Great article Helen. The reality and the spin of what the mining boom contributes to Australia is miles apart.

Most of the article is barely worth responding to, or even noticing. The bit about miners failing to pay taxes is a statement characteristic of those who nothing about the sector. Most mining companies in Australia are explorers who typically pay no tax at all, because they are not earning any money. So is the writer talking about the spec explorers or the actual miners? I suspect she is not even aware of the difference, and I suspect the author of the original book got himself throughly confused on that point.

Once in business - that is, atually earning money - miners can use past losses to reduce tax like any other Austalian company. Are miners being treated any differently to companies in other sectors? Doubt it. Each industry has its own set of concessions, incidentally.

As for Forrest's Forescue Metals not paying tax it certainly did last year - $313 million or thereabouts.. its annual report is online, so you can see the amount paid plus a reconciliation between what it should pay on a straight calculation from its profits, and the actual amount (there is not much differnce).

Now the authors may then try to claim that really that the difference between nominal and actual amounts paid in tax proves that there are dark and sinister forces at work, but their original statement about Fortescue was simply wrong. Consipracy theorists should make an effort to get their basic facts right.

The author refers to: "the growing pollution that is being caused by coal seam gas exploration."
CSG has been produced in Qld for more than 10 years. There are no examples of significant environmental damage.

"Drilling down into the coal seams to obtain the gas requires the use of toxic chemicals such as benzene, toluene, ethyl benzene and xylene."
No it doesn't. In fact, Qld has specifically banned the use of BTEX chemicals in CSG operations and NSW seems set to follow suit.

This article is lazy and misinformed.

As Curmudgeon points out, any detailed analysis would show that mining companies actually generate, directly and indirectly, very substantial revenues for state and federal governments. In fact, arguably more than any other industry as a percentage of sales.

First, the mining companies pay royalties to the states for the right to extract the minerals. In WA right now the iron ore companies pay 7.5% of sales revenues as royalties. This for assets that the mining companies have discovered and evaluated at their own cost. That weren't even known to exist before they invested millions of exploration capital.

Second, the companies pay payroll tax on their payroll. Their employees pay income tax, and GST on most of their purchases. Their suppliers pay payroll tax, and their employees pay income tax and GST.

Third, when the companies generate reported profits, they pay 30% corporate tax. And now will be asked to pay extra "Super Profits" taxes on top of that.

Which other Australian industry pays as much as a percentage of sales?

Matthew Benns' book is well researched and he shows a thorough knowledge of the mining industry and documents his claims about the environmental damage they cause, and their very perfunctory attitude to broader social responsibilities. For another review, see http://ozleft.wordpress.com/2012/01/09/anythingforaquid/

All the remarks by a number of our Australian country population think more of a prosperous Australian production, whereas the number of Lawyer city members of the political parties are making the decisions of mining exports to destroy our industries. I do want to see our Industries looked after, both the farming and manufacturing, and our workers also treated properly. I am in contempt of those people who rave on that the Labor party is only looking after the unions, the past decisions of them shows that they are only for the rich and the extremely rich, and wish to make them richer, and damn the workers.
The tax system we had from 1950 to 1970, was good for the workers and did not treat the rest unfairly, the 66.6% tax on $450,000 and zero tax on the first $35,000 or even $60,000 would fix most of today’s woes. Going by the results back in that period, there would be less crime, goods and services would be cheaper and our workers would not be getting kicked out of their homes because they would not be restricted to that two or three days work a week that exists now and they would be able to afford the mortgage. Clive Palmer said last year that he did not want that much wealth. Both the Labor and the Liberal parties have destroyed the economy through the low top tax and not increasing the income at which tax is applied, and there should be a tax of about 60% on companies at about $2 billion and zero on profits below about $5 million.
The Labor party is forever jumping on the “Global” problems to blame, but both the Labor and Liberal parties have brought it all on by their stupidity of the low taxes like that of the other countries, and the moron decision of the export of the mining resources, the reciprocal imports are destroying our own manufacturing industries.

This article is poor researched and simply cobbles word bites from the news to support hellen's existing prejudice.

