Wednesday 20th of June 2018

the miners fight back...


Mining barons Clive Palmer and Andrew Forrest have taken on the Treasurer, Wayne Swan, the first labelling him an "intellectual pygmy" who does not understand economics and the second launching a national advertising campaign against him.

The separate attacks, published today, follow Mr Swan's article in The Monthly on Friday which named Mr Palmer, Mr Forrest and the mining magnate Gina Rinehart as threats to democracy.

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makes an old man cry...

Wayne Swan's swingeing attack on those among the ultra rich who, he says, confuse the national interest with their own, poison our politics and threaten our economy was, at the very least, out there.

The Treasurer's article in The Monthly was Swan unleashed. His analysis was driven by values and frustration. The promotion of a more equal society has been one of his core political commitments over many years. And he's run up against the toughest rich miners in the battle over the mining tax.

Swan must know that he's on the downhill run as Treasurer. Barring a political miracle, he has about 18 months at the most in the job. So he's having a go. And what a go, with its ''class war'' touch and militant language.

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Sure Joe Hockey as treasurer and Julie Bishop as Foreign Minister and a heap of other rubbish as ministers of this and that... Not counting this cocky little upstart Abbott as PM... Frightful, isn't it?... Makes an old man cry...

convenient phrases...

Mr Forrest's company Fortescue Metals Group has taken out full-page advertisements in today's major newspapers condemning Mr Swan for an "irrational outburst" and "an act of cynical hypocrisy".

Mr Swan says his essay has been "wrongly described" as an attack on the rich.

"When you stand up to the vested interests, you're invariably accused of being anti-business or engaging in the politics of envy - these are the convenient phrases used by the champions of privilege," he said.

Instead, he says he is attacking "an imbalance in influence and opportunity".

the case for abolishing the states .....

WA Premier Colin Barnett has vowed to take part in any High Court challenge against the controversial mining tax, saying it would be in the interests of all West Australians.

Mining giant Fortescue confirmed today it will pursue plans to launch a legal challenge against the tax, which won passage through the Senate yesterday.

Mr Barnett said if Fortescue was to push ahead with the High Court challenge, the state government would also intervene.

"If there is a High Court challenge, the state government would intervene in that and present the state's point of view, which is to oppose the mining tax," he said.

He said the government had sought legal advice on the constitutionality of the tax, which he would make public if and when a challenge took place.

'We're not going to present our point of view out there publically, until such time as a challenge occurs," he said.

"There's a number of aspects to it, it could be argued it discriminates between states, it could be argued that the tax is on a mineral resource, which constitutionally the Commonwealth government cannot tax, that belongs to the state."

He said taxpayer's money would be used to fund any challenge, but stressed the government would not launch a legal challenge on its own.

"We would intervene in the long-term interests of the state. These minerals belong to the men, women and children of Western Australia. This is basically a tax on Western Australia," he said.

The tax - formally known as the Mineral Resource Rent Tax - won passage through the Australian Senate last night, almost two years since such a tax was first floated by former Treasury boss Ken Henry.

The 30 per cent tax will be imposed on iron ore and coal miners who record annual profits of $75 million or more, and it takes effect from July 1 this year.

Fortescue confirmed today it had engaged senior counsel.

Fortescue's decision comes after Queensland-based magnate Clive Palmer last week announced plans to mount a court challenge against another government impost, the carbon emissions tax.

"The MRRT is unfair, narrowly based, complex, inefficient and will reduce investment and future jobs in the Australian mining industry," a spokesman for Fortescue said.

"As Fortescue has previously advised, the company has engaged senior counsel and will commence legal proceedings after the legislation has been enacted and legal opinion has been finalised."

Fortescue is expected to argue that the minerals resource rent tax is unconstitutional because it discriminates between the states and directly taxes state-owned resources

Prime Minister Julia Gillard has expressed confidence in the government's legal advice obtained during the drafting of the laws.

Barnett To Join Fortescue In Mining Tax Challenge

tax credits and mining tax deferred...


MINING companies Rio Tinto and BHP Billiton have built up a combined arsenal of $1.7 billion in tax credits that can be offset against future mining tax liabilities.

And billionaire miner Andrew Forrest confirmed to Fairfax Media that his iron ore company, Fortescue Metals, would not be paying any tax under the Gillard government's minerals resource rent tax this year.

Mr Forrest, who challenged Treasurer Wayne Swan's claim that the tax would still raise billions in revenue for the government after being watered down during negotiations with Rio, BHP and Xstrata, appears to have been vindicated after Mr Swan's admission that the tax will net a paltry $126 million this year.

