Sunday, February 5, 2012

Should we nationalise the mining industry?

The following is a short piece submitted to Green Left to set out the case for nationalisation of the resources sector.
Nearly ten years of a mining boom has made significant changes to our economy and environment, with new billionaires arising and record profits for resource companies.

This has given some of the rich mining billionaires an exaggerated sense of entitlement that they have been waving around in public. When the “Resources Super Profits Tax” (RSPT) was proposed we saw Gina Rinehart speaking to a rally from the back of a truck and Andrew Forrest wearing a hi-vis fluoro work shirt to perhaps look like just another worker.

Having sunk the RSPT (and proponent Kevin Rudd), Rinehart went on to be named the richest person in the country. But these prominent individuals are only the tip of the iceberg.

The big three are BHP, Rio Tinto and Xstrata. Their combined value, internationally, is more than the size of Australia’s federal budget. They were not shy of throwing their weight behind the moves to sink the RSPT. BHP spent $22 million on a PR campaign.

Yet the resources that make them so rich are not theirs. As farmers opposing coal seam gas companies have found out, they only own the topsoil. The resources below are “commonwealth” property by law. Sadly, there is little to protect the “common wealth” of our farms or wilderness regions sitting on top when the resource below is allocated to the mining companies.

The loud voices like Forrest and Rinehart were not afraid to label the RSPT “communist” and tantamount to nationalisation. We could argue that it was a fairly mild tax, really. But more profoundly, the minerals themselves were always supposed to be the property of the whole country. The sense of entitlement these billionaires wave around is misplaced.

Progressive economists such as the Australia Institute have begun to shine the spotlight on the economic, social, cultural and ecological cost of the resources boom. Protesting farmers and Aboriginal Australians are underlining the importance of the issue more publicly.

The mining, gas and oil industries need to be reined in. Are higher taxes the only solution? Consider if the industry was in public hands. They would no more be beholden to their shareholders, bound to maximise profits whatever the cost. Nor would their huge wealth be available for schemes to corrupt the political process.

We could rein in the overseas pillage that Australian miners instigate in poor countries like PNG and the Philippines. A publicly owned mining sector could form fair partnerships with poor countries to help them develop sustainably.

So much of what is currently mined is not benign minerals, but uranium and dangerous fossil fuels. Australia is to coal as Saudi Arabia is to oil: the world’s biggest exporter. We should leave Australia’s coal, gas and uranium in the ground.

The wealth from the remaining, important minerals like iron, or rare earths for example, could be spent on programs to combat climate change, to improve health care, or any number of other social programs. It’s not small change. Mining was almost 60% of exports in 2010, or $165 billion.

But is public ownership realistic, if even the mild RSPT was knocked off?

Consider that privatisation remains unpopular despite over 20 years of promotion by governments and academia. Trying to sell off NSW power generators has been a major stumbling block for both parties. The general public still trust government bureaucracy to run public utilities over private investors despite so the years of propaganda.

This stubborn public sentiment against allowing greedy, giant corporations to plunder the economy for their own benefit is matched by a widespread concern to protect remaining wilderness areas, the climate, and farmland. These are valuable political resources.

If privatisation is still unpopular, we need to move onto the front foot and make nationalisation a real option in the minds of ordinary people again, whether or not the establishment is comfy with it.

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