MICHAEL WEST. The Minerals Council, coal and the half a billion spent by the resources lobby07/11/2017
There is no peak body or rent seeker in the country which conducts its business as belligerently, and its proponents would say as successfully, as the Minerals Council of Australia (MCA). In 2010 it ousted a Prime Minister.
Flush with funding thanks to the contributions of its multinational mining company members such as BHP, Rio and Swiss-owned coal giant Glencore, the miners’ peak body can raise a campaign warchest at a moment’s notice. And it is uncompromising, often venomous, in its rhetoric.
In 2010, the MCA managed to oust a sitting prime minister, Kevin Rudd, from office with a $22 million advertising blitz against the mining tax.
Earlier this year in the Western Australian state elections, the leader of the National Party, Brendon Grylls, lost his seat after the mining lobby campaigned against his proposal for higher taxes on iron ore producers.
Meanwhile, Rio Tinto booked a net profit of $6 billion profit for 2016, while BHP handed down a first-half profit of $4.2 billion.
An investigation of the financial statements of the MCA shows the not-for-profit association has booked revenues of more than $200 million over the past 11 years. Revenues peaked at $35 million, $32 million and $37 million in 2010, 2011 and 2012 when the group was busy fighting the mining tax, the carbon tax and the Renewable Energy Target.
This is but a fraction of the story however. Research by CoalWire editor Bob Burton, who has been studying the minerals lobby for more than a decade, has found the funding of MCA’s state satellites and the oil & gas peak body: the Australian Coal Association (ACA), NSW Minerals Council, Queensland Resources Council (QRC) and Australian Petroleum Production and Exploration Association (APPEA), is $541 million over the past 11 years.
That’s $37 million for the Australian Coal Association (wrapped into the MCA in 2013), $77 million for the NSW Minerals Council, $203.6 million for the MCA itself, $139 million for APPEA and $85 million for the QRC.
Three things to consider here:
- Major members of the MCA are majority foreign-owned (BHP and Rio 70 per cent plus) and Glencore and Peabody owned in Switzerland and the US respectively. Therefore this is an organisation which effectively represents overseas interests.
- Almost all large members have in-house PR and government relations departments to complement their external capabilities.
- Many of the major resources companies who are members of the MCA and APPEA are also members of other lobby groups such as the Corporate Tax Association and the Business Council of Australia.
Including the individual lobbying efforts of the big miners themselves, we are looking at more than half a billion dollars in hard, tax-free cash over the past decade pushing for lower taxes and deregulation of the workforce while undermining climate science and fighting environmental groups.
In a corporate sense, the MCA’s state affiliates enjoy differing relationships with the mothership but when it comes to campaigning – whether supporting taxpayer subsidies for Adani’s proposed Carmichael coal mine, boosting new coal-fired power stations in Queensland, a brown coal plant in Victoria, or protesting the shut-down of AGL’s Liddell coal plant in NSW – their efforts are united.
It is reasonable to expect an advocacy body to cherry-pick facts to suit its corporate agenda but MCA’s research is often skewed to the point of deception.
A perennial ruse is conflating taxes with royalties in order to inflate the mining industry’s contribution to Australia’s economy. This is typical MCA sophistry: “Just like other taxes that affect miners, royalties are levied to ensure the community gets a slice of mining companies’ revenue.”
The problem with this assertion, routinely trotted out by the lobby group, and based on misleading research findings by Deloitte Access Economics, is that a royalty is not a tax, it is a “cost of goods sold” and accountants treat it as such, or are supposed to at least, when auditing a company’s accounts.
A royalty is the cost a company pays to the owners of the minerals, Australian citizens in this case, via the states, to buy the resources and sell them for a profit.
It is the price of the asset and, for the MCA and its boosters to portray it as a tax, suggests the mining companies believe they deserve to get their raw materials for free. Other businesses don’t beleive they are entitled to get their raw materials for free, and these assets, whether they be coal, gold, silver, iron ore or bauxite, belong to the people of Australia.
Another typical deception is the habitual over-inflating of jobs and economic benefits of mining. As the MCA was ramping up its campaign against National Party leader Brendon Grylls last year, it quoted from its latest research, again by Deloitte, which claimed Grylls’ proposal to lift tax on iron ore would cost 7,200 jobs.
Grylls debunked the report, WA Iron Ore Analysis, as “paying for misleading analysis of the policy”.
The report claimed the proposal would shrink the economy by $2.9 billion a year even though the tax raised was just $2.3 billion.
In the past few years the funding of the MCA has shrunk from $37 million in 2012, when it splashed $12.8 million on advertising, $6.6 million on consultants and $7 million on staff, to $12.6 million in 2016.
The organisation is still in fine financial shape though. At balance date, the it was sitting on $10 million in cash and term deposits, had no debt and the 15 key management personnel shared $4 million between them.
It is facing pressure however. The Australasian Centre for Corporate Responsibility has put a resolution to BHP’s annual meeting in November, asking the company to review its membership of the Council and asserting inconsistencies between BHP’s stated position on climate change and the MCA’s lobbying position.
Not only is BHP, like other mining companies, increasingly “climate-friendly” in its energy policy but it is itself a very large consumer of energy, last year spending $1.6 billion. The cost of building new solar is now cheaper than building new coal-fired power plants. Rio Tinto too has recently built solar capacity.
The MCA’s combative promotion of thermal coal, advocacy for Adani and taxpayer subsidies, skewering of its ideological adversaries and opposition to the clean energy target are commonly thought to be no longer compatible with BHP’s official line on climate policy. BHP wanted to distance itself from the organisation although is has not relinquished membership. This, says Burton, signals a possible change in strategic direction and a less combative approach.
The Mineral Council’s equivocal position on climate change, he says, does not marry with BHP’s commitment to the Paris agreement and the consensus that increasing thermal coal production is compatible with keeping global warming to the two degrees celsius as prescribed in Paris.
BHP appears to have partially defused the row over its membership of the MCA with the recent departure of MCA boss Brendan Pearson, Pearson having been so strident in his advocacy, but shareholder activism is the new front in the war on coal. Activism is no longer the domain of purely environmental groups.
Besides the immense financial muscle of the resources lobby, there is the matter of revolving doors, the traffic in human capital between industry and politics which delivers a less measurable but equally potent source of influence.
Two notable examples concerning the MCA: one, Federal Minister for Communications Mitch Fifield recently appointed MCA chair Vanessa Guthrie to the board of the ABC despite a dearth of media experience and, two, former MCA executive Sid Marris was recently appointed climate advisor to Prime Minister Malcolm Turnbull.
Unlike many other peak bodies – the likes of the BCA, the Financial Services Council and the Australian Bankers’ Association – the MCA and APPEA do publish their financial statements on their respective websites.
In light of the push by the corporate sector to see off tax breaks for NGOs, while protecting their own tax-free status, and as they seek to influence the course of government, the transparency in financial disclosures is commendable.
Michaelwest.com.au has been funded by political and environmental group GetUp! to do a series of investigations into Australia corporate lobby groups.
This article first appeared on michaelwest.com.au on 2 October 2017