THE 2010 BENDIGO RSPT RALLY THE 2010 BENDIGO RSPT RALLY

A Victory to Commonsense

With the Resources Super Profit Tax (RSPT) behind us, following is a history of the events which occurred during May and June 2010 focusing on the Bendigo Rally and a selection of personal observations. The result of these efforts has seen an increased interest in membership and a greater public awareness.

Clearly, it is the Association’s opinion that we were drawn into this issue with little thought by the government for justifying the inclusion of quarries with mining under the proposed Resources Super Profits Tax (RSPT). It was clear from the start that the Henry review, and Treasury modelling documentation had us exempted and there was and still is no evidence of any modelling being undertaken and presented to us by the government on the impact that this would have upon our customers and our businesses.

Had the government undertaken industry specific modelling initially, they would have very quickly come to the understanding that capturing the extractive sector was impractical and could only put pricing pressure upon construction activity throughout the whole economy.

The association moved as quickly as it possibly could once it understood that there was no clear definition or understanding within the government’s mind as to who would be captured by the non-renewable resource definition with an email enquiry sent to Treasury on May 4 seeking a definition of non-renewable resources particularly low value resources.

Treasury’s reply to the CMPA on May 6 indicated that “in relation to marginal low-value projects, it is important that they are included in the RSPT scheme, as these projects are likely to benefit the most from a switch from a royalty regime to the RSPT”. It was following this response and the comments coming from industry and media that the CMPA realised it had a significant issue to address.

Following discussions with the Management Committee, a meeting was called for and held at the CMPA office in Kilmore on May 20 to commence formulating a position. This meeting was attended by representatives of the CMPA, including quarry owners and Management Committee Members Ron Kerr, Tim Bird and Garry Cranny; CMPA Treasurer and valuer Robin Hocking,

CMPA accountant John Pititto from Mead Partners and CMPA Administration Officer Gavin Moreira. Also in attendance were two Liberal Party candidates, Cameron Caine from the Federal Seat of McKwen and Craig Hunter from the Federal Seat of Bendigo.

From this meeting, the first official letter to Member which was released on May 26. This letter became the foundation stone for CMPA’s position throughout the campaign.

MODELLING THE RSPT

One outcome of the May 20 meeting was an agreement that it was essential to establish the impact that the RSPT would have upon the Member’s family businesses. It quickly became evident that a single short-run scenario could not account for the long lag ti me, and that it was not a case of ‘one size fits all’.

Accordingly it was necessary to establish a flexible model over a longer time period to give a clear and concise message that could be released in a public arena and applied to any individual site.

The CMPA engaged Tom Kerr of Conundrum Holdings to develop a model clearly illustrating the impact that this tax would have upon our members’ long term profitability, after tax earnings and net cash flows.

The modelling was initially developed to capture a 15 year period for an extractive business and took into account the size and turnover of the operation, the capital outlay (including initial and ongoing investment), historical pricing and operation growth trends, the amount (if any) of state royalties paid, the financing costs, the taxing point and deductible versus non-deductible expenditure in terms of the RSPT (see Figure 1).

In order to survive in such a competitive and capital intensive industry as ours it is imperative that our businesses are able to retain cash from aft er tax earnings for re-investment into the operation.

Models A to C show the modeled outcome for a mid-sized hard rock quarry not currently paying state royalties. Our modelling clearly showed that should this new tax have been forced upon our industry, our after tax earnings would have been slashed by up to 82% and our effective tax rates could have jumped from the current 30% to around 78%. These effects would have had dire consequences for our industry and resulted in a financial impost upon the community through a 20% increase in unit rates.

With such a high and unequitable tax burden, members would have struggled to maintain their company cars and office equipment let alone maintaining their crushing plants and heavy mobile equipment in line with current technology and legislative pressures. It is as though those advocating the inclusion of our sector had absolutely no idea of the capital intensive nature of our business and how competitively it performs in the marketplace.

As an industry our businesses are continuously forced to operate extremely efficiently in order to survive, this fact was obviously not understood or given due regard by those proposing that our sector be considered for inclusion in the tax.

The CMPA modelling was developed with the assistance of Trevor Chapman from Watco Partners and reviewed by John Pititto from Mead Partners and others within our industry before being independently reviewed for technical accuracy by Pitcher Partners.

HOW THE RALLY CAME ABOUT

Following the meeting in Kilmore on 20 May, the two candidates that had attended were offered CMPA support. This was conditional in that the candidate had to identify and contact Work Authority holders within their regions, and had to organise their own briefing session.

