This week, as a treat for its reader, Briefcase wanted to declare this page a Burke-free zone. Sadly, it failed, simply because what’s happening in Perth right now is absolutely astonishing as the fall-out from the public hearings of the WA Corruption Commission settles like a cloud of toxic radiation across the city.
If half the chatter coming from people who say they’re in the know is right, we could soon be seeing some high profile, and unexpected, charges being laid.
As so often happens in matters such as those that have galvanised business and politics around Australia, it’s not just what you see on the surface that really counts. It’s what’s happening out of sight, as investigators from a swarm of government agencies cross-reference sworn testimony in public hearings with what has been gathered covertly.
WA Inc (The Sequel), which is really what we’ve been watching for the past few months, promised to be far more spectacular than the original version, which featured some of the current players plus a few absent stars, such as Alan Bond and the late Laurie Connell.
But, even without the stars there is something that this latest version of WA Inc has that the first lacked – official bugs and phone taps (as opposed to the private bugs used by some of the original WA Inc players).
Briefcase might be allowing its imagination to run riot, but from what it’s been hearing, the vast amount of pristinely recorded conversations between hundreds of Perth’s finest businessmen, politicians and civil servants, is providing a feast of gargantuan proportions for the law enforcers.
Simply trawling through the thousands of hours of secretly collected information is keeping teams of police, corporate watchdogs, and tax inspectors busy.
Precisely what happens next is uncertain, but it appears likely that some people in their rush to cash in on the boom driving the WA economy to ridiculous heights might have made a few very simple mistakes with their paperwork.
The talk reaching Briefcase is that not everyone paying lobbyists for their services remembered to pay the required Goods and Services Tax on their accounts, or that perhaps the lobbyists forgot to charge the required 10 per cent GST.
If this speculation about GST is correct, it goes a long way to answering one of last week’s questions from Briefcase about why the Australian Tax Office and the Australian Securities and Investments Commission were so conspicuously absent from the public hearings of the CCC.
It seems the white-collar crime investigators were not absent. They were simply cross-referencing what was said in public with what was said on phone taps, in emails, or in bugs placed in private homes.
In a boom, everyone makes mistakes. We’re all just too busy to check every last detail.
But, if there’s one thing that falls into the ‘must, must, must’ category it’s paying the taxman his correct entitlement, because a failure to do so is a serious error, and to deliberately not do so is a serious crime.
What a hoot it would be if the first charges out of The Sequel are for non-payment of GST on the fat fees being charged by lobbyists.
On the small matter of the boom, the attention of Briefcase was drawn to a fascinating anomaly that might possibly affect the country’s currency.
The price of copper and nickel has reached such a stratospheric height that the value of those two metals in our five, 10, 20 and 50 cent coins appears to have exceeded the face value of the coins.
Now, before rushing out to collect a huge pile of coins and melt them down for their metal content, consider a few interesting facts. First, you would be breaking the law to damage currency, and second, there is the price of energy.
According to the public records, Australia’s ‘silver’ coins are actually made up of an amalgam of copper and nickel – 75 per cent copper and 25 per cent nickel. The stuff is called cupronickel.
Looking at nickel alone produces this rough (very rough) equation.
A pound of nickel is currently valued at around $US20 which, at an exchange rate of US78 cents, converts into around an Australian value of $25.60/lb.
That means one ounce of nickel is worth roughly $1.60, and one gram (using the avoirdupois measure of 28.8 grams to the ounce – not the troy ounce measure of 31.1g) is worth about 5.5 cents.
An Australian 20 cent coins weighs 11.3g which, given its 25 per cent nickel content, means it contains 2.825g of nickel, or about 15.5 cents worth of nickel.
The copper makes up the remaining 8.475g of the 20 cent coin. Copper is currently trading around $US2.78 a pound, or A$3.56/lb, or 22.3c/oz, or 0.77c/g – therefore the copper content in a 20 cent coin is worth about 11 cents.
Combined (15.5 cents plus 11 cents) and every 20 cents coin contains 26.5 cents of copper and nickel.
The equation is roughly the same for a five cent coin (which weighs 5.65g), but is less attractive with 50 cent coins, which weigh 15.55g.
However, if the price of nickel continues to rise, we’ll have an interesting little problem with our missing five, 10, and 20 coins – just as the Chinese and Japanese have been losing manhole covers in their roads for the iron content, and electrical wire for the copper.
Price and value are not just matters relating to pocket change. There is a much bigger fish being fried in the resources world, where high commodity prices are threatening to strangle a number of highly promoted resource projects.
Near Karratha, the crown jewel of value-added processing, the Burrup Fertiliser factory, is struggling to manage a possible shortfall in gas deliveries because the Harrier Joint Venture has failed to find enough to meet a 20-year supply contract. Without cheap gas from Harriet the future of the fertiliser plant is in jeopardy.
It’s a story with a similar theme, but with variations, at the series of magnetite iron ore projects proposed for the north-west, and south coast.
Processing magnetite, a valuable but lower-grade of iron ore than the traditional haematite, requires oodles of energy for grinding, and processing into iron ore pellets.
First shot in what could be a messy gas price war has been fired by a potential Chinese-led development at the Cape Preston project, with complaints made to the government about the high price of local gas.
What the Chinese will soon discover is that the government does not fix the price of gas for resource processing projects. A curious beast called ‘the market’ does that – and right now, the gas-price market is not moving in favour of any resource processing in WA.
Old timers will see this situation and say something like: “so what else is new, we saw it with a repeated attempts to start an aluminium smelting industry in WA, steel-making, and petrochemical production”.
For anyone interested in a spot of magnetite investing, remember the lessons of history, they keep repeating.