Ruddy deceit will increase sovereign risk

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Unsurprisingly the major miners have come out and made very strong statements about the new ‘resource rent’ tax being considered by the Australian Rudd government. There are a few things we need to acknowledge:

1. These companies often buy into these projects – If they government ‘suddenly’ adopts this policy, they will damage the sovereign risk rating of Australia, and they will thus increase the cost of capital levied upon all business.
2. Any government which has bought a mining resource will sue the Australian government, i.e. Xstrata, BHP Billiton will sue the Australian government for unfairly targeting them, and the taxpayer will pay!!
3. These companies in most cases had to find these resources. The idea that these resources are ‘owned by Australians’, and therefore have the right to apply any arbitrary tax is grossly unfair to investors. Deceitful and opportunistic parasitism you could say.
4. Rudd was flagrantly dishonest by suggesting that resource companies only paid $8 billion on its $80 billion in earnings. He failed to acknowledge that they also paid resource rent, income taxes, and actually pay 43% of their profits in tax – compared to 30% by the banks
5. This is the 2nd time a Labor government has gone after the resources sector – the last time they proceeded to adopt a ‘gold sector’ tax, which was previously royalty free, even though they pay income taxes.
6. Regardless of whether there is a new tax or not – consider the losses caused by fund managers – yes your fund managers – when the Rudd government without any warning decided to adopt this very ‘opportunistic tax’.

This is a very deceitful path by Rudd because it highlights the lack of responsibility of this guy. He wastes billions on flivilous expenditure over the last 2 years, and now he looks to the most productive sector of the Australian industry, and kicks it in the knees. Absolute parasite.

Can I say to Australians...there is something you should never do...elect a person with a detached sense of reality into office. i.e. Bureaucrats. The second is....don't create opportunities for them to 'divide and rule'. Rudd wants you to accept this tax as 'easy or uncontroversial' tax money because he thinks mining employs only 3% of employment, and in the short term it will capture money for government right, but long range (which Rudd doesn't care about) it will marginalise Australia in the global mining industry. Mining services will shift overseas, income will shift overseas, geologists will shift overseas. More companies will be run from London.

He is destroying australia's long term prospects for his short term political gains. He wants to use the money to buy concessions so he can convince you to vote for him. I don't even think the policy will be adopted. He will backed down after the election, and those 'promises' will be dropped. Its all smoke and mirrors. Get rid of him! Better still get rid of them all - vote for a libertarian. They are not perfect, but at least they are destined to leave you alone.

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Andrew Sheldon www.sheldonthinks.com