But is it?

Adrian Blundell-Wignall is a fairly bright man.  He is a former RBA and OECD official.  He also spent some time in funds management.  But today, writing in the AFR, Dr Blundell-Wignall wrote this:

Let’s start with the obvious: what lies in the ground and in the oceans around Australia is the birthright of every Australian.

Governments are supposed to manage this birthright to the advantage of the Australian people (Indigenous and non-Indigenous). But it doesn’t happen because of political capture (donations, lobbying and post-politics company positions).

These were the first two paragraphs and TAFKAS stopped reading after here.

The problem here, is the same thinking that gave Australia the mining resource rent tax.  A difference between what the technocrats would like and how the world works.

What is in the ground across Australia does not belong to all Australians.  What is in the ground in Western Australia belongs to Western Australians.  What is in the ground in Queensland belongs to Queenslanders.  What is in the ground in NSW belongs to NSWers.

Sorry mate.  But this is how it works.  Australia is not a single state.  It is a Federation.  A poorly functioning and well abused federation, but still a Federation.

The nationalisation of every issue and every tax and source of Governmental revenue is what has contributed to the economic stagnation of this country.

Australia needs to go back to first principles; that we are a federation.  And under a federation the states worry about what is within their borders and the Commonwealth worries about what goes on across the borders and outside the national borders.

We need less inter-state collaboration and more competition.  We don’t need a national industrial relations system.  We don’t need a standardised payroll tax system.  We don’t need a national school curriculum. And we certainly don’t need the Commonwealth Government regulating mines which fall within the four walls of a state.

Move on.  If there is a mining resources rent tax to be levied, it should be levied at the state level.  Let the states decide.  Let there be some competition.

The last thing we need is for the Commonwealth to take another source of income (mining royalties) from State Governments.

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33 Responses to But is it?

  1. sabena

    Correct,but you overlook the fact that the mineral rights in the Economic Exclusion Zone belong to the Commonwealth,not the states.

  2. TAFKAS:

    We need less inter-state collaboration and more competition. We don’t need a national industrial relations system. We don’t need a standardised payroll tax system. We don’t need a national school curriculum. And we certainly don’t need the Commonwealth Government regulating mines which fall within the four walls of a state.

    Damn Straight!
    We saw the benefits of state competition most starkly during the Joh years, when he turned Queensland into a growth state by acting in competition against the others.
    Australia’s problem now is the almost total lack of competition to force the pruning of the bureaucracy which is strangling us – and that suits the shiny arses in power quite well.

  3. Return taxation powers to the states.

  4. sfw

    You almost got that right but the stuff in the ground belongs to those who own the ground. If we had that sort of thinking and a system along US lines then many of the problems getting mining underway would disappear. If farmers and others got a sniff of a royalty payments for the ores etc on their land then they would be asking miners to explore and develop mines. I don’t care about the legal stuff about the minerals belonging to the crown, they are immoral and wrong, like saying that all swans belong to the crown, artifacts of another time.

  5. Boambee John

    The Commonwealth should operate with a GST of 10% (including excise levied at that rate), and mineral royalties derived from the EEZ.

    The states should receive back their income taxing owers, including company tax, and mineral royalties on the assets in each state, and choose the levels for each that meet their needs.

  6. Boambee John

    Powers, not owers.

    Freudian!

  7. Steve

    +1 to all of the above

  8. The states should receive back their income taxing powers,

    Can you imagine what state Labor governments would do if that were the case?

  9. @bemused

    The states should receive back their income taxing powers,

    Can you imagine what state Labor governments would do if that were the case?

    The same thing that a Labor Commonwealth Government would do and be subject to the same accountability of its citizens.

  10. Struth

    Competition between the states and a new voting system would be a marvelous thing.
    But let’s not forget where we are and who we are run by now.
    Hate to be a party pooper but this talk is all fairly land stuff.
    It’s too far gone to contemplate this shit.

  11. Struth

    Fairy land stuff, not fairly land.
    Fuck, I’m already getting the accent.

  12. The same thing that a Labor Commonwealth Government would do and be subject to the same accountability of its citizens.

    Far worse. They would offer free everything to every dole bludger/welfare recipient in the state (way more than now), tax the hell out of everyone else, and never get booted out.

