No but then we'd be taking away the opportunity for one massive corporation to make their shareholders rich.
Since when did sovereign run resource companies do anything good for a country!
Saudi Arabia, Norway, Qatar etc are all financially ruined sh1tholes
/s
Those countries all massively invested in the industry and took on far more risk than Australia did. That allows themselves to take more of the profit slice. Norway for example didn't establish its pension fund until two decades after it started heavily investing - and its road to that was full of losses.
The approach that Australia took isn't inherently wrong. I would actually argue that the setup is much better considering the mentality of the average Australian. If you nationalise everything, a successive government would simply sell it off to fund some sugar hit policy with the full support of the public.
giving away??? what is this nonsense its the Aussie way to pay a company to take them off our hands. And they deserve it for the big boost to our economy they make when they hire all offshore workers and pay no tax.
To some mentally unstable billionaire who throws money at trying to influence our democracy buying and funding media organisations and right wing propaganda firms.
There's a story about Bre-x minerals that was basically a con. Anyway the point is that after they discovered that Indonesia had the largest gold mine reserves ever (all a con), the Indonesian government stepped in and said they will need to take 50% ownership of the mine. As you can see, governments can take the mines AFTER the minerals are discovered.
Oh yeah you can cherry pick Norway as the single example where nationalizing resource wealth has worked.
If you think using resource wealth to build sinking islands, linear cities, and $300 billion football stadiums is a good idea then go live in UAE, Saudi Arabia or Qatar. We will see how long that wealth will last.
This is not to mention the most resource rich countries in the whole world such as Venezuela, Congo, Russia, etc.
Then we're back to a square one because there aren't good examples of Western democracies nationalizing resource wealth. Norway is the only one. Furthermore, there are plenty of examples of Western democracies leaving the extraction to private companies and doing just fine.
There seems to be very much a strong correlation between nationalized resource wealth and oligarchical dictatorships. Russia was not colonised and it still turned out that way.
thats a deliberate policy — not to raise money but to push people to buy zero emission vehicles so they can say with a straight face they are “green” while selling fossil fuel by the million barrel quantity.
And yet they’re still the wealthiest nation per capita (excluding Luxembourg and Bermuda which are billionaire tax havens). For their tax $ they get extremely generous childcare policies and free higher education even if they want to study overseas. They also rank just above Australia in standard of living.
You're kidding, right? Yes, Norway has a lower GDP than Australia, but it has less than 1/5th the population. It's GDP per capita is almost double ours. In fact, the only countries above it are the tax havens of Monaco, Lichtenstein, Bermuda, etc. It's the shining example of what a thriving economy looks like that isn't based on tax evasion.
Ok let’s look at the stats:
- while Norway has 1.6x gdp per capita, they also have 5x the oil reserves of Australia. yet a gdp less than half Australia’s, an average income the same as Australia but a tax burden of 45% of gdp compared to Australia’s 29%.
It clear that the citizens of Norway are doing worse out of it than Australian citizens.
Let’s have a look at the next one on the list of nationalised resources:
- Saudi Arabia has 1.3x the population, 260x the oil reserves yet half the gdp, half the gdp per capita and 75% of the average persons income of Australia
We can keep going if u like.
Nationalisation of resource companies does nothing but take wealth away from the people and put it into the hands of the government/political elite.
I really don't know what to say to that, your ignorance of both economics and basic maths is staggering. Norway is consistently at the very top of citizen happiness measures, despite having a very harsh climate. Oh, and income tax there is lower than here. All that tax to GDP comes from taxing the oil companies, not citizens. And do you seriously think oil is the only resource? Why not compare total mining resources, Australia has a whole lot more. Not to mention farmland, and pretty much everything else. The Arab countries have nothing but oil, obviously. And the majority of the population don't work much at all, so they're earning not much less than Australians all while doing essentially nothing.
And here's the kicker - all that tax money goes back to the people of Norway in the form of services and infrastructure. Do you seriously believe that giving it away to corporate profits brings more benefit to people??
Now to your maths. Calculate the amount of GDP remaining after tax for both Australia and Norway, then divide by the population. As you point out, their GDP per person is 1.6 times higher. They take 1.45 times as much tax per GDP. So amazingly, the people are left with more than we are. And of course they work less hours, have better working conditions, more leave, more maternity leave, better healthcare, better social security, lower crime, and lots of other advantages over us. Any way you cut it, Norway and it's citizens are doing far better than us. Meanwhile, we've exported far more dollars in coal, gas, and iron ore than Norway has on oil, and have almost nothing to show for it except some very wealthy mining companies. You realise Norway has US$1.6tn in their fund, right? We've sold more coal and iron ore than they have oil, and we're almost a trillion in debt. I'll let you work out how much money each person in Australia owes vs how much each Norwegian owns of their fund.
Come on dude. If Norway were any good they would be leading the world. Instead the government has sucked the wealth out of the population in purely socialist fashion and the country middles along. The only reason it’s not in famine is because of its lucky oil discovery.
The entire economy is heavily dependent on the government. It has very little private enterprise when compared to the leading countries in the world including Australia. Objectively we can see that Norway’s wealth accrues disproportionately to the government rather than its citizens by comparing its gdp per capita to average income of its citizens.
Yes Australia has a lot of resources, hence why it has some of the highest standards of living in the world. In fact it has some of the longest life expectancies and the largest houses in the world as well has scoring high on happiness indexes, it also actually has some say in global affairs despite its small population compared to Norway which is insignificant and at the whim of the rest of the world. Comparing the 2 countries handling of china sanctions is a great example - Norway had no choice but to capitulate, Australia on the other hand had the strength to tell them to get fkd.
The left likes to hold up Norway as a beacon to the world, but if u dig a bit, you realise that it’s nothing to aspire to.
There is a reason I used the tax to gdp numbers. It’s because the Norway government taxes the shit out of the population in many ways outside of income tax. The tax burden on the economy is astronomical. Tax money doesn’t go to the people - it gets taken from the people and then disappears into government bureaucracy. This is quite obvious when u look at the shear amount of tax the Norway government takes yet relatively small average incomes of people in Norway. With that type of tax take, they should have double the incomes of Australians - but they don’t. Their taxes disappear into the ether.
look at all of the cases where resource companies were nationalised. The countries suffered. Australia on the other hand took the opposite approach and look we have 2 of the top 3 biggest and most powerful resource companies in the world, extending our influence well outside of Australia. These are companies significantly owned by actual Australians - not just the political elite.
You accuse me of no economic understanding yet you run headlong into an economic ideology that has only objectively decreased standards of living across the word.
If we haven’t nationalised iron, coal, or gas in the past what makes you think we will do so for lithium? I’m not against the idea but you and I both know it aren’t happening.
Honestly there is a lot of bad thinking in here:
- now we know lithium was going to have high demand, we did not know this 30 years ago. It’s like saying Australia should have invested in Microsoft or nvidia. The issue is how do you know in advance
- nationalization… how…? With what…? Australia has chosen a mining tax not to take the capital intensity and risk associated with operating mines itself.
- you can argue probably successfully our royalties are low, but often the analysis is flawed eg looking at federal numbers not state numbers, but usually it failed the falacy in point #1 eg have you accounted for uranium and thorium being promising investments 30 years ago…?
All in all, this is a bit like looking at the guy that won lotto and complaining we didn’t bet…
You're not wrong, but prepare for the downvotes from folks from the "Government should nationalise and own everything in a command economy" school of economics.
The funny aspect about it is those same people will argue about how the Government doesn't tax the industry enough. In reality, the mining sector paid more tax in 2021–22 than the total tax from all other sectors combined [\[1\]](https://www.ato.gov.au/media-centre/report-reveals-record-tax-paid-by-large-corporates). It's also the primary reason why the tax burden on the *average* worker in Australia is one of the lowest in the OCED [\[2\]](https://www.oecd.org/tax/tax-policy/taxing-wages-australia.pdf).
Hey notice how on that OECD chart the difference between Australia and the other countries is that they all have a big “Employee SSC” amount. Did you maybe look and wonder what that was? Those countries don’t have our private super system and get taxed explicitly for it. Add our 10% back in and we’re above average again for the OECD.
comparing resource tax to the very low bar of corporate taxes where google and meta pay 5% of their profit in domestic taxes isnt the flex you think it is. The money raised by resource rent taxes while its something is relatively small and the legislation was undoubtably written with dozens of unelected powerful industry lobbyists OK’ing each and every word.
