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Wednesday, June 9, 2010

Teele raises sovereign risk issue

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Finally someone is talking about the sovereign risk issue which we raises about 3-4 weeks ago. The Australian Foundation Investment Company (AFIC) chairman, Bruce Teele, has raised the specter of Rudd scaring off investment in Australia. In fact the damage has already been done. Maybe that was the intent...the intent being to soften capital inflows so that the Australian dollar is relatively undervalued. i.e. The Euro and USD are going to come under pressure. This could be bad news in the future for countries like Australia. So maybe Rudd is only too happy to live off tax receipts from mining over the next few years whilst mining projects are stalled by a 'double-dip' recession.
Teele said "He also believed the tax had little chance of being implemented".
I would have thought so too if the mining industry put up a better fight, but actually they are doing a poor job. I guess they have yet to start lobbying the public with TV advertising. But consider this:
1. The global economy is about to weaken, and the mining industry might be conceded by Australians apprehensive about the environment
2. There are very few miners in Australia who are 'owners'. Most are 'managers'
3. The resource rent tax looks like being copied around the world
4. The mining industry is not a big employer

Andrew Sheldon
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