The "year of decision and delivery" is quickly coming to an end and the Prime Minister is determined to get the government's mining tax passed through the House of Representative this week before the summer break of Parliament. The Senate would then deal with the legislation when Parliament resumes in 2012.
In this desperation, in the PM's own words "to get the job done", the mining tax proposed by the government has been watered down to appease the mining barons. Australians will rightly be disappointed that the government's proposal is not snaring a fairer share of the biggest economic boom in the country's history. For that you can thank the ALP's power brokers. When Kevin Rudd was prime minister, he and Treasurer Wayne Swan cherry-picked some of the more than 100 recommendations of the Henry review with which they agreed into the taxation system, and ignored the others.
Former Treasury secretary Ken Henry suggested a "uniform resource rent tax should be set at a rate of 40 per cent". He pointed out that Australia leads the world with its reserves of "brown coal, lead, mineral sands (rutile and zircon), nickel, silver, uranium and zinc, and the second largest reserves of bauxite, copper, gold and iron ore (contained iron)".
We know what happened. The mining industry funded a multimillion-dollar advertising and lobbying campaign using influential media voices that ultimately cost Rudd his prime ministership and scrapped the super profits tax.
Instead of the 40 per cent tax applying to all mining companies and all of Australia's mineral wealth, Labor's proposal is now effectively a 22.5 per cent tax and covers only coal and iron ore projects.
The revised tax was negotiated between Prime Minister Julia Gillard and three mining behemoths, which gave it their blessing. Of course they did - they're paying less tax than Treasury's original proposal, and it includes fewer projects. In fact, the deal cut with the big mining companies will cost Australian taxpayers $100 billion over 10 years of forgone revenue - big money at a time when the government is mooting service and funding cuts to keep the budget in surplus.
The mining rent tax has already been diluted too far and means Australians are missing out on a better share of the use of their country's raw materials. A share of the tax should be going into a sovereign wealth fund - another idea advocated by Treasury but ignored by Labor. A fairer tax take could cover areas that have been neglected, such as a national dental care scheme and a high-speed rail system.
The mining tax should be fairer and it should apply to gold and uranium. As my colleague and Greens member for Melbourne, Adam Bandt, explained earlier this month: "The inclusion of the gold would generate at least $1.8 billion in revenue over the next decade." But, of course, the government lacks the courage to stand up to the mining companies.
Gillard has alerted the ALP national conference that she wants Australia to begin exporting uranium to India. The Greens will oppose any such plan. Several Labor MPs have been critical of the Prime Minister's proposal and will speak out during next month's conference. Alas, I am yet to hear anyone from Labor advocating that uranium be taxed.
The Greens are prepared to amend the government's mining tax to ensure it is fairer. The reforms to superannuation and the corporate tax rates that are linked to the tax revenue also need refining, and the Greens are prepared to help the government.
First, we should use the opportunity to review the superannuation tax concessions. Increasing the level of superannuation is vital for the welfare and financial security of Australians, but it also must be reformed to include progressive rates of superannuation taxation.
Second, the government should be considering the needs of small businesses - the real lifeblood of the Australian economy - before handing out tax concessions to the big corporations such as the big four banks.
Small business operators deserve a cut in the tax rate by 5 per cent to 25 per cent - and if the government scrapped the 1 per cent cut to the corporate tax rate they could afford it. Cutting the banks' rate by 1 per cent would hand the banks another $4 billion over the next decade. The big four banks have recently announced a combined annual profit of more than $25 billion. Do we really need to be assisting them with cuts, while small businesses deal with rising costs?
These are all commonsense proposals and should be taken up. Rather than a fair tax on largely foreign companies extracting our mineral future, this week it looks like the government will only deliver Australia one that resembles a tattered coat.
First published in The National Times on Tuesday, 22 November 2011.