Australia has grown rich on natural resources, but squabbles over the spoils continues.

[pampango]

http://www.globalpost.com/dispatch/asia/100611/mining-australia-economy-raw-materials-minerals

While most developed Western countries agonize about the long-term effects of debt in the wake of the global financial crisis, Australians are furiously debating how to divide up the vast mounds of wealth the country will extract from its massive resources boom. That’s even before most of the drilling has started.

The question is being asked: Is Australia about to become the next Qatar? Qatar’s resource-rich economy has depended heavily on oil and natural gas. Another middle-eastern resource-rich nation, Dubai, relied heavily on exporting oil in the 1970s but huge increases in oil prices after the Gulf War meant the country turned to tourism and free trade. These were not enough to save Dubai from becoming one of the worst-hit economies in the recent global downturn.

Squabbles over the spoils have become an ongoing subject of public and political debate in the country. The recently ousted Labor prime minister Kevin Rudd wanted to heavily tax mining companies to “give back to the Australian people what is rightfully theirs. ”Rudd had planned to impose a 40 percent tax on mining profits. Reacting to the plan, mining companies threatened to pull out of deals, and one — Xstrata — shelved its Ernest Henry underground mine and exploration activities, in north-west Queensland, worth more than $600 million. The issue even had an impact on global stockmarkets. Reports in June of a quick deal between the government and miners over the controversial tax lifted mining stocks in London. Shares in BHP Billiton, the world's biggest miner, Rio Tinto and Xstrata surged as much as 4.3 percent on Jun 11.The tax issue mobilized those in the industry who fear it could affect their livelihoods. More than two thousand mine workers this month marched in Perth against the “super-profit tax.”

The mining tax issue was cited as a factor in Rudd's demise — he was unseated in a Labor Party leadership challenge on June 24. The Federal government, under Gillard, on July 2 announced big changes to the planned "super-profits" tax. The tax would be levied at 30 percent, instead of 40 percent, and the definition of a super profit lifted from 5 percent to 12 percent. The tax would only apply to iron ore, coal, oil and gas, and only 320 companies would be affected. Companies earning less than $50 million Australian dollars ($42.2 million), would be exempt. Xstrata said the proposal to retain the existing taxation and royalties for copper had given it confidence to restart its operations.