Thursday, May 06, 2010

Big Rio Tinto project first casualty of new Rudd mining tax

RIO Tinto has raised the stakes in the mining industry's fight with Kevin Rudd over his new super tax by shelving its $11 billion expansion plans in Western Australia.

In a fresh blow to the Prime Minister's tax reform plans, the mining giant said it would withdraw its plans for expanding its massive iron ore operations in WA because of the uncertainty sparked by the proposed tax on super profits, The Australian reported.

As Mr Rudd faced down industry executives in Perth for a second day yesterday, it also emerged that fellow miner BHP Billiton was reassessing the viability of its iron ore and coal projects in New South Wales, Queensland and Western Australia.

And Origin Energy said the proposed 40 per cent "resource super-profit tax" would push up "retail energy prices" by making gas and coal to drive power plants more expensive.

Origin said "wholesale energy prices are also likely to increase with any increase in resources tax".

After attending a meeting with resources industry leaders on Tuesday night and holding a breakfast briefing with smaller miners yesterday, the Prime Minister refused to describe the 40 per cent rate as non-negotiable but said it was "about right".

At the "robust" dinner, mining executives told Mr Rudd his plans had done "irretrievable damage" to the Australian resources sector, were driving investment overseas and wiping out the retirement funds of thousands of Australian shareholders who could not now "afford to retire".

Shares in Australian mining companies shed more than $16 billion this week, with heavy falls by BHP and Rio in London contributing to a plunge on global markets overnight.

Shares in BHP, Rio and Andrew Forrest's Fortescue Metals Group stabilised yesterday as analysts said the selling had been overdone.

Mining executives at the meeting also accused Mr Rudd of deceiving the public by calling the tax a "super-profits" tax.

Mr Rudd is standing by his plan but has agreed to meet the mining companies again next week. It is understood Treasury is already revising its modelling on the implementation of the tax.


Abbott readies for election fight on mining tax

Tony Abbott is expected to put the Prime Minister's resource super profits tax at the centre of the opposition's election agenda today by announcing officially that the Coalition will oppose the $10 billion-a-year tax.

The opposition is expected to mount a scare campaign similar to the one it ran against the emissions trading scheme. The shadow cabinet resolved yesterday to oppose the measure after Mr Abbott and his senior shadow ministers met executives from BHP and Rio Tinto, including the BHP chief executive, Marius Kloppers.

Mr Abbott has been hostile to the tax since it was announced on Sunday but has said the Coalition would decide when it saw the legislation.

Yesterday he telegraphed the shadow cabinet decision, saying the only way to avoid the tax was to change governments at the election.

The opposition was touting claims by Origin Energy that the tax would "place further upward pressure on coal and gas prices, increasing energy costs further".

The Prime Minister was in Perth yesterday selling the 40 per cent tax, which would be levied when profits hit a certain level. The government is open to negotiations, but not on the 40 per cent rate. Mr Rudd met executives from 27 mining companies, starting with a dinner on Tuesday night. By all accounts, the dinner was polite but heated.

Mr Rudd, who joked upon arrival that he was facing the "execution squad", called on the miners to "show me the facts" regarding the impact the tax would have on their businesses.

"Rudd was very clear that he wanted to be spared the rhetoric and asked for facts, case studies, anything that we could provide that would show the devastating affect this is going to have on the industry," said one person who attended the dinner.

"He said 'show me that [the Australian resources sector] is being taxed higher than anywhere else in the world'. To his credit he did listen to what we had to say but doesn't want to budge on the 40 per cent level."

Mr Rudd followed up with a breakfast meeting in Perth yesterday.

Mr Kloppers and the other executives told the Liberals that the tax would render the mining sector uncompetitive. They were understood to much angrier at the prospect of the new tax than they were at the ETS. "Kloppers wouldn't get involved in the ETS but he's frothing over this," said a source. The government argues the Australian people's share of mining industry super profits has dwindled over the years and it will use the savings to cut company taxes, boost national savings and build infrastructure.

"Remember, the people own these resources, the companies lease them," Mr Rudd said. "I'm all for a fair return to the mining industry but I also want to see a fair return for working families."

Shares in the big miners tumbled after Sunday's announcement. Mr Rudd claimed that over the longer term the industry would benefit. "It is important to [place] emphasis on the independent modelling [MODELLING! You can get anything you want out of modelling!] of Treasury [which has] put all the factors together and projects this industry will grow by 6.5 per cent over five to 10 years," he said.


Auditor-General slams "stimulus" red-tape

SCHOOLS are shackled to excessive rules that "unduly constrain" their ability to get the best out of the controversial $16 billion stimulus package, the Auditor-General has found.

A nine-month audit of the Federal Government's school building program released on Wednesday was not the damning document the Opposition had predicted, but did reveal that problems arose in the rush to get the money spent.

However, the Auditor-General did not examine whether the projects were value for money, which has been one of the key criticisms of the stimulus package.

A survey of principals as part of the audit found almost 29 per cent believed they had not got value for money. A federal taskforce will instead investigate suspected rorts and rip-offs and report by August.

The audit also found key school data relied on to back up Commonwealth claims the scheme was creating jobs was unreliable.

It said reporting requirements for schools were too complicated and unclear and the one-size-fits-all method risked delaying projects.

Auditor-General Ian McPhee said schools were working to very tight deadlines and the rules "unduly constrained" the flexibility of education departments to determine how to roll out their share of the funding.

