In the 2000s and early 2010s, Australia’s mining industry was booming. Australia’s economy had always been resource dependent (Critchlow, “Australia Abandons Mining Tax…”), but increased demand from Asian countries had caused steadily rising prices on coal and iron since 2003. This increased demand led to increased industry profits and a bolstered Australian economy moving into the 2010s (Phillips, “The Mining Boom…”), insulating it against the Global Financial Crisis (GFC) of 2008. In 2010, the Australian government led by then Prime Minister, Kevin Rudd, began to create a mining tax on these booming coal and iron ore industries to fund new pensions and tax cuts on new businesses throughout the nation. This tax was called the Resource Super Profit Tax (RSPT), and caused much controversy among the mining behemoths of Australia and throughout the population. The RSPT eventually failed and was replaced by the Minerals Resource Rent Tax (MRRT).
John Ditchburn’s political cartoon “Where Gillard and Abbott Stand on the Mining Tax,” published on March 20, 2012, depicts Tony Abbott, the Australian Prime Minister from 2013 to 2015, standing proudly atop an elephant labeled “Mining Industry.” The elephant appears to have just stomped Julia Gillard, the Australian Prime Minister from 2010 to 2013, into an elephant-foot-shaped hole. Gillard has a large lump atop her head, and is looking at a piece of paper titled “Mining Tax” in disbelief (Ditchburn). Around the time that this cartoon was published, there was much controversy surrounding the mining tax, and Gillard and Abbott were at the center of it. As the Prime Minister replacing Kevin Rudd, Gillard was working to amend and pass Rudd’s RSPT, resulting in the MRRT; while at the same time, Abbott’s political campaign for Prime Minister was built upon the opposition of Gillard’s MRRT. The humor depicted in Ditchburn’s cartoon alludes to the flawed development and implementation of the MRRT, as well as the response of Australia’s mining conglomerates.
In 2008, economies across the globe were suffering from the GFC, the worst economic depression since the Great Depression of the 1930s. The GFC was triggered by the 2007 collapse of the United States housing market, when many homebuyers with poor credit were unable to pay off their mortgage loans, leading to a lack of liquid funds in the United States’ banking systems. The collapse of the United States housing bubble was the catalyst for the GFC, causing stock markets around the world to crash and become highly volatile (Davies, “Global Financial Crisis”). The GFC was impacting nations across the globe, but largely due to Australia’s mining boom – the biggest boom since the United States’ gold rush of the mid-1800s (Phillips) – Australia was well insulated from the negative effects of the GFC. The Australian mining boom began in 2003, and was fueled by the rapid development of Asian nations, especially China. These developing countries drove up demand for natural resources like coal and iron ore, which led to massive price increases for those resources. Iron ore prices were around $25 per ton, and peaked at $170 per ton during the boom; while coal prices were around $45 per ton and peaked around $180 per ton during the boom (Phillips).
In 2010, Prime Minister Kevin Rudd proposed the RSPT, a single, simple forty percent taxation rate on all profits of mining corporations in Australia, which would replace the previously complex, confusing taxation policy on natural resource mining corporations. The RSPT was projected to generate twelve billion dollars of government revenue in its first four years; however, it was heavily criticized by mining corporations, due to a lack of corporate consultation regarding the tax rate during its development. This led the new Prime Minister, Julia Gillard, to negotiate with Australia’s biggest mining conglomerates: Rio Tinto, BHP Billiton, and Xstrata, in order to amend the tax. The result of these negotiations was the MRRT, which taxed mining operations for twenty-two and a half percent of their total profits; rather than taxing them for forty percent of their total profits, like the RSPT. Even then, the MRRT only taxed coal and iron ore mining operations which made more than seventy-five million dollars annually, rather than all mining operations (“Australian Government Repeals…”). While the RSPT was projected to generate twelve billion dollars in its first four years, the MRRT only generated 480 million dollars in the two years before it was repealed, less than a tenth of a percent of the Australian national budget in 2012 and 2013 (Critchlow). The MRRT’s failure can largely be attributed to the immense influence that Australian mining behemoths had on the development of the tax. Their influence hindered the MRRT’s ability to produce any real government revenue which helped preserve as much corporate profit as possible.
