer generation. In contrast, Norway (when oil was discovered) nationalised, formed Statoil to extract, and had funds diverted to a future fund which benefit all future generations of their people. This would be a welcome use of such a windfall tax.

We have not heard from the Rudd Government on the issue of strengthening extractive eco management responsibility obligations for extractive industries. The Montara #oilspill last year graphically illustrated the lax legislation companies such as Atlas Rig site operator PTTEP could operate under. There is also the issue of independent monitoring by government or non-government bodies. Given the flow of information from Montara,largely repeated by the Australian Government from statements by PTTEP, one is entitled to conclude that monitoring is less than perfect. I suspect,in practical terms,non existent.

The uncertainty created in the minds investors, industry players workers and the international investment community is not salved by Opposition Leader Tony Abbott's promise to repeal the Mining Super Tax-- the day after he stated that he exaggerates and that we the public shouldn't believe everything he says.Who do you believe??

The Lessons of Montara

In the aftermath of the catastrophic Montara OilSpill,it is time for Australia to take stock.

• The Australian Federal Government have put in place an inquiry, headed by a public servant, which is almost certain to hold the Australian government blameless.
• Government sourced media reports seemed in the main sourced from the oil based interests at the centre of the disaster(Atlas & PTTEP Australia).
• The Area licensee Thai based PTTEP, has been issued further concessions by the Minister for Resources.The company took some 10 weeks to plug the well and notify of finally capping Montara 13 January 2010-6 months after the initial leakage.
• A report 13 Jan 2010 has organisation NOPSA slamming the Northern Territory Government for failing to have adequate monitoring equipment in place to ensure compliance. Montara is situated in Western Australian waters.
• Reports of Feburary 11th are that further license concessions have been granted to PTTEP, prior to completion of the inquiry.
• Further revelations to the glacial inquiry process provide a accounts of numerous systemic failures and safety breaches by the drilling operator, possibly due to inappropriate direction from PTTEP. The fact that such breaches could occur point to the fact that Australian Governments at State and federal levels have inappropriate legislation or monitoring or compliance regimes in place.

While there is a general consensus to apportion blame to well owner PTTEP and its contractors there has been some commentary also on the Australian Federal and State governments post disaster roles. There has been little public consideration of the legal framework which govern extractive operators at National or International levels.

The post event reports from federal government show that a yawning void exists in terms of compliance monitoring. There is no mention from government of inspections of operations prior to the event. Lack of response to the question, put Nov 2009 to the Environment and Natural Resources ministries entitles us to believe that there simply weren't any. Further checks of legislation show scant regard given to ensuring disaster management or environmental remedial obligations are placed on the extractives operator.

Australians must seek:

• Laws compelling ALL Extractive Industries to maintain adequate mitigation technology within close proximity to mitigate all extractive process failures, prior to commencement of process as a precondition of extractive all processes.
• No exemptions regime.
• Immediate Resumption of extractive process license area, plus all mitigation costs as breach penalty.
• Reduction of "Super Profits" Tax to compensate for extractive compliance costs.
• Broadening of "Super Profits" Tax to include non extractive businesses, such as banks and financial institutions. Consolidation of "Super Tax revenues" as "Future Fund" modelled on Norways oil based example.

Without strong legislation, it can be argued that extractive industry management have a duty of care to shareholders to operate their extractive processes at the lowest cost legally available to them: if a company is not legally obliged to use the latest, most failsafe technology available, the company directors are arguably duty bound to use a cheaper,older technology, if the failure risk is manageable,on purely the basis of cost.

This style of legislation is