  13. Spurgeon Monkfish III

    We don’t need a national industrial relations system. We don’t need a standardised payroll tax system. We don’t need a national school curriculum.

    Using that logic, we don’t need the bloody NDIS either, the “implementation” of which will prove to be the worst possible result for both people with disability and long suffering taxpayers.

  14. H B Bear

    Australia’s federation has never worked. It was modelled on the US but never reached its critical mass. Too many free riders.

  15. Ian MacCulloch

    Historically, mineral rights were private, then private/crown and then Crown only. Differing states have different royalty structures. None overly complicated but unless you are keen student of this sort of thing it is best left to others. The states administer to the old 3 mile limit and the Commonwealth beyond that. The only Resource Rent Tax applies to petroleum in Commonwealth territory viz NW Shelf and so on. I like the idea of the US system where the mineral rights are privately owned. Mind you an army of landmen & landwomen is needed to keep up with it all and the minimum royalty is 12.5% off the top plus sweeteners (it is a market based set up and can go as high as 55% for oil wells in part of California). The huge benefit is that it places a significant part of the lottery wealth in the region in which the development takes place. This tends to aid decentralisation. It does not stop the 3rd party activist in its many forms.
    Some governments are slow on the uptake. Gold has been mined in Victoria since about 1853 and royalties were only introduced last year at 3% for the first time. Well short of the 12.5% and above in the US.

  16. Roger

    What is in the ground across Australia does not belong to all Australians. What is in the ground in Western Australia belongs to Western Australians. What is in the ground in Queensland belongs to Queenslanders. What is in the ground in NSW belongs to NSWers.

    Er…no. Minerals in the ground in Australia belong to the Crown in right of the state wherein they are found.

    I’m pretty sure Blundell-Wignall understands this as well; the phrasing he used was probably requested by his editor for the sake of simplification.

  17. EllenG

    I didn’t expect to read a parochial, hippy-politics argument for localisation on thus site. I’m not sure whether the author has noticed but the primary issue of our tines is national borders and the very many problems we face as the presumptions of globalisation splinter and the US withdraws from its global defence commitments. The only people arguing today for state based sovereignty in this commonwealth are green extremists. And this author.

  18. Suburban Boy

    sfw and Ian: At common law minerals belong to the landowner, with the exception only of gold and silver which belonged to the Crown. That has been the law from time immemorial in England.

    In Australia grants of land have almost always been with the reservation that mineral rights are retained by the Crown (ie, the State or Territory concerned). That is, the land was acquired from the Crown without any mineral rights for the (new) landowners. Presumably the price of the land would have been higher had mineral rights not been retained by the Crown. Whether you agree with the policy, that is the legal situation here.

  19. It is also superficial to say these things belong to governments.

    Minerals in the ground belong to the Crown. Where they are of value, they belong to the finder. If they did not nobody would waste money searching for them – the finder has a reasonable expectation that if anything of value is discovered he may extract and sell it. Governments have introduced royalties at ever-increasing rates to sting existing owners and have erected huge regulatory cost barriers which bring sub-optimal search and extraction rates. Occasionally mining rights and rights to mine are changed criminally and possibly through corruption.

    Agricultural land belongs to the farmer owner, my house belongs to me. Housing is one area where contrived land scarcity is created by planning laws, resulting in high value where planning allows urban land to be developed. Doubtless the determination of when such planning is changed to favour the landowner often corresponds to polivital donations.

  20. MACK

    I have always understood that the States can levy income tax, and that does appear to be the case:
    “Although income taxation powers were surrendered to the Commonwealth in 1942, in theory the States are able to levy income tax. In practice this is unfeasible as Commonwealth funding to States has been contingent on the States not levying income tax.”
    https://www.treasury.nsw.gov.au/budget-financial-management/revenue-and-taxation/taxation-australia
    So ScoMo should indeed cut off the funds, and urge the States to do their own thing.
    A fundamental weakness of democracy is that it encourages politicians to raise taxes to buy votes. Competition between jurisdictions is one of the few antidotes.

  21. Don

    Australia’s federation has been consistently undermined since the 1920s by High Court’s dominated by lawyers from NSW and Victoria who craft legal decisions to suit their pre-existing centralist views of government. They have no regard to the democratic basis of the constitution as established as negotiated and approved and in light of which they should make very cautious decisions limited in scope. Instead the Court bought the Cwlth’s argument that it could expand its remit via the back door of international treaties that are wildly expanded in nature from what was envisaged in 1900.

