Saturday’s socialist speak out
Well, you’ve made a right mess of it, haven’t you Wayne? And Martin. And Julia. The fallout from the Minerals Resource Rent Tax – a whole $126 million in the first six months compared to a projected $2 billion over the 2012/13 income year – has Labor in tatters.
Treasury testimony to the Parliament has blown Swan’s excuse about the dog eating his homework – sorry, about changing market circumstances being the reason for the fall in actual collections. First, the ‘compromise’ Swan and Ferguson reached with the big 3 mining companies means that they can value their old projects at current market prices, thus wiping out much of the ‘super’ profit.
For example, The Australian on Thursday mentioned that BHP had purchased some Queensland coal mines 30 years ago for $3 billion. That actual cost could be the base for working out super profits. Alternatively the current market value – what the mines could be sold for – could be the base. In the case of the mines in question that current market value is $18 billion.
The government compromise allows the mining companies to use the second figure in working out their super profits if they want. Let me give a highly simplified example based on these figures. Say the mines are really profitable and make a net return of $600 million. $600 million on an initial outlay, the historic cost, of $3 billion, is a 20% return, a super profit.
$600 million on today’s net present value – current market valuation – of $18 billion is a 3% rate of return. No super profit here, move on.
There looks like there’s another reason why the figure for the tax collected was so low. The government wants to tax the super profits that the mining companies make from the minerals just being minerals, not the value the companies add, for example by processing them, getting rid of impurities etc. But it looks as if the mining companies have been using this difference to claim most of their profits are arising from their downstream activities. That is a matter for audit.
The ALP tore itself apart over the original Resource Super Profits Tax. In response to immense pressure from the mining companies the party knifed Kevin Rudd, its Prime Minister, and the new leader, Julia Gillard, the Prime Minister for mining companies, oversaw the gutting of the RSPT and the implementation of the present debacle.
Many will see this in terms of personalities, but the reality is it tells us something about the degeneration of the ALP from a party of supposed social democracy to one of neoliberalism. This long road to market nirvana means that Labor as social democracy can no longer perform a vital role for the system – impose solutions on capitalists for the benefit of capitalism generally.
Another fall out from the MRRT debacle has been to give fuel to the Conservative cry of where’s the money coming from.
Having abandoned tax cuts for companies because the MRRT would not raise enough, Labor was going to use the revenue from the MRRT to fund the shortfall in revenue that will arise because of the increases in compulsory superannuation, and to contribute to Gonski and NDIS education and disability ‘reforms’. These are market based changes couched in the rhetoric of reform.
So the Opposition asked Swan would he rule out tax increases. He didn’t do so immediately. The proverbial hit the fan and a few hours later Swan ‘clarified’. There would be no tax increases.
A Treasurer with a bit of guts could have proclaimed there would be tax increases, on the rich. He could have made the point that taxing Gina Rinehart, a woman whose wealth increased by around $20 billion in the last 18 months, made perfect sense since her wealth is built on the back of our labour. But of course Labor can’t do that. It is the handmaiden of capital and can’t launch even a little skirmish against its masters these days.
What it will do as business tax receipts continue to drop markedly is to ‘exercise spending restraint’ according to left wing Minister Penny Wong. This is code for attacking welfare for poor people (remember single mums) and further cutting spending on public health and education to address the $10 billion deficit.
If Labor wanted a chance to win the election then the rhetoric of class war might help it. Such is its degeneration it can’t even utter words of opposition to its rich mates.
Australian Ben Zygier suicided in a suicide proof cell in Israel. Zygier held two passports, was a Mossad agent and may have turned. His suicide looks suspicious, as does the cover up from Foreign Affairs.
In other news, mass murder Barack Obama has continued his drone bomb spree; Israel executed an Australian citizen with nary a worry from Australia until the crime has been exposed; Los Angeles police executed Christopher Dormer – taste of things to come as the beast of US imperialism turns its attention to the ‘enemy’ within; the revolution in Egypt has quietened for a few days, both sides eyeing each other; Gillard negotiated a rotten deal to turn New Zealand into a warehouse for asylum seekers here, exporting our concentration camps to yet another country; union freedom fighter Bob Carnegie went on trial for contempt of court for organising a community picket; and climate change continues unabated despite rhetoric from war criminal Obama.