WA tax grab: Mining leadership must step up on policy

WA

Leaders in Australian mining must step up after successive governments have slugged the industry.

While the mining industry in Western Australia is distracted by the State Government’s proposed $400 million grab for gold mining royalties, there’s an even bigger and more important issue from the budget facing us all.

That’s not to say the gold mining royalty rate grab isn’t outrageous — it is. And as a supporter of the mining industry I’m completely against it. But it’s the State Government’s plan to increase payroll tax that should be sending shock waves throughout the industry — and indeed throughout every large organisation that employs staff, let alone businesses with plans to grow.

The McGowan Government announced last week, in its first budget, that companies paying employees between $100 million and $1.5 billion will see their payroll tax rise to six per cent, while those higher than that will pay 6.5 per cent, for the next five years. This tax hike comes despite Labor promising in Opposition that no such increase would take place and is set to hit around 1300 businesses across the state. That’s an estimated $435 million over the next four years going into government coffers and not back into businesses for investment and growth.

As anyone with a first-year economics unit under their belt can tell you, payroll tax is a direct tax on employment and therefore acts as a disincentive to employ more people. Unlike a royalty — which is a tax applied only when you have made a business successful — payroll tax is applied to every single decision a business makes to employ another person, before knowing whether that person is going to work out and before a company can even be sure if their business model or investment has any hope of succeeding.

There is an appalling irony here. State Labor governments around Australia have regularly made statements about how part-time work — in fact any work that is not permanent — is not secure. This is in the face of numerous pieces of public research clearly proving that this is, in fact, not the case and — more pointedly — that jobseekers actually want flexibility.

These arguments aside, can someone please explain to me how political groups and the unions who support them can one moment argue that not enough secure jobs are being created but then, with their very next breath, increase the most direct tax there is on employment? Payroll Tax is insidious and should be reduced or removed altogether — and certainly not increased. 

How to get cut-through with the public on issues affecting mining

There is, I’m sad to say, little hope that this message will cut through. Here’s why: I believe strongly that the vast army of employer and business groups out there are getting it wrong. They’ve been distracted by the big shiny object: the gold royalty hike.

There is no doubt now that we will hear an avalanche of cries from the gold sector and its heavy-hitting personalities and industry associations, like the AMEC, CCI WA, and so on. Indeed, the shouting has already started.

But as I have argued before, this is a reactionary game driven by self-interest— and not one that tends to garner much sympathy or support from the wider public.

Is there a better way? Yes there is.

Rather than BHP spending whatever amount of money promoting their history and values, rather than RioTinto doing similarly, and the AMEC mobilising its resources to this latest fight against an issue of the day, why don’t all of these groups get together? They should form an alliance of mining self-interests and put aside a percentage of their members’ funds to create a mining newsroom that could proactively and positively promote our industry constantly and continuously. The fact that we don’t do this leaves us exposed and looking like bullies reacting to every issue of the day.

This would be really useful and show true leadership. 

And I concede again, this does sound naïve, but it’s time someone had a go and stopped this ridiculous series of constant running battles where everyone loses. 

Steve Heather signature
Steve Heather – BAppSc (Mining Engineering) WASM, FRCSA

Managing Director & Principal Executive Search - Mining People International (MPi)

Fellow/National Board Member – Recruitment, Consulting & Staffing Association Aust. & N.Z. (RCSA)

Steve.heather@miningpeople.com.au