THE specialist group set up to negotiate with miners the fine print of the revamped mining tax probably has just one job – to keep the industry from again uniting behind a major political campaign like it did for six weeks in the middle of this year.
THE specialist group set up to negotiate with miners the fine print of the revamped mining tax probably has just one job – to keep the industry from again uniting behind a major political campaign like it did for six weeks in the middle of this year.
Given the policy transition group is headed by the Resources Minister Martin Ferguson and the former chairman of BHP Billiton Don Argus, both politically savvy leaders, it is highly likely their report, to be handed to Treasurer Wayne Swan later this month, will attempt to deliver enough to miners big and small to stop another war erupting.
While the federal government is not facing re-election as it was in May and June when the mining tax debate was at its loudest and nastiest, it has a tenuous hold on the seat of power; and after the experiences of earlier this year it may be wary of what the industry is capable of.
On May 2, Mr Swan took the industry by surprise by announcing the Resource Super Profits Tax aimed at raising $12 billion within the first two years of operation.
Caught off guard, the industry was probably expected to capitulate in docile resignation. That had appeared to be its likely response after apparent complacency in the face of earlier leaks that a tax was coming.
Just to make sure, after announcing the tax the federal government embarked on a media and advertising blitz to convince the community that the mining industry was not paying a fair share for Australia’s natural resources.
Recounting the period, Minerals Council of Australia public affairs director Ben Mitchell said the government’s sales pitch featured misleading figures and strong personal attacks on senior Australian mining industry executives.
“These personal attacks backfired badly as they further strengthened the resolve of the executives targeted by the abuse,” Mr Mitchell said.
Apart from personal attacks, industry leaders felt betrayed by the government, having been led to believe that a mining tax would involve consultation and be part of broader tax reform, not the unilateral cash grab that it turned out to be.
“In terms of preparing for the communications campaign, we were underdone,” admitted Mr Mitchell.
“While the mining industry and MCA more specifically had carried out a significant amount of economic modelling and other work for the promised consultation process, we had done little planning for a full scale ‘comms’ battle with the government.
“Any why would we? Just six months prior to unveiling the mining tax, the government said the mining industry had been raining gold bars on the public coffers.
“All of a sudden we were ripping off the people of Australia.”
To the MCA the response was simple; it was already paying a fair share of tax – in fact it was the biggest taxpayer in Australia and it was interested in a dialogue with the government on tax reform, not a tax grab.
“The government regularly tried to embarrass the industry by pointing out that we had put a profits-based tax concept on the table,” Mr Mitchell said.
“It’s true – it was our idea.
“The objective for the government was to make it look like they were delivering exactly what we’d asked for.
“They hadn’t, which was obvious to most people given we were on TV and radio every five minutes denouncing the tax, but the government thought they were on a winner.
“It actually had the reverse effect.
“It demonstrated to people that we were reasonable, that we were prepared to embrace tax reform; but not this proposal.”
There is some debate about what anti-mining tax advertising came first but it is likely that Pilbara miner Atlas Iron got line honours. The company had a full-page advertisement with an open letter from managing director David Flanagan published in daily newspapers on May 8 to appeal to the public to examine the impact of the tax.
Another early starter was the Association of Mining & Exploration Companies, which went to air with a radio campaign put together by Perth-based The Brand Agency.
AMEC CEO Simon Bennison said that, due to the way the campaign started, there was an information vacuum that provided the government with an early mover advantage.
“When the RSPT came out on May 2 we were pretty unified with the rest of the industry that we had to advise the public about the implications of what this means right across Australia and internationally,” Mr Bennison said.
“We wanted to remain as apolitical as we could as an organisation.”
The radio advertisements cheekily got around concerns about directly criticising the government by congratulating it instead. A host of foreign accented voices from Canada, Russia and South America thanked the Australian government for helping investment in their mining industries at a time when capital was still hard to get after the global financial crisis.
AMEC also held press conferences with a line-up of numerous heavyweight managing directors and other leading executives to show there was a unified position across the small and mid-tier players it represents.
In August, once it was clear the Minerals Resource Rent Tax deal announced by new Prime Minister Julia Gillard had sidelined smaller miners, AMEC ran television advertisements with the theme that everyone would get whacked by the mining tax. These aired during election campaign.
By then the MCA had pulled out of the campaign – removing the best-funded component of the industry side of the debate. Backed by the big mining players, the MCA had a rumoured war chest of as much as $100 million, of which $17.3 million had been spent prior to the deal with the government.
The federal government had a budget of $38 million to spend, having bypassed its own rules requiring sign-off for such advertising by the auditor-general. By comparison, AMEC is thought to have spent less than $2 million.
The MCA’s big backers may have been sidelined by their deal but it is clear the Canberra-based lobby group is keeping its powder dry.
Critics gave the MCA’s television advertisement campaign by Lawrence Creative Strategy, the agency behind Kevin ’07, a clear win over the government’s broadcast messages.
In creating that series of advertisements, the MCA had recorded dozens of real people complaining about the tax, all new material that could be brought out if needed.
And, as part of its anti-tax effort, the council had created a sophisticated website from scratch called Keep Mining Strong.
The site recorded visits by 100,000 people. It also offered specialist information for groups like the media.
“As part of the deal with the government to suspend our advertising, we shut the site, although it still lives in the nether regions of cyberspace and is continuing to be updated and maintained,” Mr Mitchell said.
It seems the mining industry is not going to be caught napping again.
One Perth public relations expert who was involved in the tax debate on behalf of a mining client believes that the industry may well find itself back fighting the government as detail of the MRRT becomes public.
The PR expert believes that the government will find the MRRT doesn’t deliver the funds it requires.
“There is a world record price for gold, under the RSPT definition those guys would be making a super profit,” the source said.
“I think we are only half way through the story.
“By February or March it will be very loud again.”