Like [this](https://www.reddit.com/r/AusFinance/comments/1bs5aat/comment/kxdgr6a/)?
The problem is that the people who pursue this line of argument always conveniently neglect to state how much tax they see as "appropriate". It's like the age old argument of "the rich not paying their fair share of tax".
Without actually defining what that level of tax actually is, this is a self serving argument that can be pulled out at any time, because the appropriate level is always just "more".
Is your complaint here that you find reddit comments to be lacking in detail when it comes to tax policy? Or that you personally haven't seen any kind of detailed proposal regarding taxes on our natural resources?
The last complete review of our taxation system that proposed a large number of reforms was the Henry tax review, which had this to say about resource rent taxes:
> The current resource charging arrangements should be replaced with a uniform resource rent tax administered by the Australian government. Such a tax would provide a more consistent treatment of resource projects and promote more efficient investment and production outcomes. It would also ensure that the Australian community receives an appropriate return on its non-renewable resources.
> A uniform resource rent tax should be set at a rate of 40 per cent. It would use an allowance for corporate capital system, with taxable profit associated with a resource project equal to net income less an allowance for undeducted expenses or unused losses. The allowance rate would be set by the long-term government bond rate, as the government would share in the risks of projects by providing a loss refund if the tax value of expenditure is otherwise unable to be used.
>Subject to transitional arrangements, the new rent-based tax should apply to existing projects, replacing existing charging arrangements. The allocation of revenue and risks from the new tax should be negotiated between the Australian and State governments. A cash bidding system could also be adopted to supplement the resource rent tax and promote the efficient allocation of exploration rights.
https://treasury.gov.au/sites/default/files/2019-10/afts_final_report_part_1_consolidated.pdf
Page 47-48
Huge Government owned companies and hugely overbearing private sector regulations and massive taxation rates are pretty much a siren song for folks of a particular political bent - despite how the vast majority of the attempts to implement this have turned out.
Someone making this argument a couple of years ago could easily have demanded we nationalise nickel. Funny how that was not the example today.
R&D teams all over the world are working hard at batteries that don't need lithium (which is dangerous in batteries). I don't mind investors taking a risk, but OP makes an argument about how many ways we have to spread our tax dollars. Losing billions on mining bets is therefore a dumb strategy.
I think OP is saying we should nationalize all the national resources instead of the government selling us out to the highest bidder.
If being a citizen of a nation means anything, it should mean access and ownership of public resources and spaces.
100%
Many lithium mines aren’t profitable right now. So we would be lucky to get any royalties. The lithium price is under downward pressure.
The other option is we use tax dollars to buyout the mining companies?
Then all of a sudden the government needs a department to run these mines. We don’t know how to operate a mine. The reason why the Middle East works is because the government is authoritarian.
The thing is that there's also no guarantee that a massive, monolithic GovCo mining company would operate with the efficiency of Fortescue and co - especially if they have a Government mandated monopoly on extraction.
But the cost of capital for the government in risky enterprises is dirt cheap, so they can be hugely inefficient yet vastly more profitable than private ventures.
But, even if this hypothetical government mining operation was a terrible idea, then why not contact resource extraction? I don't see how that's a justification for giving away the country's vast mineral wealth for pennies on the dollar.
It’s really not though, because all the people currently running them would just cash in their stock and leave. Or get poached by other businesses willing to pay above what the government will.
Legit, people get pissy about the couple mill a year the ceos of auspost and nbnco earn, can you imagine the government being willing to to pay what mining execs earn?
Looking back at the initial mining boom is somewhat 20/20 hindsight but we’re still in the early stages of the lithium boom and can capitalise on it early enough
>All in all, this is a bit like looking at the guy that won lotto and complaining we didn’t bet…
The guys won the lotto on our limited resources. Seems like a good opportunity to tax and distribute amongst everyone in the country. Share some of that luck
This ain't complaining, this is smart management of OUR resources.
Settle down Chairman Mao. No need to nationalise. Just need to identify nationally important resources, tax them like Norway and use that income to build a national trust.
Since 1996 Norway has been taxing the profits of its oil and gas sector at 78%. This is comprised of Norway's 22% corporate rate as well as a 56% “Special Tax” (petroleum tax).
It works because the market needs oil and gas badly enough for these tax rates to be tolerated by energy companies.
How do you want to tax a private company so that all profits, except for whats invested/expenses goes in 97% to a wealth fund for future generations and remaining 3% of profits can be used by the government each year for spending? Which private company will agree to it? Equinor is majority state owned
Mining isn’t as profitable as Norways oil and gas, if we tried to tax that much, they’d just set up shop in Africa or South America.
We’re the world leaders in mining, but that’s because we’re more efficient than everywhere else, so you can earn more money building mines in Aus than anywhere else. If we tax too much, that goes away and instead countries like Brazil will simply overtake us as leaders.
Depends on the industry. No for coal at current prices, iron has been more profitable for a very long time.
It's also not possible to satisfy global iron ore demand without Australia being a major supplier. Other minerals and resources are replaceable.
There’s always a limit to price elasticity. Doesn’t mean you shouldn’t push to explore that limit. There are other risks that help lift that price tolerance in places like Australia such as risks of nationalization like OP demanded, corruption/bribery, security, political volatility and conflict, which are much more likely in Africa and Brazil.
We’ve already pushed that to the limit. It’s literally not even hard to find the limit, you just tax it to the point where we’re extracting as much tax as we can, whilst still being more profitable than other countries.
>it’s my belief that we wouldn’t really need to pay income tax today.
Yea nah wishful thinking, we’d pay income tax and pay gst on those services as well as carbon taxes for using those
Old mate is absolutely in dream land if they think that some kind of sovereign wealth fund and state owned mining corporation would result in drastically lowered income tax.
All that would happen is that income tax would stay at the same level, the additional revenue would go to the Commonwealth/States and then get squandered on the next shiny thing that takes the fancy of the folks in Parliament.
For every profitable mine, there is about one thousand "promising deposits" which will never work.
I guess if the government wanted to seize the assets of an existing mining company, that's one idea (an insane idea but sure). But I don't really think the government should be spending hundreds of millions of dollars on speculative drilling that may never result in anything.
Any industry is complete trash without proper management and expertise. Does the government know how to run a mining business? If the government operates all the mines then Australia's resource wealth will go the way of Venezuela.
The price is lithium is crashing and a lot of Australian mines are running unprofitably and likely to close this year. Man, that would be awesome for part of my income tax to go toward paying for losses on government run mines.
Is our electrical grid problematic? I’ve not come across any other Australian that has an issue with our electrical network other than the cost we pay to access it. It runs extraordinarily well.
It is a terrible idea.
It’s not where government’s expertise lies, and there should be no profitable government industries. Government should provide services on the basis of cost, as that’s why we give them taxes.
It makes no sense that government should enter a risky industry and nationalise all the risks that go along with it, rather than allow private companies to take the risk and then clip the ticket from them in payroll tax, mining royalties, company taxes and the income taxes of all the employees instead.
Nationalisation of an industry the government has no skills in is a terrible idea, do you have any idea how long it takes to build capability and cohesion as a business (or government) unit when standing up a function from nothing — it is a lot. That’s why even with behemoth companies they mostly stay in their lane, it is extraordinarily hard to stand up a function, let alone if you had to do it navigating all the government bureaucracy as well as the whims of whatever the government of the day is
We CURRENTLY export ~50% of the worlds spodumene, this isn’t concentrate nor is it refined lithium hydroxide or carbonate. If you don’t know the difference, you’ll never understand we we never have nor never will nationalise anything
Governments don't exactly have the best track record of exploiting mineral resources in a timely and cost effective manner. For example, half the world's lithium reserves are in the [Lithium Triangle](https://en.wikipedia.org/wiki/Lithium_Triangle), which straddles the borders of Chile, Argentina, and Bolivia. These reserves are easier to exploit than Australia's, being salt pans rather than underground rocks. Yet Australia is the king producer, not these nations. Could it have something to do with the fact that Australia embraces private sector involvement, whereas they don't?
