Can you explain?

Craig Emerson did his PhD thesis at the ANU under Ross Garnaut on rent resource taxation. So this exchange is particularly meaningful.

TONY JONES: Alright, two years ago, if I can quote your own speech in Western Australia, you said that ‘slowing down the development of Australia’s mining and energy resource industries would be a scandalous wasted opportunity.’

Can you [explain] the economic theory that says a 40 per cent tax on mining profits won’t have exactly that scandalous effect you were talking about?

That’s a fair enough question. Dr Emerson has a PhD in that very area.

RARELY does a young academic get the chance to implement their doctoral dissertation as official government policy. Two months after the election of the Hawke government I submitted my PhD thesis on minerals policy, supervised by Ross Garnaut.

But it didn’t spend years gathering dust. Garnaut had taken a position as economic adviser to prime minister Bob Hawke and in late 1983 I was offered a position on the staff of then resources and energy minister Peter Walsh. My brief was to design and implement a resource rent tax for the Australian mining and petroleum industries.

So this is exactly his area of interest and even after all these years should be able to make a basic explanation.

CRAIG EMERSON: Sure, I’m happy to come to that and what I was talking about in that speech which, if Tony Abbott had bothered to read the speech, but he finds economics…

TONY JONES: I’ve read it, I’ve seen…

CRAIG EMERSON: so boring. You’ve already..

TONY JONES: I’ve read it and I’ve seen the context of it.

CRAIG EMERSON: And you would have seen..

TONY JONES: The rationale of what you said…

CRAIG EMERSON: Well, hold on Tony..

TONY JONES: still stands.

Yes. Well. I think the answer to Tony Jones’ question ‘Can you [explain] the economic theory that says a 40 per cent tax on mining profits won’t have exactly that scandalous effect you were talking about?’ is ‘No’. When your best person, the man who designed and implemented the rent resource tax, can’t explain how the new tax will work then you’ve got a huge problem.

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70 Responses to Can you explain?

  1. Butterfield, Bloomfield & Bishop says:

    HE has in other places and who knows he may have here.We do not know.

    Can you elaborate on you and the rest completely ignoring the micro-economic benefits of the tax?

  2. Andrew Carr says:

    There’s a big difference between cant and wont explain. Emerson does note that his speech was about Immigration and Infrastructure not tax, and that similar fears were raised about the petroleum resource rent tax and were proved wrong.

    If we assumed anyone spinning a question didn’t know the answer we’d have to assume none of our politicians were smart enough to even tie their own shoes.

    One thing I like about this site is that it’s usually free of the usual glib snark of most right wing blogs, I hope it remains so.

  3. Sinclair Davidson says:

    Andrew – Emerson knows an answer to the Jones’ question. Just yesterday Ken Henry had to issue a press release on this very point. The impact of the RSPT on mining is the story and the government is having many birthday cake moments explaning itself.

  4. jtfsoon says:

    The Mineral Council of Australia actually requested a rethink of the tax system along RRT lines (though combined with the abolition of State royalties). The microeconomics of it aren’t that hard to grasp – it reduces the upside but also reduces the downside. I think claims about how the govt isn’t really going to commit to the downside are disingeuous at this stage. They have set up a panel of mining industry people to advise on the implementation of this tax. they are committed to it and they presumably honoured their commitment in the case of the PRT.

    The problem with the tax which the miners want to address may well be the threshold and the rate but as the Mineral Council submission shows they don’t have a problem with the idea per se. I don’t see why anyone else does. One is a tax above a certain level of profit (which may need to be reset if this is to work better), the other is a tax on all your costs of exploration. Well duh which is going to cost you more in most cases? No surprise the MCA wanted it.

  5. I actually want Emerson to explain. He seems gagged by Tanner and Swan. If it is a good refrom he should explain. I feel that he may have been overridden by higher ups on the idea of a super profit. That truly needs a redefinition if what sadi was official.

  6. jtfsoon says:

    Minerals Council of Australia submission

    There is a strong argument to reform the basis of determining royalty payments to a profits based
    criteria from a revenue one. Royalties define the revenue sharing arrangements in the joint venture
    between the State and the company in the conversion of natural capital to societal capital. Thus a
    profits based system with an appropriate rate and base better takes account of the sharing of the risk
    in the joint venture arrangement. Royalties are a charge on cost of doing business, hence could be
    struck on a capacity to pay basis as a share of profits, thereby taking account of all of the matters
    affecting the profitability of the business.

    of course it does also go on to say (and this may be why the miners are pissed off)

    Any reforms should be prospective in nature. Existing royalty systems should be
    allowed to be retained for existing projects
    , with any new regimes only applying to
    new projects for which the implications of any changes can be factored into the
    investment decision.

