PM Gillard’s defiant speech to the Minerals Council of Australia yesterday – asserting national ownership of our mineral wealth and the country’s right to a share of the bounty being dug up and shipped out – was good politics, good economics and a much needed assertion that government makes the decisions, not the wealthy.
But how she arrived at the position she hammered the miners with is flawed: right answer, wrong logic.
Miners are in the business of extracting economic rents. They portray themselves as grizzled entrepreneurs working hard in tough places. So are panel beaters, as Gillard rightly points out.
A mine requires an exploration license then a mining license to protect a discovery from being dug up by someone else. These government-granted monopoly rights secure investment, credit and customers. Do not doubt for one moment that the difference between fortune and failure is entirely due to the government-granted right to sole exploitation of a resource.
There is no reason on earth why they should be given away free, particularly as our constitution reserves the mineral wealth to the common good.
But then Gillard’s logic fails. Prime Minister, it is not about the ‘redistribution’ of wealth, despite its appeal to the peanut gallery who love a free dollar lifted from someone else’s pocket. It is about where government takes its revenues, a matter citizens should watch as closely as the spending it makes possible.
It is about migrating government revenues from taxes with big deadweight costs to non-distorting bases. Stop punishing work and enterprise with the same blunt tax instrument that discourages the consumption of alcohol, tobacco and gambling.
The challenge is to fund government from the natural endowment, as Dr Henry proposed. Bring in the original Resource Super Profits Tax (RSPT), bring in a federal Land Value Tax and get rid of those 125 blood-sucking leech taxes that drain away our national vitality.
