Mining small but big, Dr Dennis smart but du....?

Dr Richard Denniss was at it again today, if he is not embarrassing himself by being academically crippled by Lord Monkton at the National Press Club Climate debate, he is busy releasing reports designed to wage a business class war against the mining industry.

See link below

Australian Mining not so big?

The gist

The report is a basic factual account of some figures regarding the size of the Australian mining industry and where the profits go. The interpretation and moral argument that Dr Denniss spins from the facts are truly remarkable and need to be examined.

Dr Denniss argues that 82% percent of  Australian mining profits head overseas and considering that  foreign ownership of Australian mining is 82% that makes a lot of sense. When I invest in a company regardless of geographic location I expect the return from that investment to flow back to me, otherwise I would sell those shares immediately.

Dr Denniss advocates that this large percentage of profits flowing back the the people who put up the capital in the first place is immoral and as a country we should seek to claim a greater share with the mining tax. It seems to me leftists cannot avoid the temptation to lift even more money from the hands of private individuals.

Dr Denniss likes to deliberately frame his  call for state sponsored theft in the coat of nationalism, suggesting that mineral wealth belongs to all Australians. People ignorant of mining and investment in general would easily miss the faux logic of his argument.

The catch cries of returning the profits of Australia's mineral wealth to all Australians is a great way to stir up xenophobia and class envy in the mob against the high paid and profitable mining industry, but the policy consequences morally and economically are conveniently evaded by Dennis and his ilk.


Got Values?

Perhaps I am too brazenly right wing economically, but there are two moral principles I hold that make Dr Denniss' arguments invalid.

The first value is that profits belong to the investor and the company undertaking the mammoth task of bring minerals to market.

If I or anybody else invests money in a venture, the profits of their speculation should return back to them; no government has the right on foreign ownership grounds to raise taxes.

Economically it sends a sovereign risk message to the foreign investors whose money provides so much economic activity to the regions of Australia. Dennis of course claims mining is only a small part of the economy, but clearly he has not heard of Western Australia and North Queensland. The mining tax would be a tax on regional Australia and unlike Denniss, miners do not have a back up job with a left wing think tank cooking numbers for governmental propaganda.

Profits belong not to Australia, but to investors, they risked their money they are entitled to the rewards, unless the government intends to give them a bailout when and if their investment turns a loss? The mining tax removes investment incentive from a source that cannot be replaced domestically; we loose jobs and potential economic activity as a result of a punitive policy such as the mining tax.

Those who express the view that it is Australia's mineral wealth are not understanding the role of roylaties, which is a state tax levied on the ore regardless of profit. Company tax then sits on top to take a sizeable cut of the profts; what is left gets distributed in dividends to the shareholders. When the left make the call to share Australia's mineral wealth they seem to forget how much investment, intelligence and sheer hard work is involved in bringing minerals and ore from the earth and processing them into a profitable form.

Perhaps iron ore is some parts of the country is an exception with buckets of red dust being loaded onto trains and tankers, but a sizeable fleet and billions of infrastructure still need to be built and maintained even to scoop up Pilbera red dirt onto trains. Dr Denniss likes to decouple minerals in the ground from minerals processed on the back of huge investments largely from foreign sources. If you want a bigger share of the mineral wealth you need to go work in a remote town and start pulling 12 hour shifts!

The second value is flat company tax. We might still perform the barbaric practise of tiered taxation for incomes, but it has been a long and stable principle of both sides of government that company tax should be flat. The reason being productivity, we want Australian companies who work hard and innovate to be rewarded with the only thing that can reward a company, profit. More profitable companies equates to better employment opportunities for our workforce, and general economic well being. Once you start punitively attacking companies for their profits or what industry they are in you start to send a moral message.

This moral message is that if you do well, you will be punished; this is a meritocracy in reverse. The left try to alienate the mining companies by branding them foreign and their Australian contribution as minor, but its smoke and mirrors for a partial takeover of mining.

