Time is right to make mining wealth common wealth

Australia has avoided the worst effects of the Global Financial Crisis largely because of China’s continuing high demand for our minerals and the Rudd Labor Government’s $42 billion stimulus package.

The resource rich areas of our country are doing well, while other parts of the economy and many Australians are still  hurting.

Under our federation, the more populous and wealthier States, New South Wales and Victoria, have generally subsidised the other States and territories for most of the last century.

In recent years however, the fortunes of the States have been turned on their heads. The profitable race to rip rocks and gas from beneath our soil and seas has generated enormous wealth for companies and individuals - operating mostly in Western Australia, South Australia and Queensland. And for them, there’s much more to come.

Australia has always been subject to boom and bust cycles for our resources, but the continuing strength and resilience evident in economies like China and South Korea, has given our biggest miners the confidence to make even greater investments.

Australians own the minerals of our continent from which mining companies and industry figures make billions of dollars each year. These are non-renewable resources. Once they are gone from the ground and used in other industrial processes, they are gone.

That’s why the Gillard Government is taking an important step to tax the super profits of mining so that the proceeds can be reinvested to make Australia a more prosperous nation. And the government is doing this while we still can. The time is just right for the Minerals Resource Rent Tax. The demand for and prices being paid for our resources are high, and will likely remain so.

There will always be a struggle between the public interest and private interests when governments ask mining companies to pay a higher price for our national, natural resources.

This was the case when Australia’s richest person, mining magnate Gina Rinehart addressed the Commonwealth Business Forum in Perth this week. Ms Rinehart described the Minerals Resources Rent Tax as “resource nationalism”.

She warned that such taxes damage “investor confidence and renders formerly attractive and value-adding projects less viable”. Change the words at the end this sentence from “less viable” to “no longer astronomically profitable” and you get a truer picture of what is meant.

Australia has no shortage of mining billionaires. Ms Rinehart has estimated wealth of $10 billion alone.

And I can’t help think that mining wealth ought to be tied more closely to the common wealth. Bring on the MRRT!