Friday, July 30, 2010

Misconceptions about the resource rent tax

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Quote from Royd Bogan:
"The fairness thing eludes me. A tax is a tax, it's not an issue of morality. The rate of the tax is an economic and political matter, using "fairness" on either side simply distorts the discussion".
Oh, a pragmatist. Well you know we are close to fascism when the popular consensus is that 'morality is not an issue', that a 'tax is a tax'. Great logic. Bogan has descended to the cognitive level of a common house pet. Oh, hang on, he is talking economics. Hell, he has gone off the monitor..warning! Warning! Back to pragmatism. Well, you know economics actually acknowledges moral issues. i.e. It is based on the concept of 'rational man'. It assumes in fact that we are all rational. Which means...if you introduce some psychology, we like to be appreciated or validated for good, not punished for it with high taxes, or worse resented/hated. Hating millionaires might become popular next. Vulgar materialism anyone? It also means we like to avoid sovereign risks, so with little property rights in Australia, we might be better off investing in Ethiopia, where they have greater respect for wealth creation because they have none. The next thing is industry moves offshore, Australia is no longer a centre of mining industry, so we all live in South Africa or Brunei instead. Brain drain 20 years off. Is that enough economics for you; even tossed in some psychology and tourism for dessert.

Quoted from Adultmale
"I forgot to say that the mining companies already pay the same tax as all other companies (as well as royalties). You have to ask yourself why Kev and Julia aren't putting a 'super profits' tax on banks. They post obscene profits every year while they are actively reducing their work force and closing branches". Source: Political
The reason is simply that the banks and media always support the government, and the govt always support them. The banks and media are bipartisan supporters of govt, and the feeling is mutual. Look at how the govt obstructed the IMF, which is suing the banks to get them to repay their unfair fees. How long did it take the govt to reduce interest rates on credit cards.
Apart from these vested interest groups, there are also partisan groups like the unions (Labor) and business (Liberals). The banks and media are the 'untouchables'. Google is also untouchable for strategic only pays 0.5% tax on its Australian income. Lucky guys!

Quote from Royd Bogan:
"As for the economic benefit of mining, yes it's there but it's sad to have to acknowledge that we don't have the wherewithal to actually produce something from the minerals we dig up and export. That's the bloody annoying part, the cargo cult mentality of the Howard government has apparently been continued by Labor. If we actually used the stuff ourselves we'd have a stronger economy, but it's easier to dig it up and sell it to China then buy back the goods. Some things never change". Source: Political
More commentary by people who don't understand commerce or economics. The reason why we don't process iron ore is because we cannot compete with China. Now, if you think about it, the reason is that we have minimum wages in part (because of Socialist Labor), geopolitical and geographic issues, and also because we can get greater productivity from placing our labour elsewhere. i.e. IT sector.
The reason we don't use iron ore is because we consume very little. Few countries can compete with China on processing costs. That will be true for another 2 decades, then Vietnam and India will be cheapest, then probably Africa I guess. Iron ore needs deep water ports.
We used a great deal of coal....but I guess many of you are not too happy about that. I love the mentality what you do for the country...but do you mind if we screw the industry and investors. Why would you want to invest in mines or downstream industry if you as an investor are treated this way. Have some empathy or proclaim your parasitic souls.

Quote from Royd Bogan
"The miners can stop work on a site if the price of metals beomes unprofitable. They sack the workforce, install a maintenance and security workforce at lesser cost and mothball everything until the price goes up". Source: Political
You mean investors should take a loss (as opposed to making a profit) in order to support those parasites whom think the world owes them a living.
Let me understand this, you want the cash, but not to support stable jobs? Clearly you are advocating shutting mines. So I guess you are just a cynical leach, as opposed to an idealistic one.
Rest assured there will be millions of you trying to grab a buck from the miners. Rest assured exploration spending will evaporate in new projects. It will continue in developmental projects for 6-10 years, but that will be the end of the mining industry. Maybe the Chinese will not even fund developments, opting for safer West African countries like 'Angola' instead. Hard to believe we could 'out' Angola in the sovereign risk stakes, but clearly that is what the standards of parliamentary conduct have descended to....and I don't like the Liberals either. I suggest not voting or voting for a minority like the Liberal Democratic Party. They don't have much on policy or principles, but I think that's because they have no money. Mind you, when they do, they will probably become liberals. Ok, so I'm all you've got, and I'm not running or even there you go. Go buy a house or drown your repressed memories of this conversation.
Andrew Sheldon