    This and not working out a deal to avoid double taxation by the States and setting the tax at such a low threshold is where the govt has stuffed up.

  7. Jason,

    I have a very simple alternative. I reckon their should be a deferable LVT on mines and offshore mining. The revenue should be split on onshore projects between the States and the Fed and split on a per capita basis offshore. As mnay licenses should be expidited as possible. The LVT should be deferrable until a threshold profit rate where the ROE exceeds the historical ASX rate net of the average commerical WACC. Once you exceed the rate, you also pay back the deferred LVT and the current LVT. The recovery rate should not exceed a 10% profit rate, on top of the LVT.

  8. Homer,
    As I said over at LP and here in the past, the main effect will be on exploration. So far, none of the advocates of the tax has shown how it (with the royalties regime still in place, as is likely) will actually help find the next generation of mines.
    Perhaps you can.
    To me, the problem with a lot of the discussion on this matter is the concentration on what happens to the current mines. The answer is that it will just add to the revenue to the Feds out of the mining industry. Nothing (much) else is likely to change.
    It is exploration – the process of finding the next generation – that will really suffer.

  9. Rococo Liberal says:

    So really the RRT is a royalty and not a tax at all. It is a royaly based upon profits above a certain threshhold.

    But then, the Feds probably can’t charge royalties on State property. So the true answer is the States should change their royalty regimes to a profit-based calculation.

  10. boy on a bike says:

    How about a supertax on job placement companies? They too exploit our natural resources (human beings) and are nothing but blood sucking leeches on the body politic.


    I imagine that idea would last as long as it would take for Therese to pick up a frying pan and belt some sense into Kevin.

  11. I think there is merit in the Monster Raving Loony Party’s PR approach, but only after Rudd’s bungled version of the reform.

    Such policies should have been announced from the outset as ridicule.

  12. Butterfield, Bloomfield & Bishop says:

    It is a tax on super-normal profits.
    if companies are exploring on the expectation of that they are raving loonies.

    The proposed regime is far better for marginal mines.

    the proposed regime is relatively generous to mining companies in ‘bad’ times.

  13. “It is a tax on super-normal profits”

    No it is not. I can get a better return on capital at my local bank.

    “The proposed regime is far better for marginal mines.”

    But not exploration or junior miners with upside potential.

    “the proposed regime is relatively generous to mining companies in ‘bad’ times.”

    They could simply defer royalites. Your argument reeks of industry policy.

  14. Butterfield, Bloomfield & Bishop says:

    If you could get a better return at the bank then all the money would go there.
    It hasn’t so it isn’t. your maths are at it again.

  15. No, not my maths, Rudd’s. He’s the jerk who doesn’t understand the CAPM equation. I can get better than the “super profit rate” at the bank.

    Nor can you understand contemperaneously that the tax is set below industry costs of capital although there is a lot of upside.

  16. JC. says:

    I actually think it’s a way of closing down mining in this country, as there are more than enough loons that would want this to happen.

  17. Butterfield, Bloomfield & Bishop says:

    no it isn’t.

    the costs of capital for a mining company that has super-normal profits is nowhere near there.
    Like Judith you have confused hurdle rates of return to costs of capital.

  18. jtfsoon says:

    your proposal is neither here nor there as it is not on the table.

    Tell us what you disagree with in the Mineral Council’s submission.

    Making emotive and irrelevant points about what the govt decided to call the tax because it legally can’t collect royalties (RL gets it) is a distraction from the main issue. The mining industry itself obviously thinks there is merit to such a tax. What they’re unhappy with is the double taxation issue hasn’t been resolved to their satisfaction (since state royalties are merely rebated) and presumably the level of the tax and the rate at which it kicks in. However Homer is correct and this has nothing to do with industry policy which is about picking winners – this is just another way of setting royalties (again RL gets it) and with less distortion.

    The Minerals Council is not innumerate. Let me emphasise again – it *wanted* to move from a revenue base to a profit base of taxation.

