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Case
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Reference no. 313-226-1
Published by: IE Business School
Published in: 2013
Length: 27 pages
Data source: Published sources

Abstract

This is part of a case series. In 2010, the Australian Government announced a proposed overhaul of the taxation regime governing its large mining sector. The announcement came at a time when Australia’s mining industry was booming but concerns were also growing about how to distribute the gains of the mining boom between mining companies and the Australian people, and how to harness the success in the mining sector to promote long term sustainable economic growth across Australia. It was partly to address these concerns, as well as to improve the efficiency of the way in which mining was taxed, that the tax reform proposal was developed. At the heart of the proposal was a shift from a volume based royalty system of taxation to a system based on mining companies’ profits. The mining sector in Australia viewed the tax reform proposal negatively and anticipated that it would hurt profits and performance in the short and medium term. Focusing on Xstrata, the largest foreign mining company operating in Australia, the case charts how the mining industry acted collectively to conduct a wide-ranging and aggressive public and private lobbying campaign against the tax. Central to this campaign was the use of traditional and new media - newspapers, radio, television, Internet, and social networking sites - to try and turn public opinion against the tax. This campaign successfully sowed doubts into the minds of many and attracted support from the political opposition, and other business groups outside of the mining sector. So successful was the campaign that it contributed significantly to weakening the position of the Prime Minister who proposed the tax, Kevin Rudd.

Time period

The events covered by this case took place in 2010-2012.

Geographical setting

Region:
Oceania/Australasia

About

Abstract

This is part of a case series. In 2010, the Australian Government announced a proposed overhaul of the taxation regime governing its large mining sector. The announcement came at a time when Australia’s mining industry was booming but concerns were also growing about how to distribute the gains of the mining boom between mining companies and the Australian people, and how to harness the success in the mining sector to promote long term sustainable economic growth across Australia. It was partly to address these concerns, as well as to improve the efficiency of the way in which mining was taxed, that the tax reform proposal was developed. At the heart of the proposal was a shift from a volume based royalty system of taxation to a system based on mining companies’ profits. The mining sector in Australia viewed the tax reform proposal negatively and anticipated that it would hurt profits and performance in the short and medium term. Focusing on Xstrata, the largest foreign mining company operating in Australia, the case charts how the mining industry acted collectively to conduct a wide-ranging and aggressive public and private lobbying campaign against the tax. Central to this campaign was the use of traditional and new media - newspapers, radio, television, Internet, and social networking sites - to try and turn public opinion against the tax. This campaign successfully sowed doubts into the minds of many and attracted support from the political opposition, and other business groups outside of the mining sector. So successful was the campaign that it contributed significantly to weakening the position of the Prime Minister who proposed the tax, Kevin Rudd.

Settings

Time period

The events covered by this case took place in 2010-2012.

Geographical setting

Region:
Oceania/Australasia

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