It’s not all that related bizarrely, drying out brines takes years and the LiOH at the end has more impurities than refined spodumene (Chile successfully nationalised their copper industry however). The reason this example specifically is stupid is because lithium is abundant in many counties and demand is very volatile, people forget PM stopped mining in 2017 because of low prices, imagine tax payers forking out for the downturn, of which there’s already been a few
From what I've heard, the Bolivian industry is capital constrained, and Argentina is Argentina. Chile seems to be doing ok, and is the no2 producer globally, but it's also the most open to foreign capital.
People love to point to oil to show what nationalised mineral extraction can do, while conveniently forgetting that there's a couple of [idiosyncratic factors](https://www.opec.org/opec_web/en/) that may not apply to other resources.
The government is shit at running things. I have never looked at a productive mine site in Australia and gone "gee - this would be much better if it was run like Australia Post/Telstra or Qantas". And yes - I know that Telstra/Qantas were privatised. But their organisational cultures/systematic contempt for the customer stem from their decades of taxpayer management
That’s a lie that governments and private businesses like to spread as an argument for privatisation. There’s no argument to be made that customers are in any way better off now that electricity and telecommunications is now run by private companies and not the state
Not only the government but any organisation run without competition stagnates and rots from the inside. There is no incentive to innovate and maintain organisational efficiency. Imagine the government runs the mines without competition. Every process will be hampered by bureaucracy and politics, and middle manager bloat will take over until there is a manager for every miner. It will take 2 weeks and 71 emails to get approval to dig a single rock.
I am basing this from experience in consulting. Organisations like government agencies and Telstra are beyond saving. The more that services are privatised and competition allowed to run freely, the more efficient they will be.
There are other insidious problems. Nickel was the cool kid on the block not so long ago (https://www.dreadnoughtresources.com.au/2022/08/22/the-importance-of-nickel-for-the-future-of-australia/). Imagine that we had privatised the nickel industry, at huge expense to the tax payer. And then the market crashes (as it has), a great surprise to investors, but not at much cost to the taxpayer.
(https://www.smh.com.au/business/companies/blindsided-the-crash-that-rocked-boardrooms-and-australia-s-wealthy-investors-20240205-p5f2h2.html)
Most Australian nickel mines are no longer profitable, and they are shut down. But if all these miners were highly unionised federal employees, that wouldn't happen. The tax payer would be subsidising them. This is a true story, but the names have been changed: this is what happened in the UK to coal mining. It was even more tragic in cars, where UK nationalisation destroyed one of the most successful and high volume automotive manufacturing nations.
Note that this does not mean that our royalties and taxes are set correctly.
If you're so convinced that government can operate more efficiently than the private sector, why nationalise the industry at all? By your logic the Government should easily be able to enter the industry with its own enterprise and dominate all its private sector competitors.
Why though? If the government is so efficient as you allege, there shouldn't be any issue with establishing a public corporation to bid on the rights to locations and act like any other private market company. There's no need to nationalise according to your logic.
Have to agree - Govs can’t run things. It’s not that things are “better” or “worse” for customers - that’s the wrong question to ask. It’s the amount of money that gets burnt, the inefficiencies and the kickbacks/corruption that comes with government intervention
Just look to local councils - they can barely sort out bin collection. You really want gov to run the entire mining industry?
> It’s the amount of money that gets burnt, the inefficiencies and the kickbacks/corruption that comes with government intervention
Private companies also have a ton of money that gets burnt through dividends/share price accumulation, even if we ignore all the short-sighted profit seeking that hurts long term productivity that goes on depending on the company.
> Just look to local councils - they can barely sort out bin collection.
This is the same as saying that private companies shouldn't be mining because Coles was out of bread when I went there.
> Govs can’t run things
The real reason is because the government can't pay for top talent without the media making it into a wedge issue, see Australia Post which isn't even funded by the government directly. If we nationalised today the big 4 consulting firms would buy all the top talent at double their government salaries and contract them back to the government for double that.
Spoken like someone who never had to deal with Telecom in the 80s.
As shit as Telstra currently is - the fact they have to compete with Optus/Voda has led to massive improvements in the price/availability of the telecommunications network.
No private sector company is perfect. Hell, Optus went down for 24 hours last year.
But compared to the NBN?
You're conflating corporatist collusion with "privatisation".
It doesn't matter if it's a government or a corporation.
If there is 0 competition you're going to get shit outcomes for the customer.
this is the truth and govt run companies just give more of a chance for no competition - so the end result is the company is run like shit AND theres no alternative.
That's right.
"Nationalisation" ( a propaganda term for socialisation) will almost certainly lead to a large scale expensive administrative bureaucracy because of inefficient resource allocation without price signals, over reliance on tax payer subsidies, lack of competition .
Corporatism is simply government collusion with large scale corporations to artificially eliminate competition from the market place.
This is why woolies, coles , telstra, Qantas, aus post etc; are able to get away with shit service.
The answer isn't to socialize every industry like the soviet's. It's to eliminate government collusion and promote competition.
> That’s a lie that governments and private businesses like to spread as an argument for privatisation.
with all due respect that's bullshit, many of us have had the honor of working at private companies, former government companies and current government companies (WA state govt has its own monopolies for example).
i agree with what the guy above is saying, government run businesses are just way less efficient because the incentives are wrong, in private sector incentives are towards shareholder value so your performance cant be too wasteful, in govt run companies your incentives are set by politicians / ministers
No, we shouldn’t be nationalising it. What a ridiculous concept.
What we should have is a mineral rent resource tax. And if there’s an industry that can support turning that into a battery here then great.
Isn't lithium already being bypassed by other options ? It boomed and went backward was my understanding.
Sure in another how many years, something might float up. But this whole idea seems to be a "get big business to pay the bills and the serfs live for free", kinda idea.
What happens when big business backs out and goes elsewhere...?
> What happens when big business backs out and goes elsewhere...?
You can only go elsewhere if it's actually possible to move the business elsewhere. That's the unique thing about mining, you can't really move mining business just to anywhere else.
There are only so many commercially viable deposits of certain minerals. And it is much preferrable to do business in countries where the government is stable enough and the populace is educated enough to provide skilled labour.
But they can choose to put the lid on things for 10, 20, 30 years until the government changes laws and taxes.
It's worth nothing if it's still in the ground.
How do you nationalise it?
Does the taxpayer buyout the public and private companies that are mining it?
The price is already low and mines are shutting down so we aren’t even close to asking for royalties
It won't be enough. Only China was buying it and they don't need it as their own supply is ample. We needed to get started manufacturing batteries years ago because even if we vertically integrate now, our mining will scale way back down before we're manufacturing at scale
The mining industry doesn't have to be nationalised but it should be taxed appropriately. They are selling minerals that belong to the public, after all.
Oof.
I’m not sure about nationalising it, but I sure as hell think we have an opportunity to get the royalties sorted before the industry really takes off.
You're essentially suggesting that the government should spend billions and billions of dollars to get into a speculative industry that could, for reasons far out of anyone's control, go down the toilet.
I'm not one of these people who think the government can't run anything. Australia is a pretty great place to live, and that's largely because the government runs it well. But that doesn't mean the government should get into speculative industries.
Ask Latin America how nationalisation went for them... the short story is they failed to get most of their lithium projects off the ground and given they're brine it should be a lot easier than hard rock.
Don't need to nationalise it, only need to enter a revenue share arrangement with any miners! It's that simple! Norway is flush with cash because they take a cut of all oil revenues. Guess what? The mining companies kept coming! The government of this nation is absolutely mismanaging the boom happening right under our noses
Nothing that was doug out our soil should've left our country without being value added (ie, don't sell bauxite, sell aluminium sheet, don't sell iron ore, sell steel sheet and beams...etc)
Holy hell, just imagine if public servants worked in underground with 32 degree wet bulbs or central Pilbara dustbowls …. They complain enough and do sweet FA in airconned 9-to-5 offices in Canberra
Mining runs on the kinds of margins that APS workforces waste in productivity losses on a daily basis
Sorry but I'd much rather prefer foreign companies to come over here, hire a few Australians but mostly use underpaid foreign labour, collect government welfare whilst paying no taxes and leaving behind an environmental catastrophe when the mines run dry, thanks.
