Australian Miners and the Resource Super Profit Tax
(11 pages of text)
This case presents a means by which students can explore how government policy is influenced by the actions of stakeholders in an economy: firms, taxpayers, voters, unions, and other organizations. It highlights how policy-making can be a process endogenous to the interests and influence of the private sector, and not an exogenous one, even in domains that are the power reserve of public policy makers.
In 2010, the ruling party in Australia has devised a new tax, the Resource Super Profit Tax (RSPT). This tax has been devised to enable national and state governments to benefit from the boom in the mining industry by expropriating a greater portion of the industry’s earnings. The RSPT has been prepared without any input from major mining companies in Australia, and if implemented would represent a substantial increase in their tax payable. The case is presented from the perspective of the CEO of BHP Billiton, one of the largest mining companies in Australia. The situation considers what, if any, action can be taken to combat a tax that has already been devised by the government and is about to be implemented. Successful analysis of the case involves an evaluation of all stakeholders in the Australian economy that will be influenced by the imposition of the RSPT. After this is done, a strategy needs to be devised that will influence the government to withdraw a tax to which it has already demonstrated a firm commitment.
This case can be used in a strategy course, a global strategy course, or a business environment and public policy course. Generally, the case is best taught near the middle or end of the course, as it represents a new tack on strategy, as compared to the standard industry- and company-level analyses. In a business environment module it can be taught near the beginning, when one is considering how various organizations or actors in a particular business environment influence the formulation and implementation of a strategy. The case involves an analysis of stakeholders in an economy to identify their potential support or opposition to the implementation of a new policy. The next step in the analysis is to devise a strategy to mount the weight of the interests to the point where the government (policy makers) must listen to these interests or risk damaging their future viability (losing the next election) or engendering long and costly opposition to the implementation of the new policy. The time needed for the presentation and discussion of the core issues is 80 minutes, although it can take up to two hours, depending on how an instructor uses the coalition-building and negotiation exercise that comprises this case.
Mining, Quarrying, and Oil and Gas Extraction
Australia, Large, 2010
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