The Crush On Australian Mining Profits

[ ] INTRODUCTION "The Liberal Party believes that the State's mineral resources belong to the people of Queensland and therefore it is essential that the state, on their behalf, obtains maximum benefit from the development of those resources." (Liberal Party, 1980 "Mineral Resources Policy" p.2). "Unless sound policies are implemented.... increased production of minerals will benefit only the already wealthy and the lucky few... A resources tax is essential to ensure that above normal profits are shared by the whole community.... Labor policies on taxation must ensure an adequate return from mining developments to the Australian people." (Labor Party Policy Paper, May 1982 "National Issues relating to rapid expansion of mineral production during the eighties". p.1, 37, 47). Judging from these statements, key political parties in Australia believe that mining profits are lightly taxed and that shareholders get most of the benefits. THE REALITY The Government Share of Income statement in Table 1 attempts to measure the government share of the income generated by the "Big Five" Australian mining companies - Broken Hill Pty Ltd. (BHP), CRA Limited, Utah International, MIM Holdings Ltd., and Western Mining Corporation ("WMC"). These companies control over 70% of Australia's mining industry including all the most profitable mining operations. They dominate the mining and processing of iron and steel, aluminum, manganese, coal, oil and gas, copper, lead, zinc, silver, nickel, gold, ferro-alloys and salt in Australia. They are also major world exporters of most of these products. They are thus a representative sample of the profit-earning side of the Australian mining industry. In their two most recent financial years these five companies had income before tax of A$6,980 million. The Government share of this income was A$6,285 million or 90%. The total market capitalisation of the Big Five is about A$8,480 million. (December, 1982). Governments thus consumed the equivalent of 82% of their total value in just two years. This was taking place while the politicians drafted the above statements calling for an "adequate" share for the people.