Category Archives: Social Capital

Where’s my mining boom!!!

The mining tax has become a major issue over the past week since it was revealed that it had generated far less revenue than the government and the community originally anticipated in it’s first six months of operation.

At first glance, this issue might seem like a political minefield for the ALP as it plays into classic Liberal Party frames in relation to the ALP being wealth redistrubtors, the party that punishes success and so on.

The reality as you’re about to see is very much the opposite.

The mining tax has overwhelming support in the community and the general consensus is the miners and the mining industry aren’t contributing enough to the overall well being of the Australian economy and society in general. There are of course economic reasons for this dynamic such as the dramatic rise in the price of iron ore over the past decade and China’s intense demand for Australian resources to facilitate their rapidly growing economy.

What I’m going to focus on with this post is how it plays out in the realm of public opinion and the national political debate.

We’ll start with a poll conducted in June 2012 by Galaxy Research on behalf of the “free market think tank” the Institute of Public Affairs (The IPA). This poll asked the question:

“In your opinion, who do you think is more responsible for Australia’s strong economy? The Gillard government, or the mining industry?”

The results were:

The Gillard Government: 28%

The Mining Industry: 69%

Don’t Know 8%

Given the IPA’s close ties to mining magnate Gina Rinehart and the Liberal Party of Australia, it’s fair to assume that they commissioned this poll and released it in order to humiliate the federal government. That doesn’t mean we should treat this poll with any more or less suspicion than any other poll.

Far from it!

I interpret these results a bit differently than they obviously do (if they saw it my way, I’m not sure they’d have released it). I think the public feels hostage to the mining industry and they want the government to act on their behalf! …

Moving right along!

Next, we’ll look at Essential Media’s polling on public opinion to both mining as an industry and the mining tax as a policy.

January 21, 2013:

Q. How much trust do you have in the following industries to act in the public interest

Total trust

A lot of trust

Some trust

Not much trust

No trust at all

Don’t know

Agriculture

72%

20%

52%

18%

4%

5%

Tourism

68%

12%

56%

22%

6%

5%

Manufacturing

56%

8%

48%

30%

8%

7%

Construction and development

48%

5%

43%

33%

12%

6%

Retail

47%

3%

44%

38%

12%

3%

Telecommunications

37%

3%

34%

41%

18%

3%

Banking

33%

5%

28%

36%

29%

3%

Mining

32%

3%

29%

35%

25%

8%

Media

30%

2%

28%

40%

27%

2%

Power companies

18%

1%

17%

37%

41%

4%

From the results above, we can see that mining is near the bottom of trusted industries in Australia only ahead of the media and power companies. This alone is quite telling. Let’s look deeper at the public’s opinion in regards to the actual policy. Again from Essential Media:

November 28, 2012:

Q. Do you support or oppose the following Government decisions?

Total Support

Total Oppose

NBN (National Broadband Network) – high speed broadband access across Australia

69%

20%

The Minerals Resource Rent Tax (MRRT) – a tax on large profits of mining companies

63%

22%

The carbon pricing scheme – a tax on industries based on the amount of carbon pollution they emit

46%

44%

If we break that down even further into intensities of response we get:

Strongly support

Support

Oppose

Strongly oppose

Don’t know

25%

38%

12%

10%

15%

It’s pretty clear when you see these results that the Australian public overwhelmingly support the mining tax. When you consider the IPA commissioned Galaxy Poll that shows Australian’s consider the mining industry as responsible for the country’s strong economy, it’s not hard to understand why this is the case. The mining industry is powerful and they need to be held accountable for the public’s economic well-being through the public’s elected representatives: the government.

But what about the Coalition’s initial argument in relation to miners leaving the country when the mining tax came into operation? Did the public buy it?

June 12, 2012:

Q. Which of the following statements is closest to your view?

Total

Vote Labor

Vote Lib/Nat

Vote Greens

Labour costs and taxes threaten the future of mining investment in Australia

32%

19%

47%

16%

Mining companies want Australian resources and they will continue to invest here despite labour costs and taxes

49%

62%

39%

69%

Don’t know

20%

19%

14%

15%

I think it’s safe to say that based on the results above the answer to that question is a very definitive no!

Here’s another question from Essential Media, this time in relation to whether mining companies pay enough, the right amount or not enough tax:

April 23, 2012:

Q. Overall, do you think mining companies pay too much tax, not enough tax or about the right amount of tax?

Total

Vote Labor

Vote Lib/Nat

Vote Greens

Pay too much tax

11%

8%

15%

2%

Don’t pay enough tax

37%

54%

25%

63%

Pay about the right amount of tax

27%

18%

37%

6%

Don’t know

25%

20%

22%

29%

Based on the results above, it’s pretty evident that the Australian public doesn’t seem to have a lot of sympathy for the mining industry. The point is made emphatically when you see results that show 37% of respondents believe mining companies don’t pay enough tax!

Lets see what polling conducted by other organisations and institutions tells us.

In mid 2011, UMR Research conducted a poll into attitudes towards the mining industry. it found that 41% of respondents felt the big mining companies were paying too little in federal taxes compared to 33% who felt the mining companies paid about the right amount. A mere 7% of respondents felt the miners paid too much!

In October 2011, the Australian National University released a poll on attitudes to government and government services which showed 12% of respondents believed mining companies were taxed too high compared to 29% who believed they were taxed about right and 59% who believed they were taxed too low. This poll also showed an overwhelming 81% of respondents approved of taxing very profitable mining companies.

Fast forward to April 2012 and AC Nielsen conducted a poll for the Australian Financial Review that showed only 12% of respondents felt they had personally benefited “a lot” from the mining boom. By contrast 33% of respondents felt they had benefited “a little” and an overwhelming 52% of respondents felt they “had not benefited at all.”