    Which is higher in the majority of cases? Revenue or profit? The arithmetic isn’t difficult

  19. boy on a bike says:

    Where is your money Homer? Have you been supporting Australian miners by buying their shares and giving them the capital to explore and develop new mines, or have you been sitting back and allowing evil, blood-sucking foreigners to buy those shares instead?

    If you’ve had your money sitting in the bank instead of shares, why is that so?

    Under the new regime, will you be pulling your money out from under your mattress and buying shares, or not? If so, why not?

  20. “the costs of capital for a mining company that has super-normal profits is nowhere near there.
    Like Judith you have confused hurdle rates of return to costs of capital.”

    You’re a fucking idiot.

    BHP has costs of capital of about 8-10% for rail projects. This was estimated from the WA price regulator. Their return on capital employed is about 35-38%. This is from their company reports.

    It’s simply ridiculous you try to tutor me but if you think you can teach Judith to suck eggs, you’re off your meds.

  21. Jason: I do. Rudd stuffed it up. Now I’ve more of the Henry review and I’m shocked at what has been ignored.

    I don’t see why my proposal is “neither here or there”.

    Homer continues to defend Rudd’s mistakes by lecturing us by how out of depth he is. A Brown tax doesn’t reek of industry policy? Taking a stake directly in an industry by bearing the risk would at least seem to slant that way.

  22. Butterfield, Bloomfield & Bishop says:


    I wil say this very very slowly.

    hurdle rates of reurn are different from ROA.

    Think about it

  23. Homer,

    Bash yourself over the head with the heaviest book you can find when you say to yourself…The BHP cost of cpaital rate is above that of the super tax threshold of super profits that Rudd set. This and the double taxation problem are what are so bad about this tax.

    Repeat about 1000 times.

  24. Butterfield, Bloomfield & Bishop says:

    oh by the way I do not support that approach but it is hardly nationalising the industry if you look at commodity prices on a historical basis

  25. JC. says:

    A brown tax would never work. Who in their right mind would trust any Australian government writing a cheque for billions of dollars in a probable time of recession or budget stress. There is about as much chance of that happening as there is of Rudd suddenly becoming smart.

  26. “oh by the way I do not support that approach but it is hardly nationalising the industry if you look at commodity prices on a historical basis”

    Yep sure Homer. No risk in the minerals sector.

  27. Butterfield, Bloomfield & Bishop says:

    You idiot it is actually below the threshold.

    if the cost of capital was actually their return on assets they would pay LESS tax under the proposal.

  28. jtfsoon says:

    so now your criticism of the RRT is that it’s too generous to the mining industry?

    The point is that a Brown tax is suppose to reduce both the downside and the upside. So no, it isn’t industry policy because its intention isn’t to pick winners but to reduce volatility,

    This goes back to Andrew’s question. It’s not immediately obvious that reducing volatility will reduce exploration but it’s less counterintuitive than it would be under the premise that most people are looking at it – i.e. solely as a tax rather than a risk sharing arrangement.

  29. jtfsoon says:

    that should read:

    It’s not immediately obvious that reducing volatility will INCREASE exploration but it’s less counterintuitive than it would be under the premise that most people are looking at it – i.e. solely as a tax rather than a risk sharing arrangement.

  30. jtfsoon says:

    The PRT is a Brown tax.

    Judith made the point that the current set up of the RRT is actually quite different from the PRT reducing their comparability in practice. However if the argument is against Brown taxes in general then it’s difficult to argue that they can’t work.

  31. “if the cost of capital was actually their return on assets they would pay LESS tax under the proposal.”


    1. Super profit rate: 6%

    2. State royalties still exist.

    3. BHP cost of capital: 8-10%

    4. BHP ROCE: 35-38%.

    Let’s see some calculations, fella.

    Jason – how is engaging in risk management not industry policy? (Maybe the banks would like done for them?) Maybe it doesn’t pick winners and they also pay a consumerate fee but it seems like state direction of the economy. Why is the reduction of volatility necessarily a bad thing? This just punishes efficient producers. I’d ask has it got any benefits but I think lowly of Rudd’s proposal so I don’t think it’s comparable to the original idea. I’m also highly sceptical given the company tax changes and super changes, as noted by Swan himself.

  32. JC. says:


    The tax may reduce volatility, however that doesn’t speak about origins in terms of how the volatility is derived.