Mr McPhee concluded there were some positive early indications the program was reaching its aims and said 95 per cent of principals surveyed said the funding would provide ongoing improvements to their schools.

Although the Government had claimed the school projects would be built with energy efficiency in mind, the audit found there was a limited green focus and commitment. In fact the Queensland Government said its projects would add $30 million a year to its energy, water and maintenance bills.

The Opposition said the program was a "disastrous waste of taxpayer's money" and it would use Parliament to pursue audit revelations the Government knew a cost blow-out was likely before the program even began.

Education Minister Julia Gillard yesterday said the program had helped keep Australia out of recession and the Government remained focused on getting value for money.


Bureaucrats catch the bully bug from anti-test teachers

Eve and Katsuya left Sydney at 7.30am and drove home, arriving at 12.30pm. Eve drove for the first two hours at an average speed of 60km/h. Katsuya drove the rest of the way, averaging 90km/h. What was the average speed of the whole journey? a) 67km/h; b) 75km/h; c) 78km/h; d) 84km/h.*

This is an example of the sort of innocuous question that will appear next week in the national NAPLAN tests, which are causing World War III in education circles.

It's hard to believe teachers' unions would stoop so low as to threaten casual and retired teachers brought in by schools to supervise the tests for years 3, 5, 7 and 9.

But their bully-boy tactics are there in black and white on the NSW Teachers Federation website: "You should be aware that if you [supervise the tests], you may quickly find yourself in a hostile environment where the teachers . . . have refused to administer NAPLAN 2010. These teachers and principals will not thank you for your intervention."

It's just part of union attempts to sabotage the popular tests, which are an important tool to improve education, especially for disadvantaged students. We see from last year's NAPLAN tests, for instance, that NSW schools fared disproportionately well, especially in primary reading, which shows former premier Bob Carr was justified in defending the curriculum from the worst educational fads. We can learn from some of the surprise successes, such as Macquarie Fields High School in the oft-maligned south-west suburb, which ranked in the top 100 schools in the country in numeracy.

But the militant ideologues of the Australian Education Union and the NSW Teachers Federation are determined to boycott the tests, ostensibly because they object to the possibility they might be used to rank schools in "league tables".

The only logical explanation for this madness is the unions are frightened of information. They don't want Macquarie Fields to be hailed a success or become a model for other schools in impoverished areas. They want to hide failures and condemn another generation of young Australians to illiteracy.

Even if the union campaign is only slightly successful, it will have contaminated this year's results. As this will be the second national test for students who sat the first test in 2008, it is crucial to measure their progress. It is the children who will suffer from this unseemly squabbling of grown adults.

To their credit, federal Education Minister Julia Gillard and NSW Education Minister Verity Firth are standing firm, determined to introduce transparency and accountability to the nation's classrooms. But it seems those good intentions only go so far. When it comes to a small software company that has turned the test into an easy online tool for schools and students to take regular snapshots of academic progress, education departments have resorted to the same intimidatory tactics as the unions.

David Johnson owns Naplan Online and AUSSAT Online, websites that allow students and teachers to take tests online, with immediate marks, and to track their results over time. He says he is being driven out of business by bullying bureaucrats.

Over the past nine months, he says the NSW Department of Education and Training and the Australian Curriculum, Assessment and Reporting Authority, have sent him five threatening legal letters alleging copyright infringements and demanding he hand over his domain name and logo and stop people from doing the tests online. On Sunday night, he was intimidated enough to shut down the free online testing site, despite having "tens of thousands" of parents registered.

"We're just a small software business trying to make a dollar," he says. "The schools absolutely love [the website]. It cuts out the bureaucrats and empowers classroom teachers and principals. There is nothing like it available in Australia."

He says inefficient education bureaucracies have spent millions of dollars on IT departments that have not been able to create any comparable tool. Instead, they have trademarked the NAPLAN name and are trying to shut him down. "Why are government bureaucracies trying to operate like businesses? If everyone could use the NAPLAN assessment papers other people could develop new products and services that benefit everyone," he says.

An IT expert married to a schoolteacher, Johnson, 43, came up with the idea for the website after his eldest son sat the first NAPLAN tests in 2008 and he saw the flaws. "It was all paper-based, expensive and controlled by big bureaucracy." The tests are in May but results are not returned until September, giving little time to correct problems.

"If a child is struggling you need to know as quickly as possible so that you can act," he says. He worked out how to overcome the inefficiencies with software, which he patented, and has already sold to 300 schools, to use as a supplement to NAPLAN. His paid subscription service allows teachers to test students several times a year, giving them several data points from which to judge progress.

While NAPLAN is a useful tool for education departments to allocate resources to under-performing schools, in the classroom teachers still need ways to assess the progress of individual students. More data points help them identify where a child is faltering or progressing and to communicate to parents what value has been added over the year.

All the information Johnson uses is publicly available. He has just been more efficient than education bureaucracies at making it useful. There are plenty of commercially available NAPLAN guides in print form that help teachers and parents prepare children for the tests.

As Johnson says: "If our site disappears, someone somewhere will build another site to replace it." But he is running out of money and is now thinking of giving up and taking an IT job overseas. He has shown how private enterprise can solve problems more efficiently than bureaucracies. But his travails show how innovation is crushed when those bureaucracies run out of control.

SOURCE (There is now some talk that the unions will back down under threat of losing pay)

1 comment:

Paul said...

Rudd has proven so bad for Australia that one wonders just who he must have been employed by. It does seem that in the so-called "great democracys" the leaders have interests other than those of their people foremost in their thinking.