Thursday, May 20, 2010

Industry Consultation Missed in Resources Super Tax


There's a lot of debate about the Rudd Government's planned 40 per cent super tax for big mining companies in Australia.

It now appears to be the big issue in the looming Federal election.

The idea of resources rents have been around since the 1960s and I even remember studying the concept in my postgraduate Diploma of Agricultural Economics in the mid80s.

So what went so wrong for the Rudd Government?

They failed to adhere toseven critical public relations and change management rules:

1. Always consult widely before you introduce new policy. Inclusiveness, accessibility and diversity are critical.

Rio Tinto Ltd.'s managing director in Australia, David Peever, claims the consultation process isn't broad enough, with the mining industry unable to raise key concerns.

2. Provide lots of information - this avoids uncertainty. Make the information confidential. Private not public debate.

3. Provide mechanisms for feedback - in private not in the media.

Here's a view from Australia's richest person, mining magnate Andrew Forrest (pictured):

He told the Australian Mines and Metals Association national conference that consultation with the government over the tax had been futile.

"They said to us we can't change the tax, the 40 per cent rate, the six per cent, the retrospectivity, we can't change it," he said in Perth.

"They said `if you want to get rid of this tax, you have to change the government'.

"And that doesn't really suit me at all."

Media reports claim the West Australian billionaire and Mr Rudd have become close friends during the past three years through their work in promoting indigenous employment and welfare but recent policy was testing their relationship.

"Having a policy which pits me against some of the people I deeply admire is placing me in a very difficult position."

The news report said Mr Rudd would not return his calls and the only people he was prepared to speak to was the media.

4. Evaluate feedback.

5. Report and publish feedback.

6: Timing - try and avoid an election year. If it is negative - do it early in your term of office. And not after the announcement.

"We're having a mature discussion with the business community, with mining companies about these matters, and we'll continue to do that," Australian Treasurer Wayne Swan said the government is consulting in a genuine way with the mining industry and taking their views on board. But after the announcement not before and certainly not played out in the media.

7. Responsiveness - if you are going to make changes, deliver the quickly not over a long period like five years for the planned new Resource Super Profits Tax.

Professor Neville Norman at an Institute of A Chartered Accountants breakfast believes there is a 90 per cent chance the Rudd Government will not introduce the Super Tax.

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