    If the soften the potential upside we also need to keep in mind that may not be softened in other parts of the world and I would assume the cost of capital is the same for similar projects.

    If that’s the case then we’re not taking into account that the potential unmolested upside is a way of potentially compensating investors for higher risk.

    In other words investors may want the high potential volatility.

  33. Jason,

    I think the Brown tax has an implict assumption about volatility being normally distributed. The better miners will choose projects with long tails. Unless you know overall the volatility summates to a normal looking average, then I think this is a long term problem it has and risk appetites will change vis a vis lower returns & prices for projects that until recently had the best upside.

  34. Adrien says:

    Please note Tony Jones is asking this question. You know something’s crazy about a tax when a prince of left-liberalism thinks it’s batshit.

  35. Butterfield, Bloomfield & Bishop says:

    err Mark go back and see what you said and then look at what I said.

    your point now is different

    Err yes state royalties still exist but given they are rebated they in essence do not pay them the commonwealth Government does.

  36. No Homer I haven’t changed my mind. I now I haven’t because this is getting repetitive.

    The mining companies still view this as double taxation. Jason has said as much.

  37. Butterfield, Bloomfield & Bishop says:

    to make this very very simple thew royalty is paid and then given back.

    If it were paid and not given back then they would be taxed twice.

    they are not.

    I assume they have done this because of time and sometime in the future the royalty will be negotiated away and the States get some other revenue raiser

  38. “to make this very very simple thew royalty is paid and then given back”

    Please explain why the miners are upset about this.

    “I assume they have done this because of time and sometime in the future the royalty will be negotiated away and the States get some other revenue raiser”

    Assume a can opener. The Federal and State Governments have budgets based on actual or planned tax increases. Your reasons are heroic to say the least.

  39. This is from the rather undetailed budget overview:

    “Two speed economy

    The global financial crisis saw a shift in the balance of world economic activity towards China, India and other emerging Asian economies. These
    countries are set to be major drivers of the world economy in future decades.

    Australia is well positioned to benefit from this economic shift, with substantially increased demand for our mineral and energy resources.

    But with the opportunity of a mining boom comes the challenge of managing a two-speed economy. The non-mining sectors of the economy will find it tougher to compete for workers and capital.

    In these circumstances, the best thing the Government can do tosupport growth in the broader economy is to cut company taxes and encourage investment in key skills and infrastructure.

    A better trained workforce and a larger capital stock boost the productive capacity of the whole economy, while still supporting its adjustment to a higher terms of trade.

    States with a large share of mining activity are likely to continue to experience strong growth. But boosting the economy’s productive capacity will ensure that the benefits of growth are shared by working families across the nation.”

  40. sdfc says:

    If what you say comes to fruition BBB then it is just an other nail in the coffin of federalism.

    Why should the resource states be forced to suck off the tit of the parasitic federal government even more than they already are.

  41. jc says:

    I agree SDFC, it would be much better for all concerned if the resources states left the federation.

    Screw Canberra.

  42. sdfc says:

    I don’t necessary want to see the end of hte federation JC, I just think the states should raise a greater proportion of the overall tax take and the feds much less.

    The commonwealth should stick to its core business such as defence and foreign affairs etc and stay out of the states’ business.

  43. JC says:

    That’s good you think like that, SDFC. However how does your defense of the stimulus figure in all that as that’s a pretty centralized function as the states don’t have the power of a central bank to co-ordinate monetary policy.

  44. sdfc says:

    My defence of the stimulus policy was centred around the obvious fact that stimulus policies work as opposed to the standard classical line that they don’t.

    State autonomy in fiscal policy is in no way contradictory to having an Australian central bank. I have ot opposition to monetary union.

  45. JC says:

    Your monetary union won’t work without political union. I would have thought that would have been obvious by now.

  46. sdfc says:

    Are you saying there can be no political union without federal domination of states rights with respect to taxation?

    I’ll have to come back later JC, I’m off to watch Freo’s bid for top spot.

  47. JC says:

    No I’m not saying that. I’m saying there can’t be monetary union without political union.

  48. Boris says:

    Jason, I think you are completely right. It is not a bad tax at all except:

    1) Royalties are still in place
    2) The threshold is shamelessly low
    3) The rate is too high (well maybe not)
    4) It is to be applied retroactively
    5) It violates state rights.

    Other than that it is all fine.

