What Saudi Arabia is to petroleum Australia is to minerals, Australia a continent on one of the slowest tectonic plates, mixed with a few asteroids over billions of years, has made Australia the Saudi Arabia of minerals. BHP is one of many companies who are mining these minerals and selling them for staggering profits to foreign countries. Now there has been plenty of criticism from towns and local communities who live near the mining sites, or towns who are about to be mined, and it would appear in a never ending cash grab the government labor/liberal is selling the non renewable resource hand over feet. What ever to appease the hand that feeds them tax money.
I'm not sure if it was a strategic move to fail or if he was plain stupid? but in another Kevin Rudd stuff up, he chose to tackle the giants of the mining industry in a time where job security was low. In a financially unsound time where BHP was announcing mammoth profits.
Its highly debatable talking point in Australia about the tax the government charges BHP and other mining companies, BHP say they did an independent study by KPMG, and claim they pay 42% in tax. BHP was a strong company even in the heart of the recession, sure their share price plummeted but they own virtually everything they do, they buy things because this helps to reduce their taxable income, which any smart company would do. Meaning 43% tax is after all their expenses and deductible items have been applied, its a golden ticket for CEO's and the board to grossly over spend to reduce their taxable income, the result the taxpayer misses out.
Let us set the record straight, the mining industry is one of the primary reasons Australia didn’t feel the full blow of the GFC, and is vital for the Australian people and government. What needs to be understood is the soil they mine is Australian soil, its a non-renewable resource, which means if Australia sells itself short then we will feel it for generations to come. In a time where china is buying up as many natural resources as possible it would be stupid to sell Australia short.
Lets say your neighbour comes over to your home and says he found an oil reserve in your back garden!!! you're not in the oil business and your neighbour suggests he will run an oil rig and you will split a percentage of the profits. Sound's great hey??? Now lets say your neighbour says, you have to buy all of the equipment, pay for staff and all expenses, for the oil rig including transportation etc and even though you pay for everything your neighbor is keeping it as his property. How much should you pay him for the privilege of drilling your new found fortune? What if other neighbours would be willing to give you 80-90% of the profits and they take 10-20%?. 10-20% isn't bad considering the oil well will bring in billions each year. What if your neighbor demands he gets 58%?
BHP wants 58% of the profit and they think they deserve more. Why? because they are comparing their business to standard company tax which is 30% plus GST. Since when did a normal company get their product paid for by the Australian people? I can’t start a car manufacturing plant, charge the government for all the components of the car and sell the car for profit so why can BHP sell our minerals?
BHP needs Australia, Australia doesn't need BHP, we are selling ourselves short. Even looking at it basically if 40% mining tax can keep Australia out of a recession then why aren’t we looking to take more of a percentage.
Kevin Rudd knew this and he played weak hand with BHP, he wanted to increase tax and BHP in purely a political move laid off workers and claimed the economic down turn along with government uncertainty had caused overseas countries to look elsewhere for minerals. This isn’t the case at all, BHP could have minimized their profits, taking into account the cost increase in minerals world wide, they could have contributed more to the country that lets them mine, and still returned a healthy profit to share holders. The decision to lay off workers was purely political, to create confusion and anger towards the government.. Why try and negotiate against a government when you can fire people and let them do the talking? Meanwhile BHP recorded another multi-billion dollar profit.
That's how BHP Robbed Australia
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