A Tax on Resources and Mining?

The basic principles..
Mineral resources belong to the Nation (and their future children) - not to multinationals.
Mining companies are merely the contractor, hired to facilitate the extraction and shipping to the market place. The owner of the goods (Australia) should be setting the sale price, not the contractor.
The owner of the goods should be getting the lions share of the sales revenue, not the middle-man contractor.
Most 'middle-men' in a production process expect to be well rewarded - with just a FEW PERCENT of the final profits.  It is almost criminal for a middle-man to return just a "few percent" to the owner of the goods.

Mining companies DO need large investment funds, they have high expenditures, but that doesn't justify why they are allowed to take such a high proportion of the revenue. Even with those "high expenditures", they have become financially larger than most countries on earth. They are obviously exagerating their costs.

Most Nations are planning higher resources taxes on these mining giants for several reasons..
* They have foolishly run out of money and are facing massive future debts. (see below)
* The public has become aware of just how little they have been paid for their resources.
* The public is becoming hostile to the massive political 'gifts' that were required to facilitate those cosy deals with mining giants.

Will the big mining companies withdraw their investments?
Not if several countries adopt the same higher royalties. Where will they go? If they go to Argentina they may get nationalized!
Even if they do withdraw, we can start over.. With the existing pool of experienced workers and local engineering expertise, it would not take long for a new public owned mining giant to establish itself in the global minerals market place.
China would even invest in such a company because they would have a supplier that wasn't trying to shaft them on prices! (China jailed Australias Stern Hu for 10 years on 'shafting' charges!) They would have a supplier that could set lower and longer term prices.

We will use the revenue from the minerals tax to fund the new 'Peoples Bank'..
The old 'Peoples Bank' (The Commonwealth Bank) now earns about 5 billion dollars a year. Sadly, we sold it off for less than 10 billion (or 2 years of todays profit). In the private sector, a CEO would be jailed for approving a sale price that low.  That asset belonged to our children - it wasn't ours to sell..  We must start restoring these assets for future generations.
It will be a long process.  The Commonwealth Bank has assets of over 500 billion dollars. (which we sold for about 10 billion!) It will take us a decade to re-build sufficient assets to compete with OUR old bank and gradually buy-back those millions of mortgages. The minerals tax will allow us to buy-back about 10% of the Australian mortgages per year. That will be on a 'first to apply' basis. That will mean some home owners might have to wait 10 years to get these much cheaper home loans.. [read more on the 'Peoples Bank']

As mentioned above, most Nations are planning higher resources taxes because of impending debts..
Some of the enormous future debts we and most nations are facing..
1. The future costs of health care for the 'Baby boomers' and the Obesity epidemic.
2. The future costs of repairing an aging civil infrastructure. (Bridges, Dams, Piping, Highways)
3. The future costs of increasingly severe Natural Disasters. (perhaps one Katrina every year!)
4. The costs of even a modest rise in ocean levels. Conservatively, over a trillion dollar within 20 years.
5. The extreme costs of defense against Terror attacks and our war against Drugs.
6. Repaying the enormous costs of rescuing their major banks.
These impending debts will possibly triple our already massive debt.
Everyone and every corporation will be required to cut costs and contribute more.

There is another factor that is being ignored in this debate..
No Nation should rely on the trading whims of another nation.. At any time, China could change track.. They could suddenly cease buying iron ore from us for any number of reasons! We are placing too much trust in this revenue stream, it is dangerously distorting our economic policies. While mineral resources are 'in demand', we should be wisely conserving much of that revenue. There will be times ahead when that revenue will collapse for several years - and we will need those reserves to keep those workers productive (stockpiling for a future recovery?)

Germany is growing incredibly strong industrially and financially without any revenue from windfall mineral demands.
Quote from wiki.. "Germany has a social market economy characterised by a highly qualified labor force, a developed infrastructure and a high level of innovation."
All nations need to rely more on innovation and production - and less on tourism and windfall mineral demands.
The very fact that our economists are fearful of any "mining tax" is an alarm bell that we are already too reliant on minerals and are becoming obsequious (crawling) to mining companies.

Note.. Our 90+ policy articles are all in the 'peer review' stage.. [more..]