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. (1300)