Do we really want the government to have more money to waste; it would no doubt be better left in the mining companies coffers to fuel the next stage of investment in Australian jobs.

The Government thinks they know best how to spend money, the reality of consequences of their spending programs suggests otherwise.


The mining tax has toppled the first term leader Kevin Rudd and it is set to do the same to Prime Minister Gillard. The ALP and press gallery will cry about the salesmanship and the leadership turmoil, but it is pure and simply an immoral policy of the most shameful order.



A precedent set, next victim please!



Why does the government dare not attack the super profits of banking? Perhaps the answer lies in the truth of Dr Denniss' recent study. The mining industry account for around 2-3% of the economy directly, therefore it is easy for the government to try and wedge a small workforce of 200,000 away from the general  population.

Operation: Wedge Politics

The tactic is clear alienate 200,000 high paid miners and their foreign paymasters and simultaneously claim they are wrecking the rest of the economy by driving up the Australian dollar whilst not being that large a contributor to the economy.

So we are told by Dr Denniss Mining is having a large negative affect whilst having a small benefit! I wish he would model the affects of high tax and labour regulatory burdens on the economy, but apparently profits earned by industry should be shared by all Australians regardless of who put up the investment dollars and who did the work. Sounds like Marx 'from each according to his ability, to each according to his need.' I guess Dr Denniss missed those few decades where equalising profit starved a half a continent to death.

Economics is about incentives, if you take away carrots and apply the tax stick your going to change investment habits. Flight of capital is a real risk but the left do not appreciate or understand history.

Australians  in the resource states and regions are rejecting the wedge knowing how the mining boom has flowed through all parts of the economy. Flat corporate tax and royalties are a perfectly fair and adequate system to price finite resources. Lowering corporate tax would be far more affective to help the lagging parts of the economy. The government does want to share that fact with the electorate; instead seeking to pit industries off against each other in an attempt to secure the funds to pay down their debt.

Q N A sans Tony Jones!

We are told minerals are finite, but that is what royalties are for!

We are told miners need to pay their fair share, but is that not how a percentage based corporate tax works?

The more profit you earn the more tax you pay!

Some may argue it is like a progressive income tax for business. Then why is the long held, stable notion of flat corporate tax readily abandoned for one industry only? Why does the highly profitable banking sector get a free pass?

The answer is that banks affect everybody, mining only a few (a respectable few), therefore the industry specific class war between the well paid miner and struggling manufacturing worker is established by the left in the eyes of the electorate.


 The high dollar is great for consumers and we are all consumers?

Naturally the low cost of flat screen televisions and a whole manner of easily affordable imported goods that has underpinned high living standards in Australia is ignored by Dr Denniss and the ALP with only the convenient envy peddling message of mining as a wrecking ball being allowed to permeate the unquestioning press gallery.

If we pass on the costs of the mining tax to commodities, then the goods we buy from China must rise also, so essentially it will hit every Australian indirectly with the 'Made in China' label littering the  electronic goods of every Australian household.

Econ 101: Attention: The Left!

Capitalism works at improving living standards because the most efficient companies are allowed to excel and take profit to reinvest in further improvements to the productive capacity of the economy. When governments start to pick and choose who to help and hinder the great machine driving innovation gets a flat tyre. It can only keep driving so long before it has to pull up and change a tyre (extended metaphor, it just happened, you love it).

Profit belongs to investors, when governments change the rules mid stream they send a warning to the sources of capital on which our mining industries so depends. The message is risk, not of company performance, but of government hostility to high performance. It is an immoral message, economically risky and the fact xenophobia and simplistic economic data is being used to justify the government shakedown makes the heist that much worse.

Australians may at times be jealous of the mining industry, they might have a high dollar affecting their business, but to support a policy which punishes success is surely a far worse transgression. Mining will boom and bust, but China will continue to out compete us in manufacturing regardless of the dollar. Productivity gains, innovation and lower taxes is the fix to that issue, not trying to lift profits away from the people who invested it.

