The -mining- tax system explained using the language of beer

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this;

The first four men (the poorest) would pay nothing.
The fifth would pay $1
The sixth would pay $3
The seventh would pay $7
The eighth would pay $12
The ninth would pay $18
The tenth man (the richest) would pay $59

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20". Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes.

So the first four men were unaffected.

They would still drink for free. But what about the other six men - the paying customers?

How could they divide the $20 windfall so that everyone would get his fair share?

They realised that $20 divided by six is $3.33.
But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).

The sixth now paid $2 instead of $3 (33% saving).

The seventh now paid $5 instead of $7 (28% saving).

The eighth now paid $9 instead of $12 (25% saving).

The ninth now paid $14 instead of $18 (22% saving).

The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

"I only got a dollar out of the $20 saving," declared the sixth man.

He pointed to the tenth man, "but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get $10 back, when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.

The people who already pay the highest taxes will naturally get the most benefit from a tax reduction..

Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

Mining History

I've been checking out the history of mining a bit at the moment. It's interesting to know that in Australia, it started with production of coal from around Newcastle within 10yrs of the first fleet.

The first 'mining lease' as such in Australia was granted to AACO (1828/1829) - ironically an the Australian Agricultural Company. This was meant to be for 31yrs, but seems to have been cancelled in 1850.
http://www.heritage.vic.gov.au/admin/file/content2/c7/COAL_Context.pdf

I don't think the mining and agriculture industries clash as much as the media illustrates. I grew up on a farm, and I know a few operators maintain a farm in their numerous days off. there are a few clashes though, when there happens to be great quality ore that is feasible to mine, underneath a family farm that has been there for years. The crown holds ownership of the ore, hence the royalties they can impose on mining companies.

Interesting that they were so many restrictions to mechanisation of mines, changing from hand worked methods. The electricity to site must have presented a problem, as well as trying to convert previously hand worked mines, not to mention that people tend to prefer what they are used to. It seems to me that these days, people are more likely to consider new, alternative methods that are possibly an improvement on traditional processes, but not yet proven. Hard to say, considering I never lived in that era, all I have to go on is the history that has been written down.

I think it's great to understand what things have evolved from, especially so we don't repeat any mistakes!!

Straddie Operations

Straddie seems to be in the news a lot, and not for good reasons. I would love to go over there at some stage and see the mining operations, as well as the island. The mining there is of mineral sands, using a dredge. The CRL website does a great job of explaining it all, much better than I could.
http://www.consrutile.com.au/home/inner.asp?main=3&sub=18&page=18

Interesting to see the statements made in the protests against the sand mining operation.
“Ms Truman said the Enterprise mine on the southern part of the island was the deepest mine “ever”, with a 100m high face.” I’d like to see where these ‘facts’ come from.
http://discoverstraddie.com/2009/08/15/crl-are-you-serious/

Two seconds on Google brings up a Russian Mine (Mirna Diamond Mine), is over 600m deep. This is not even the deepest surface mine, let alone underground mine. I can’t find if it is even the deepest sand mine, besides which I don’t see the problem with depth, as long as it is properly managed.

http://www.couriermail.com.au/news/queensland/north-stradbroke-island-mine-rort-alleged/story-e6freoof-1225764046748
Another story has an opinion on the expired mining leases, but this seems to be the Government at fault, not the mining companies. They have applied to renew the leases, but the Government is yet to make a decision on whether or not to renew them. This definitely doesn't seem like a 'loophole' to me, just bureaucracy making sure the process is 'thorough and efficient'. I think anyone dealing with the Government will be aware of the time it takes to get things done.

Apparently (according to the protestors), mining leases cover 70% of the island. How is it fair to take this away from a company that has been paying (and quite a lot if it is like any other mining operation in Australia) for this right? Considering that they are the most environmentally conscious company I have heard of, I think they are at least entitled to a fair debate, but that never seems to happen between public perception and mining companies. I will agree where it is clear that mining companies do not do enough for the environment, but a fair debate needs to occur, not just one-sided from the protestors (who rarely research their facts).

Check out the CRL site to find out the lengths they go to for the environment. I know they do what they say, because the nesting boxes created a safety hazard for the workers who had to check and report on their use. They have since implemented the use of cameras on poles, which prevents the need for ladders on unstable surfaces, and surprises like snakes in the boxes.
http://www.consrutile.com.au/home/inner.asp?main=3&sub=35&page=35

Interesting sidenote, that Unimin Australia Limited (an Aust company) has acquired majority interest in CRL (as of last year).

These protestors aren’t doing themselves any favours either, considering the amount that many mining companies in Australia contribute to the community.
http://www.consrutile.com.au/home/inner.asp?main=2&sub=60&page=60

There has also been a lot of talk (and court cases) over CRL selling excess sand to the construction industry in particular. This might not seem to make sense, but basically when any mining is carried out, the previously compact waste and ore swells, and takes up more volume than it originally did. My understanding is that in order for CRL to achieve the same land profile, or even just to minimize the height of the dunes to make it safe, it needs to get rid of excess sand. To be honest, I think this is a smart move to sell the excess sand to another industry that needs it. More money in the company might mean more employees, greater pay, more money for the community or environment, who knows? I’m sure at least some will be accounted for as pure profit, but who knows?

Anyway, that's enough of my opinion, what's yours?

Vac Work

I'm coming to the end of my vac work, with only 3days left. I'll have to get used to choosing what to wear again, I do get a bit used to the hi-vis at times. I'm sure I will manage though, it has only been 3wks.

So far I've done a lot more surveying than engineering work, but there is not a lot to do at this site, considering that BMA do most of the plans, and just tell Downer what to do where. It's a bit frustrating to see the diggers move so much and so often, losing time and having to float them down to the other end of the mine, but considering that Downer only does the prestrip here (the section between topsoil and ore), they have to fit in with the blasting crews, topsoil operations, dragline and coal excavation. Considering all of that, BMA has to fit everyone into each part of the mine to minimise interaction.

I'm definitely not looking forward to going back to uni, it's so much more fun being on site!!