Wednesday, July 28, 2010

Market risk of Resource Rent Tax

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The coal market consultants Wood Mackenzie have come out in defense of the mining industry over the resource rent tax. From the outset one must consider that Wood Mackenzie is a consultant to government and the mining industry, though most of their business is with the private sector, so some bias is possible. But I actually agree with them for reasons I will add. Appreciate that coal and iron ore are low value, high volume businesses requiring a great deal of investment (i.e. capital intensive).

As a prior coal analyst with Barlow Jonker (which was years later taken over by Wood Mackenzie), I can say there is a tendency for people to reflect only on the short term market for commodities. The reality is that commodity prices went very high in the 2000s, but we must remember they went so high because of the under-investment in the 1980s-90s. Higher prices have sparked a rash of new, small projects, so its possible that prices could stay low. This government intervention strikes me as a govt-orchestrated attempt to curtail the development of new capacity in order to keep prices high. Good for Australia it could be argued, but at whose expense? Certainly to the benefit of Fortescue, BHP and Rio Tinto.

In the long term the market could go either way. Coal and iron ore are common commodities. We must also remember that China has a great deal of it as well. We must also acknowledge that the global seaborne coal and iron ore supply curve tends to get flatter as the market expands. That makes competitition very intense. We can also expect that the last commodities boom will result in a lot of new players, who will keep prices down.

I recall studying the Carbocol SA Cerrejon de Norte coal mine in Colombia when I was an analyst. At the time, everyone thought that coal prices were going to $100/tonne in the 1980s. Instead they went closer to $25/tonne, and resulted in mines going broke. Carbocol was nationalised by the Colombian govt, much like the Australian govt plans to expropriate the profits from Australian miners. The legacy was that Colombia lost investment credibility, and the mine was loss-making for a decade. It never recovered its capital. The same risk exists if the Australian govt takes on a commercial risk in order to profit from mining. It might even become a mining industry rort like the tax credits for the wine and timber industry. Of course a strong China and India augers well for prices, though who knows what could happen in the next 10 years. Do we want the government accepting that commercial risk? Its your money, their lack of accountability.

The very idea of government basing its budgetary spending on voltatile commodity prices is grounds for concern, though in fairness, we tend to see commodity prices offset by a weaker $ on that basis the government is pretty safe, so commodity price changes will be ameliorated by balancing exchange rate movements; particularly as high household debts will pin interest rates at a low level.

It is clearly suspicious that the Gillard government is unwilling to disclose its commodity price-forex assumptions underpinning the claim that the tax will pull in $10.5 billion in its first two years.

According to the SMH, the head of coal supply research at Wood Mackenzie, Gero Farruggio, said that as the MRRT was a profit-based tax, government revenue would become more sensitive to price fluctuations. ''A return to the low prices of just a few years ago will see no additional government revenue flowing from MRRT, with some companies benefiting from a reduction in the corporate tax rate from 30 per cent to 29 per cent,'' he said.

Really though he is ignoring the exchange rate impact, and I suspect the exchange rate will offset it. Pragmatic arguments like these ought not however be the basis for moral-political decisions. Otherwise lets just kill all politicians and retarded kids, and we will add $2000 per capita to GDP in the first year and heaps more when we finally eradicate the oppressive arbitrary laws of political middlemen who create no value.

Gero Farruggio also said ''Indonesia dominates the ranking tables, with the largest thermal coal production and lowest average cash cost - in contrast to Australia. It has moved to reduce the level of government take from coal production".
We must remember however that Indonesian export coal will principally find local markets in future, so that is a domestic cost. Export sales could be expected to become less significant, and maybe for the government, security of supply considerations might justify a higher tax. Not legitimately, but that is what governments do....justify expropriation. Stuff those who are impacted.
Andrew Sheldon

Foreign criticism of Australian tax policy

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It is interesting how elections draw out all types of personal commentaries. Consider the latest criticism from Nobel Prize-winning US economist Joseph Stiglitz - which strikes me as self-defeating. He is critical of the "mining industry having too much influence on the political debate on Australia's mining tax". Why then should he seek any influence at all, and why did he take any position at all when he is not an Australian citizen, and clearly does not understand mining. I always knew how the Nobel Prize went to the undeserved...this is a case in point. Lack of critical insight being his problem.

