MAC: Mines and Communities

Australia's carbon tax debate ignites

Published by MAC on 2011-09-12
Source: ABC News,, statement, others

New report demolishes mining industry claims

Australia's coal mining giants are trying to scare the life out of its citizens over the impacts on jobs and investments from the recently-proposed nationwide carbon tax
see MAC: Australia Passes CO2 Offset Laws, Carbon Pricing Next

The proposal is due to be debated by parliament this week.

In a statement last week, Rio Tinto's Mr Peever (sic) cryptically described the tax as "lack[ing] the flexibility to adjust to the emergence of a different reality".

However, according to a new report by the Australian Institute, it's the miners who need to adapt to reality.

The Institute points out that the number of jobs actually created  by the industry is far lower than is widely perceived. The majority of its profits are siphoned overseas; and the future of non-mining sectors in the country is being set at grave risk.

Meanwhile, the state government of New South Wales plans to increase royalties paid by mining companies, in order to meet its own obligations to pay the carbon tax.

Australia coal miners caught in vicious carbon tax circle

By Frik Els

8 September 2011

Amid dire predictions about job losses and the drying up of investment in the sector due to a proposed carbon tax come more bad news for Australia's coal miners.

Platts reports New South Wales plans to increase the royalties it receives from coal companies to offset some $400 million in extra costs to the state's coal-fired electricity generators due to the very same federal government carbon levy.

Around 95% of NSW's royalty revenue comes from coal mines where rates currently top out at 8.2% of the value of production and is forecast to rise to $2.1 billion in the year ending June 2013 after the hikes come into effect.

Platts reports royalties are levied by Australian state governments on the value of coal production and present royalty rates in New South Wales are 6.2% for underground mines that are more than 400 meters deep, 7.2% for mines less than 400 meters deep and 8.2% for open-cut coal mines. reported on Wednesday Australia's proposed emissions trading scheme - which will evolve from the carbon tax being implemented next year - has won praise from Beijing, where it will be the model for one of six Chinese pilot programmes to be introduced in 2013. Earlier this week the EU also endorsed the controversial Australian plans and announced the start of talks for the eventual linkage of carbon trading by 2015.

WA Today reports support for Australian Prime Minister Julia Gillard from business has been scarce in recent months, and earlier this week the government was criticised by one of its own business advisers - former BHP Billiton chairman Don Argus - for not properly planning how the proceeds of the proposed carbon and mining taxes would be spent. Gloucester Coal, Rio Tinto and Xstrata all have operations in NSW.

Government accused of propping up miners

By Alexandra Kirk

ABC News

8 September 2011

The Federal Government has been accused of featherbedding mining profits with taxpayers' money while manufacturing jobs disappear.

The Australian Manufacturing Workers Union (AMWU) says in 2009-10 the ever expanding mining sector received over $1 billion of government assistance, while manufacturing, which employs five times as many people, received much less.

AMWU head Dave Oliver says government support is propping up mining profits while manufacturing is being battered by a high Aussie dollar and cheap imports.

"What the Government should be doing is looking at redirecting some of the assistance that is going to the mining sector back into manufacturing," he said.

Mr Oliver says the latest Bureau of Statistics figures for 2009-10 tell the story.

"The level of government support to the mining industry has increased - it was $1.1 billion for that period and at the same time we saw the level of government support decrease for the manufacturing sector down to $880 million," he said.

"Manufacturing in this country employs 1 million people. The mining sector employs 200,000. Record profits in the mining sector and significant pressure in manufacturing. It's a no-brainer for us."

But the Minerals Council of Australia spokesman Ben Mitchell argues it is actually the reverse.

"I've heard the manufacturing industry concerns and they are valid, but to suggest that mining is receiving more in assistance than manufacturing is wildly off the mark," he said.

Mr Mitchell says the ABS figures are not a measure of overall government assistance.

"They also include the diesel fuel rebate which is a refund on taxes paid to a key production input - that being diesel fuel for mining - so we're not comparing apples with apples," he said.

"The Productivity Commission figures, which are the most reliable, comprehensive and independent figures produced on the government assistance, show there is a vast gulf between assistance for mining versus assistance for manufacturing."

The Federal Government agrees the definitive authority is the Productivity Commission which shows the Commonwealth is providing more support to manufacturing than mining - the Government says three times more, the Minerals Council says six times as much.

Mr Oliver is nonplussed.

"I don't know what figures they're going from," he said.

"I'm simply working off the ABS stats that have come out.

"We want to make sure we've got a strong, viable manufacturing industry in place and it should be the Government's role now to actually support the industry at the time where it's needed the most."

A spokeswoman for the Industry Minister Kim Carr says the Government is committed to ensuring manufacturing has a strong future and is helping manufacturers innovate and be more competitive.

