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Friday, 28 May 2010

It seems miners and the federal Opposition are busy fomenting a distracting illusion that the economy will suffer if the "super profits" tax is passed into law. Treasury Secretary Ken Henry has contributed valuable nuggets of information to show that it's not true.

It is true that Australia avoided a recession, but the Australian mining industry actually experienced quite a deep recession. In the first six months of 2009 it shed 15 per cent of its workers. Mining investment collapsed, mining output collapsed.

Had every industry behaved that way our unemployment rate would have climbed to 19 per cent.

He added during a Senate Estimates hearing yesterday that he was fed up with people telling him that the mining industry had saved the Australian economy from recession. It was "curious to say the least" so to assert, he said.

Estimates hearings are usually pretty interesting places to hear what prominent - but often overlooked - public servants really think about the state of the federation. The government has started to stream them live online but they're still overshadowed by parliamentary Question Time, which is a shame as they are far more revealing of facts than the usual party-room spin that's reported.

Henry's considered opinion deserves wider play due to the massive and well-funded campaign by the miners that aims to cement in the minds of Australians a belief that resources are key to the country's prosperity and that the tax big miners so dread will cripple their operations, leading to unemployment and slowing growth.

The quietly-spoken, beetle-browed bureaucrat and author of the tax report where the idea for the tax originated offers his opinions in a far less obtrusive way. But that doesn't mean they are less worthwhile.

It's a hard sell. Mining contracts sealed with overseas buyers, for example, often come with big-buck dollar deals attached. 'Billions' is a weighty word when connected to money. Deals that cover large periods of time - they may extend for thirty years - also capture our imaginations. It's a matter of national pride.

Because of this, mining is a sexy industry. It's also easy to conceptualise. You imagine hard-hat wearing engineers, electricians and mechanics shod in dusty boots and clad in khaki shorts, short-sleeved shirts and fluorescent safety vests wiping the sweat from their brows as they toil under the oppressive, 40-degree sun of the Outback.

Another thing in its favour is that you can actually see the result of mining. Big bulk-carriers run aground on the Great Barrier Reef. TV news report wallpaper shows massive equipment digging up, transporting, and loading onto ships a steady brown stream of ore or coal. Natural gas in the photogenic spheres mounted on the decks of LNG transports is way cool. There's nothing abstract about it. The positive affect such vision produces helps give miners a heavy handicap in the political stakes.

But Henry is not alone in being sceptical and cool when it comes to looking at the figures. University teachers are, in fact, as essential to Australia's economy as those rugged engineers. Foreign enrolments at our universities account for about the same amount of economic activity - three percent of the total - as mining. The Indian student bashings in Melbourne are a bigger threat to national accounts than the super profits tax.

Guy Pearse, a University of Queensland researcher and author of 2007's High and Dry, a book about the Howard government's performance on climate change, is as fed up as Henry about the cachet and importance commanded by the mining industry, especially coal mining.

The media, and especially The Australian, are doing a lot to promote the views of miners. The Murdoch broadsheet, especially, stands shoulder to shoulder with the Minerals Council of Australia and the federal Liberal Party in its zeal to punish the government on this score. It's time for rational perspectives, like Henry's, to get a say. Which is why I wrote this post.

Pic credit: The Pongo Blog.

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