It is to the credit of Craig Hunter, the federal candidate for Bendigo that he seized the opportunity and he and his campaign team contacted Work Authority holders in their electorate. This received an excellent response and in excess of twenty people attended a breakfast meeting on 11 June at Rotary Flat. The feeling of the meeting was that the industry needed to highlight its concerns quickly and the impact this proposal would have upon the wider community.

A motion was moved by Ian McClure of Bendigo Washed Sands, that something more substantial be done, and that consideration is given to a truck rally.

This was relayed to the CMPA who accepted the challenge and preparations were commenced on that day. From the CMPA’s perspective, with the public holiday on June 14, planning couldn’t commence until June 15.

CALL TO ARMS

The commitment of the Association was displayed through the organisation of Members being called to arms at very short notice to bring forward their plant and equipment in a military like performance. This commitment is reflected in the honour role showing those who were part of the rally or attended the briefing that followed.

In excess of 7,000km were collectively travelled to get to the rally, with an estimated cost of $91,000 in lost trucking costs alone (i.e. standard daily income of $1,300 per truck over 70 trucks). The professionalism and pride that was demonstrated on the day by those participating was impeccable.

THE CHALLENGE OF COMMUNICATION

With only three days (June 15 to 17) to effectively organise a rally and contact Members, this was as challenging as being granted a new Work Authority within one year of application!

The organisati on of the rally and the local media coverage at Bendigo was undertaken by the Association’s Chairperson, Tim Bird, his family and staff of Allstone Quarries. The decision to organise the rally from Bendigo’s Prince of Wales Showgrounds was seen as the correct one within 15 minutes of the gates opening for the rally a column of trucks and assorted vehicles arrived for marshalling. His foresight in organising a light plane was foiled by fog and low cloud cover.

Julie Millowick, Lecturer In Charge of Photojournalism at LaTrobe University, organised her six photographers to position themselves along the route to record history taking place. Topping this off was the subtle details like the coffee machine lady supporting the protestors, the white lining for transport parking, the organisation of the hall including audio visual for presentations following the rally, the distribution of media releases, and the call to arms made to all members.

Developing media releases was undertaken by Tom McKenny from Industri Communications. The support, guidance and wisdom given in crafting our approach to the media and our media releases throughout the whole period was greatly appreciated.

The clear and concise messages reflected in their reading, dated:

• June 7 (‘The Construction Materials Industry Demands Answers on Super Profits Tax’),
• June 16 (‘Construction Materials Industry Rallies Against Super Profits Tax’) ,
• June 24 (‘Time Bomb in RSPT on Quarrying’), and
• July 2 (‘Commons Sense Prevails in MRRT’).

Thanks are also extended to Di Rule for her early guidance and opinions on undertaking in a media and rally campaign.

Appropriate signage was essential to the success of the rally. Prepared by Paul Taylor from Super Signs Australia with only 24 hours notice was a display of our Associates’ commitment. Work started on June 16 with discussions on designing a logo and wording for the signs, taking into consideration the mounting difficulties and being conscious of cost.

Waffle board and stickers were the final outcome with over 200 signs being made. Works were undertaken in the evenings between six and eleven at night on the Wednesday with a truck and trailer from SBI Cranbourne Quarries, driven by Paul Williams, picking up the signs at 6.30pm on Thursday June 17 from Frankston for delivery to Bendigo the next morning.

A comment was passed by Paul Taylor that he had never seen a truck and trailer combination enter his street for a pick up or delivery before, this area was the domain of very small vehicles and even they had difficulties managing access.

Many of these signs are depicted on the cars and trucks in the photos throughout this story.

WORKING WITH THE MEDIA

There was extensive regional media coverage leading up to and following the event in the press, on television and radio. This resulted in numerous interviews being undertaken by local and regional papers (Bendigo Advertiser, Midland Express, Weekly Times), television (WIN news for Ballarat and Bendigo) and the ABC (particularly the Ballarat, Bendigo and Mildura stations).

News of the rally reached Melbourne audiences through both ABC’s and Channel 7’s evening news programs, and 3AW’s drive program. The event provided the opportunity for the association and its members to engage with all forms of media.

We quickly developed the skill of transforming facts to provide focused, relevant, articulate information that was news worthy. A particularly noteworthy example is the letter to the editor written jointly by Glenn Guest, Doug Hansford and David Horner of Pyrenees Quarries and Vin Oliver of Mount Granite Quarries which was published in the Midland Express on June 29.

Those listening for the first time ever were starting to understand that the sector served the wider community on a daily basis through meeting their needs through the supply of sand, stone and other products and that they are an essential service.

Many CMPA Members conducted interviews with their local media outlets and letters were sent to prominent journalists. Other members sent letters and met with Federal Members, particularly in the opposition.