  22. Aynsley Kellow

    Yet the situation under the Constitution is that the Commonwealth was given no power over natural resources – though it has gained some under heads of power such as s51(xxix) External Affais after the Tasmanian Dams case.
    TAFKAS is correct. The RSPT failed because the Commonwealth could not prevent the states simply increasing royalty collections to ensure that the rents went to them. And the the Commonwealth was prevented constitutionally from imposing a differential tax between states to make it uniform. Treasury overlooked this little imperfection in the scheme, and Rudd was in a rush to introduce it to achieve the chimera of his balanced budget

  23. Aynsley Kellow

    Alan: Mining law does usually give an expectation that the holder of a licence to explore will be permitted to go on to mine an ore body, but it also prevents them from simply sitting on that information. There is usually provision that the information discovered by exploration becomes crown property after a period.

  24. MPH

    Birthright is a funny term to use when 29% of current residents weren’t even born here.

  25. Colonel Bunty Golightly

    Bullshit! The GST completely stuffs that arguement.

  26. Aynsley,
    I agree that moning law does not permit an exploration lease without exploration taking place. The deal is that the lessor must show some activity and regularly report to the MINES dept and it then becomes public

  27. Rockdoctor

    Exploration licence rules vary from state to state. I am most familiar with Queenslands regime. There are points where the info has to be handed over to the Government data base. Mostly if you give up the lease as if bought out the new entity gains the info.

    Also a certain amount of exploration must be done per year to stop entities buying up leases and sitting on them, though that is ridiculously easy to get round in my experience if you have the resources, a drilling rig and a couple of holes or some sort of electronic program such as seismic with a lot of office work will generally get you there.

    I have said it before, if we had an American style system where the landholder owned everything from the start we would probably be in a good place now and none of the tension between us Geologists/Drillers that is present in part today. Retroactively trying to impose this regime, good luck as IMO greed by Government and landowners along with green lawfare would render it next to unworkable now.

  28. Judith Sloan

    Just an opionated rant. I don’t take any notice of him anymore.

  29. sfw

    I agree with Rockdoctor and Alan, the minerals do belong to the crown and that is the problem. Alan has always argued for change when it’s needed but in this case he always sits on his hands and says that nothing can be done. Rockdoctor is spot on it would be a very difficult thing to change the ownership of the minerals but it we went to the US system then suddenly you would have landowners begging for exploration and development. We have a dud system and that must be obvious to anyone who thinks about these things.

  30. The problem with the landowner having the mineral rights is that it vests a share in the reward to a party that has nothing to do with winning it. Thus, the reward for the discoverer is diliuted and the incentive to search out for hidden value correspondingly reduced. This is further complicated by hold-outs where reslources are in different leases.

    Until we destroyed prospectivity with Mabo, heritage and environmental restraints, Australia enjoyed the world’s highest expendiure on prospecting as a result of the then clear rules on finding, and ownership.

  31. sfw

    Agree Alan however just accepting the status quo will not improve things, the only change that will guarantee support for exploration and development is giving the land owners a direct share in the profits via a royalty scheme. Sure it’s complex and hard to develop and administer, but in the US oil and other resources are mined everywhere, even in cities. I can’t think of any other way to get a rapid reversal in our mining problems. The way things are here there is simply no incentive for any land owner to have mining operations conducted on their land.

  32. entropy

    Giving royalty rights to the landholder would also greatly increase the cost of land for more mundane activities like agriculture. Farming would inevitably become more corporate, like it is in America.

    And in Queensland, it would make it even more likely the State would continue to lease out the majority of its pastoral lands, rather than convert it to freehold. The ALP left prefer leasehold already as it is easier to take the land away for sometime useful like wildlife corridors.

    Anyway, a restructure where taxes and emissions pertaining to them belong to the states and the feds have to ask for money would be awesome.

  33. PaulW

    Australia needs to go back to first principles; that we are a federation. And under a federation the states worry about what is within their borders and the Commonwealth worries about what goes on across the borders and outside the national borders.

    https://australianfederationparty.org.au/

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