    The treatment was spot on, the medicine was correct, only the dosage was wrong. The patient died.

  49. badm0f0 says:

    “I’m off to watch Freo’s bid for top spot.”

    How did that work out for you?

  50. Peter Patton says:

    Behold the cat toying with the mouse!

    Will somebody please put the buffoon mouse out of its misery. As Paul Keating was wont to say.

    Shut up, and sit down, you complete boxhead! You are flat out counting past ten!

  51. Jason Soon says:

    you’re right Peter.

    It’s excruciating.

    I didn’t know Henry had such a cruel streak in him 🙂

  52. JC says:

    Did you guys my comment on the open thread about this?

    Here: (I saw it last night).

    Henry Ergas debates Robert Mann and ends up owning him. Bob has more owners than the Brooklyn bridge.

    Bob seems to be fast becoming the public intellectual “slapperee”

    Everyone slaps poor old bob around these days.

    In fact I think he ought to change his name to Bob Slapper-Mann

  53. JC says:

    Is Bob really that smart though? I mean here’s a guy that says he knows next to nothing about economics and he starts debates with really good economists tempting to dismiss their area of expertise.

    What the hell is going on at Latrobe?

  54. Jason Soon says:

    Can you believe Manne’s second reply?

    he actually thinks it’s a good argument to present himself as being against facts and logic

    To judge by your letter you are a logical positivist for whom knowledge in human affairs can only be gained by the testing of hypotheses. In the area of most human sciences this view is a half-century or more out of date. Let me show why by taking an event in history that interests both of us: the Holocaust. Probably the finest general history is Saul Friedlander’s. You can read its hundreds of pages without finding even one hypothesis to test.

    Henry replies:

    The refusal to accept assertions that are woollyminded and half-baked; to let errors of logic lie; or to kow-tow to mere citations of authority: that is what ensures reason, however flickering its light, remains the source of human progress.

    This is why it is a shame you refuse to carefully define terms, frame testable propositions and assess them against facts. Indignation, no matter how loudly repeated, is not explanation.

    It is also why the injustice you do to the great Saul Friedlander is so lamentable.

    Friedlander, you claim, was not interested in carefully comparing hypotheses with evidence. The opposite is true, as his texts on alternative explanations of the Holocaust make clear. From so towering a figure of contemporary history, would one expect less?

    My god, that was a self-upper cut

  55. dover_beach says:

    JC/ Jason – Manne had no other option, he has a neither a grasp of the facts or a judicious interpretation of the facts. It is true to say that the ‘facts’ do not speak for themselves but his effort in explaining a reasonable point was completely ham-fisted. And Henry was right to hammer him for his lack of specificity; we can talk for ages in generalities and not make what we’re talking about any more intelligible which is exactly what Manne does. It was all rather embarrassing for Manne.

  56. Peter Patton says:

    Dear Bob

    First, the influence of the ideology that is often called neo-liberalism on the advanced economies since the late 1970s, and especially where its importance has been greatest, in the US and Britain.

    Like Dionysus from the thigh of Zeus, the Terminator – often called “neoliberalism” – drops from the sky. Its date of birth? “Tthe late 1970s.” Like The Terminator, its single-minded mission to destroy “the Keyensian social democracy consensus” wastes no time, and takes no prisoners. Its target? “The advanced economies.” Success rate? Mostly in the UK and US.

    Second, the degree of responsibility the ideology must accept for the global financial crisis that brought the world economy to its knees after the collapse of Lehman Brothers in September 2008.

    OK, you chide Henry for his ignorance of the “early histories of the GFC.” Yet you say the GFC occurred in September, 2008. 18 moths ago is hardly the subject for historians. And the destructive power of this “neoliberalism?” Is it just as we might say, the US dropped nuclear bombs on Japan in 1945 causing WWII to end. The only difference is that one was evidenced by the flattening of a bank, the other by planes dropping bombs hitting the ground, and flattening cities.

    While one was caused by an airplane called the Enola Gay, you say the other was caused by an “ideology.” Or perhaps you soothe Japanese survivors that there was no plane, no bombs, just as “ideology.”

    And third, whether the GFC is likely to discredit neo-liberalism in the way stagflation discredited Keynesian social democracy in the latter half of the 70s and, if so, what is likely to take its place.