Mining industry ads work, but fewer manufacturing workers do

The Australian Institute press release

8 September 2011

Public perceptions of the size and significance of the mining industry to the Australian economy are radically different to the facts, a new survey by The Australia Institute reveals.

When asked what percentage of workers they believe were employed in the mining industry, the average response was around 16 per cent, when according to the Australian Bureau of Statistics (ABS) the actual figure is 1.9 per cent.

The survey also found Australians believe that mining accounts for more than one third (35%) of economic activity. However, ABS figures show that the mining industry accounts for around 9.2 per cent of GDP - about the same contribution as manufacturing and slightly smaller than the finance industry.

The survey was conducted as part of a new research paper by The Australia Institute. The Institute's Executive Director Dr Richard Denniss will launch Mining the truth: The rhetoric and reality of the commodities boom on Thursday 8 September at the Institute's annual conference in Sydney.

Dr Denniss said the mining industry's expensive advertising campaigns had clearly had an impact on people's perceptions.

"The mining industry likes to portray itself as a big employer, a big tax payer and a big money maker for Australian shareholders. Yet the reality just doesn't match the rhetoric," said Dr Denniss.

"The mining industry's advertisements ignore the way that the mining boom is driving up the exchange rate, driving up mortgage interest rates and driving down employment in other sectors of the economy.

"It is a bit rich for former BHP Billiton chairman Don Argus to talk about declining productivity growth when an analysis of the figures actually reveals that productivity in the non-mining sectors is growing quite rapidly. The irony is that it is the rapid decline in productivity in the mining industry that is driving down the national figures," said Dr Denniss.

The paper also reveals that the mining boom is driving a blow out in the current account deficit with the International Monetary Fund expecting the current account deficit to reach 6.5 per cent of GDP in the medium term. In the middle of a supposed export boom this will put Australia back into Paul Keating's 'banana republic' territory.

"It's amazing to compare the rhetoric of the mining industry with the reality of the national accounts. Not only is the mining boom reducing the competitiveness of other exporters but the enormous outflow of profits to the foreign owners of the mining companies is driving up the net income component of the current account," said Dr Denniss.

"It might seem bizarre, but Australia is set to simultaneously experience a mining boom and a blow out in our current account deficit.

"The mining industry is in the middle of planning massive further expansions. But the faster the expansion of the mining industry, the lower the level of employment in other industries will be. You don't have to be a protectionist to see the merit in slowing the approval of massive new mining and coal seam gas ventures," concluded Dr Denniss.

In summary, Australians believe that the mining sector:


Rio Tinto warns Gillard over carbon tax

By Peter Ker

Western Australia Today

7 September 2011

MULTINATIONAL miner Rio Tinto has intensified its opposition to Australia's carbon tax, urging Prime Minister Julia Gillard to go back to the drawing board and start again on carbon policy.

In the latest of a series of public attacks on the controversial carbon plan, Rio's Australian general manager, David Peever, said the government had not adapted to the geopolitical landscape that had emerged since the failed Copenhagen climate talks of 2009.

Rio has previously claimed the tax would penalise trade-exposed industries and deter investment in resource projects, but yesterday Mr Peever stepped up the attack by urging the government not to proceed with the tax in its present form.

''The government should take the time to go back to the drawing board and reconsider its approach,'' he said. ''There must be, and is, a better way for Australia to make its contribution.''

Mr Peever said Labor's approach to carbon policy was built on the expectation that all nations would co-operate to combat emissions growth.

''It lacks the flexibility to adjust to the emergence of a different reality,'' he said.

''Accordingly, the scheme fails to provide the framework necessary to enable sensible planning for investment in projects that will extend to 2030 or 2040.''

Support for Ms Gillard from business has been scarce in recent months, and earlier this week the government was criticised by one of its own business advisers - former BHP Billiton chairman Don Argus - for not properly planning how the proceeds of the proposed carbon and mining taxes would be spent.

Mr Peever fuelled perceptions of a gulf between the government and business yesterday when he expressed frustration over the consultation process for the carbon tax.

''Over the past months Rio and a number of other businesses and organisations put forward a range of suggestions and aired a series of concerns from the minerals industry about the carbon tax as part of the climate change business roundtable,'' he said.

''Unfortunately, these fell on deaf ears. This is very frustrating.''

Rio was one of three big mining companies - alongside BHP Billiton and Xstrata - invited by Ms Gillard to help shape Labor's revised mining tax last year.

The government plans to introduce the carbon tax to Parliament next week, and Ms Gillard said its opponents would not stop the bill winning passage through the hung parliament.

''Everybody in the Parliament knows from the statements that have been made by parliamentarians that the legislation has sufficient support to get through and it will,'' she said.

''I do expect, as we see constantly from the opposition, that we'll see all sorts of wrecking tactics, but we will work our way through and ensure that the legislation does go through.''

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