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May 14, 2012Opinion

PALMER AFR PHOTOGRAPH BY GLENN HUNT 30042012.NEWS- Clive Palmer announcing at a press conference in Brisbane that he will be building Titanic II.Nervous … perks mining magnates like Clive Palmer have enjoyed for too long have now come under threat. Photo: Glenn Hunt

In the days leading up to last week’s budget, the minerals giants grew nervous. Already cranky at having to pay the carbon tax and the mining tax from July 1, they were uneasy at speculation that certain tax perks they enjoyed were in the frame, as the government strived for savings to achieve its promised surplus.

Reports suggested such breaks as the $2 billion diesel excise rebate, exploration deductions and accelerated depreciation were under consideration by the razor gang. So, they ran full-page newspaper ads essentially warning the government to back off.

Under their parent lobby group, the Minerals Council of Australia, the companies, primarily BHP Billiton, Xstrata, and Rio Tinto, argued they were not prepared to pay even more tax. The ads carried the line ”keep mining strong”, the same line that underpinned the $22 million blitz in 2010, which shredded the Rudd government and the original incarnation of the mining tax, the resources super profits tax.

The government’s response to these new ads was deafening silence. Even though, at the time, the Treasurer, Wayne Swan, was in full flight against powerful vested interests flexing their financial muscle to shape public policy to suit their own interest rather than that of the nation.

The focus of Swan’s ire was the mining bazillionaires Gina Rinehart, Clive Palmer and Andrew Forrest. When Swan began his crusade, starting with an essay in The Monthly, the most obvious example of a vested interest shaping government policy had been the mining tax campaign.

It proved so effective that it became the template for other campaigns, such as that by the gambling lobby which put so much pressure on targeted MPs that it weakened the prime minister’s leadership, defeated the proposed reforms and collapsed the deal Andrew Wilkie had with the government.

Yet Rinehart, Palmer and Forrest were at most bit players in the war against the original mining tax.

They do not even belong to the Minerals Council, which waged the campaign. When Swan was asked at the National Press Club on March 5 whether he was going after the wrong people, he explained that after initial resistance the minerals giants sat down, negotiated a compromised tax and have accepted it, whereas the others keep griping.

”We resolved this issue of a resource rent tax in the national interest, sitting across the table with responsible mining companies, who eventually came to the party and worked our way through the issues. It wasn’t possible for some months for that to happen, but it did happen,” he said.

”But what we’ve seen, not just during that debate and even prior to the resolution of the issue, was the vested interests that I have talked about here today who have continued a really strong, vitriolic, well funded [campaign], backed by enormous corporate manoeuvring from a group of people to try and sink this tax.”

When the budget came out, the miners won. There had been serious consideration of going after their tax perks but there was nothing in the budget. As one minister said during deliberations, ”Do we really want to pick another fight with them?”

The budget forecast the mining tax to make $13.4 billion over four years, about $900 million less than forecasts last year. This reflects volatility in commodity prices and the dollar. Forrest maintains the revenue forecasts are fanciful because, he said, neither his company, Fortescue Metals Group, nor any of the big three were going to pay any mining tax for several years because they hoodwinked the government during negotiations and can deduct the market value of their operations from their mining tax liability.

The big three are slated to pay 80 per cent of the mining tax so, if they do not stump up, there will be an almighty hole in the budget, especially as the revenue has already been allocated to various measures, including two extra cash handouts worth a combined $2.9 billion which replaced the promised company tax cut.

The Opposition claims on one hand that the mining tax will kill the industry but, on the other, agrees with Forrest that it is not going to make any money.

Tony Abbott, Joe Hockey and Ian Macfarlane have all said the miners have told them they will be paying no mining tax for several years.

It is understood Hockey got a clip around the ears from BHP for being too candid about what he had been told, including that a company had ”given me data”. The other version, coming from the minerals industry, is that Hockey did not accurately reflect what BHP told him and that the company does expect to pay the tax.

Either way, we will have a first indication in October when the first instalment must be paid. If the money is there, Forrest and the Opposition will look stupid. If it is not, we’ll see how brave the government really is.

Read more: http://www.smh.com.au/opinion/politics/proof-will-be-in-the-paying-when-mining-tax-kicks-in-20120513-1ykre.html#ixzz1unlhhuj3

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