I rise to speak…

I rise to speak on the Mining Tax bills with mixed feelings.

This comes partly from being a Western Australian Senator. Dealing with these bills has exposed the degree to which Canberra views my state as little more than a lucrative and ever expanding hole in the ground.

I want to set one myth to rest at the outset: the idea that the support of the Greens for fair taxation of this industry means we are anti-mining. Of course we are no such thing – a big wind turbine, perhaps for many people the symbol of the transition that we are here to drive, is two hundred tonnes of steel. Solar PV cells require rare earths and silicon. Electric vehicles require high capacity lithium batteries. The high speed rail system that we want to introduce to this country will run on steel rails. It’s very hard to do any of that without mining.

What I am opposed to is the idea that because of its role in our economy, the mining industry should be entitled to throw its political weight around like some kind of cartel, dodge fair taxation, and punch holes in environmental protection and heritage laws built up painstakingly over many decades.

Every time a public policy issue arises that affects mining interests, whether it be taxation, Native Title, Carbon price legislation, or industrial relations reform, sections of the industry shriek sovereign risk and threaten to pack up and leave. Not the whole industry of course, just those with the more aggressive sense of entitlement, the Xstratas of the world. We saw that most recently with the contrived hysteria around the RSPT.

Whenever I hear these threats to throw the toys out of the cot I think it would be interesting for, just once, for someone to carry the threat through and leave, to help reduce pressure on interest rates, inflation, exchange rates, house prices and so on.

But of course, it is an empty threat – the orebodies are here, and the stable political and security environment, the rail and port infrastructure and permissive planning environment is here. It is just schoolyard bullying with a big budget, and on the rare occasion someone calls it out, it turns out to be vapour.

The main reason for my ambivalence on these bills comes from the simple fact that they would have been better, had the Government not caved in to the bruising campaign of intimidation and misinformation run by the Minerals Council on behalf of its membership, with the Liberal and National parties as their ever compliant policy sock puppets.

Before I deal with the mechanics of the legislation it’s important to remember what we’re talking about here. The Coalition have approached this debate as though the minerals in question all belong to Clive Palmer as his birthright, and that this tax is a criminal socialist misappropriation of wealth from its rightful owner.

Senators from the Labor benches have of course made the point that Australia’s mineral resources belong to all of us by way of being the property of the crown, that is, the crown of a much-loved hereditary monarch on the other side of the world.

In fact, these minerals are coming from country, from Aboriginal land, where in many cases the two hundred year legacy of dispossession is still real and present.

Here we are in Canberra, thousands of kilometres from iron ore operations in the West Pilbara, discussing how to redistribute the largesse from a once in a lifetime mining boom, while those from who we take these commodities live in conditions of degrading poverty within sight of ever expanding waste rock dumps.

We were told that the Native Title system would correct these historic injustices and position Traditional Owners to benefit from extractive industries on their land.

The record has been dismal. An ARC funded research project examined more than 40 native title agreements negotiated with mining companies since 1992 and discovered that in only a quarter of cases were Land Councils able to negotiate substantial revenues.  We know why – the Act spells out that Aboriginal people who’ve gone through the arduous process of proving to a Tribunal that they’ve somehow managed to maintain connection to country, have the right to negotiate over projects, but not the right to say no.

They know that if negotiations break down, the project will go ahead without any royalties being payable. In that legal context, there is no equality of arms, and that’s how the system is set up.

I congratulate my Western Australian colleague Senator Rachel Siewert for bringing forward legislation to address this and other serious flaws with the Native Title Act.

So, thus far the mining tax debate has been able to progress as though the mining revenues in question were discovered on some accountant’s spreadsheet in Melbourne or on a hard drive deep within the Treasury Department.

The distance between the major mining provinces and the vast majority of Australians has created a disconnect, such that our current, highly unusual circumstances are seen as normal, an economic perpetual motion machine that will keep the cash registers in Canberra ringing and deliver a razor thin budget surplus just in time for a federal election.

Maybe it even will. But the fact is, this is a temporary phase – a moment highly dependent on successive five year plans drafted by the Chinese Communist Party, dependent on ever increasing and unregulated combustion of cheap fossil fuels, and dependent on the continued confidence in a global financial system that is profoundly out of balance.

Fundamentally, mining booms all end the same way.

Visit Goldsworthy in the Pilbara; it’s now just a collection of empty quadrangles fading back into the spinifex, a short distance away from a mine void that was abandoned when the iron ore ran out. Goldsworthy was closing at about the time that the much larger Mt Whaleback deposit was being opened up, literally a mountain of iron that BHP have been dismantling for four decades.

Read DRET’s annual resource report and you’ll see we have eight or nine decades more worth of iron ore mining, at present rates of extraction.

That little caveat – at present rates of extraction – heralds the Goldsworthy endgame. None of the proponents in the Pilbara, or on the North West Shelf, or in the Bowen Basin or the Darling Downs or out at Olympic Dam, have any intention of proceeding at present rates of extraction. Their shareholders would sack them if they did.