Although we have not listed all participants, we greatly appreciated their efforts with particular thanks going to Tim Bird.

Honour Roll

The CMPA Management Committee, Secretariat and every Member of the Association would like to pass on their sincere thanks for your personal commitment in attending the CMPA RSPT Rally.

This was a watershed event and something you should be extremely proud of in that it will be remembered in our industries pictorials and written history. It was an event which will stand the CMPA in good stead over the years to come when negotiating our concerns with government on issues affecting our sector.

If there are any names missing from the register, please let us know as we are confident at least 20 participating vehicles have not been recorded. The professionalism and pride that was demonstrated on the day by those participating was impeccable.

REGIONAL COMMENTS

The night prior to the rally saw many preparing their vehicles for the trip to Bendigo. One example was that of Geelong Lime, from the Melbourne region, who were up till midnight putting lights and mudflaps onto the vehicle to ensure it was roadworthy. The ’79 Kenworth and its unloved 36,000Ltr aluminium tanker covered in signage left Geelong at 8am for the trip to Bendigo arriving 3 hours later.

Tom McCann said after the meeting, ‘The day provided an absolutely excellent display of small to medium business that had seen the impact this ill thought tax would have upon their businesses’.

David Jefferies from Casacir was one of the Gippsland region who made the trip to Bendigo (via Deer Park). One of his Kenworth 408SAR, 550hp trucks and trailers made the 8 hour round trip. David said he was more than impressed with the day’s events and that the industry should be proud of their organisation.

A significant contingent of four truck and trailers was in attendance from Burdett Sands, from the Melbourne region, including one being driven by Andrew Burdett himself. Aft er leaving their yard at 6.30am they headed to Bendigo via Deer Park. Upon arrival at Bendigo these drivers in particular were seen polishing their chrome.

They headed home via Seymour returning at 6.30pm. Placards were displayed on the entire journey home. A total of 1,100 litres of fuel was used on the trip. Andrew said there was a necessity to show solidarity against the proposed tax.

Steve Bell from Mansfield Constructions, from the North East region, also made a huge effort floating a brand new Hyundai 770 loader across from Mansfield. Unfortunately unless willing to cover the cost of any torn tram lines (last time costing $22,000); at over 4.5m it was unable to fit along the route.

Discretion and good quarry sense saw the loader left at the showgrounds. Steve commented that the day was extremely important and warranted the time committed.

Bob Ferguson from Morree Quarries, from the South West region, made the three hour trip from Harrow to attend the rally. Bob said, “The [RSPT] is an issue of great importance, and as such we were happy to support and participate in the day’s activities. Our thanks go to those who organised the rally for the industry”.

John Mawson from Mawsons, one of the North West contingent, had several vehicles including concrete agitators att end the rally. “We were glad to participate and be part of the industries display of solidarity. It was essential to alert the federal government to the potential damage that such a wide based tax can do to the quarrying and broader construction industry; it would have affected the affordability of housing and infrastructure very significantly. The rally improved awareness greatly and helped the government reach a more sensible approach to tax in the mining industry”, John stated.

THE RALLY

On arrival the drivers registered and positioned themselves in the marshalling area, separating their vehicles with just enough space to move between them.

There were four persons charged with the roles of coordinators, having white hats given to them, and this was overseen by Ashley Cox. Ashley, representing Ashley Institute of Training formally an AWU organiser, was the primary coordinator aptly picked for his towering presence and rugged presentation. With megaphone in hand he was truly in his element.

In perfect lines of twenty one trucks abreast and four rows deep waiting to move off , placing placards and proudly inspecting the full array of transport vehicles that were assembled.

The local Liberal Federal candidate Craig Hunter and the Liberal Shadow Environmental Minister Greg Hunt addressed the assembly before it took off wishing success and pledging their support for small to medium businesses.

The sitting member for Bendigo, Steve Gibbons, watched the rally as the column moved past his office for over of an hour and a half made up of maintenance vehicles, gypsum carriers, lime distributors, tray trucks, cars, floats, tankers, concrete agitators and truck and trailer combinations.

Bob McLean from St Arnaud in the excitement locked his keys into the car and was worrying he would miss moving off in the rally. His wife and blue heeler were standing by the vehicle as we started to move off. A coat hanger was brought in, and the rally was joined. Bob and his dog made it onto the telly for the first time in his life. Since returning from Bendigo, Bob has become a celebrity in St Arnaud!

People were called to order by Ashley and the column moved off on time at noon not returning until 1.30pm.