''The record stands for itself,'' Mr Forrest said.

While the focus has been on the dramatic shortfall in mining tax collections compared to original Treasury projections of more than $10 billion over four years, the most recent financial accounts of Rio Tinto and BHP Billiton show the two miners have built up $1.1 billion and $637 million in tax credits respectively.

The credits did not reduce the amount of company income tax they had to pay, but can be carried forward to offset any future mining tax liabilities.

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Meanwhile on the political front....
Opposition Leader Tony Abbott and his arithmetic man, Joe Hockey, have been having a particularly jolly time tormenting the World of Hurt in the days since. This might seem curious to the rational, for $126 million is exactly $126 million more than they would reap from the miners, who they don't want to tax at all. In opposition, freedom is just another word for nothing left to lose.
Kevin Rudd, of course, lost everything through his version of the mining tax. You may recall that in 2010 the big miners, infuriated at the idea they might have to pay a slice of their super profits to the nation, went berserk, and Rudd's colleagues dumped him as prime minister.
''Well,'' said Rudd, ''The origin of the mining tax, as you know, came from the Henry Review which was established by the Treasurer [Wayne Swan]. The Treasurer brought it to the relevant ministers of the government including then deputy prime minister [Julia Gillard] and myself. We supported the Treasurer's decision.''

Interviewer, David Speers: Sorry, Wayne Swan's proposal for the mining tax?

Rudd: ''Yeah, yeah, and the government supported him, led by myself and other senior ministers. Of course after the government's leadership changed, the Treasurer and the new Prime Minister elected to make some significant changes to the structure of the tax. I think we are all familiar with what those changes are. So, I think in terms of any future changes to the tax, given the fact that it has not collected any real revenue of any significance so far, that really is a matter for the Prime Minister and the Treasurer to consider and I'll leave it with them …''

Planet Kevin maintained a perfectly serious face, but you could almost hear the heart singing. If revenge is a dish best served cold, he was ladling dry ice.

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NOTE: Deferred, in accrual accounting, is any account where the asset or liability is not realized until a future date (accounting period), e.g. annuitieschargestaxesincome, etc. The deferred item may be carried, dependent on type of deferral, as either an asset or liability. See also accrual.


Unfortunately, the term deferral is also often used as an abbreviation for the terms deferred expense and deferred revenue that share the common name word, but they have the opposite economic / accounting characteristics.




the miners want our cake and eat it...


The Federal Government says its $1 billion industry plan will generate jobs and innovation and strengthen Australia's flagging manufacturing sector.

However, one mining group warns that it looks like an economic plan lifted from Soviet-era Russia.

Under the Government's buy-Australian push, projects worth $500 million or more will be required to consider involving local firms and labour.

It is called the Government's Industry and Innovation Statement, A Plan for Australian Jobs. Under the plan, major projects will have to give what is being called "fair consideration" to Australian manufacturers.

More support will be given to small and medium businesses to help them grow.

Union leaders such as Paul Howes have thrown their support behind the blueprint.

"We can't allow our economy to become a one-trick pony, reliant on one sector at the mercy of global commodity prices," he said.



Kevin Rudd has to take much of the blame

And it brings us to the mining tax. Let me be crystal clear about this: Labor has made an almighty hash of the minerals resource rent tax, revealing an abysmal level of political nous, moral courage and administrative competence.

It failed to release the Henry tax reform report for discussion well before announcing its decisions (thereby catching the miners unawares), failed to explain an utterly mystifying tax measure (and, before that, press Treasury to come up with something more intuitive).

It failed to stop the entire business community joining the miners' crusade against the tax, failed to counter the economic nonsense the miners peddled in their TV ad campaign, and failed to hold its own in the negotiations with the big three miners, allowing them to turn the tax into a policy dog's breakfast that, at least in its early years, would raise next to nothing.

In all this Kevin Rudd has to take much of the blame (for lacking the courage to release the Henry report early), Wayne Swan has to take much of the blame (for not putting Treasury through its paces and being so weak at explaining the tax) and Julia Gillard has to take much of the blame (for decapitating Rudd and then being so desperate to rush to an election she was prepared to agree to anything the miners demanded, without proper Treasury scrutiny).

After all that, Labor deserves no mercy. But the truth is Tony Abbott also played a part in lumbering the nation with a bad tax.

The case for requiring the miners to pay a higher price for their use of the public's mineral reserves at a time of exceptionally high world prices (even now) is strong.

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