Of the many recent failings of Kevin Rudd’s Prime Ministership, none have been more glaring than the unpopular super profits tax on the mining industry. Julia Gillard, like other leaders in the current political and economic climate, has inherited many issues. None however, will be more significant in her quest to win the upcoming election than her treatment of this new taxation legislation on the mining sector.
Julia Gillard has announced that she wishes to have serious negotiations with the mining industry. Gillard said that she will end government advertising and asked that the mining industry do the same. Within hours, they did. Sky News has reported that BHP Billiton Ltd, the Minerals Council of Australia, the Queensland Resources Council and the Association of Mining and Exploration Companies have all agreed to temporarily suspend advertising against the super profits until discussions and negotiations are held.
The mining industries have been spending around a million dollars per day on television advertising, and when adding the costs of radio, print, and online, they have certainly been aggressive with their message against the new legislation. The advertisements of the Minerals Council of Australia can be seen here.
Since Rudd’s removal from the top job earlier today, mining stocks have risen with the prospects of the government making changes to the new legislation. BHP Billiton and Rio Tinto stock prices rose by more than $6 billion today. The overall market increased significantly this morning after the leadership announcement, despite US markets weakening the night before, which would normally be followed by negative results on the Australian markets. After the morning surge, the market consistently lowered though out the afternoon with the S&P/ASX200 index closing 0.1 per cent down.
Not surprisingly, amidst the ritual congratulations and commiserations, the Opposition were quite critical during question time continually asking, if the mining tax were scrapped or reduced, how does the Labor party plan to recover the $12 billion revenue the new tax was due to produce. Gillard refused to bite on the question, simply outlying the importance of having real discussions stating that, ‘we need to do more than consult, we need to negotiate’.
Today’s events have dramatically shaped what was already going to be an interesting public debate concerning the distribution of wealth created by Australian resources. The advertising has been pulled but we certainly haven’t heard the last of this issue, which, despite a change of Labor leadership, will still most certainly shape the outcome of the upcoming federal election.
Ryan Jon is upstart’s political editor.