WESTERN Australian Premier Colin Barnett feels hard done by. 
So hard done by that he is willing to chuck his lot in with the miners in a High Court challenge to the mineral resources rent tax.
He says that more than 60 per cent of the tax will come from Western Australian mining and that much of the rest will come from Queensland, and this is discriminatory.
True, the Constitution gives the Commonwealth Parliament the power to make laws with respect to “taxation, but not so as not to discriminate between the states or parts of states”.
And to a non-constitutional lawyer the mining tax might seem to discriminate. But that is not how the High Court and constitutional lawyers see it. Indeed, from the very earliest days of the federation the High Court has rejected the Barnett and mining industry reasoning. And the reasoning has been reaffirmed many times since.
In tax law, legal form and legal application to individual taxpayers have been more important than overall outcome, for very good reasons. The former can be adjudicated. The latter varies according to circumstance.
In 1906 the court held that the fact one state bears a greater tax burden than another will not be discriminatory, provided the same rate of tax applies across all the states.
Income tax works like this. You pay a certain rate for a certain income whether you live in NSW or Tasmania. The fact many more people pay income tax in NSW and more tax is raised there than Tasmania is irrelevant.
The fact that Western Australia has more miners and more profitable miners than others states does not make the tax discriminatory.
For the tax to be constitutionally discriminatory, it would have to impose one rate on, say, Victorians and a different rate on Western Australians.
But neither income tax nor the mining tax does this. They apply the same regime of levying the tax on everyone and the same regime of deductions to everyone.
In 2004, the High Court reaffirmed the principle. Discrimination, it held, was the unequal treatment of equals.
If all miners are taxed in the same way there is no discrimination.
There are a few other legal straws that the miners and the WA Government are clutching at.
Section 114 does not permit the Commonwealth to tax the property of a state. The simple answer to that is that even if a state could claim the minerals as its property, the Commonwealth is not taxing that state property. Rather it is taxing the profits made by miners in digging the minerals out of the ground and selling them.
The next straw is that Section 99 provides that Commonwealth revenue law may not give a “preference”. Well, you can hardly argue that the Commonwealth is giving a preference to states with little mining just because it is taxing all mining activity the bulk of which happens to take place in one state.
Lastly, Barnett whinges that wealth is being taken out of his state to pay for things in other states and that this is unfair. Well, whatever its fairness, it is certainly not unconstitutional. The very reason for the constitutional provision that permits the Commonwealth to grant money to the states (Section 96) is to help the weaker states. That is the nature of a federation.
It may be that mining money raised in Western Australia will politically speaking and in practice be spread among people throughout Australia via company tax cuts. But constitutionally the revenue goes into one pot. And the money comes out of that pot as the Parliament decides.
In a federation you do not silo the federal revenue and spending in each state, or there would be no point in having a federation.
In any event, Western Australia probably has a greater drag on Australia’s defence and border-protection effort than its population size would otherwise warrant.
This whole constitutional-challenge threat is part of the rich miners attitude that they can buy whatever they like and get their won way if they throw enough expensive lawyers at it – like Gina Rinehart assuming the ordinary practice of justice being done in the open does not apply to her.
The miners have already bought a substantially watered down mining tax through sacring the government with a $22 million advertising campaign. What a bargain.
But now the law is through, they can spend as much money as they like on expensive lawyers in the High Court. But the constitutional straws they clutch at will give way.
They will be wasting their money in challenging the tax. But then they have plenty of money to waste. Or maybe the whole thing is a publicity stunt.
DOT DOT DOT
Speaking of rich miners, was the weird Green-CIA conspiracy theory put this week by Clive Palmer a portent that Australian politics is following the US?
Palmer’s rave was similar to US conspiracy theories: Barack Obama is a Moslem and was not born in the United States and his health-care program is a Marxist-Socialist plot to destroy America.
Worse, Rinehart and Palmer have got their eyes on the media. In the US, the far-right created Fox News. During the 2008 presidential elections and 2010 mid-term elections Fox became the voice of the Republican Party, especially its far-right Tea Party wing.
Fox is not a news network, like CNN, CBS and the others. It is a cheer squad for Republican candidates. It has no journalistic integrity. It allows Republican candidates to spruik for campaign donations. It always gives them soft questions and those few Democrats masochistic enough to go on it get pounded.
Fox makes up stories. It artfully rips things out of context to portray Democrats in a bad light.
It has happened because the US has dropped the fairness requirement for broadcasting. The argument was that there was enough diversity within the total US media not to require individual outlets to have standards of fairness and accuracy.
It has meant those with the money can buy a network and run their agenda as “news”.
In this year’s election Obama will be fighting the Republicans and Fox “News”. It is going to be very difficult for him and something his opponent will not suffer.
Beware this happening in Australia. Recent actions by rich miners suggest they would like to follow the US.
CRISPIN HULL
This article first appeared in The Canberra Times on 24 March 2012.