    What was this “Keynesian social democracy?” Another amorphous “ideology” or did have some physical/material manifestations? Are there more than one sorts of “social democracy,” or just “Keynesian?” Can “Keynesian” be used as an adjective in any other contexts, or just “social democracy?” See, here’s the thing. When I studied history, there were always tonnes of material events and human beings charging around, for us to follow.

    Where was this “Keynesian social democracy.” And when did it kick in? Above, you mention three actual material things to moor your argument: “UK,” “US,” and “the advanced economies.” Let’s check them out.

    <b<The UK

    Well, yes, Keynes himself was an Englishman, born and bred in the UK. So where was the inevitable “social democracy?”


    Unemployed Workman’s Act and Employment of Children Act.

    Passed by? Well by real people actually, not “ideology.” Those people? Well, they called themselves “The Conservative Party.” Keynesian? Well, while nobody denies Keynes brilliance, he was 20 at the time, barely out of Eton, studying Calculus and set theory at Camridge.

    1908 – 1916:

    • Old Age Pensions.
    National Insurance Act – health care and unemployment benefits
    Parliament Act weakening the House of Lords
    Minimum Wage Act

    Keynes? Er, still in short pants. No, its was the Liberal Asquith government.


    Beveridge Report recommends extension creation of National Health Service and extension of unemployment benefits. Keynes? Social democracy? Maybe if that’s what you call the Liberals and Conservative Party.

    1943 vote to implement Beveridge Report defeated by whom? Neoliberals? Ah, no that would be the Labour Party. Why? Because it was a diversion from what they really wanted. Socialism. That is, Marx not Keynes.


    Ah! Finally, the socially destructive welfare-state building Liberals and Conservative Party are booted out. By “Keynesian Social Democracy?” Ah no, by the British people who voted in the Labour Party, described itself as a “democratic socialist” party. In 1918, Labour inserted “Clause 4” into its Constitution:

    To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.

    Now, I’m no Keynes scholar, so perhaps you will chide me for being unfamiliar with Keynes’ treatises being mere paraphrases of Marx, and that therefore, the 1945 Labour government was “Keynesian social democracy.”
    Well, if your understanding of Keynesian Democracy is the nationalization of the nation’s infrastructure, central back, utilities, and energy industries.

    • the Bank of England,
    • coal mining,
    • the steel industry,
    • electricity, gas,
    • telephones, and
    • the railways, road haulage and canals).

    Again, perhaps your familiarity with Keynes will be able to indulge my ignorance, and point out once more “Keynes not Marx” and “Social Democracy” not “Democratic Socialism.”


    Oops, Labour lops of drug prescriptions for the NHS. Sounds pretty neoliberal to me, eh?

    1951 – 1963:

    Continuous Conservative rule. In 1960, Labour Party “split” (sound familiar). The “right-wing” faction called “the Gatskillites” launched their “Campaign for Democratic Socialism” Still mo darn “Keynesian Social Democracy.” Perhaps the left-faction? Well, no. The Left, called “the Bevanites” demanded more “Marx not Keynes.” Their particular model in fact explicitly embraced “Leninism.”

    I’m sure you get the picture.

  57. Peter Patton says:


    He knows nothing about history, philosophy Year 9 Maths either. Probably shares an office with Marilyn Lake. 😉

  58. dover_beach says:

    PP, do you believe the rumours?

  59. Jc says:

    The funniest thing I’ve seen for a while was when he was accusing Keith W of being racist for using words of old-fashioned terms that were no longer in use and had, according to Slapper-Manne, strongly racist connotations.

    Keith Windschuttle’s response was that he applied quote marks when using those terms to show he was using them in the historical context only and unlike Slapper-Manne who used those terms without those quote marks in things he wrote.

    Here: read Keith’s response to his accusation. He’s become the right punching bag.

    How the hell would anyone with 1/2 a brain dig a hole like that just puzzles me?

  60. Peter Patton says:


    One of the most faith-shattering experiences of my life was reading KW’s first book, and being persuaded without a shadow of doubt, that he was not exaggerating one syllable. Over the last few years, I have managed to read just about all the major Australian historians, and cannot believe that this can happen in a liberal democracy.

    How can those people still be employed with their 6-figure salaries, with life tenure, let alone still be allowed to call themselves Professor! How did/does this happen? The network these people have obviously built throughout the bureaucracies, Quangos, schools, and universities must be very sophisticated for this shakedown to continue.

