The mining tax is good news for Australia's health

The Mining Tax is good for Australia's Health
by Gavin Mooney

(This piece first appeared on Crikey, May 27, 2010)

Plans for a tax on mining profits may be causing palpitations amongst mining industry chiefs, but perhaps it’s actually a positive for the broader population’s health.

The proposed new tax on super profits has clear health effects. Some are negative and are the result of the apoplexy that its announcement has caused among the ‘big miners’.

But there are potentially some substantial positive health effects as well. What is noteworthy is that while there has been concern expressed by the super prophets of doom for the health of the goose that has in the past, they tell us, laid the golden egg (of mining booms), the positive impact on human health seems to have been ignored.

While several aspects of the tax remain to be sorted, one thing is clear. It is a tax on the rich which is redistributive to the poor or at least to the rest of us. The best evidence for this is that it is those on high incomes who are leading the charge against this impost.

Twiggy Forrest and his big miner mates are not the downtrodden of Australia. Their shareholders are also relatively well heeled. So among Australians, it is those on above average incomes who will be hit by this tax.

On whom will the benefits be bestowed? Well like all such tax gathering exercises we never quite know and probably never will.

But we can be clear that not all of the monies will be returned to the top end. There will be some redistribution. There are for example noises about it going to pensioners who overall are not the richest gang in town. It has been suggested that hospitals will benefit and since we can assume that means public hospitals, the benefits of that will go more to the poor – who tend to use public hospitals more than the rich and who tend to be more sick anyway. And Ken Henry has endorsed the idea that Aboriginal people should benefit.

But the big health news is simply that the tax will reduce income inequalities in this country. These have been growing in recent years – so a shift back to a more egalitarian Australia would be good. A ‘fairer go’ in itself would be welcome but as Wilkinson and Pickett* have so ably shown recently, inequality kills – and their concern has not been geese but people.

But just imagine if this idea of redistribution were to catch on in a major (as opposed to a big miner) way?

Imagine if the people (that forgotten breed) were to think: ‘this is a good idea, we like the notion of a fairer Australia and we buy this idea that these public health gurus tell us that inequality is bad for our health. We can relate to that. It’s not that we are envious – we are not into this ‘politics of envy’ stuff. But we do believe in a fair go.’

Where might this all end, good heavens? Well in economic theory (sorry, but yes there is such a thing) the excess profits tax is relevant in any industry where there are big profits and barriers to entry.

That is not socialism or communism (as big miners have claimed). It is straight textbook economics.

So who or what is next in line? Surely the banks … here again there are excess profits and barriers to entry. Beyond the banks? Well readers can draw up their own list.

The excess profits tax on mining might just be a start to redistribution through taxation and a move to a more egalitarian society. The government in the wake of the “Preventative” Task Force Report is beginning to buy into the idea of using the social determinants of health as the road to better population health. It’s easier anyway than trying to take on the AMA.

So there are major health issues at stake here and not just big miner ones.”

* The Spirit Level: Why More Equal Societies Almost Always Do Better, Richard Wilkinson and Kate Pickett, Allen Lane: London.