Saturday, May 8, 2010

Miners adopting wrong argument over resource rent tax

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The strategy to date of the miners is going to result in the government adopting this resource rent tax. The reason is the moral ambivalence of 'big business'. I am not suggesting for a moment that business is immoral, I am saying they are uncertain about their moral value, and thus not able to communicate a consistent ethical argument which would give their case the legitimacy which I know they have. The problem is that they, like the broader community, are a product of Christian philosophical values. Christianity and capitalism have existed alongside each other for a long time. Christianity has a legacy of retaining the 'moral high ground' whilst business was always about practicality. It is not surprising therefore that:
1. Government will appeal to the common good, the need to raise money in this financial crisis
2. Big business in contrast is going to argue that it needs to make a 'reasonable rate of return' if it is to sustain long term investment.

This is not a compelling argument. Big business will lose with this approach. Why? Because people, like business people, think short term. They are thinking they are in a financial crisis, they would prefer the tax burden to apply elsewhere. We don't have the ability to pay, 'big business' does. Business loses by this measure. By definition, business tends to make profits, and have a surplus. The public and government can spend without consequences because there is always someone to pick up the pieces. You might say that the government picks up after the big business fails, e.g. The HIH Insurance debacle. But that is only because of the community-wide implications of financial failure.

The proper argument
The decision to adopt a Resource Rent Tax is political folly, however it is just one piece of a succession of follies. They have their origin in the structure of government, and the values underpinning those structures. Unless big business repudiate that legacy of values and political structures, we are looking at the march of Rudd's fascism down Bond Street...or is it Bridge Street....Collins Street.
History is replete with examples of government ineptness, both as moral agents and executives. They spend tax receipts with no regard for consequences. They are not 'earners' of capital, they are expropriators. I would prefer money leave Australia than end up in the hands of government because I know that foreigner earned it. If we treat investors right, they will came back. Rudd's strategy will drive them away.
History is also full of examples of government applying a tax to one minority, and upon the principle of 'divide and rule', spreading their taxing powers to others. They do this by appealing to some majority. Eventually we end up all paying more tax because government by its nature is not efficient. They did not earn the right to occupy government. Understand that our politicians are not the best that our political system can produce, they are the worst. They are the best liars, the best manipulators of spin, and you deserve them because you allow them their ethical disposition to fester. Stamp out the cancer destroying politics in Australia! Require more of your politicians. Limit their arbitrary powers. Require laws to be based on principles. Require political parties to have coherent value systems.
Business needs to make this debate about ethics. It is business who is on the back foot on this issue because of their ambivalence. Business of course has a bad reputation because of the practices of a few, e.g. HIH CEO, Alan Bond, etc. The reality however is that it is government which allows these bad examples to fester. i.e. The lack of effective, under-resourced regulation in Australia, the arbitrary laws which facilitate loopholing of tax codes and statutory regimes. Accounting principles and Common Law do not allow this, the arbitrary 'creep' of statutory and tax legislation does! Stop it before it destroys the country; reducing it to a lower level of depravity than it has already fallen to.
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Andrew Sheldon www.sheldonthinks.com
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