He makes a comparison between the mining industry and regulation of the financial industry. Firstly, if one is having wealth expropriated from you, who else has a legitimate interest in the outcome other than the victim. The mining industry lives according to the rules. Is it fair and reasonable than shareholders and miners loose out because the government decides to change the rules in the middle of the game? Shareholders invested in mining projects based on a certain tax regime. The government has decided near the top of the boom to steal the upside in the stock price, which can only impose losses on shareholders in a specific sector of the economy. Its not even broad-based. It is grossly discriminatory.
He adopts the idea that 'resources were public' property. True enough, some years ago, the government adopted another arbitrary law saying all resources are govt owned. It then entered into mining title on certain terms, and now it wants to arbitrarily change them AGAIN. If it wants to do that it ought to do it to any new title applied after the law is enacted, not 'effectively' retrospectively applying to existing mining title.
There is a big difference also between public ownership of resources and public ownership of 'mineable reserves'. These companies have spent a lot of money proving up these resources, and the government wants to come in and take the 'value-add'. Rest assured if they thought mineral prices would collapse for the next 3 decades, they would drop the tax proposition because it was always about the money. It is utterly self-serving, unprincipled and unjust.
How can you compare that with regulation of the mining industry. Regulation ought to be about protecting citizens. This resource rent tax is utter and blatant extortion and expropriation. The fact that it is supported by a former 'paid' bureaucrat ('grim reeper') in the World Bank, is reason for questioning his ethical pretext.

He also said that "to date the windfall gain from the rise in iron ore had gone disproportionately to the companies, while a disproportionately small fraction had gone to Australian citizens".
The reality is that Australians have the opportunity to benefit from the mining industry if they so desire....they ought to invest, not support expropriation. I might add the people who made the 'windfall' are not necessarily the existing shareholders. Shareholders chage. In any respect, any wealth was 'made' by these companies and shareholders in accordance with the law. The law is to protect, not to sanction abuse.

His next argument is that: ''The natural resources belong to the people".
That's right, under some prior imposition government forcibly assumed ownership to all mineral resources. It has since sub-leased those lands to the mining industry, and the industry has acted in good faith with those laws, which were adopted by the government. Those resources are now 'mineral reserves', upgraded by the definition of valuable metal through drilling, geological and geophysical surveys. They are a value proposition, and these people saw the value, and the government wants to take it away, even though it defined the rules. If anything it is a testimony to the fact that governments can't see 'value', so why ought they be controlling it? They cab only result in the Australian people losing value. Expect all future exploration to go abroad. The trend was already there as it becomes much more difficult and expensive to find minerals (other than iron ore and coal) in Australia.
Its possible the govt is exposing taxpayers to huge market risk. Who knows. It also raises the spectre of corruption. Rudd/Gillard could have done a backyard deal with Rio Tinto and BHP to get their deal. That is why arbitrary law like this is wrong. It is a recipe for corruption. BHP in recent years has already been caught engaging in corruption...despite it supporting an ethics committee. Might these executives have a Swiss bank account since they met personally with the PM and ministers. Let's have some laws based on defensible principles.
Why does the Australian people have to benefit. They didn't create any value. Let them make their own wealth and not impose on others thrift or initiative.
I accept the argument that there could be a better system for auctioning exploration title, but actually that might only result in the government getting less, and market traders getting more, as it would only attract more speculators. Its not an issue of competition. Competition suggests more players, buyers and sellers, and that can only result in higher prices for title, as it will result in broader recognition of value. That is why Australia is cheaper than overseas markets, because we are a smaller market. But regardless, the benefit will go to speculators, not the government.
The reason why the govt needs to impose on others is because they are not able to efficiently run the economy. Despite miners producing a lot of value, they are unable to motivate the broader population of Australia to work, so they have to burden the mining industry with 40% tax, when Google pays just 0.5% of its income in tax. Why? Its going for the 'cheap shots'. Google can more easily shift its operations abroad than miners can move their mines abroad. Its pure extortion of those who are defenseless from the arbitrary power of government.
Arguments comparing tax expropriation to questions of regulation have no validity, and highlight the bias of this 'red-card' bureaucrat. He was an advisor to Clinton for heavens sake.
Andrew Sheldon

