Friday, November 25, 2011

Slippers, feather dusters & the mining tax

Here in Australia, the Slipper matter continues to dominate the political news; here is another example.

Listening to the commentary suggests that my own reactions are a little of of kilter in terms of the weight I place on it. It may, as Tony Abbott is trying to suggest and as The Ages' Michelle Gratton believes, go to the question of the PM's moral integrity. I think that people are missing the point here, and in any event this will play out in the electorate as it will. 

I remain of the view that I expressed in Labor gives Abbott the slipper:

Of more importance was the passage of the Minerals Resource Rent Tax through the Parliament. I say this only because I expect this tax to trigger events that are likely to have a much bigger political and public policy impact.

On Wednesday (23 November), the ABC's  Alan Kohler had a scathing piece Mining tax outcomes: everyone's a loser. I have a high opinion of Mr Kohler, and the piece is worth reading. However, I believe that he misses or understates certain point.

One is simply the growing international economic gloom. I have made the point before that we shouldn't  count our chooks until they actually get to the roost. I remember too many previous mining booms. Given that the projected revenue from the tax has been more than allocated, the Government faces a significant risk.

The second is one that I have also referred to before, the implications of the growing clash in Commonwealth-State relations.

During the lead-up to the vote on the mining tax, the Commonwealth agreed with the Independent Member for New England, Tony Windsor, for new procedures for the treatment of coal seam gas proposals. The stated aim is "to ensure that all future decisions about coal seam gas projects and large coal mining developments are based on the most rigorous scientific evidence available."  The key elements are:

  • Provide $150 million to establish a new Independent Expert Scientific Committee that will provide scientific advice to governments about relevant coal seam gas and large coal mining approvals where they have significant impacts on water; oversee research on impacts on water resources from coal seam gas and large coal mining projects; and commission and fund water resource assessments for priority regions.
  • Establish a new National Partnership Agreement with the states through COAG, agreeing that the Commonwealth and states have to take into account the advice of the Committee in their assessment and approval decisions.
  • Provide $50 million in incentive payments to the states to deliver this outcome.
  • Mandate that the Independent Expert Scientific Committee publicly disclose its advice to ensure local communities have all the best information available to them.

I have no particular problem with the idea of objective scientific assessment. However, this decision effectively creates a new decision making level limited to water and coal seam gas and large mining proposals. Other mining proposals such as gold mines that may affect water are excluded, while other environmental issues associated with coal seam gas and large coal mining approvals will continue as at present.

Water is important. Further, many of the projects in question are in the Murray Darling Basin where water supply including ground water is a very important issue. However, the decision was taken by the Commonwealth in isolation and was, as so many of these things are, primarily a response to a single symptom. The form of its decision with its focus on approval processes intended to be implemented through yet another National Partnership Agreement was characteristic. We have to many of these now, and they haven't worked very well. In practice, Partnership is a euphemism for Commonwealth controlled conditions.

Our present Commonwealth Treasurer is a bit of a feather duster.

In debate on the legislation, he continued to assert that the states could lump it or like it, that the Commonwealth would retaliate with reduced funding in other areas if the mining states continued to increase royalties. With two of those states under Liberal-National Party Governments, with Queensland likely to go the same route, with WA already refusing to participate in a number of Commonwealth proposals, the Commonwealth will need to be prepared to do more than spank a state's hand with a feather duster.

In our present system, the States increasingly have responsibility without authority. The Commonwealth's command and control approach compounds the problem.

Wars over the environment and the share of benefits from resources are working their way out across the country. National politicians and those who report and comment on their activities really adopt a helicopter approach, looking down from on-high onto a landscape flattened by height. In doing so, they fail to see the ripple effects across the country, ripple effects that actually feed back.

It should come as no surprise that WA National Party cross-bench member Tony Crook should be working so closely with the Association of  Mining and Exploration Companies on the mining tax. After all, Resources for the Regions has been central to the resurgence of the WA Nats.

It should have come as no surprise, although it did to many, when coal seam gas blew up as a major issue; it had been brewing for several years. It should come as no surprise that the Newcastle Herald is fulminating against both state and Federal Governments and calling on the Hunter's Federal Labor MPs to ensure that the coal rich Hunter gets a fair return from local mining.

The Herald's call is a symptom of another problem, the way in which role confusion actually centralises local and regional lobbying in Canberra. Increasingly, the poor Federal MPs have to taken on the role once filled by their State counterparts, and they can't really do it. Their electorates are just too big, the coverage too wide.  

Looking down on the height flattened landscape, these things can be ignored until the cumulative effects reach a point where the carriage overturns, throwing all into the street. I may be wrong, but I think that we are close to this point. That is why I regard the mining tax as important rather than the speaker question.

Mr Slipper's decision affects immediate political power, the constitutional flow on effects of the approach adopted to the mining tax may affect our very structure of governance.    


Anonymous said...

Jim, I agree with your emphasis in this post. The Slipper thing is just basic politics, and very temporary given he is a shoe-in to be shoved out at the next election. Ms Gratton reminds me of that "why wasn't I told" character of early tv fame.

Kohler's article mixes timeframes to establish his premise. I cannot see, for instance, how Wilkie's $100M amendment "gap" relates to 2019-20 $4.2Bn super "cost to budget" and $9.4Bn "concessions". I would rabbit on about just these three figures more, except I know your spam machine would censor me...

Suffice to say at this point that your 'arial view misleads/hides' some of the important issues is well put, and that all of it anyway is highly dependent upon what happens elsewhere in the next 6-12 months; by which I mean Europe, USA, China.


Jim Belshaw said...

Actually there is a far bigger problem, kvd, historical inaccuracy that I hadn't focused on.