  61. Jc says:

    I really don’t know a much about that argument only in so far as the following.

    The holocausters suggest there was a long maintained push at high levels of Australian government to extinguish the aboriginals either by killing them or “breeding” them out.

    Keith W says that’s a lie and shows there was no formalized structure or anything resembling that to either kill off Aboriginals or “breed” them out of existence.

    This doesn’t mean that Keith W doesn’t believe there wasn’t any murdering of aboriginals or serious racism practiced by some people. However KW provides strong evidence that the claims the Holocausters say aren’t true.

    Is that the argument in a nutshell?

  62. rog says:

    JC confesses that even a half wit can puzzle him.

    Thats because he is a nit wit and in the land of nit wits half wits are king

  63. Jc says:

    Oh Hi Wodge.

    You’re really quite the fast thinking comedian?

  64. rog says:

    But Sinclair, it isnt a 40% tax on existing profits as they are calculated today it is a tax on future profits less royalties and exploration costs and allows for reduced company tax.

    Oh, forget it – back to the cartoons

    You there jc?

  65. rog says:

    “only in so far as the following.”

    Would the person in the monkey costume please resume their seat

  66. Jc says:

    …it isnt a 40% tax on existing profits as they are calculated today it is a tax on future profits less royalties and exploration costs and allows for reduced company tax.

    Wodge, are we getting back to your suggestion that Exxon makes $477 billion profits… a profit that no firm in the world is close to approaching?

    Wtf do you mean by ” future profits” you knucklehead? What is that supposed to suggest?

    Look doofus this is how it works. Now sit down, don’t crease your dress and listen.

    The tax in going to be introduced in 2012.

    The government itself is making the assumption that in the year 2013 the year they turn in a magical $ 1 billion surplus, it will receive $9 billion extra from the new tax over and above the present arrangements, so they themselves are forecasting future profits, you knuckle head. Heaven forbid that it doesn’t happen, as the budget would be running at a huge deficit.

    Anyways let’s move on.

    The way they will calculate the tax is to take a firm’s profit, rebate the state royalties and then take the firms equity capital, impute the long bond interest rate and tax the excess at 40%, calling it a super profit.

    It’s basically the same as if the government came to you when you were a carpenter, took the value of all your drills and hammers etc including the spunky Holden Ute, figured out the value of those assets calling it capital and then hit you for a super profits tax after imputing the long bond rate.

    Is that better?

    I’m not sure what happens to the profit in between zero and the long bond rate in terms of whether it is taxed at the normal company tax rate.

    Now, what the hell are you talking about, you genius. Seriously what the hell is this reference to super profits you’re making?

    The best marker at the moment is that the Big Miners are saying the tax will hit them for 57% of profits as they stand now.

    You really are a knucklehead, Wodgie. No kidding.

  67. Rococo Liberal says:

    Jason, good to see that we agree on what the RSPT actually is: a royalty based upon profits rather than upon the amount of ore extracted.

    The problems are the tax base and the rate, the first of which is too low and the second of which is too high. This means that whilst the mechanism of the RSPT is better than the current system, the practical result will be awful.

    The Rudd Government with its usual political tin ear has cocked up even more than usual in making the RSPT some sort of tax-the-rich crusade.

    Minerals are owned by the Crown in right of the States. Therefore, it is really the States that should collect any royalties. However, there may be some constitutional problems for the States levying royalties based upon profits, because this could be seen as an income tax which the HIgh Court has said the States cannot impose. Personally I think the argument could be made that mining royalties, no matter how computed, are levies of excise. So the States shouldn’t be allowed to impose them.

    That leaves the Commonwealth having to use its taxing power. The question is how much tax should they levy? Rudd and crew have argued that under the royalty system the miners have paid too little ‘tax.’ Yet the industry body has siad that it favours calculating royalties on a profit basis. Obviously this means that the current royalties are too high. Any additional tax would be a super profit tax, that is super profit for a useless Government.

    It follows that the Senate should block the RSPT.

  68. Rococo Liberal says:

    As Homer would say, Manne is a tunc.

  69. Peter Patton says:


    You’re over-thinking it. KW does not argue, he SHOWS incontrovertibly that most of the people who occupy professorships of Australia history actually LIE right throughout their academic careers.

  70. Peter Patton says:

    Never have wiser words been spoken.

    Please Professor Manne, it is time to retire.

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