big 3 miners failed to show leadership

The big three miners, BHP, Rio and Xstrata must shoulder a fair proportion of the blame for this current state of affairs...and by this I mean having a ALP-Green House of Reps and a Green controlled senate.

Yes, they acted out of self interest in withdrawing their ad campaign and conducting secret negotiations with the ALP to water down the RSPT. However they abrogated their industry leadership role to the broader industry. BHP for one, should never be considered "The Big Australian" again. At the time of the leadership coup you will recall they negotiated to get the best deal they could out of the ALP for themselves. All political niceties were put aside about policy. The ALP was just after a pure tax grab, plain & simple....and yes they ran rings around the ALP - and the commercial ignorance of Gillard, Swan, Ferguson and a raft of Treasury officials still astounds me.

The Big 3 did this because they saw this as the best chance to reduce the tax payable. One area in particular - the introduction of new depreciation regime at allowable at full market value is brilliant for them. It puts the MRRT on the never-never. If Wayne Swan still thinks they will be coughing up $10.5 billion by 2013/14, the Big 3 are still laughing until they wet their pants! It just won't happen - forget about it; Swan's mythical surplus on which the MRRT rests will never occur.

The Big 3 made a calculated assessment that it was the best outcome for their self interest to settle for the new tax regime, and hope for a coalition victory where there would be no MRRT. BHP & Rio left junior iron ore miners out to dry, in part because they saw an opportunity here to maintain their duopoly via taxation.

I will very briefly paint an alternative universe. What say if, on Gillard seizing power, the Big 3 kept their advertising campaign going, right up to and through the elecetion campaign? Most likely there would be no MRRT and and the coalition would have swept into power.

The above scenario did not occur of course. The Big 3 are still liable for the MRRT - we have a ALP-Green alliance in the lower house, and a Green controlled senate. The greens want to raise the MRRT rate, and may well expand it to other commodities. So, we pretty much have a bad outlook for mining investment, at the very time when Australia could be fully pressing forth its comparative advantage.

This could have been avoided if the Big 3 stepped up to the plate as sector advocates. They did not, and the industry suffered. I wonder what will now happen for the Final Investment Decision (FID) of Olympic Dam with an ALP-Green alliance and a green controlled senate. That is a $20 billion investment decision that automatically looks a lot shakier now. Don't forget the Greens want to ban uranium mining in their wisdom.

Moving forward, to use that lovely phrase, the Big 3 cannot be considered the voice of the mining industry. They are not worthy to be so. Andrew Forrest has picked up the pieces, and is trying his valiant best - Andrew Forrest is not "The Big Australian", but he is a bigger Australian than anyone in the Big 3.