How would you feel if you owned owned shares in BHP whose profits got walloped due to a new regime nationalizing a mine in South America? You might think that is the stuff of third world dictatorships, but this government is trying to do it, in part, very soon. Nationalizing mines is bad news, doing it partially is simply expecting foreign money to make cake but letting our government take a lion's share. There are other mineral resources opening up in the world with far lower labour and tax burdens than Australia, let us not send the wrong message.

I will leave the readers with these issue to process, I must now wash my hands which are filthy with stench of excessive cliched metaphor use and disdain for leftist voodoo economics.

P.S Dr Denniss is now shamed twice, his intelligence seems to lack in both climate science and for his pet area of expertise, economics. What are they teaching in universities now? Certainly not how to integrate facts or cause and affect! A is A!

If you wish to watch academic drowning see below:

A lord or not, he was certainly victorious! Despite the press gallery being oh so quiet on that front!

ABC ignorance of mining diversity

Why don’t they dig for ore in Balmain instead? | Herald Sun Andrew Bolt Blog

Deborah Cameron recently made comments suggesting that the mining lifestyle has no lifestyle appeal outside of an econmic one. She then went on to describe mining towns as a place unsuitable for raising children.

On what evidence does she make these claims and are they at all balanced?

As a residence of a bustling North West Queensland mining community i find such blanket statements bordering on the offensive. Instead of getting angry i might illuminate the readers on why mining has many advantages to city life and that the industry is not just Fly In Fly Out mining camps.

Here are some facts about my lifestyle.

1. I work 4 days on and 4 days off, alternating beween days and then nights. Ample time to relax and when i take a block off i can potentially have 12 days of holidays which only cost me 48 hours of annual leave. Going back to a regular working week would cause mild depression.

2. I earn more than a head teacher as a second year electrical apprentice, and do not have to do marking or extra activities once i clock off from work.

3. My real estate prices are not collapsing like coastal prices and the the rent i collect from my rental generated a small profit in its first year of being rented, on the coast your rent maybe covers half your costs and the growth is likely negative.

4. I drive 5 minutes to get to work with no traffic and the showers and uniforms are provided at work. In the city you spend upto 1.5 hours in traffic unpaid.

5. All my friends live five minutes away, all the shops and gyms too. Anti-social is not how I describe my town.

The town I live in is ethnically diverse with locals through to domestic migrants and every single race under the sun all sharing in the prosperous mining lifestyle. I might add that they all get along famously with none of the racial ghetto failings of the city.


As you can see its a relaxed lifestyle with ample free time to pursue other interests.

As for Cameron, she needs to realize there is a multitude of options for mining lifestyles.

The coal belt around Mackay allows drive in drive out work in a range of work patterns and at the end of hard week, your back on the coast taking in the sea breeze like all those blessed city people who own coastal property.

Atleast in Mackay the average mine worker can afford a coastal property, the city folk need to have a few spare millions just to have a peek at the ocean over their neighbours roof.

As for the kids, i am no expert as i am yet to produce a litter, but i have many friends at work who have young families. They came out to the mines to provide their families with a better life.

Kids cost money, mines pay money, lots of it. The move to a mining town has enabled people working for below average wages, barely making ends meet, to provide a standard of living that simply is not available in the city for these families staking their hopes on the mines. They now have houses and new cars, with good schools within walking distance to send their kids too.

The other phenomenon apart from improved wealth and lifestyle that mining provides is how once one leg of the family establishes itself, the extended families also find their way out to the towns. The amount of extended families that migrate out into my mining community is astounding. Something is drawing these families out of the city and away from the coast...perhaps their is a link between economics and lifestlye?

Perhaps working 9-5 on the coast for 50k to provide for a two kid family simply is not a lifestyle at all.