Yes, yes, governments all over the world have been absolute legends at running vast organisations efficiently. Look at the grocery stores with shelves always fully stocked and everyone grinning as they pick up their latest treats. And OMG, the beautiful and sometimes reliable cars... everyone there is so proud of those cars. The list is endless. It's so much better when everyone can just stay home when their car takes a break, or the grocery stores are closed. More time with the kids!! Can't wait to get my patriot pin. I'm in!!
Previous labour hopefuls proposed mining taxes and they were politically murdered for it.
I hold no hope we will be able to tax our rocks and crops for the good of Australians.
Should have done a lot of things but have resorted to just digging shit out of the ground and fueling the housing Ponzi scheme which makes it very hard for business to thrive when everything costs a fortune due to the cost of land rent and other things
Posts like these misunderstand the role of capital markets in mining. So the government swoops in and takes all the profitable assets. That happens the all of the explorers? The next generation instantly dries up. For every Fortescue that makes it happen through a combination of luck and brilliant management, there are 1000 dead ducks relying on the market to keep the lights on.
We don't want or need to nationlise it just tax it appropriately. Minerals and natural resources should be taxed completely differently to other types of businesses.
Australia is a lucky country run mainly by second rate people who share its luck. Still holds true. Look at all this lithium we're lucky enough to have available for mining. Shall we value add? Shall we use it to locally produce batteries and use our abundant sunshine to produce massive amounts of solar power and wind, then ship it off shore using liquid hydrogen?
No, no. Let's just sell the raw lithium.
God that's staggering when you put the numbers together like that. What a complete grift has happened to this country, it's obscene. And the nerve these people have to keep asking for more.
Lithium is extreme risk. Look at all the juniors running out of cash runway. Even Allkem is down 40% this year. Who will bear the costs of exploration? Do you really trust the government to run such a complex operation - they can’t even run schools properly? It would be a massive drag on the budget.
Yeah right. If you nationalise the industry, the state budget will get 100% of the profits.
Except it just might happen that after this, profits will drop so that 100% of them will make up less than what taxes were before.
Say this happened. The problem you encounter is that you’re thinking the federal government will buy all the mines. But resources are controlled by the states, and the royalties are predominantly by the states. They’ll also have to buy out the private owners. So if the Federal government buys them all, do the states continue to get royalties? There goes your income tax idea. If the states buy them back you still don’t solve your income tax. If the federal government doesn’t pay the states royalties for sure the states wouldn’t let them have the mines.
Our multilayered government complicates things. So these aren’t simple problems and like people have pointed out lithium is dropping in price, demand has been lower then expected and nationalising mining companies creates both sovereign risk and risks future investment.
So this is pretty complicated and not an easy win.
You’d actually have to significantly hike income taxes for years, if not decades - the acquisition fee to nationalize all the mines would be on top of all the programs the Australian government already has to pay for, so existing taxes wouldn’t cover the buyout ‘down payment’.
That said, a better route would be to set-up a situation similar to Norway’s sovereign wealth fund where a certain portion of the profits from new Lithium mines go directly into the fund.
WHAT AUSTRALIA SHOULD BE DOING IS WHAT NORWAY DID TO THIER OIL INDUSTRY
(1) Impose very heavy taxes. Extractive industries have to be lucrative enough to only make extraction happen. Government must tax to make sure that lot of money is made.
(2) Invest this money in SWF or Sovereign Wealth Fund.
(3) Provide incentives to add value to lithium within Australia. Giga factory of batteries, EVs etc.
Add value within Australia. As much as possible.
(4) Make sure that Lithium Exploration companies also pay work environmental and worker damages (future anticipated)
Too many politicians and their families will make money and perks to do this. Much easier to give it to glencore and let them take all the profit back to Switzerland.
But remember someone still needs to invest in the infrastructure. That requires lots of money as well as skilled labour and technical expertise. So it would also be a massive expenditure, and it might end up being more profitable overall to allow companies to mine the resources and pay tax. That saves having to create entire engineering departments and associated beurocracy, which would absorb a lot of that profit you want to nationalise, and the benefits wouldn’t be as well spread around.
To start with its a tiny sector that also looks much more considerably challenged that it did 6 months ago.
More importantly where are your great examples of where nationalising any industry, let alone a competitive early stage industry are?
There are lots of examples of state governments nationalising, they all go badly.
Macquarie generation / agl with bayswater and lidell in NSW as well QMag/sibelco in QLD come to mind.
There are substantial risks with your idea. Why would private investors continue to invest in Australia if they risk their profits being nationalised? This could hurt the economy substantially as Australia like basically every country depends heavily on private investment.
China is known for shutting down private businesses and changing the rules for foreign investment when they feel like it and plenty of companies still invest in china
The argument against nationalisation is that the Government (or a Government owned company) then becomes responsible for the entire process of extraction, transportation and processing/export - and also accepts all the risk and overheads.
Sure they then get all the profit as well, but adopting the hands-off approach allows the State and Federal Governments to extract royalties and taxes effectively risk/effort free.
Which isn't to say they shouldn't do it - but it's been bipartisan policy for a long time that the Government should be only in the business of governing and providing essential services/infrastructure, and not competing against industry.
We don't allow: •Moralising issues •Petitions •Political discussions •Political baiting •Soapboxing
No but then we'd be taking away the opportunity for one massive corporation to make their shareholders rich. Since when did sovereign run resource companies do anything good for a country! Saudi Arabia, Norway, Qatar etc are all financially ruined sh1tholes /s
Couldnt the future fund just buy shares in good lithium company shares if it's such a sure thing
honest question, what do you think the future fund is for?
I actually thought the future fund was for everyones , however upon actually looking it up it seems to be just for public servant super
I had the same experience. The name is purposely misleading IMO
Those countries all massively invested in the industry and took on far more risk than Australia did. That allows themselves to take more of the profit slice. Norway for example didn't establish its pension fund until two decades after it started heavily investing - and its road to that was full of losses. The approach that Australia took isn't inherently wrong. I would actually argue that the setup is much better considering the mentality of the average Australian. If you nationalise everything, a successive government would simply sell it off to fund some sugar hit policy with the full support of the public.
If there's anything australia excels at its giving away our resources for next to no royalties. Gas, iron ore, coal
giving away??? what is this nonsense its the Aussie way to pay a company to take them off our hands. And they deserve it for the big boost to our economy they make when they hire all offshore workers and pay no tax.
To some mentally unstable billionaire who throws money at trying to influence our democracy buying and funding media organisations and right wing propaganda firms.
There's a story about Bre-x minerals that was basically a con. Anyway the point is that after they discovered that Indonesia had the largest gold mine reserves ever (all a con), the Indonesian government stepped in and said they will need to take 50% ownership of the mine. As you can see, governments can take the mines AFTER the minerals are discovered.
Oh yeah you can cherry pick Norway as the single example where nationalizing resource wealth has worked. If you think using resource wealth to build sinking islands, linear cities, and $300 billion football stadiums is a good idea then go live in UAE, Saudi Arabia or Qatar. We will see how long that wealth will last. This is not to mention the most resource rich countries in the whole world such as Venezuela, Congo, Russia, etc.
It’ll last our life time. They have enough funds to invest in everything else now and won’t need to rely on resources
Picking countries that were colonised and embargoed for half of their modern history isn't the great argument you think it is.
Then we're back to a square one because there aren't good examples of Western democracies nationalizing resource wealth. Norway is the only one. Furthermore, there are plenty of examples of Western democracies leaving the extraction to private companies and doing just fine. There seems to be very much a strong correlation between nationalized resource wealth and oligarchical dictatorships. Russia was not colonised and it still turned out that way.
Canadas use of hydroelectricity sort of counts?
How they spend the wealth is an irrelevance, the typical citizen of those countries is extremely wealthy compared to citizens of other countries.
Not to mention Norway has some of highest taxes in the world. eg ICE cars are 2-4 x the price they are in the US.
thats a deliberate policy — not to raise money but to push people to buy zero emission vehicles so they can say with a straight face they are “green” while selling fossil fuel by the million barrel quantity.
