When one gets in bed with government, one must expect the diseases it spreads. – US Congressman Ron Paul M.D.
If you can’t trust the government, who can you trust? - Sam Walsh, CEO, Rio Tinto Iron Ore.
In retrospect it becomes clear that hindsight is definitely overrated! - Alfred E. Neuman.
Mining companies are outraged and planning an advertising blitz against the government over the perceived double cross over the Mining Resource rent tax. It is a little late for that, given that the actions of BHP Billiton, Xstrata, and Rio Tinto have placed the reigns of government into the hands of the very people doing this to them.
There is no doubt that the entire industry was sold a pup by the Rudd government over the mining super profits tax during the interval between the issuance of the Henry tax review, and the announcement of the tax and budget forecasts. During this time they were repeatedly assured that there would no new tax without consultation with them.
Rudd actually had Resources Minister Martin Ferguson doing the rounds of his contacts within the industry reassuring them of this. It seems that during this time while the Treasurer, Wayne Swan was working out the details to present as a fait accompli a deliberate decision was taken to keep those affected in the dark using the excuse that if they were informed the executives would be required to inform their shareholders.
The mining companies began an advertising campaign against the tax in the lead up to the last election. The current problem began when despite having the Rudd government on the ropes, CRA along with BHP Billiton and Xstrata sold out to Gillard in a sweetheart deal for lower rates of taxes to themselves. Now to their apparent surprise they are beginning to understand that they have been conned.
Gillard assured them that all state royalties would be offset against the tax, however they have now discovered that increases in such royalties will not be covered. In the meantime we have all of the state governments spending hand over fist and making a virtue of it owing to the irresponsible belt tightening of the private sector.
The states will therefore be looking for a sector of the economy to loot, one that is doing reasonably well despite their depredations and the economic downturn. Guess who that is going to be.
While wishing them well with it, I feel they have missed their chance. Had the three who are screaming the loudest at the moment not sold their mates down the drain, we would have a government who were diametrically opposed to the tax in its entirety and were prepared to make expenditure cuts in order to balance the budget.