Deborah i think people have made a choice to suit their needs, and instead of making factless denigrations of some imagined toxic mining town, you should go see for yourself what the mining lifestyle has to offer.


Burns your suits and put on a hard hat! The mining lifestyle is fun, the work atmosphere great!

Paul (protectionism) Howes

Recently in light of the shedding of some 1000 jobs by steel maker Bluescope, CWU chief Paul Howes has called for a return to protectionism to shelter trade exposed industries from the negative effects of the high Australian dollar. In particular he has called on government to regulate mining companies to be forced to buy Australian made steel. 

Mr Howes connections to The Socialist Alliance are well known, as are his claims to abandoning his socialist beliefs and recognizing the power of the market to provide prosperity. I wonder then why at every opportunity he advocates policies that could be described as none other than socialism by stealth. 

Surely there has not been a more ridiculous claim in recent years from the unions to use government to dictate where one industry must procure such an integral part of its operations, steel. Although, I do believe to be left leaning in your politics stems from an inability to properly integrate economic history with current events.


Unintended consequence! Sometimes it is so obvious maybe it is intended.

Mr Howes economic genius was best expressed on a recent MTR segment on the 23rd of August featuring Steve Price and known conservative Andrew Bolt. Mr Howes expressed the view that if we had the Resource Tax on mining in place, the dollar could be down and allow our steel to remain somewhat competitive. His basic message is he wishes to use government to punish companies for productivity and reward those who do not compete via government enforced redistribution. 

Mr Bolt engaged in a futile back and forth where Mr Howes was unable to have the consequences of his economics explored in full. Mr Bolt was able to ask some questions but they were readily dismissed by Mr Howes as he continued his Rant on protectionism.

Mr Bolts questions boiled down to these two essentials questions.

Will such a measure force up the cost of mining the iron ore that feeds the manufacturing of steel? Will this cost be passed on?

It does not take a business degree to be able to recognize that a measure to force mining companies to buy more expensive Australian steel will add further costs to the actual mining of iron ore.

Firstly the cost will be passed in full back to the Australian steel manufacturers; making their product more expensive to customers outside the mining sector. It will drive all but there government enforced customers away due to added input costs passed on from the iron ore companies. 

Secondly it will establish a government monopoly for Australian steel manufactures allowing them to set monopoly prices to the mining industry and remove any pressure to innovate and improve their manufacturing process to become more competitive. Put simple, it is moral and economic hazard.

Lastly by putting upward pressure on mining costs we then make our mining operations less competitive on the international scene. Australia has high grade resources but we are not the only country, new deposits of various base metals and energy are being brought online around the globe every day to fuel China's appetite.

Australia already has expensive labour and tax costs; facing possible Mining and Carbon taxes, a measure such as that proposed by Mr Howes would simply allow foreign competition in mining and the already killer competition in manufacturing to damage our big industries driving prosperity and employment to new shores.

Mr Howes inability to grasp the consequences of his policy demands is staggering but not surprising. The left still pushing a raft of failed theories of economics from Keynes to Protectionism leaves me know doubt they are unable to integrate proven historical economic failures with current events threatening the global and domestic economic situation.

The arguments against protectionism are well founded, and the removal of a raft of protectionist policies in the 1980's are one of the biggest factors in transforming our country into the prosperous powerhouse it is today. The inability of Mr Howes and the current Federal Government to understand our countries success and how open market policies drove it through the last two decades is having very real consequences as we go into a new wave of uncertain times.


Australian manufacturing is under threat so if not protectionism, what?

Put simply I do agree with Mr Howes assessment of a high dollar driven by high commodities as the main cause of our manufacturing industries decline. It is however not the only cause; as we know manufacturing has been dying the slow death for over two decades in this country due to global competition. 

High labour costs, heavy regulation especially on labor, and burdensome tax rates imposed by all levels of government are three major government created issues which are in our means to control. Global competition is not something in our control, how our government impacts our businesses is!