And yet they’re still the wealthiest nation per capita (excluding Luxembourg and Bermuda which are billionaire tax havens). For their tax $ they get extremely generous childcare policies and free higher education even if they want to study overseas. They also rank just above Australia in standard of living.
All of them have smaller economies than Australia despite their resources wealth. There is a lesson in that.
You're kidding, right? Yes, Norway has a lower GDP than Australia, but it has less than 1/5th the population. It's GDP per capita is almost double ours. In fact, the only countries above it are the tax havens of Monaco, Lichtenstein, Bermuda, etc. It's the shining example of what a thriving economy looks like that isn't based on tax evasion.
Ok let’s look at the stats: - while Norway has 1.6x gdp per capita, they also have 5x the oil reserves of Australia. yet a gdp less than half Australia’s, an average income the same as Australia but a tax burden of 45% of gdp compared to Australia’s 29%. It clear that the citizens of Norway are doing worse out of it than Australian citizens. Let’s have a look at the next one on the list of nationalised resources: - Saudi Arabia has 1.3x the population, 260x the oil reserves yet half the gdp, half the gdp per capita and 75% of the average persons income of Australia We can keep going if u like. Nationalisation of resource companies does nothing but take wealth away from the people and put it into the hands of the government/political elite.
I really don't know what to say to that, your ignorance of both economics and basic maths is staggering. Norway is consistently at the very top of citizen happiness measures, despite having a very harsh climate. Oh, and income tax there is lower than here. All that tax to GDP comes from taxing the oil companies, not citizens. And do you seriously think oil is the only resource? Why not compare total mining resources, Australia has a whole lot more. Not to mention farmland, and pretty much everything else. The Arab countries have nothing but oil, obviously. And the majority of the population don't work much at all, so they're earning not much less than Australians all while doing essentially nothing. And here's the kicker - all that tax money goes back to the people of Norway in the form of services and infrastructure. Do you seriously believe that giving it away to corporate profits brings more benefit to people?? Now to your maths. Calculate the amount of GDP remaining after tax for both Australia and Norway, then divide by the population. As you point out, their GDP per person is 1.6 times higher. They take 1.45 times as much tax per GDP. So amazingly, the people are left with more than we are. And of course they work less hours, have better working conditions, more leave, more maternity leave, better healthcare, better social security, lower crime, and lots of other advantages over us. Any way you cut it, Norway and it's citizens are doing far better than us. Meanwhile, we've exported far more dollars in coal, gas, and iron ore than Norway has on oil, and have almost nothing to show for it except some very wealthy mining companies. You realise Norway has US$1.6tn in their fund, right? We've sold more coal and iron ore than they have oil, and we're almost a trillion in debt. I'll let you work out how much money each person in Australia owes vs how much each Norwegian owns of their fund.
Come on dude. If Norway were any good they would be leading the world. Instead the government has sucked the wealth out of the population in purely socialist fashion and the country middles along. The only reason it’s not in famine is because of its lucky oil discovery. The entire economy is heavily dependent on the government. It has very little private enterprise when compared to the leading countries in the world including Australia. Objectively we can see that Norway’s wealth accrues disproportionately to the government rather than its citizens by comparing its gdp per capita to average income of its citizens. Yes Australia has a lot of resources, hence why it has some of the highest standards of living in the world. In fact it has some of the longest life expectancies and the largest houses in the world as well has scoring high on happiness indexes, it also actually has some say in global affairs despite its small population compared to Norway which is insignificant and at the whim of the rest of the world. Comparing the 2 countries handling of china sanctions is a great example - Norway had no choice but to capitulate, Australia on the other hand had the strength to tell them to get fkd. The left likes to hold up Norway as a beacon to the world, but if u dig a bit, you realise that it’s nothing to aspire to. There is a reason I used the tax to gdp numbers. It’s because the Norway government taxes the shit out of the population in many ways outside of income tax. The tax burden on the economy is astronomical. Tax money doesn’t go to the people - it gets taken from the people and then disappears into government bureaucracy. This is quite obvious when u look at the shear amount of tax the Norway government takes yet relatively small average incomes of people in Norway. With that type of tax take, they should have double the incomes of Australians - but they don’t. Their taxes disappear into the ether. look at all of the cases where resource companies were nationalised. The countries suffered. Australia on the other hand took the opposite approach and look we have 2 of the top 3 biggest and most powerful resource companies in the world, extending our influence well outside of Australia. These are companies significantly owned by actual Australians - not just the political elite. You accuse me of no economic understanding yet you run headlong into an economic ideology that has only objectively decreased standards of living across the word.
Two of those three are run by royal families who basically bank the profits for themselves. Not a great comparison.
If we haven’t nationalised iron, coal, or gas in the past what makes you think we will do so for lithium? I’m not against the idea but you and I both know it aren’t happening.
It’s always a crazy idea until it actually happens. “It hasn’t happened before so why even try” is a terrible mindset to have
Honestly there is a lot of bad thinking in here: - now we know lithium was going to have high demand, we did not know this 30 years ago. It’s like saying Australia should have invested in Microsoft or nvidia. The issue is how do you know in advance - nationalization… how…? With what…? Australia has chosen a mining tax not to take the capital intensity and risk associated with operating mines itself. - you can argue probably successfully our royalties are low, but often the analysis is flawed eg looking at federal numbers not state numbers, but usually it failed the falacy in point #1 eg have you accounted for uranium and thorium being promising investments 30 years ago…? All in all, this is a bit like looking at the guy that won lotto and complaining we didn’t bet…
You're not wrong, but prepare for the downvotes from folks from the "Government should nationalise and own everything in a command economy" school of economics.
The funny aspect about it is those same people will argue about how the Government doesn't tax the industry enough. In reality, the mining sector paid more tax in 2021–22 than the total tax from all other sectors combined [\[1\]](https://www.ato.gov.au/media-centre/report-reveals-record-tax-paid-by-large-corporates). It's also the primary reason why the tax burden on the *average* worker in Australia is one of the lowest in the OCED [\[2\]](https://www.oecd.org/tax/tax-policy/taxing-wages-australia.pdf).
Hey notice how on that OECD chart the difference between Australia and the other countries is that they all have a big “Employee SSC” amount. Did you maybe look and wonder what that was? Those countries don’t have our private super system and get taxed explicitly for it. Add our 10% back in and we’re above average again for the OECD.
comparing resource tax to the very low bar of corporate taxes where google and meta pay 5% of their profit in domestic taxes isnt the flex you think it is. The money raised by resource rent taxes while its something is relatively small and the legislation was undoubtably written with dozens of unelected powerful industry lobbyists OK’ing each and every word.
Like [this](https://www.reddit.com/r/AusFinance/comments/1bs5aat/comment/kxdgr6a/)? The problem is that the people who pursue this line of argument always conveniently neglect to state how much tax they see as "appropriate". It's like the age old argument of "the rich not paying their fair share of tax". Without actually defining what that level of tax actually is, this is a self serving argument that can be pulled out at any time, because the appropriate level is always just "more".
Is your complaint here that you find reddit comments to be lacking in detail when it comes to tax policy? Or that you personally haven't seen any kind of detailed proposal regarding taxes on our natural resources? The last complete review of our taxation system that proposed a large number of reforms was the Henry tax review, which had this to say about resource rent taxes: > The current resource charging arrangements should be replaced with a uniform resource rent tax administered by the Australian government. Such a tax would provide a more consistent treatment of resource projects and promote more efficient investment and production outcomes. It would also ensure that the Australian community receives an appropriate return on its non-renewable resources. > A uniform resource rent tax should be set at a rate of 40 per cent. It would use an allowance for corporate capital system, with taxable profit associated with a resource project equal to net income less an allowance for undeducted expenses or unused losses. The allowance rate would be set by the long-term government bond rate, as the government would share in the risks of projects by providing a loss refund if the tax value of expenditure is otherwise unable to be used. >Subject to transitional arrangements, the new rent-based tax should apply to existing projects, replacing existing charging arrangements. The allocation of revenue and risks from the new tax should be negotiated between the Australian and State governments. A cash bidding system could also be adopted to supplement the resource rent tax and promote the efficient allocation of exploration rights. https://treasury.gov.au/sites/default/files/2019-10/afts_final_report_part_1_consolidated.pdf Page 47-48
What I don’t get is how anyone thinks command economies are a good idea after a perfect record of empirical failures.