For example:
1 Corporate tax is paid on book profit, against which capital works can be written down, such as Forrest's new ventures. However, income tax, payroll tax and mining royalties are still paid. And jobs are maintained.
2. FT's enterprises are a tiny fraction of the mining industry, who on average pays about 42% royalties and tax.
3. With the mining boom, mining is projected to pay nearly 30% of Australia's corporate tax, and without which Australia would not have survived the GFC

Mining is by it's very nature is a dirty business; however, at current extraction rates; most will be played out in around thirty short years? What then?
As for the tax they pay? Some do pay a fair share and some don't? There are a number of instruments that allow many miners and other companies to avoid a fair share of tax?
Paper loans from parents, which then elicit a never ending interest only, of up to 11% commercial rates? While it is not universal practise; it appears to be common?
Then there is the double tax act of 1953, which allows overseas tax payments (alleged) to be used as tax offsets here?
Bob Hawke is on the public record, claiming that around 40% of our international guest corporations, pay no tax to anyone?
Why do we continue to tax earnings or income, which can be written down or written off, when it'd probably be more practical and less avoidable; to simply tax expenditure?
A very simple entirely unavoidable tax on all expenditure; set at just 4.8%, would raise significantly more revenue than all the current convoluted complexity.
And the fact that it was entirely unavoidable, would allow most companies and others to pocket current compliance costs, which can sometimes eat around 7% of the bottom line; and, a win/win outcome.
A very simple modest tax and very low energy costs, would encourage most of the high tech energy companies and manufacture to relocate here; and, provide us with essential income and export revenue, when the mining industry is little more than a few holes in the ground, or memories?

Rhrosty
in mentioning the bit about paying interest to loans to overseas parents you hit on a long-recognised dodge.. for decades now the ATO has run what it calls thin capitalisation rules to prevent profits being transferred in that way. Bob Hawke was prime minister some time back, I might point out..

Ed Lewis
If the article is an accurate reflection of what was in the book, then it cannot possibly be well researched.. If you look back over the posts, it is obvious that the authors of either the book or the article are just throwing muck around, hoping something will stick. I don't know about the environmental side of it, but from the financial point of view they are talking plain nonsense..

The points made with respect to environmental issues are valid, but need to be put into context. Mining projects within Australia are subject to very stringent EIS (Environmental Impact Statements) prior to mine approval, and they must undertake rehabilitation at mine closure. Usually this is very successful in Australia. For example, I would challenge anybody to point to where beach sand mining took place on the NSW coast over the past 30-40 years. The rehabilitation has been very well done.

Environmental issues generally arise in countries less advanced than Australia where some of the same mistakes that were made here many years ago are still being made. While Ok Tedi demonstrably happened, I doubt whether any Australian mining company boards would approve such an approach today.

A further point to be made is that EVERY land use involves environmental impact. I remember, for example, when St Georges Basin was a pristine coastal lagoon surrounded by beautiful bush. Today it has been developed for residential, and lost forever as a pristine environment. Most mines are in very remote locations of relatively low environmental value, and in any case, at cessation of mining are restored.

Every land use requires a trade-off between the value of the land use (residential development, farming, ports, airports etc etc) and the environmental impact involved. Standard rules should be applied to ALL land use. Viewed that way, mining will be seen as relatively low long term impact compared with the benefits offered to the country.

Tax, a very complex issue.

Ask yourself this question.

Have you ever paid cash for something to receive a discount by avoiding the GST?

Now if you have, and that accounts for most of us, then how can we sit there accusing the miners of not paying enough tax.

After all, we avoid tax if we take the cheaper deal, which is highly illegal whereas the miners minimize tax which is legal.

Think about that before you cry fowl on the miners for not paying enough tax.

As for the miners, life without them would see massive changes I doubt many of us are prepared for.

In thirty years there is every chance we will have no manufacturing, no small retail, no tourism and very few jobs.

Remember, a large portion of the workforce is being generated, indirectly, by the mining, and these jobs will also be lost. So brace your selves.

Flat tax is the ONLY FAIR tax !

There are some very dishonest methods of argument being used here. I'm not inclined to take seriously anyone who starts out accusing a writer of laziness etc without first taking up substantive issues. They start out with a sneering appeal to prejudice.

Here are some responses to substantive issues.