Taxation - Australia needs to be an easier place to do business!
The elephant in the room taxation. It is understandable but unforgivable how unions so tightly weaved into the power structure of the ALP refuse to acknowledge how hard all levels of government make it for every single small business through to large company to compete domestically and abroad. I always wonder why we never see unionists denouncing the Carbon and Mining tax despite the obviousness of their soon to be felt impact of jobs and living costs. 

Union leaders always support these tax measures which will hurt every Australian provided their particular industries of concern receive nice healthy compensation packages from the government. Could rent seeking and payed support be so obvious? Unions then wonder why their membership and general community support wanes much like the manufacturing sector in this country.

Union leaders by their nature must be tribal and look after their members interests, but they do so at the expense of every other Australian and whichever singled out industry is poised to be shaken down by the ever cash hungry government.

Union members must demand their leaders to fight the Carbon and Mining tax for their own well-being and for the rest of the Australians whose living standards are under threat from big government far more so than competition abroad.

Labour costs will never compete with developing countries but they can be reduced by removing payroll tax. This abhorrent tax pushes employers for doing a moral and economic good of making people productive. Union bosses should be all over this tax if they really want to keep their members gainfully employed.


Unions like the ALP, simply out of touch!

It seems plain to me that union leaders such as Mr Howes are either wilfully ignorant of economics or deliberately exploit a form of class welfare between high and low performing industries to extort protection from government for their members industries. They do this with reckless abandon for the consequences to industries and workers outside (not entirely) their union membership.

It is no surprise the Federal Labor government has brought forward part of the 100 million dollar assistance package to the steel industry in Australia, it amount to nothing more than paying people like Paul Howes and his fellow union bosses to keep quiet. They get a handout whilst other companies and individuals will take the brunt of a new raft of government imposed costs on living and producing. 

The better you perform as a company or individual the less likely you are to receive assistance. The productive part of the economy which exists because it efficiently meets market demand pays for those who do not. Short term such measures are affordable and politically popular, in the long term however it is unsustainable and will come back to bite us. It happen in the recent past and we responded, why do we now take a step backward?

No private industry should ever have to rely on government handouts to exist. Markets can only work if they are set free to work, otherwise scare resources are poured into economically unsustainable investments and it is only a matter of time before the government money runs out. Once these funds dry up those businesses much like the solar and insulation installers which made up the first stimulus response post GFC find they have no business and close doors and lay off workers. 

The market forces innovation, it is a creative destruction, but countries that embrace it are best able to meet future uncertainty than countries whose economies need welfare to exist.

Union leaders will continue to drive membership levels south if they refuse to properly understand economics and continue to support anti-prosperity measures put forth by the federal government. The alienation of union bosses with their members is analogous to Federal Labor's alienation of the Australian public. Nobody in power is listening to who they are entrusted to protect and it seems power, special privilege and perhaps protectionism are the defining themes of this horrendous political paradigm now steering us head long into uncertain economic times.


Big government get out of the way!

The debate should not seek to force high performing companies to prop up lower performing companies but look at what is really making it hard for all Australian businesses to compete. Blaming some industries for doing well then punishing them is as immoral as it is dangerous; exploiting it to push protectionism, a character flaw.

Every business person can tell you how government regulation and endless taxes are making it hard to earn in this uncertain climate.

We cannot alter world economic conditions or competition. We can however lower taxes and make Australia an easy country to do business in, be it manufacturing, mining and everything in between!

Operation Stimulus: A Legacy of Debt

In the immediate wake of the Global Financial Crisis the vast majority of developed countries around the world rapidly deployed stimulus spending in an effort to replace falling private sector spending with government spending. The USA led the way with multi-billion dollar packages and tax payer bailouts of private banks, other countries throughout the Eurozone followed suit and Australia was no exception. Now the dust has barely settled and a new round of troubles has been stirred by the raising of the US debt ceiling and the downgrade from a triple A credit rating.