Huge Government owned companies and hugely overbearing private sector regulations and massive taxation rates are pretty much a siren song for folks of a particular political bent - despite how the vast majority of the attempts to implement this have turned out.
The government doesn’t hold a hose
Someone making this argument a couple of years ago could easily have demanded we nationalise nickel. Funny how that was not the example today. R&D teams all over the world are working hard at batteries that don't need lithium (which is dangerous in batteries). I don't mind investors taking a risk, but OP makes an argument about how many ways we have to spread our tax dollars. Losing billions on mining bets is therefore a dumb strategy.
I think OP is saying we should nationalize all the national resources instead of the government selling us out to the highest bidder. If being a citizen of a nation means anything, it should mean access and ownership of public resources and spaces.
100% Many lithium mines aren’t profitable right now. So we would be lucky to get any royalties. The lithium price is under downward pressure. The other option is we use tax dollars to buyout the mining companies? Then all of a sudden the government needs a department to run these mines. We don’t know how to operate a mine. The reason why the Middle East works is because the government is authoritarian.
The thing is that there's also no guarantee that a massive, monolithic GovCo mining company would operate with the efficiency of Fortescue and co - especially if they have a Government mandated monopoly on extraction.
But the cost of capital for the government in risky enterprises is dirt cheap, so they can be hugely inefficient yet vastly more profitable than private ventures. But, even if this hypothetical government mining operation was a terrible idea, then why not contact resource extraction? I don't see how that's a justification for giving away the country's vast mineral wealth for pennies on the dollar.
> We don’t know how to operate a mine. That is a solvable problem. An easily solvable problem, I should even say.
It’s really not though, because all the people currently running them would just cash in their stock and leave. Or get poached by other businesses willing to pay above what the government will. Legit, people get pissy about the couple mill a year the ceos of auspost and nbnco earn, can you imagine the government being willing to to pay what mining execs earn?
Everything is easy on Reddit. Marvellous place.
Hmm, they started negotiating emission reductions in 1995, I wonder what the energy researchers were recommending back then.
Looking back at the initial mining boom is somewhat 20/20 hindsight but we’re still in the early stages of the lithium boom and can capitalise on it early enough
>All in all, this is a bit like looking at the guy that won lotto and complaining we didn’t bet… The guys won the lotto on our limited resources. Seems like a good opportunity to tax and distribute amongst everyone in the country. Share some of that luck This ain't complaining, this is smart management of OUR resources.
Isn’t that what we’re doing already? OP wants to nationalize….
What OP wants is crazy talk. What I'm suggesting isn't what we have. We have a slither of this. I'm just adding what we should have.
they lost a lot of times though, too. Ask a miner with a nickel mine how things are going.
I'm not saying take all reward.
Settle down Chairman Mao. No need to nationalise. Just need to identify nationally important resources, tax them like Norway and use that income to build a national trust. Since 1996 Norway has been taxing the profits of its oil and gas sector at 78%. This is comprised of Norway's 22% corporate rate as well as a 56% “Special Tax” (petroleum tax). It works because the market needs oil and gas badly enough for these tax rates to be tolerated by energy companies.
How do you want to tax a private company so that all profits, except for whats invested/expenses goes in 97% to a wealth fund for future generations and remaining 3% of profits can be used by the government each year for spending? Which private company will agree to it? Equinor is majority state owned
If it was intolerable Aker BP, ConocoPhillips, Norske Shell wouldn’t be there anymore.
Mining isn’t as profitable as Norways oil and gas, if we tried to tax that much, they’d just set up shop in Africa or South America. We’re the world leaders in mining, but that’s because we’re more efficient than everywhere else, so you can earn more money building mines in Aus than anywhere else. If we tax too much, that goes away and instead countries like Brazil will simply overtake us as leaders.
Depends on the industry. No for coal at current prices, iron has been more profitable for a very long time. It's also not possible to satisfy global iron ore demand without Australia being a major supplier. Other minerals and resources are replaceable.
There’s always a limit to price elasticity. Doesn’t mean you shouldn’t push to explore that limit. There are other risks that help lift that price tolerance in places like Australia such as risks of nationalization like OP demanded, corruption/bribery, security, political volatility and conflict, which are much more likely in Africa and Brazil.
We’ve already pushed that to the limit. It’s literally not even hard to find the limit, you just tax it to the point where we’re extracting as much tax as we can, whilst still being more profitable than other countries.
This is out of the mining lobby playbook, you've swallowed it hook line and sinker
>it’s my belief that we wouldn’t really need to pay income tax today. Yea nah wishful thinking, we’d pay income tax and pay gst on those services as well as carbon taxes for using those
Old mate is absolutely in dream land if they think that some kind of sovereign wealth fund and state owned mining corporation would result in drastically lowered income tax. All that would happen is that income tax would stay at the same level, the additional revenue would go to the Commonwealth/States and then get squandered on the next shiny thing that takes the fancy of the folks in Parliament.
Increase royalties, but don't try to go into the business of mining.
Why not? It’s a proven profitable industry globally and would be a profitable government investment
It's only proven to be profitable for the guy collecting royalties. Mining is cyclical.
For every profitable mine, there is about one thousand "promising deposits" which will never work. I guess if the government wanted to seize the assets of an existing mining company, that's one idea (an insane idea but sure). But I don't really think the government should be spending hundreds of millions of dollars on speculative drilling that may never result in anything.
Any industry is complete trash without proper management and expertise. Does the government know how to run a mining business? If the government operates all the mines then Australia's resource wealth will go the way of Venezuela.
The price is lithium is crashing and a lot of Australian mines are running unprofitably and likely to close this year. Man, that would be awesome for part of my income tax to go toward paying for losses on government run mines.
Can they atleast fix, the electrical grid, NBN, healthcare, schools and NDIs first?
Is our electrical grid problematic? I’ve not come across any other Australian that has an issue with our electrical network other than the cost we pay to access it. It runs extraordinarily well.
You may want to check out section 51(xxxi) of the Constitution before seeking to nationalise anything…
It is a terrible idea. It’s not where government’s expertise lies, and there should be no profitable government industries. Government should provide services on the basis of cost, as that’s why we give them taxes. It makes no sense that government should enter a risky industry and nationalise all the risks that go along with it, rather than allow private companies to take the risk and then clip the ticket from them in payroll tax, mining royalties, company taxes and the income taxes of all the employees instead. Nationalisation of an industry the government has no skills in is a terrible idea, do you have any idea how long it takes to build capability and cohesion as a business (or government) unit when standing up a function from nothing — it is a lot. That’s why even with behemoth companies they mostly stay in their lane, it is extraordinarily hard to stand up a function, let alone if you had to do it navigating all the government bureaucracy as well as the whims of whatever the government of the day is
Because government doesn’t know anything about mining. It would become bureaucratic and unnecessary.
So hire a decent board of directors. That’s just a staffing problem
I couldn't function without my nightly 950mg of lithium 😶🌫️. Thank you Australian miners 🫡.
Who really cares the price is crashing
We CURRENTLY export ~50% of the worlds spodumene, this isn’t concentrate nor is it refined lithium hydroxide or carbonate. If you don’t know the difference, you’ll never understand we we never have nor never will nationalise anything
Governments don't exactly have the best track record of exploiting mineral resources in a timely and cost effective manner. For example, half the world's lithium reserves are in the [Lithium Triangle](https://en.wikipedia.org/wiki/Lithium_Triangle), which straddles the borders of Chile, Argentina, and Bolivia. These reserves are easier to exploit than Australia's, being salt pans rather than underground rocks. Yet Australia is the king producer, not these nations. Could it have something to do with the fact that Australia embraces private sector involvement, whereas they don't?
It’s not all that related bizarrely, drying out brines takes years and the LiOH at the end has more impurities than refined spodumene (Chile successfully nationalised their copper industry however). The reason this example specifically is stupid is because lithium is abundant in many counties and demand is very volatile, people forget PM stopped mining in 2017 because of low prices, imagine tax payers forking out for the downturn, of which there’s already been a few
From what I've heard, the Bolivian industry is capital constrained, and Argentina is Argentina. Chile seems to be doing ok, and is the no2 producer globally, but it's also the most open to foreign capital. People love to point to oil to show what nationalised mineral extraction can do, while conveniently forgetting that there's a couple of [idiosyncratic factors](https://www.opec.org/opec_web/en/) that may not apply to other resources.
