Sunday, February 5, 2012

What about the mining boom?

The following article was published in Alliance Voices, the discussion bulletin and newsletter of the Socialist Alliance, as a proposal for that organisation to consider.
Something has been bugging me ever since I saw Gina Rinehart on the back of a ute speaking to a rally of struggling mining executives against Kevin Rudd’s ill-fated Resource Super-Profits Tax.

In a nation that supposedly has tall-poppy syndrome in spades, how does this tantrum-throwing tycoon get away with standing up in public and demanding sympathy against a new tax on her mind-boggling wealth derived from mining resources supposedly owned by the general public?

The mining industry, fuelled by eight years of boom, have become overconfident, politically drunk on their fabulous financial success. It’s time for the left to capitalise.

The social-democratic left are already putting forward a program to capitalise on the mining boom – quite literally, in the case of Paul Cleary, author of Too Much Luck – the mining boom and Australia’s future (Black Inc, 2011).

Cleary puts an argument for some kind of sovereign wealth fund, modeled perhaps on examples that he cites from Norway, Chile, or even PNG or East Timor (where he worked as an advisor to the Timor Leste government when they were working out how to best use their oil revenue).

The point of a sovereign wealth fund is that, if it’s set up so that it can’t be raided and squandered by politicians in the short term, the finite resources we are selling (minerals, fossil fuels) can be transformed into a lasting fund that can benefit the nation long after the resources have been dug up and sold or burned.

This may not be our preferred way of dealing with the mining boom of course. We should consider what is the Socialist Alliance response.

Previous statements on the mining sector include SA's 2010 discussion paper by Dick Nichols on how to fund our policies.

While Dick pointed out that “If the mining giants like Rio Tinto and BHP-Billiton were compelled to cut their profit rate in half government revenue would benefit by about $26 billion a year,” Dick pointed out that:
“Labor lost the war over the RSPT because it was completely out-mobilised by the mining giants, the most powerful sector of Australian capitalism.
“Once BHP, Xstrata and Rio Tinto unleashed their threats of an investment strike and job losses, the Rudd government had no answer.
“The Rudd government was never going to raise the threat of nationalisation to counter the big companies’ rebellion.
“That experience just confirms that the sort of budget the SA proposes (which would benefit the vast majority of the community) has to be fought for. Labor’s RSPT was feasible technically, but the social and political force to impose it on the big mining corporations was missing.”
Dick and Simon Butler also penned an article “Tax the super-rich to fund renewables” which discusses the BZE plan for 100% renewable energy.

“Taking the profit share of the Australian economy as a whole, the $36.7 billion BZE estimates is needed for the renewable transition amounts to only 12.7% of the 2008-09 gross operating surplus of corporations operating in Australia.

“It could be collected by lifting the company tax rate, pursuing corporate tax evasion and imposing a super-profits tax not only on the mining sector, but on the finance sector, in particular the big four banks. These accumulated $22 billion in pre-tax profit in 2008-09, and their return on equity stands around 20%.”

What policy is best?

So far, we have responses that mention nationalisation as a threat if companies don’t pay up the higher taxes we would like to raise from them.

Perhaps that’s the best way to proceed. I was very inspired by the Bolivian example. The Bolivian people had an uprising to put in a government that would nationalise their natural gas industry, their main natural resource commodity, and use the wealth to the benefit of the people. What about Australia’s mining sector? If only!

I’d like to propose we begin investigating the most practical policy that we can advocate, a policy which will get a hearing, but will actually start to solve the problems caused by the mining boom.

Those problems are not simply that big miners are getting away with super profits.

Paul Cleary surveys many of the other problems: the dollar’s rising value is killing the tourism, manufacturing and agricultural export sectors – all important, if not essential, sectors of Australia’s economy. If or when the mining boom turns to bust, the rest of the economy could also be left in ruins.

Skilled workers are being sucked into the mining sector; Cleary even relates that the Navy have been complaining about mining companies hanging around their bases to lure tradesmen away!

Likewise, investment is all being sucked into this runaway sector. Other parts of the economy cannot procure finance for their projects when it’s all flowing to the mining industry.

The social impacts of mining are terrible, whether its the divide-and-rule deals forced onto indigenous communities, or the impact of Fly-in, Fly-out (FIFO) workforces.

And of course the boom in mining is leading to a headlong rush into disastrous and polluting projects like coal-seam gas, and the frightening expansion of the coal export industry right when we need to be locking these resources underground for the sake of the climate.