The mining industry intends to double present rates of extraction across the board, as soon as possible, halving the depletion horizon. Then the imperative from the shareholders and the creditors will be the next doubling. And then the next.

This boom is coming to an end one way or another, but we’ve been hypnotised by the laws of supply and demand and the powerful magic of price signals to believe that it can last forever. Geology says otherwise, and geology will win.

That is the context in which we debate these tax bills today.

What do you do with such windfall gains while they are here? In the midst of this turbocharged resources free for all, economic common sense is being fed into a primary crusher and bald faced rent-seeking has been put up on a pedestal as though it was a proxy for the national interest.

Asset stripping has been deliberately confused with wealth building. It is the liquidation of four billion years of geological inheritance in a few short generations, rebranded as sustainable growth.

Treasury told the economics legislation committee a fortnight or so ago that there are $450 billion in extractive industry investments in the pipeline in this current decade. That’s a figure well in excess of the entire Commonwealth annual Budget.

It’s a figure probably unprecedented in the history of the country. Governments at all levels are dismantling anything that might stand in the way of this headlong rush to strip the continent of its resources as rapidly as possible.

These are non renewable resources, sold off cheaply on long-term contracts, resources that will be immeasurably more valuable as we move into an age of depletion. In the case of fossil resources, some of it will need to stay in the ground in perpetuity. Instead, state governments have become hooked on mining royalties despite the economic collateral damage that it now impossible to ignore.

Why would we remove all obstruction from an industry that has demonstrably pushed the currency up by 30%, structurally damaging the tourism, education and manufacturing sectors which employ collectively ten times as many people?

Why would we push the fast forward button down harder when the RBA was citing the risk of the mining boom overheating our economy in their statements in the wake of every interest rate rise between May 2006 and March 2008?

The commodities boom has seen labour costs bid up so rapidly that other sectors can no longer retain workers – sectors including the Australian Navy, who now can’t put submarines to sea for a lack of marine engineers and other skilled workers.

The boom has helped put unprecedented stress on Australia’s already dysfunctional housing market, particularly damaging for people not on mining wages but nonetheless caught up in a property bubble.

Why would we pour more fuel on the fire? We know why. The Australia Institute’s estimate of the profits to be raked out of the mining industry over the next decade stands at about $600 billion. That’s why. Well over half a trillion dollars – not in turnover, in profit.

Treasury’s original model of taxing this unprecedented windfall was met with a beautifully calibrated $22 million advertising campaign, an incalculable return on investment that crashed the Resource Super Profits Tax, cost a sitting Prime Minister his job and led to the watered down model we’re presented with today.

When we turn to the opposition we find that they’re led by a guy who just bobbs up and down when Mitch Hooke tells him to. The sum total of their initiative is to let these profits be sucked out of the country as rapidly as possible. It is an industry policy that says liquidate everything, as quickly as we can, no matter what the collateral cost to the environment, to communities on the front line, and to the rest of the economy.

The Greens propose to return to a model more akin to the one that former Treasury Secretary Ken Henry started with, or, heaven forbid, a model closer to the Petroleum Resource Rent Tax that was also met with high pitched shrieking from the industry and its Liberal Party proxies when it was introduced. If that tax has held the industry back since it was introduced I’d be delighted to see the evidence.

The Greens propose to roll back the frankly idiotic get out clause that gives the states a blank cheque to raise royalties which will then be fully reimbursed by the Commonwealth. Premier Colin Barnett is quite right when he reminds Canberra that mining royalties are a state responsibility and accuses Canberra of bullying in threatening to withhold GST receipts by way of retaliation. I don’t understand what the Treasurer is doing. Maybe a Government Senator will jump up during the debate and let us know.

We believe the some of the benefits of this boom, properly taxed, should  be banked in a Sovereign Wealth Fund as a source of capital for the future when the well has run dry, and as a hedge against rapid currency movements. The Norwegian model is frequently spoken of – the North Sea oil fields are now well down the back end of the depletion curve, but smart policy making there has left the country with one of the largest sovereign funds in the world from which to sustain prosperity.

Colleagues, when we put this bill to a vote later tonight I’ll be voting for it, because the alternative is to vote for nothing. Unlike the friendless CPRS, this is an example of something being better than nothing. But as Senator Brown has indicated, this is a package that will require ongoing review and improvement, to see if the reality bears any resemblance to the modelling. I want to know whether or not AMEC were right when they told us a couple of weeks ago that accountants for the big three miners have so completely wormholed this package as to cripple it. I don’t often get up here and agree with AMEC, but credit where it’s due – the big three miners sold out AMEC’s membership, the juniors and mid-tier miners, and did a deal to benefit themselves at their established operations.

This is a story that still has some twists and turns in it yet. I find myself in the peculiar position of agreeing both with AMEC and Premier Colin Barnett in the course of this contribution, which has created strange alliances and probably cost a few friendships as well. If we can at least agree that these resources are non renewable, and that we here in Canberra are placed in a position of great trust in their stewardship and liquidation, that will at least be a start. I thank the Senate.