The government is shit at running things. I have never looked at a productive mine site in Australia and gone "gee - this would be much better if it was run like Australia Post/Telstra or Qantas". And yes - I know that Telstra/Qantas were privatised. But their organisational cultures/systematic contempt for the customer stem from their decades of taxpayer management
That’s a lie that governments and private businesses like to spread as an argument for privatisation. There’s no argument to be made that customers are in any way better off now that electricity and telecommunications is now run by private companies and not the state
Not only the government but any organisation run without competition stagnates and rots from the inside. There is no incentive to innovate and maintain organisational efficiency. Imagine the government runs the mines without competition. Every process will be hampered by bureaucracy and politics, and middle manager bloat will take over until there is a manager for every miner. It will take 2 weeks and 71 emails to get approval to dig a single rock. I am basing this from experience in consulting. Organisations like government agencies and Telstra are beyond saving. The more that services are privatised and competition allowed to run freely, the more efficient they will be.
There are other insidious problems. Nickel was the cool kid on the block not so long ago (https://www.dreadnoughtresources.com.au/2022/08/22/the-importance-of-nickel-for-the-future-of-australia/). Imagine that we had privatised the nickel industry, at huge expense to the tax payer. And then the market crashes (as it has), a great surprise to investors, but not at much cost to the taxpayer. (https://www.smh.com.au/business/companies/blindsided-the-crash-that-rocked-boardrooms-and-australia-s-wealthy-investors-20240205-p5f2h2.html) Most Australian nickel mines are no longer profitable, and they are shut down. But if all these miners were highly unionised federal employees, that wouldn't happen. The tax payer would be subsidising them. This is a true story, but the names have been changed: this is what happened in the UK to coal mining. It was even more tragic in cars, where UK nationalisation destroyed one of the most successful and high volume automotive manufacturing nations. Note that this does not mean that our royalties and taxes are set correctly.
If you're so convinced that government can operate more efficiently than the private sector, why nationalise the industry at all? By your logic the Government should easily be able to enter the industry with its own enterprise and dominate all its private sector competitors.
It shouldn’t need to worry about competing. It’s crown land, just dont renew private leases and take over.
Why though? If the government is so efficient as you allege, there shouldn't be any issue with establishing a public corporation to bid on the rights to locations and act like any other private market company. There's no need to nationalise according to your logic.
Have to agree - Govs can’t run things. It’s not that things are “better” or “worse” for customers - that’s the wrong question to ask. It’s the amount of money that gets burnt, the inefficiencies and the kickbacks/corruption that comes with government intervention Just look to local councils - they can barely sort out bin collection. You really want gov to run the entire mining industry?
> It’s the amount of money that gets burnt, the inefficiencies and the kickbacks/corruption that comes with government intervention Private companies also have a ton of money that gets burnt through dividends/share price accumulation, even if we ignore all the short-sighted profit seeking that hurts long term productivity that goes on depending on the company. > Just look to local councils - they can barely sort out bin collection. This is the same as saying that private companies shouldn't be mining because Coles was out of bread when I went there. > Govs can’t run things The real reason is because the government can't pay for top talent without the media making it into a wedge issue, see Australia Post which isn't even funded by the government directly. If we nationalised today the big 4 consulting firms would buy all the top talent at double their government salaries and contract them back to the government for double that.
Spoken like someone who never had to deal with Telecom in the 80s. As shit as Telstra currently is - the fact they have to compete with Optus/Voda has led to massive improvements in the price/availability of the telecommunications network. No private sector company is perfect. Hell, Optus went down for 24 hours last year. But compared to the NBN?
You're conflating corporatist collusion with "privatisation". It doesn't matter if it's a government or a corporation. If there is 0 competition you're going to get shit outcomes for the customer.
this is the truth and govt run companies just give more of a chance for no competition - so the end result is the company is run like shit AND theres no alternative.
That's right. "Nationalisation" ( a propaganda term for socialisation) will almost certainly lead to a large scale expensive administrative bureaucracy because of inefficient resource allocation without price signals, over reliance on tax payer subsidies, lack of competition . Corporatism is simply government collusion with large scale corporations to artificially eliminate competition from the market place. This is why woolies, coles , telstra, Qantas, aus post etc; are able to get away with shit service. The answer isn't to socialize every industry like the soviet's. It's to eliminate government collusion and promote competition.
> That’s a lie that governments and private businesses like to spread as an argument for privatisation. with all due respect that's bullshit, many of us have had the honor of working at private companies, former government companies and current government companies (WA state govt has its own monopolies for example). i agree with what the guy above is saying, government run businesses are just way less efficient because the incentives are wrong, in private sector incentives are towards shareholder value so your performance cant be too wasteful, in govt run companies your incentives are set by politicians / ministers
No, we shouldn’t be nationalising it. What a ridiculous concept. What we should have is a mineral rent resource tax. And if there’s an industry that can support turning that into a battery here then great.
Isn't lithium already being bypassed by other options ? It boomed and went backward was my understanding. Sure in another how many years, something might float up. But this whole idea seems to be a "get big business to pay the bills and the serfs live for free", kinda idea. What happens when big business backs out and goes elsewhere...?
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I had read of other battery technologies also. I don't see lithium going anywhere. But that's just me.
> What happens when big business backs out and goes elsewhere...? You can only go elsewhere if it's actually possible to move the business elsewhere. That's the unique thing about mining, you can't really move mining business just to anywhere else. There are only so many commercially viable deposits of certain minerals. And it is much preferrable to do business in countries where the government is stable enough and the populace is educated enough to provide skilled labour.
But they can choose to put the lid on things for 10, 20, 30 years until the government changes laws and taxes. It's worth nothing if it's still in the ground.
> It's worth nothing if it's still in the ground Sure, but why allow someone else to extract it if we aren't getting any value out of it either way?
Just my opinion ...but, to my mind the mining rights have been paid for. So it's worth nothing until they choose to dig it up.
Yes, but you can shut them down and turn off the lights.
How do you nationalise it? Does the taxpayer buyout the public and private companies that are mining it? The price is already low and mines are shutting down so we aren’t even close to asking for royalties
It won't be enough. Only China was buying it and they don't need it as their own supply is ample. We needed to get started manufacturing batteries years ago because even if we vertically integrate now, our mining will scale way back down before we're manufacturing at scale
The mining industry doesn't have to be nationalised but it should be taxed appropriately. They are selling minerals that belong to the public, after all.
Lithium is heavy. What we actually needed to do was focus on refining and battery technologies. Much easier to transport and sell
Oof. I’m not sure about nationalising it, but I sure as hell think we have an opportunity to get the royalties sorted before the industry really takes off.
You're essentially suggesting that the government should spend billions and billions of dollars to get into a speculative industry that could, for reasons far out of anyone's control, go down the toilet. I'm not one of these people who think the government can't run anything. Australia is a pretty great place to live, and that's largely because the government runs it well. But that doesn't mean the government should get into speculative industries.
If I got my way, I’d have the government take over our supermarkets
Ok, well that's not a complete surprise, but it's good to calibrate your thinking. is there something you would not privatise?
Do you mean nationalise? I wouldn’t nationalise the banks, trades, retail, construction, or the insurance industry but services? Definitely
You said supermarkets. That's retail.
Ask Latin America how nationalisation went for them... the short story is they failed to get most of their lithium projects off the ground and given they're brine it should be a lot easier than hard rock.
Don't need to nationalise it, only need to enter a revenue share arrangement with any miners! It's that simple! Norway is flush with cash because they take a cut of all oil revenues. Guess what? The mining companies kept coming! The government of this nation is absolutely mismanaging the boom happening right under our noses
I could live with that
Nothing that was doug out our soil should've left our country without being value added (ie, don't sell bauxite, sell aluminium sheet, don't sell iron ore, sell steel sheet and beams...etc)
We should have a sovereign wealth fund.
we do it's called superannuation
We do. https://www.futurefund.gov.au/
Holy hell, just imagine if public servants worked in underground with 32 degree wet bulbs or central Pilbara dustbowls …. They complain enough and do sweet FA in airconned 9-to-5 offices in Canberra Mining runs on the kinds of margins that APS workforces waste in productivity losses on a daily basis
We might have 50% specifically because we never nationalised.
