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Mining tax & Abbott

The relative failure of the mining tax reform was certainly due in part to its poor execution and particularly the inability of the then Rudd Government to explain the motivation for a decent tax reform that shifted the incidence of taxes away from output-destroying output-based royalties towards a tax that took most only when the industry was booming.  It isn’t booming now so that revenues are much less than expected. The Labor Party has not proven effective at explaining the rationale for many of its policies.

But part of the problem with the tax was the hysterical campaign of lies launched by the Australian right when it was first proposed.  All the IPA nonsense and the political opportunism of Tony Abbott played into the hands of the miners and left Australia with an inferior tax reform to the one first proposed by the Henry Review. Abbott and the right-wing won because of Labor’s precarious political position.  They won a victory on this issue and now are using the low tax receipts from the tax to further criticise Labor.   Will Henry Ergas, Sinclair Davidson and Judith Sloan  get well-paid adviser positions when the Liberals gain power? Take a gander at the pure nuttiness of the Ergas-Davidson position here.  Presumably these marginal economists would prefer output-based taxes that impact on miners whether they are in boom or recession.  An appalling denial (ignorance?) not of some esoteric point in tax theory but of undergraduate economics.

There are two difficulties here apart from the finances of the extreme right.  For one the Labor backdown has surely convinced every interest group in Australia that the soundest business investment is in politics and manipulation.  The second difficulty is that we now face the prospects of a poor Labor Government being replaced by an opportunistic and dishonest Abbott-led government.  Those who think that Abbott will change his outlook on the world once he becomes PM should look back at the way he has been prepared to deceive on such issues as carbon pricing and the mining tax.  We do need some ethics in Australian politics (agreed the Labor Party is rotten to the core on this one) but bible bashing bigot Abbott won’t deliver what we want.   He will behave as he has in the past and put political opportunism ahead of the nation and civic duty. Watch out ABC and watch out the environment – there are debts to be repaid and enemies to destroy.

9 comments to Mining tax & Abbott

  • yes the position of Ergas /Davidson is what you would expect from opposition shills. There is no logic at all.

    Their understanding of politics is appalling.We are not the US.

    Public Servants have large files of criticisms made of Departments.

    It isn’t hard to see how silly those criticisms are or policies which they advocate.

    for example it doesn’t matter who the Treasury head is the minute Davidson tries to prevade any influence his belief this current budget was expansionary wil be shown as complete evidence his knowledge of fiscal policy is nil.

    Ministers take departmental advice. does anyone really think that will include these people?

  • dismalscience

    Part of the problem is that economists continue to deride the PRRT as affective tax mechanism, which is why we ended up the MRRT mess. Sometimes economists need to step back and accept that something actually works (for over 20 years) and that their theories need to change. It’s a pity universities are not undertaking research to address this issue… Treasury was consulting CSIRO about behavioural economics when the MRRT was being developed!

  • derrida derider

    Unusually, a criticism of Labor by you that I agree with. It is true that the weakness of Labor’s position has made it a target for every well-funded vested interest around. In fact considering how weak their position has been since 2010 the amazing thing is not that they’ve buckled to some of this but that they’ve managed to resist big slabs of it.

    And it is also true that the influence of the (literally crazy) US right on our own right has made them increasingly toxic. My only consolation with the impending Abbott government is that on form he is a politician more likely to be interested in populist nostrums for his re-election than in pursuing the right of his party’s obsessions. Also, nottrampis has a point – his public servants weren’t much impressed by Abbott when he was Health minister, but they tell me that he was impresed by them and is well aware that PS advice usually gets its facts right while lobbyist and political adviser advice often doesn’t. I think his recent kind words about the PS’ professionalism were sincere.

  • bugger stuffed it up but the link works

  • Intriguingly, Henry Ergas points to the volatility of the miner’s income – a fair point – and one that justifies the original design of the mining tax (without the fancy footwork on delaying the Treasury’s contribution to the 40% joint venture. Sad that someone as intelligent and well read as Henry has come to this.

    Indeed, he’s even got into some old fashioned hate speech in his latest.

    NOW we know. Locked away in Parliament House were the world’s largest miners. In strode the new
    Prime Minister and her Deputy Prime Minister and Treasurer, with a spring in their step and fresh
    blood on their hands. As the execution of Kevin Rudd had shown, it wasn’t that they lacked scruples;
    they simply wouldn’t let them get in their way.

    Pretty low grade stuff.

  • Jim Rose

    few were impressed by Abbott until he became opposition leader.

    since then, he has been the most effective oppostion leaders since WWII. pulled down a first term PM and has another on the ropes.

  • No Jim,
    It was the faction heavies tht brought down Rudd.

    he was headed towards an easy victory

  • Jim Rose

    nottrampis, so Rudd was ahead in the opinion polls and he had not backed down on any great moral issues of our time?

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