Mining the carbon tax

Funny thing about a federal government, even a rather dopey one: if you kick it hard enough and long enough, it will bite back. Michael Pascoe explains.
Mining the carbon tax Mining the carbon tax Mining the carbon tax Mining the carbon tax Mining the carbon tax

Miners have managed to earn themselves a 6.21 cents a litre for diesel next financial year.

Staff Reporter

Published in the August 2011 Australia’s Mining Monthly

Congratulations to the mining industry lobby for achieving the scrapping of its diesel excise rebate, the fuel tax credits scheme.

Given the poisonous relationship between miners and federal Labor, one might wonder what else could be lost in the run up to the next election.

Of course a reasonable person – a species unlikely to have much to do with the political lobbying game – might argue that the rebate was an example of corporate welfare that was meant for the deep shaft anyway, as recommended by the Henry tax review.

But if there was any doubt about the rebate’s fate, it was removed by mining’s decision to effectively join the Liberal Party, if not launch an Australian chapter of the Tea Party.

(Come to think about it, compared with Christopher Monckton, Sarah Palin would at least provide some humour, however unintentional.)

And once lost, it would be foolish to think a Coalition government would give the excise gift back.

The Abbott and Hockey show will have enough problems sticking anywhere near its current confusion of surplus and tax cut promises while paying farmers to bury charcoal.

They are hardly likely to be bothered with giving the odd squillion back to such a profitable industry.

On the other hand, it is amazing to observe how the coal miners managed to get away with special pleading for gassy mines, never mind the joint effort by industry and government to continue to pretend to believe the emperor really is wearing the most glorious suit of magical clothes.

You might know the story better by the euphemisms of “clean coal” or “carbon sequestration”. And for all those who believe in Santa Claus, industry and government will soon partner in an International Father Christmas Excellence Institute, pouring in hundreds of millions of dollars each to fund experimentation into flying reindeer.

Not that the Australian Coal Association saw it that way, bleating that the carbon price of $23 a tonne would add $1.80 a tonne to the cost of mining the black stuff. Well, maybe – the association’s selective use of commissioned research to claim job loss Armageddon does not lead to confidence in its figures.

The difference of course is that coal mining was more able to call on the lobbying assistance of unions whose primary interest is in maintaining the incomes of existing members, so that one current mine perhaps closing means more than two potential mines opening. Oh well, the $1.3 billion compensation package might help a little.

(It’s a digression, as Labor’s whole carbon pricing exercise is primarily about pricing carbon, not saving the planet, but even if you only want to pretend to be concerned about climate change, you cannot expect to keep burning brown coal. There is only so much even Santa Claus can believe in.)

The best lobbying performance of this particular carboniferous age though goes to the local steel industry in sticking its hand out for a tax payer handout.

BlueScope Steel in particular deserves a round of applause for finding a way to get a feed off the tax payer while other companies are having to donate to potential Labor voters.

BlueScope managed to lose $55 million in its latest half year without any carbon tax, a fact that somehow helped it get money from Canberra.

I lose money all the time, but the government doesn’t want to help. So it goes.

What the whole exercise shows is that what a resources rent tax does not take, something else will if an industry is unsuccessful in building a happy relationship with the government of the day.

As many a warrior has discovered, you have to be very careful about declaring war on a superior force.

A Colonel David Hackworth is quoted as instructing: “If you find yourself in a fair fight, you didn’t plan your mission properly”. Or as John Steinbeck allegedly put it: “If you find yourself in a fair fight, your tactics suck”. Same diff.

Right now, the resources industry is not in a position to hope for even a fair fight. Its strengths and weaknesses are well known while its tendency to cry wolf from time to time has damaged its credibility, but this is not a new problem.

Mining lost the PR war before it even knew that a battle was being fought. The tribal elders were quietly sleeping when the environmental movement of one sort or another grabbed the hearts and minds of much of the nation.

The primary school syllabus I grew up with, extolling unquestioning pride in Australian mining, has long been out of print and nothing the industry has attempted has gone close to recapturing those golden years of extractive laissez faire.

Never mind this federal government. There is something very much like a backlash brewing against mining wealth, a resentment of “rich bogans” enjoying the fruits of working hard and long in a booming industry while much of the rest of the nation is travelling quietly, a belief that few benefit from mining while many end up suffering from a strong Australian dollar.

Even Murdoch’s right-wing The Australian newspaper has been running sob-sister stories of nasty resources companies clashing with noble farmers.

The backlash generally ranges from the ill-informed to the plain stupid, but it is real enough. In the business of image and perception, it is image and perception that counts, not reality.

Mining outside coal and iron ore might have thought itself terribly clever to run the campaign it did against the MRRT Mark 1 and escape inclusion, but the way it went about that campaign ensured it would end up paying somewhere down the track.

An extra 6.21 cents a litre for diesel next financial year – and more each year after that – is indeed paying.

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