At Home

In Australia our government emptied the surplus of the previous government then borrowed additional billions to engage in a range of spending programs in order to stave off recession. The country did manage to just avoid a technical recession and the Rudd Labor government got free press to claim an economic point. Unfortunately for the government and more importantly the tax payer, all policy measures, especially those that require billions of government borrowings have consequences that can be hidden for years and sometimes decades.

It is impossible to prove or disprove whether the governments spending worked to stave of the GFC recession gripping most advanced economies. Certainly we had incredible terms of trade and a high dollar to keep us economically firing; stimulated greatly from the Chinese whose extensive savings meant they kept paying historically high prices for our resources. During these extraordinary market conditions the government poured borrowed money into a range of stimulus measures which have proven to have been highly wasteful and not too impressive in job creation.

Enough commentary has been made on the waste of the BER and Pink Batts program. The consequence is we have little to show for the destruction of the future fund designed to cover government liabilities going forward and to top it off we have an estimated government debt peak of 190 billion dollars estimated to occur in 2013.

The Consequence

Debts have to be paid, especially government debts. If governments postpone repaying what they owe you get the basket case economies of Europe floundering in low to zero growth and jobs vanishing to the suffering of your citizens. The US is facing the ever looming reality that its debt will diminish its place in the world as super power. Unemployment is around 9% and economic growth is nowhere in sight. Japan has been pump priming for generations much like the US and Europe and has nothing but economic decline to show for it. Stimulus does not work in every historical example I have encountered. In fact the more a country stimulated with borrowed money the worse and more prolonged the economic effects tend to be. So did Australia's stimulus really work or was it to small to hurt us much and was it masked by strong terms of trade due to our unique tie to the Chinese economy?

My Answer is the stimulus in Australia was masked and the debt legacy is about to face a real economic test.

GFC round two

A fresh wave of economic uncertainty is making its way around the economies of the world. The real issue of our current government debt is going to be tested in the second round of financial issues gripping the world. If stimulus did work the first time the option to use it again is off the table for the government, they cannot risk the debt issue already sour in the public spoiling completely. They must return to surplus and they have a plan, this plan is you and i, the tax payer.

While Australians face uncertain times going forward the government is going to make us directly or indirectly pay for the debt with a raft of new taxation policies.

The Mining Tax singles out a high performing industry to help refill the coffers. It is sending a message to the world that if you do well in Australia the government will take notice, attempt to turn the public against you, then take by force an even higher share of your profits. It troubles foreign investors and it scares companies at home, not to mention the workers who no doubt enjoy their salaries which compete and even out strip many of their professional counterparts in the city. Many Australians love a strong mining industry and the Mining tax threatens to reduce the strength of it going forward into now very uncertain times.

The Carbon (Dioxide) Tax is much the same issue in regards to damaging our stable business reputation abroad. Instead of just singling out high performers it targets any business or individual who consumes or produces products which create Carbon Dioxide emissions. In short everybody will pay for this tax, directly or indirectly. The governments compensation is smoke and mirrors to grab votes early before the real effects are felt when the price signal ripples through the economy driving up prices and setting our international competitiveness up for a big governmental hit, a government own goal.

The government has a plan to return to surplus. It involves robbing the productive sections of the economy for wealth redistribution and setting our economy at a severe competitive disadvantage in economically uncertain times. The legacy of debt has been bigger government spending and now game changing levels of government interference which only spell danger going forward into the aftermath of the GFC.

When governments over react and rely on defunct pump priming spendathons whilst ignoring the evidence of failing Europe, Japan and tragically the United States, it is the tax payers who bear the price. All debts must be paid, you cannot fix debt with more debt, and it is very worrying that we will face higher business and consumer costs as we head down an ever darkening economic future; our global competitiveness severly hampered.