Friday, July 23, 2010

Gillard driving Australia to economic distortion

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Australia’s PM says ‘Australia won't be able to meet its targets for reducing carbon gas emissions without charging polluters’. Actually that is not true. She could if she wanted to simply legislate to prohibit or phase out those technologies and industries which cause pollution. After all, if the government really believes there is a dire catastrophe around the corner from climate change, it ought to take that action. The reality is that the government is using ‘fake science’ to lobby for more tax, knowing full well it will not reduce carbon emissions. In fact it will have the opposite effect; as all government ‘ideas’ tend to have. Let me give you some examples:
1. Governments in Australia, NZ, Germany, Denmark, etc had the great idea of offering free insulation to the poor, and to those homes which are reluctant to invest in such schemes. Far from resulting in subsidies, it saw installers mark up their prices, so there was in fact no benefit for home owners. It gets worse. All those installers took on more staff who incorrectly installed the product resulting in legal action, and in some cases the product integrity (i.e. the water-repellant character of the product) has been questioned, i.e. AirFoam in NZ. It gets worse. Far from helping people to save energy, it actually gave homeowners an incentives to shift from insulating their bodies with clothes to using 'inefficiently' heating their entire homes with wood fires. So some 800,000 homes in NZ alone could end up consuming more energy than they would otherwise have used...because consuming it before would have been a waste of money.
2. Governments argue too that penalizing polluters will cut pollution; but in fact it will push industry offshore to China, or other third world countries where standards are more lax, and these companies will have to ship products around, so transport costs will be higher. It can only result in a sub-optimal response. Of course business wants a carbon trading scheme so it can simply pass on the cost to customers. Of course it does not care as long as the world follows the same stupidity. This is the stupid pragmatic or relativist philosophy which will drive the world towards fascism. It gets worse.
3. Governments will be far less efficient with the tax dollars collected than business, because governments don’t actually create wealth. You say governments are not supposed to create wealth..true, but they ought to facilitate wealth creation, not sabotage the process. We must remember we really can’t afford to obstruct wealth creation, lest we be underfunded or too poor when a real catastrophe arises. Its not just about the money either; its the technology that money allows us to fund. Technology which allows us to overcome such challenges. You will not hear about those products from government. Why? Because it is not responsible for them. They are only responsible for the real crises, like financial meltdown, caused by government intervention in financial markets.
For those who still believe there is a primarily human cause to climate change, let me raise the specter of solar flares and sun spots. Research since 2005 is showing that this is a far more plausible cause of recent climate fluctuations. The correlation is unmistakably good for the last few years of day. Al Gore swooned people with his ‘hockey stick’. It was a fabrication based on dubious extrapolation of data.
If there is an end for the world in sight, it is going to be precipitated by government, and its unthinking leaders like Julia Gillard. Taxing pollution will not cut pollution it will merely impose a cost on existing plants. It will speed up the replacement of old plants. The reality is that the government does not believe the science either. It just feels compelled to appease its unthinking electoral support base. Really Labor cannot think beyond that. It will do a fabulous backdown after the election. Should we be worried then? Well yes, because we will awaken the next day as a fascist regime where facts have been displaced by the arbitrary assertions of politicians. Liberals in the media will help us get there.
Want to know more about climate change - then listen to critical thinking scientists, not the academics detached from reality with a liberal agenda. You never here about them in the media.
Andrew Sheldon