The MRRT was enacted on July 1, 2012, but was repealed just two years later by Gillard’s replacement, Prime Minister Tony Abbott, on September 2, 2014. Abbott’s repeal of the tax was largely thanks to the Palmer United Party – Australian oil tycoon Clive Palmer’s conservative, pro-industry political party – controlling the senate vote to repeal the MRRT (“Australia’s Mining Tax Repealed”). Shortly after the repealing of the tax, Chief Executive of Australia’s Business Council, Jennifer Westacott, claimed that “The Senate’s vote to repeal the [MRRT removed] an unnecessary weight [from] Australia’s economic growth and competitiveness … [improving] Australia’s reputation as an attractive investment destination … [ensuring] a strong, growing resources industry into the future.” This claim was proven to be true, as many other nations welcomed the repealing of the tax, and were ready and willing to invest in Australian resource industries (“Australian Government Repeals…”). This exemplified the positive effects that the repeal of the MRRT benefited Australia’s economy, in the long run. Despite these benefits, there were still naysayers to the repeal of the MRRT, arguing that the revenue generated by the tax could be used to strengthen Australian communities and infrastructure (Gaille, “Eight Mining Tax…”).
While Ditchburn’s cartoon was created two years before the MRRT was repealed, it accurately portrays many of the elements of the mining tax controversy around the time of its creation. Abbott standing atop an elephant labeled “Mining Industry” shows that he was working with Australia’s mining corporations in order to repeal the MRRT. Additionally, Abbott is shown shirtless, baring his hairy chest. This is a humorous commentary on the sexist, and borderline misogynistic, comments he made during his campaign for Prime Minister, which contributed to his feud with Gillard (Badham, “Why Some Australian…”). The mining industry being represented by a massive elephant shows the massive power that the mining corporations wielded in Australian politics at the time. This immense influence of the mining corporations is represented by the elephant stomping Gillard into an elephant-foot-shaped hole – along with her “Mining Tax” paper, representing the MRRT. This is representative of the way that the mining corporations essentially neutered the RSPT, turning it into the non-functional, ineffective MRRT. Overall, the cartoon’s various features humorously depict the ways that Australian mining corporations, along with Abbott, stunted the development and implementation of the MRRT, removing its effectiveness; leaving Gillard to wonder what went wrong with the tax.
Australia’s mining tax controversy of the early 2010s is very reminiscent of the debate surrounding increasing taxes on the Texas sulphur industry of the late 1930s. This debate was touched on in John Knott’s 1937 cartoon, “Legislator with the Sales Tax Complex” (Knott) and its accompanying editorial “Taxing Natural Resources.” In both Australia’s debate – touched on by Ditchburn – and Texas’s debate – touched on by Knott – the debate was centered around whether government revenues or industrial development should be prioritized, and in both cases, industrial development was prioritized. Additionally, both debates were set against the backdrops of horrible economic depressions, significantly impacting the debates and their outcomes. Even the two cartoon’s compositions are strikingly reminiscent of one another. In Ditchburn’s cartoon, Australian mining industries are depicted as a massive elephant trampling an attempt at taxation (Ditchburn). In Knott’s cartoon, Texas mining industries are depicted as the towering “Old Man Texas” (“Knott, John Francis”) threatening an attempt at taxation with a powerful resistance (Knott).
Australian mining corporations warping the RSPT into the MRRT in order to support their own development and the eventual repeal of the MRRT to invite foreign investment in Australia’s resource sector is shockingly reminiscent of Texas’s 1937 debate regarding taxation of natural resource industries. In both cases, the mining industry’s long-term growth and development were prioritized over short-term revenue gains for the government. Whether by the influence of mining conglomerates or by the government’s own choice, it seems that industrial development is prioritized very highly in politics. Through these historical examples, we can learn that history very often does repeat itself, and that by learning from our past, we can better understand our present.
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Critchlow, Andrew. “Australia Abandons Mining Tax as China’s Resource Demand Weakens.” The Telegraph, Telegraph Media Group, 2 Sept. 14, www.telegraph.co.uk/finance/commodities/11069343/Australia-abandons-mining-tax-a Chinas-resource-demand-weakens.html.’
Davies, Justine. “Global Financial Crisis.” Canstar, Canstar, 18 Sept. 2017, www.canstar.com.au/home-loans/global-financial-crisis/.
Ditchburn, John. “Where Gillard and Abbott Stand on the Mining Tax.” Inkcinct Cartoons Australia, Inkcinct Cartoons, 20 Mar. 2012, www.inkcinct.com.au/web-pages/australian/political/2012–political.htm.
Gaille, Brandon. “Eight Mining Tax Pros and Cons.” Brandon Gaille: Marketing Expert, Brandon Gaille, 15 Mar. 2016, brandongaille.com/8-mining-tax-pros-and-cons/.
Knott, John F. “Legislator With the Sales Tax Complex.” Dallas Morning News, 24 Mar. 1937, p. 2. Web. 26 Sept. 2017.
“Knott, John Francis.” Texas State Historical Association, 15 June 2010, shaonline.org/handbook/online/articles/fkn05.
Phillips, Keri. “The Mining Boom That Changed Australia.” ABC Radio National, ABC, 13 Apr. 2016, www.abc.net.au/radionational/programs/rearvision/the-mining-boom-that-changed-austrlia/7319586.