The rich are in revolt against Labor’s mining super profits tax. One of Julia Gillard’s first moves as new Prime Minister was to signal her desire to give ground to the mining companies. The mining bosses have amassed a $100 million war chest to fight the tax, declaring that they will bring down the government if they don’t get their way. There seem to be no limits to their self-serving excuses about why some of Australia’s richest companies shouldn’t pay any more tax.
They even manufactured an anti-tax rally to greet Kevin Rudd and his cabinet members on a visit to Perth. But the sight of two of the country’s richest people, billionaires Gina Rinehardt and Andrew Forrest, rallying protesters decked out in business suits (including Liberal Julie Bishop) was telling. Rinehardt is the country’s richest woman with a fortune of $4.75 billion and Forrest has amassed a whopping $4.24 billion from his mining interests. Respectively they are the second and fourth richest people in the country. The mining companies are raking in billions—and we should make them pay.
Why can’t Labor sell it?
Given their obscene wealth, you would think there would be widespread support for making mining companies hand over a fairer share to the rest of the population. But incredibly, Labor is failing to win the argument about the new mining tax. Taxing the big corporations should be popular—a survey last year by the think tank Per Capita found 64 per cent believe big business doesn’t pay enough tax.
Labor’s loss of credibility after Rudd and Gillard’s backflips on climate change and refugees mean less people are listening to them. They have spent three years talking about change but delivered little.
The way they have tried to sell the tax has not helped—they have not been not prepared to pose the issue in class terms. The government refuses to systematically attack the massive profits mining bosses are making, and argue to tax the rich for the benefit of ordinary working people.
Instead they are planning to spend most of the proceeds of the tax on helping business. Most of it will be used to pay for reducing the overall corporate tax rate from 30 to 28 per cent and to create a fund to pay for mining infrastructure.
Rudd’s main defence of the tax was summed up on ABC radio like this, “It is about making all of our companies in the Australian economy more competitive globally.”
Only about a third of the money raised will go to working people—to pay for increased superannuation. Even this is something workers will not see until their retirement. The Per Capita tax survey found that an overwhelmingly 79 per cent want governments to put more money into public services—especially health and education. If Rudd and Gillard were proposing to spend more of the money on public services to benefit working people, instead of pandering to business, they would find it easier to win support.
But Labor is not prepared to scare the rich and the corporations with the idea they should all be paying their fair share of tax. One of the main complaints of the mining companies about Rudd was that he did not give them adequate “consultation” over designing the tax. New Labor leader Julia Gillard has moved to placate them by declaring she is “throwing open the government’s door to the mining industry”. Big business’s real concern has been that their “right” to dominate the process of government decision-making might be at threat.
This is a concern through the whole of the ruling class—which is why even business figures outside the mining industry oppose it, from the Business Council of Australia to Rudd’s supposed “friend”, business figure Rod Eddington. Revealingly, he told the Financial Review “The thing I’m most concerned about… is process… given this is a fundamental change in the way our most successful industry, mining, is taxed.” But big business has no right to trample on democracy by dominating government decisions in the way they are used to.
Instead of pointing this out Gillard has moved to reassure the mining companies her government is serious about negotiations over the tax.
Rudd and Gillard have been willing to allow business to dictate government policy in the past—as seen in the CPRS negotiations, where business extracted colossal sums in compensation. This is the way all Labor governments have behaved in power—setting out to run capitalism in the interests of big business. Any hint that this might change draws fury from the big corporations.
If Julia Gillard caves in to the mining companies it will be a setback for the left and the idea of taxing big business fairly to fund social services. But so far Labor has failed to win the argument about taxing the mining companies on their own. A serious union campaign, building on the AWU and CFMEU ads, with major demonstrations and public meetings, in support of taxing the massive profits of the mining companies could boost support and push Gillard in the right direction.
But unions and the left should not support Rudd and Gillard’s tax uncritically. We should call for the money to be spent on public services, not on cutting corporate tax. Aboriginal people, whose land has been stolen and destroyed to allow mining companies to profit, should also get their fair share. There should be real funding for jobs in Aboriginal communities, not for the racist Intervention policies. We also need a real climate policy from government, with funding for renewable energy.
There are also plenty of other corporations making super profits that should pay more tax to fund all this. The big four banks recorded record profits of $14 billion in the last six months of last year. Since 2000 the profit share of Australia’s wealth rose from about 22 per cent to 27.7 per cent, its highest level since the 1950s. That increase means business made $71 billion extra profits. Labor should be forcing all of them to hand over more of that as tax. The continual cuts in the corporate tax rate should be reversed by restoring it from its current 30 per cent closer to 49 per cent—where is was in 1987.
A program of substantially increased government spending on social needs, from health and education to renewable energy, funded by taxing corporations and the rich would be enormously popular. Unions and the left need to use the debate over the mining tax to force Labor in this direction.