To make the point even more emphatic: in Western Australia, where you’d expect to see most of the benefit from the mining boom due to the incredible amount of mining investment and projects being implemented in the state, 23% of respondents felt they’ve benefited a lot compared to 35% who felt they’d benefited a little and 41% who felt they haven’t benefited at all! … In Western Australia! … The state that constantly threatens to secede because they’re doing the “hard work” for the rest of the country and overflowing with mining riches!

Finally UMR Research once again conducted another poll in September 2012 in relation to attitudes towards the mining industry. Although it found 41% of respondents thought they and their family were better off thanks to the mining boom compared to 23% who thought they and their family were worse off, their research also found that 61% of respondents agreed to the statement “Australia’s economy is too mining focused at the expense of other industry sectors” and 66% of respondents felt the industry is too dominated by big multinational companies.

I think that’s enough polling data for you to get the picture of how the mining industry, mining companies and the mining tax are viewed by the Australian public.

What all of this tells us is there is a feeling that the mining industry is responsible for the economic success of Australia, yet at the same time it’s very clear that an overwhelming majority of people are feeling and thinking that something needs to be done to take advantage of the boom and they’re viewing the mining tax as a favourable policy response.

So when the mining companies and the lobbying firms produce advertisements like the one’s below, all they do is reinforce the view that they’re not doing enough for Australia and the public demand more from them and their government to make things right.

The results in terms of public opinion are pretty much the opposite of what we all think the mining industry wants which is to pay as little tax as possible and in some rare cases the diabolically ingenious idea of paying “less than” nothing.

With all of that firmly in place, what happens when the public hear that the mining companies spent $22 million on an advertising campaign in 2010 to roll a Prime Minister who was trying to look after the Australian people’s interests?

How do you think the public feel when they see mining companies (especially extremely large foreign mining companies) and the mining industry as a group attempting to avoid paying the mining tax by any means necessary and earning themselves hundreds of billions of dollars in profit over the next decade at the Australian people’s expense?

How do you think the public feel when they hear that the government’s policy to deal with this issue of securing Australia’s future prosperity after the mining boom ends only raised a mere $126 million in revenue in it’s first six months of it’s operation, not even scratching the surface of the $2 Billion in revenue the tax is meant to generate for this financial year?

How do you think the public feel if they read an essay by the Treasurer (big “if”) about the importance of “the fair go” in relation to Australia’s identity and talking about the influence of Bruce Springsteen in relation to how he goes about formulating policies while hearing, reading and feeling what the policies he espouses and has implemented are actually delivering to the Australian people?

How do you think the public feel when they hear about all of the global economic uncertainty and insecurity while having to keep up with the ever increasing demands and difficulties of modern life?

How do you think the public feel when they see television documentaries that demonstrate what these mining companies are doing and what they can afford such as their own private airports and fly in and fly out workers to these regional communities in which they operate?

How do you think the public feel when they see television, radio, and full page magazine advertisements such as the three I’ve posted above from companies and lobbyists on behalf of the mining industry that appear to have unlimited money and political power and a larger voice in the “democratic” process than the average person?

How do the public feel you ask?

Where’s my mining boom!!!

(That isn’t a question)

Embracing the community and building social capital

Community is one of those concepts government’s seem to be threatened by because it challenges the concept of representative democracy. Using Harvard Business School Professor Michael Porter’s language, governments see the concept of a community as a new entrant, lowering the barriers to entry to the competitive market place known as the democratic contest of ideas. In simple language: communities are competition!

One of the scary and exciting things about social media is it’s ability to generate communities based upon niche or popular issues.

Member for Fraser, former ANU economics professor and potential future Prime Minister Andrew Leigh wrote a superb book titled Disconnected which talked about the vast amount of data that shows the long term decline in social capital in Australia as well as offering ten practical solutions to rebuild it. These included ideas like donating, volunteering, holding a street party, contacting two politicians and many more. It seems to me there’s a big opportunity here.

GetUp is the classic example of an Australian grass roots organisation that attempts to galvanise community engagement on progressive issues via the groundswell of social media tools. I think it’s an interesting model, but I think some of their main flaws revolve around their organisation being designed around the tools rather than an idea and they associate themselves too much with The Greens rather than political parties across the entire spectrum of representation.

That being said, I suspect many organisations that exist for a reason besides the use of social media tools to make a little bit of noise in the media are studying GetUp very closely and creating ways to emulate their model of galvinising participation around issues while taking it to the next level by figuring out ways of forming a community using some of the ideas among others in Andrew Leigh’s book (not to mention the thousands of other books written on the subject).

I suspect this trend will only amplify in Australia as social media becomes more and more popular and the public become more motivated by issues rather than political parties. The bigger and more polarising the issue, the more power to the organisation attempting to exploit the groundswell.

If the Government of the day has a different view to the community, they have two choices: they can fight the community or they can embrace the community. Fighting the community seems a futile exercise because the more the government fights, the more they increase the disconnect between themselves and the public which gives more power to the community.

The second choice logically would be to embrace the community by listening and coming to some sort of win/win solution. Of course this would require some good will, a constructive purpose and an end to the constant fight over petty issues. A challenge to go beyond one’s self interests and focus on the larger interests of the community.

People want to feel apart of something bigger than themselves but when they see fighting over trivial nonsense and total war becoming the new black instead of good will, harmony and community, the end result is mass disengagement.

The organisations that deal with the national conversation on a daily basis and understand how to embrace and build communities around big issues will be the big winners of the future.