The transport column was lead off by a single axle two tonne Isuzu tip truck with a life size fibreglass Murray Gray bull with the following slogan draped over its back, “K-Rudd Your Visions and Revolutions = 40%. Bull Tax”. Goulburn Valley Resources’ Wally Gianarelli came bringing a bit of humour but he understood the serious side of the day. Even the sign writer could see both the seriousness and the humour behind the policy.

As an observer, you could only be in awe of the transport column as it stretched 2km wrapping itself around the central area of Bendigo with its head catching its tail at the intersection of the Midland Highway and the McIvor Highway, as highlighted below.

The local Win News reported in its lead story that evening the column consisted of in excess of 100 quarry trucks filling the streets of Bendigo. It just goes to show there were many local businesses and late arrivals who attached themselves to the column as it left the showground.

A symbolic gesture by the rally saw samples of products produced in the local area being provided to the sitting member to increase his understanding of the industry. No feedback on these materials have been received or for that matter any comment from any sitting Federal Member from Victoria other than those who attended the rally.

RALLY MEETING

On returning to the marshalling area, more than 120 people proceeded to the Exhibition Building in the showground precinct to hear a presentation of the CMPA’s position.

The meeting was called to order by Ashley Cox. Tim Bird, our Chairperson, opened the meeting by thanking the Show Society, City of Bendigo, VicRoads and the Police for their support and understanding.

Ron Kerr, CMPA Honorary CEO, presented the Association’s statement to those present, key segments are below. “This will be forever known as the “2010 Bendigo RSPT Rally” or for short the “Bendigo Rally”.

Our member’s personal feelings and concerns brought about the organising of this rally today which clearly highlights their frustration with the proposed RSPT and the way in which they are being treated by the state.

This is an event which has never occurred in our industry before. There is something wrong when so many congregate together in such a short period of ti me at great expense to themselves. The only similar story of a call to arms was the miners’ rebellion at the Eureka Stockade in 1854 where 150 men stood up to the government representative of the day as a result of an oppressive licence fee. History tells us that common sense prevailed in that the fee was abolished.

Every person here today is an integral part of a family business an SME – a small to medium enterprise. The back bone of this nation’s economy.

Our businesses are inter-generational, they are highly capital intensive and each person within these businesses is a skilled practitioner of their craft. They are conscious of the responsibilities they have to uphold within their local communities from the services they provide through to the impact they have on their environment.

Every person here through their attendance today has shown a deep personal commitment to their industry, their local community and their fellow CMPA members.

Every person here wonders how their business has been drawn into the RSPT debate. They are all competing to provide services to their local community in an extremely competitive environment. They are running on the smell of an oily rag. Their bushiness will not be able to absorb the projected increase in taxation without lifting their prices above 26%. This will have profound impacts on all the customers we serve. This will reduce the volumes of material sold to only further exacerbate the profitability of each of the individual members businesses.

This tax is not stronger. This tax is not fairer. This tax is not simpler. This tax will bring exemptions to some in our sector. Financially advantaging those who are not extracting from crown land. Giving advantage to others who are processing resources which are difficult to trace. Creating a need to minimise its impact within our business accounts. Creating another set of accounts to manage. Giving the stronger businesses an advantage over the smaller operators.

How is any of this stronger? How is any of this fairer? How is any of this simpler?

Tom Kerr and Trevor Chapman then continued the meeting with the presentation of a 15-year model that had not yet been third party accredited, but the information presented stood the test of ti me. The final, third party approved model was subsequently provided to all Federal Members on 24 June.

SUMMARY TIMELINE

Some of the key media presentations and events that occurred during the RSPT campaign are listed below. The interviews were made available to members in electronic format (and remain available from the CMPA).

17 June – CMPA spokesperson, Ron Kerr, interviewed by ABC outlining key issues
18 June – Rally held, CMPA model released & CMPA interviewed by numerous media outlets
4.40pm 18 June – Ron interviewed by 3AW Melbourne discussing concerns from rally
5.20pm 18 June – Ron interviewed by ABC discussing concerns from rally
5.20pm 23 June – Marti n Ferguson replied to 18 June ABC interview (unavailable for comment at earlier date)
9pm 23 June – Kevin Rudd challenged
9am 24 June – Julia Gillard appointed PM
9am 2 July – RSPT vastly changed and renamed to MRRT excluding low value resources (i.e. quarries)

Concluding Comments

We collectively showed the wider community that we professionally manage a significant sector of the economy; we are essential to it and have shown we are skilled and articulate in relaying our industry’s message. We do underestimate the total impact that our industry has upon the state’s economy. It clearly isn’t just 3,000 employees.

We will have to keep a close eye on the electoral campaign policies and the period following to ensure a similar tax is not re-introduced.

The action we took will not be forgotten by those in Canberra, and showed if you stand up and fight for what you believe in, things can be changed.

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