Sunday, July 4, 2010

Gillard caves in to mining giants

From the standpoint of conventional political ``analysis’’, Julia Gillard has had a spectacular start to her reign as prime-minister. She wrested the position from Kevin Rudd with minimal bloodshed, announced she was going to neutralise the mining tax controversy by negotiating with the mining billionaires and was rewarded with a dramatic turn-around in the opinion polls.

On July 2, her deal with the three biggest multinational corporations in the mining industry – BHP Billiton, Rio Tinto and Xstrata – was revealed. This deal gave enough compromises to these corporations to the point that they called off their advertising war against the government. However, the deal will still result in $10.5 billion in extra revenue for the government (compared to $12 billion expected from the original proposal) meaning the government doesn’t have a huge budget black hole to contend with.

On the face of it, this is a win-win deal for everybody except the Liberal party whose chances of winning the coming election now appear to have evaporated.

However, Gillard’s and the ALP’s folding before the mining bosses is nothing more than a continuation of a ``business as usual’’ which is not in the interests of the working majority in Australia.

It is not that Labor’s original mining tax proposal under Rudd was particularly radical. At best it was a modest reform (although in this era where counter-reform is much more common, a modest step forward is not to be sneezed at). Nevertheless, it could more accurately be described as ``populist’’ than truly ``progressive’’.

Rudd launched his proposed tax under the banner of attacking super profits in the mining industry. However, in addition to returning the federal budget to surplus, the proceeds of the tax were to be spent on reducing the already low corporate tax rate from 30% to 28% and funding a range of new subsidies to the mining industry itself.

Rudd was apparently gambling (inaccurately as it turned out) that a public stoush with the extremely rich billionaires in the mining industry would enhance his election prospects by boosting his image as a reformer who stood up for workers’ rights against the big bosses. He was expecting that the new subsidies for the mining industry would neutralise the opposition of the smaller mining corporations and the cut in company tax rate would be lauded by bosses in other industries.

It is also clear that Rudd’s strategy always included the plan to compromise on some aspects of the tax. This would enhance his public image as someone who was prepared to take on the big corporations (with the initial headline announcements) but also enable him to cut a deal that would not be too taxing for the big end of town who were his real masters.

The surprise revelation on July 2 that treasury made a ``mistake’’ in calculating how much money the original tax proposal would have generated ($15-20 billion instead of treasury’s forecast of $12 billion) is possibly nothing more than an indication of the amount of ``wriggle room’’ that Rudd was always planning to deal away to the bosses. (Alternatively, it could just reflect that the mining bosses control even more billions than previously thought and should be made to pay more tax!)

Public comment by Fortescue Minerals boss, billionaire Andrew Forrest, reveals that Rudd himself was on the verge of reaching an acceptable deal with the mining bosses before he was unceremoniously dumped by the ALP machine. According to Forrest in the June 30 Sydney Morning Herald online, a discussion paper outlining significant compromises by Rudd was ``24 hours’’ from being publicly released at the time he was dumped as PM.

There is a substantial similarity between the compromises that Forrest negotiated with Rudd and the compromise deal released by Gillard. This reveals that the dumping of Rudd was more about a public relations image for the ALP than a policy change for the government.

Forrest may now be complaining that Gillard only negotiated with the multinational billionaires instead of the Australian billionaires but this is a sideshow from the main issue – Australian workers aren’t getting much if anything out of the new tax - neither in the original nor amended versions.

Much is made of the fact that Gillard has retained the increase from 9% to 12% in the ``superannuation guarantee’’ that is to be funded by the tax. This does mean that Australian workers will get increased superannuation, even under Gillard’s deal.

However, this superannuation measure was never expected to cost more than $240 million. In other words it is spare change in the context of a tax expected to raise more than $10 billion (barely 2 per cent). The inclusion of this measure is more about selling the tax to the public than sharing the wealth currently monopolised by the exploiting class.

It has also been predicted that this increase in superannuation will actually reduce government expenditure over time as less government money will be spent on pensions.

What can progressive people learn from this experience?

Quite a few people will be breathing a sigh of relief that the worrying prospect of a Tony Abbott-led Liberal government seems less likely than it did before.

However in reality, we should be less impressed with the ``clever’’ manoeuvrers by the parliamentary ALP than by the public campaign by the mining billionaires when it looked like they weren’t going to get what they wanted.

Mining bosses, like other bosses, are used to having an open door to government ministers. The parliamentary system is rigged to be more responsive to the big end of town than to ordinary people even if the executives periodically have to pay $5000 or so to attend fundraising dinners with ministers. (Who can forget Forrest’s lament that the prime minister wasn’t returning his calls? His standard expectation is to have a direct line to the PM!)

However, when the mining bosses didn’t get what they want, they launched a public, political campaign to try to change the balance of forces in their favour. Of course their main method of struggle was to pay for a multi-million dollar advertising campaign and they could count on sympathetic coverage in the establishment media (owned by corporate executives just like them).

Our side doesn’t have multi-millions, so our methods of struggle have to be different. If we want to see a genuinely progressive taxation reform – or any other reform for that matter – we need our own public political campaign: public demonstrations, industrial action and civil disobedience.

If the ALP were truly a workers’ party, they would help us wage campaigns like that. Since they’re not, we need to build a party of our own.

[This article was submitted to Green Left Weekly by Alex Bainbridge, Socialist Alliance candidate for Perth.]