Higher taxes, such as on super-profits, are one option for approaching the problem, and the social-democratic solutions proposed by Cleary are quite reasonable as a starting point. Alternatively, public ownership does not necessarily mean complete nationalisation; a 51% controlling state share in mining projects would be another option if a way of introducing such measures could be promoted. Increased royalties per unit of resource might be another method. I’m not the expert in resource economics!

Is this a priority?

At the Climate Change Social Change Conference, when I spoke on renewable energy, one member asked a question as to whether SA should campaign to nationalise the energy sector. Given SA’s other policies, you would think so.

But I was caught slightly flatfooted at the time, because I had this thought in the back of my head that it is so much more timely to attack the mining multinationals right now. If SA were to launch a campaign for our vision of the economy, the mining boom is the biggest, fattest target.

Climate change is overall still the greatest threat, but mining (taken broadly) also covers coal, gas and oil; so we are also addressing the climate issue from another angle. SA must still argue that all Australia’s fossil fuel extraction be ceased as soon as practicable.

I suggest SA should campaign to put the mining sector under public ownership and/or control (or whatever exact policy framework is decided that works best).

SA is involved in many campaigns, and in fact there is a tendency to try to be involved in everything, but unless or until the organisation grows a lot, there will be a need to prioritise.

There’s many ways to prioritise which campaigns are actively promoted, and on the other hand, which ones are not taken up.

One way of looking at this proposal is “niche campaigning”. No-one else is doing it, probably no-one else is likely to take it up, but the campaign will be of ideological benefit to other movements SA is involved in (unions, climate movement) and it will help to clarify and articulate SA’s political program.

How to run a real campaign

Let’s not just print a broadsheet that sits in piles on stall tables and leave it at that. Let’s conceive of a more rigorous campaign. SA should be able to employ a campaign coordinator, for at least 3 days a week, with a defined position and a set of tasks and goals.

Here’s an outline of what those tasks and goals might look like:

1. Setting the campaign foundations:
  • SA needs to first thrash out its exact policy. The campaigner would collate discussion and research into what works best as a policy and how it is best presented in public communication.
  • Research the state of the mining industry. Who are the companies? Where are they operating? How much tax are they paying? What overseas operations do they have? How many workers are they employing, under what conditions?
  • Design a plan for branches to run on the campaign. This could include a powerpoint slideshow, printed material, a website, a list of potential allies to invite to endorse or support the campaign.
These preliminary elements could largely be fed into Green Left Weekly as a forum for discussion and publication of the information we collate.

2. Getting out on the campaign trail.
  • The campaigner needs to undertake some of this work, but ideally co-ordinate members in each state to do work on it.
  • Make a list of organisations and individuals to present our ideas to and seek their support or at least get them interested – by going and speaking to them as a group (or individuals where necessary)
  • Looking at SA’s current geographical spread, plan street outreach – stalls, petitions, normal campaigning activities
  • Identify university departments and courses to target with publicity, to get invited to speak to, and so on
  • Work the media, including regional publications and broadcasts in areas we don’t normally get out to, and seek to have the campaign mentioned there whether by letters to the editor, media releases, local area visits, etc.
Some of this is what SA already does, but other activities will be new areas to some degree and members will have to learn new skills.

3. Setting goals.

A campaign can’t be open-ended or ill-defined. Inevitably, such a campaign will peter out and be forgotten or deprioritised. That’s why it needs it’s own funded national co-ordinator, and local committees working on it wherever we have a branch or group of members who can be involved, all working to agreed goals and timelines.

We need to be driven by the campaign goals. For how many organisations have meetings been organised, out of our target list? How many articles have discussed our campaign in newspapers? Have new allies come on board? Having clear targets makes it possible to measure progress and decide when to stop or to escalate to a new level or adopt new tactics.


Firstly, having a campaign that is run professionally and takes a definite chunk of resources, will probably squeeze other areas of work. So SA members have to be confident that this one is worth it.

The political benefits will be to popularise a left economic program among ordinary Australians, and to educate or pressure groups on the left and green spectrum to adopt and thus spread some of SA’s policy. SA had a little of this effect with the climate charter, but SA is only one cog in a big climate movement wheel.

Political economy is not the popular kid in the class as far as most socialist organisations today are concerned, but it’s a key building block of the socialist critique of capitalism. A campaign like this would bring it back into focus; something that’s desperately needed.

Lastly, as alluded to in the previous article I wrote in Alliance Voices about Melbourne branch, I am deeply dissatisfied at the shallow and reactive way Socialist Alliance tends to interact with a lot of campaigning. This would be a break from that and would help to train and recruit new members to a thorough and effective way of doing politics. I think it would be worth a big effort.

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