(Note – I wrote this just before going to Lao for several weeks and forgetting to post it.  It relates to this Minerals Council ad, which I can’t find a better copy of:

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Obviously the full page newspaper ads put out by the Minerals Council of Australia (MCA) detailing their members’ tax payments recently tells “their story”.  It’s their money paying for the ad, so there is nothing wrong with them telling their story – that the mining industry has paid company tax and royalties at levels five times higher than ten years ago.  But there are two sides to every story, so here’s some of the other side – unfortunately I don’t have the means to fund a series of full-page ads.

• This increase in payments comes about as world prices for minerals have reached historic levels and Australian mining output has increased.  It does not represent large increases in royalty or tax rates.
• In fact rates of corporate tax faced by the mining industry are lower than for most industries, around 13% (TAI 2011).
• Royalties aren’t really a tax – they’re price we sell our minerals to mining companies.  If our minerals are worth more, the miners should pay us more for them.  Royalty figures are not related to changes in market value but set by state Government by regulation and the major movement in rates of payments have not kept pace with market prices.
• Mining companies receive large tax breaks, such as fuel rebates, accelerated depreciation and tax deductions on exploration activities and these are not reflected in the picture painted in the ad.
• While the mining boom brings prosperity to some, it is driving up the exchange rate and increasing costs of skilled labour for other industries, such as manufacturing, agriculture and tourism – industries that are far larger employers.

Clearly there is a need to tell both sides of the complex story of the Australian minerals industry and its contribution to our economy.  But telling this story is difficult as  information regarding mining royalties and taxes is difficult to access, involving different federal and state departments.

As part of the Publish What You Pay (PWYP) coalition, Economists at Large is working with industry, governments and regulators to encourage revenue transparency in the mining industry.

One important step forward in understanding the full story of the mining industry has been taken with the commencement of  Australia’s  pilot of the Extractive Industries Transparency Initiative (EITI).  The EITI is a voluntary global standard for revenue transparency in the extractives sector that requires signatory governments to disclose payments they receive from mining, oil and gas companies and for those companies to publish what they pay so that any discrepancies can be identified.

PWYP members and aboriginal groups are sitting down with the MCA  and some of its members  as well as Federal and State Government reps  as part of a multi-stakeholder group to work out what information should be reported as part of the pilot. We are calling for the pilot to include payments from governments to companies such as concessions and subsidies to also be reported in order to ensure a more accurate picture of the financial flows emerges..

Perhaps if this happens we’ll be a step closer to getting the full story about the contribution of mining makes to our national economy and Australia’s future?