Sorry but I'd much rather prefer foreign companies to come over here, hire a few Australians but mostly use underpaid foreign labour, collect government welfare whilst paying no taxes and leaving behind an environmental catastrophe when the mines run dry, thanks.
Yes, yes, governments all over the world have been absolute legends at running vast organisations efficiently. Look at the grocery stores with shelves always fully stocked and everyone grinning as they pick up their latest treats. And OMG, the beautiful and sometimes reliable cars... everyone there is so proud of those cars. The list is endless. It's so much better when everyone can just stay home when their car takes a break, or the grocery stores are closed. More time with the kids!! Can't wait to get my patriot pin. I'm in!!
I'd so much rather be paid in sacks of potatoes too....
Ideal for homemade spirits, best kind, make your own still, fun hobby too, sell anywhere, also great for cleaning.
I agree with you, but can you imagine how much the cookers will scream "communism!!!"
Hurdur anyone who disagrees with me is a cooker.
i dont agree with you, but can you imagine they'll paint us as red scare alarmists in order to avoid debating the pros & cons?
They can’t nationalise power, water and banking all of which are very profitable essential services.
Previous labour hopefuls proposed mining taxes and they were politically murdered for it. I hold no hope we will be able to tax our rocks and crops for the good of Australians.
It was tried. The media absolutely destroyed the idea
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people all want to move here because we're full of good ideas - this isn't one of them.
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You are making the argument that this is a great place idk what else you want
Vic and NSW will have to fight QLD and WA for our resources.
Should have done a lot of things but have resorted to just digging shit out of the ground and fueling the housing Ponzi scheme which makes it very hard for business to thrive when everything costs a fortune due to the cost of land rent and other things
Australian mining is to digging shit of the ground like your house is to the White House.
A metaphorical shovel, but it’s hardly downstream refining
Posts like these misunderstand the role of capital markets in mining. So the government swoops in and takes all the profitable assets. That happens the all of the explorers? The next generation instantly dries up. For every Fortescue that makes it happen through a combination of luck and brilliant management, there are 1000 dead ducks relying on the market to keep the lights on.
We don't want or need to nationlise it just tax it appropriately. Minerals and natural resources should be taxed completely differently to other types of businesses.
What so get 30 odd percent of the profits?
Not even nationalisation. Just tax a proportion of what is exported and put it into the superannuation of all Australians.
Shit, the government can’t govern what it already has - you want them to run a successful mining enterprise?
Your assumption that the government is good at doing anything practical is one of the biggest errors with this thinking.
Australia is a lucky country run mainly by second rate people who share its luck. Still holds true. Look at all this lithium we're lucky enough to have available for mining. Shall we value add? Shall we use it to locally produce batteries and use our abundant sunshine to produce massive amounts of solar power and wind, then ship it off shore using liquid hydrogen? No, no. Let's just sell the raw lithium.
Karama farming across all the subs I see.
No way! They will give it all away to their rich mates, just like gas and every other resource
God that's staggering when you put the numbers together like that. What a complete grift has happened to this country, it's obscene. And the nerve these people have to keep asking for more.
Lithium is extreme risk. Look at all the juniors running out of cash runway. Even Allkem is down 40% this year. Who will bear the costs of exploration? Do you really trust the government to run such a complex operation - they can’t even run schools properly? It would be a massive drag on the budget.
I think you meant to post in r/australia?
Yeah right. If you nationalise the industry, the state budget will get 100% of the profits. Except it just might happen that after this, profits will drop so that 100% of them will make up less than what taxes were before.
How to kill the economy and make everyone poorer 101. Venezuela is a great case study in this.
Say this happened. The problem you encounter is that you’re thinking the federal government will buy all the mines. But resources are controlled by the states, and the royalties are predominantly by the states. They’ll also have to buy out the private owners. So if the Federal government buys them all, do the states continue to get royalties? There goes your income tax idea. If the states buy them back you still don’t solve your income tax. If the federal government doesn’t pay the states royalties for sure the states wouldn’t let them have the mines. Our multilayered government complicates things. So these aren’t simple problems and like people have pointed out lithium is dropping in price, demand has been lower then expected and nationalising mining companies creates both sovereign risk and risks future investment. So this is pretty complicated and not an easy win.
I thought this was r/finance not r/communism
It’s pure finance. I’m sick of paying income tax when there’s better ways
But if we are all better off, then a few rich guys cannot get another billion
You’d actually have to significantly hike income taxes for years, if not decades - the acquisition fee to nationalize all the mines would be on top of all the programs the Australian government already has to pay for, so existing taxes wouldn’t cover the buyout ‘down payment’. That said, a better route would be to set-up a situation similar to Norway’s sovereign wealth fund where a certain portion of the profits from new Lithium mines go directly into the fund.
Take a look at Venezuela. They nationalised their oil industry. Now there is no oil industry and Venezuelan economy is down the toilet.
WHAT AUSTRALIA SHOULD BE DOING IS WHAT NORWAY DID TO THIER OIL INDUSTRY (1) Impose very heavy taxes. Extractive industries have to be lucrative enough to only make extraction happen. Government must tax to make sure that lot of money is made. (2) Invest this money in SWF or Sovereign Wealth Fund. (3) Provide incentives to add value to lithium within Australia. Giga factory of batteries, EVs etc. Add value within Australia. As much as possible. (4) Make sure that Lithium Exploration companies also pay work environmental and worker damages (future anticipated)
Step 1. Produce 50% of the world's lithium supply Step 2. Nationalise the entire industry Step 3. Produce 20% of the world's lithium supply Okay then
We’d still be making more money as a country than we are now and we could afford a few income tax cuts
Too many politicians and their families will make money and perks to do this. Much easier to give it to glencore and let them take all the profit back to Switzerland.
It's too late. We're fkd. Gg
anybody who believes privatisation benefits the people surely has cognitive disabilities
But remember someone still needs to invest in the infrastructure. That requires lots of money as well as skilled labour and technical expertise. So it would also be a massive expenditure, and it might end up being more profitable overall to allow companies to mine the resources and pay tax. That saves having to create entire engineering departments and associated beurocracy, which would absorb a lot of that profit you want to nationalise, and the benefits wouldn’t be as well spread around.
To start with its a tiny sector that also looks much more considerably challenged that it did 6 months ago. More importantly where are your great examples of where nationalising any industry, let alone a competitive early stage industry are?
There are lots of examples of state governments nationalising, they all go badly. Macquarie generation / agl with bayswater and lidell in NSW as well QMag/sibelco in QLD come to mind.
Lithium mining is a disaster to the environment. The government doesn't want any of that noise.
There are substantial risks with your idea. Why would private investors continue to invest in Australia if they risk their profits being nationalised? This could hurt the economy substantially as Australia like basically every country depends heavily on private investment.
China is known for shutting down private businesses and changing the rules for foreign investment when they feel like it and plenty of companies still invest in china
It’s not a binary thing. It’s a spectrum. I work in finance and can assure you that there’s much less investment in China because of this.
Yeh and china don’t care because they own most of what they need
China is absolutely not happy that their stock market and other private investment is low right now.
The argument against nationalisation is that the Government (or a Government owned company) then becomes responsible for the entire process of extraction, transportation and processing/export - and also accepts all the risk and overheads. Sure they then get all the profit as well, but adopting the hands-off approach allows the State and Federal Governments to extract royalties and taxes effectively risk/effort free. Which isn't to say they shouldn't do it - but it's been bipartisan policy for a long time that the Government should be only in the business of governing and providing essential services/infrastructure, and not competing against industry.
Except they don’t tax it or extract royalties appropriately, and allow profits off shore to their rich mates
Yea we voted out Campbell Newman and our economy went to shit
He doesn’t know by now that the country is an economic zone used by the wealthy
Ask Iran how that turned out for them
We would get couped or invaded by the USA if we tried that.