1. The poster who refers to royalties as taxes displays a deep ignorance of the mining industry and economics. Farmers pay a price to buy their land, that is not tax. Miners pay royalties to buy the right to exploit a resource. That is an input, or purchase price, not a tax, although the two things were dishonestly confused by the mining companies' demagogic campaigns against the Rudd and Gillard mining taxes. The Rudd tax would have secured a much fairer return for the majority of Australians, but the Labor Party buckled to big money, which is a bit of a habit for it these days.

2.Matthew Benns' book is about producing mining companies, not explorers. The poster who introduces that point does so in the hope of obfuscating, not clarifying.

3. None of the critics of the review appear to have read the book, yet want to hold forth on the review. It would be a good idea to read the book so you have some idea what you're talking about. What I see here is mainly general assertions with a neoliberal bias (no tax, low tax, flat tax, etc), with very little substance.

4. The book is about the operations of Australian, and Australian-linked mining companies overseas as well as in Australia. The Ok Tedi disaster is one of many, and it is still going on in the hands of another company, although it is scheduled to close this year. Damage done, mineral wealth removed, leave the locals to clean up the mess; tell me the old, old story.

I could go on, but I've reached my word limit and I'm not convinced of the value of grappling with such ignorance and arrogance.

Ed,

Firstly Helen's post is not a book review, but her commentary on the issue emanating from the book.

Secondly, Mining royalties are a tax as defined in the dictionary.

A tax may be defined as a "pecuniary burden laid upon individuals or property owners to support the government [...] a payment exacted by legislative authority."[1] A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government [...] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."

You appear guilty of more ignorance and arrogance than any of the other posters.

Indi, we have been over this before, a flat tax is simply unfair, as those on a lower wage require 100% of their income just to scrape through, while the high income earner sits pretty.

In my view the only fair flat tax would be a real transaction tax. The GST is no such tax.

Alternatively, you could increase the tax free threshold, then impose a flat tax.

A transaction tax, once modeled and approved, would relieve business of so much red tape that it may even make it worth while doing business.

Now back to the miners.

They are listed companies and are simply minimizing their taxes to the letter of the law.

When we all put in our tax returns, we do the same thing.

Receipts for coffee at meetings, union fees, subscriptions, uniforms etc etc.

If you take all your deductions, including negative gearing allowances, then apply our net tax to our gross income, the result will be a lower tax than if you had no deductions.

This is exactly what the miners are doing.

They just have the means to do it better.

Shadow minister, you're talking nonsense. Royalties are the purchase price of an input (minerals) that's essential for mining. End of story. If you confuse a purchase price with a tax, everything is a tax, which no doubt suits neoliberal anti-tax propagandists, but as economics is pure moonshine.

And, Curmudgeon, I wrote a bit more last night on sandmining, but ran into this site's word limit on comments.

I've been to areas of the NSW coast that have been sandmined. What you say may be true to the casual observer, but not to anyone who saw the area before it was mined. The large dunes are mostly gone, replaced by low dunes, artificially stabilised with plantings, but vulnerable to high seas in stormy weather. I've seen such dunes breached by the sea and that pattern is likely to continue. Some of these areas will be the first to go under in the event of any sea level rise.

Some clean-up work after mining is required by law in Australia, but it is usually perfunctory and cosmetic.

The book and article offer a shallow, incomplete understanding of Australia's mining industry designed to appeal to the chattering classes but not to serious people who are interested in policy analysis. In response to the puerile statement "For every $240,000 worth of iron ore that Fortescue Metals sells it gets about $200,000. Of this the commonwealth receives about $27,000 in taxes and the state around $12,000 in royalties. But the Yindjibarndi, the traditional owners of the land being mined, receive a miserly $136.", consider this:
The $27,000 of taxes is spent to benefit all 23 million Australians (including traditional owners), equal to 0.11 cents per person. The $12,000 in royalties is spent on some 3 million West Australians, equal to 0.4 cents per person. The $136 paid to traditional owners goes to a small group of less than 200 people, equal to 68 cents per person. When you consider that Fortescue Metals generates billions of dollars of income from its iron ore sales, the major per capita beneficiaries are without doubt the traditional owners. I have no complaints about this income distribution, by the way, but use this to show how biased and shallow the book and article are.

Ed,

While you would prefer to redefine the definition of what is a tax to meet your political agenda, I prefer to rely on the generally accepted definition as used by the ATO, accounting firms and government generally. The definition I gave could not extend to everything, as most costs are not payments to legislative authorities.

Helen using examples of what happened many decades ago is completely irrelevant to what is happening today.

those on a lower wage require 100% of their income just to scrape through, while the high income earner sits pretty.
rehctub,
Are you saying that a, say 20 % tax on every dollar earned hits the rich & the poor equally ?
Let's put this way, some working bloke earns a $1000 & out of that he pays $200 Tax. The rich bloke pays exactly the same. Now the worker doesn't earn anymore but the rich bloke earns $10,000 more so he pays $2000 in Tax. I fail to see any unfairness in that. The present system is what wrecks our economy where the worker still pays 20% whereas the wealthy only pays a fraction. Oh yes, they are portrayed as paying 49 cents or more in the Dollar but unlike the worker they can claim just about all if not more back in Tax write-offs.
Where is the fairness there ? I see it with donations where they give generously with the right hand whilst the left hand is already filling out a Tax refund claim form.

Indi, as I said, tax is a very complex issue.

Firstly to your flat tax. Yes, a flat tax does hurt
Lower income earners, as it bites into their living money, whereas fo the high earner, it cuts into their disposable money. Many low income earners don't hae disposable income.

Donations.
If you make a donation of say $1000, this comes from your gross income, so, you either pay it in tax, or a doation. Either way, you don't have to use of it, however sponsorship can get messy, a many sponsors get gifts which can attract FBT.

Write offs.
If you take any companies before tax earnings, then add in the deductions, interest, depreciation, funding costs, motor vehicle costs, etc etc, you will find that these all add up to the amount of tax one would have paid if they had no deductions.

Now as for Claiming everything but the kitchen sink, just remember, most of the smaller companies go to work just like you and I, of cause they want to make a profit, but the difference is, they often risk their house, just so others can have a job.

This furfy about companies only paying 7% tax is just that.

They just dont pay income tax, nor do they enjoy the benefit of a tax free threshold.

People need to get their head around that.

Royalties. Personally, I consider them a tax, however, they don't form any part of income of company tax, as they are over and above.

tax is a very complex issue.
rehctub,
Only the present system with all its variants. It couldn't be any simpler than 20 % full stop.
The present complexity is the issue which we need to rid ourselves of.
I'm afraid I fail to see any of the complexity you refer to in a flat tax. I think it's got more to do with those raking in the dough worrying about losing a few crumbs.

I guess we will have to agree to dissagree indi.

Companies would love a flat 20% tax rate, or better still a very small transaction tax, say 1%.

Just think, every time $100 dollars moves from one bank to another, a dollar is collected.

As I have said before, it is suggested that every other tax, including PAYG and company taxes could be abolished.

Why on earth we haven't gone there, at least on a trial basis, is beyond me. The recent QLD flood levy would have been a good example of trying this tax.

One thong that is a given is that the present system of tax collecting is not going to be sufficient in years to come.

Then what!

Then what!
rehctub,
I think that when the time comes in the very near future the crowd which advocates a flat tax & National Service will romp it in at the election. Why do I think so ? Because I am observing increasing discontent with the way our society is being manipulated by ex lawyers. People are sick & tired of working just to support others. Reward for effort not getting fleeced for effort is now well in the firing line. People are getting more enlightened, just wait for a little while & you'll see. Already people are looking beyond the mining boom.

Reward for effort has been long gone.

As a baby boomer i stated to invest at about 30, why, because I knew when compulsory super came in that there would be little hope for a pension when I retire, or at least one you can live on.

As for free loaders, I'm with you on that one, make everyone work for their money, no free hand outs and certainly no having large families in the expectation that someone else will provide for them. Damn that baby bonus!

At fhe very least, cash payments for welfare and alike should be stopped immediately, because we the tax payer should at least have some say as to where these dollars can be spent, and certainly not wasted.

In 1965 there was one person in 22 on welfare/support here in Australia (IIRC) whereas now there is one person in every 5 being supported by the taxpayer. And guess what. That one in 5 doesn't include the carers and the bureaucrats we are also supporting.

We have a situation in Australia where 60% of the voting public pay 10% of the tax. So guess what. They will always vote for more public expenditures coz they aren't the ones who are paying for it.

Interesting discussion to explore what can be done about it.