Thursday, July 22, 2010

Andrew Forrest rejoins Resource Rent tax opposition

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I am pleased to see that Andrew Forrest has either rejoined or clarified his position with respect to the Resource Rent Tax, however I am suspicious of his support because he has sought arbitrary clarification of his position at the expense of principles. On the one side I understand that he is trying to advance his shareholders interests (i.e. shareholders in Fortescue Metals), but on the other hand, his shareholders are likely to have broader interests. His customers for iron ore also have broader interests. They also want to see all these smaller, less advanced iron ore projects developed, as well as coal projects, since iron ore customers also buy coal.
So herein lies my problem with Andrew Forrest's real position. He and the government are really the ones who solely benefit from his little backyard deal. He has given the government a 'card' to sell in this election, that they were able to reach a deal with the 3 largest miners. My problem with this is that Forrest has court and received favour from the government, and as a result of those actions, some iron ore projects in Australia could face excessively high taxes, whilst he is quarantined from them. This is therefore a form of protectionism. It has established a 'tax barrier to entry' in the market, and it will result in him having the favoured position of rolling out further iron ore production capacity at the expense of others.
Really I would like to see Andrew Forrest repudiate his agreement with the government prior to this election, as well as support the efforts of the Association of Mining and Exploration Companies (AMEC) to disparage the unfairness of this tax. The issues which should be raised in this media campaign are:
1. The desirability of government vs private spending
2. The arbitrary expansion of govt power
3. The arbitrary expropriation of wealth from 'select' shareholders, who need not be even wealthy ones. The smart money might already have left iron ore.
4. The unfairness of the tax - the govt picking winners, Google paying 0.5% tax compared to the mining industry, over 44%.
5. The impact on our credit rating, which will raise interest rates
6. The impact on the economy and jobs
Andrew Sheldon

Monday, July 19, 2010

Deal by major miners undermines Australia's smaller miners

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The latest sage of the Resource Rent Tax debate sees the government playing favours with the large miners at the expense of the miners. It is a strange situation. Beyond belief. Here I am arguing principles of justice or political rights with an industry which divides itself into the "haves" and the "have-nots". The Minerals Council of Australia (MCA) represents the big end of town. They fund the bulk of the organisation I guess, and account for the greater number of directors for the organisation, so they essentially control its debate. This has resulted in them 'selling out' smaller mining interests. Democracy is wonderful isn't it.
This has prompted small miners to establish their own body - The Association of Mineral & Exploration Companies (AMEC). This body tends to represent companies capitalised anywhere between $5 million and $500 million dollars, depending on how large and advanced their project is. There are so many of them, that they are not without influence. But they are going to have to get their TV adverts organised because there is just 3 more weeks left. No radio, TV or newspaper advertisements are allowed in the closing week.
They have a legitimate complaint - the government has essentially undermined their wealth. i.e. the government has ripped the profit upside from shareholders for its own use. The government is not even a good spender, so why would anyone want them. People think they will benefit, but governments don't create wealth, and neither do many of the recipients of the money.
The problem of course is that the Liberals are looking so bad with Tony Abbot. The guy is ranking at just 20% for preferred PM, compared to 55% for Labor's Gillard. I think a lot of people are thinking its too early for another Liberal leadership, and they will be thinking Gillard hasn't really had a chance. Women will be thinking the party needs a women for a 'good spring clean'. I've got a better your utter contempt for the constitution by not voting at all. It is all rhetoric to legitimatise extortion... in this case from small miners for the sake of Labor interests.
The deal done between Labor and the majors is of course good for the majors. The government has succeeded in dividing the industry. Fortescue, BHP and Rio Tinto get a special deal. You might ask why? Well, some years ago BHP was caught disbersing bribes for the sake of some Iraqi wheat deal. Is there corruption involved here? Who knows? But these people have no moral standing when they do deals at the expense of industry, at the expense of competition. These three companies have sought from the government special conditions, and the government has given it to them, to split the mining industry. The government will sell this as a 'compromise'. Its not - its a betrayal (by the miners) - its extortion (by the government) - its fascism. Its about time the public drew a line and stood for principles or otherwise accept that they caused fascism to develop. Voting for Liberal will not help. Don't vote or vote for smaller government. Libertarianism all the way! Throwing darts is your next best option. Preferably at the government and hard!
Andrew Sheldon

Saturday, July 17, 2010

Australia - Don't Vote!!

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Here is a YouTube video by a guy who presents a very eloquent justification for not voting in the forthcoming Australian election in August 2010.

Andrew Sheldon
Resource Rent Tax Australia
Applied Critical Thinking |

Thursday, July 15, 2010

Seasonal tax threats care of your accountant

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Its tax season and as can be expected every season, the Australian Tax Office (ATO) is out with its own form of "shock & awe". By that I mean psychological abuse. Basically the tax office is the execution agency which implements unethical laws. By that I mean there is no logical defense or justification for forcing you to pay tax. Of course there are plenty of rationalisations. But since they have no great conviction and they don't expect to either, they use subtle threats in the media. The nature of the threats takes the following form:
1. Appeal to fear: They highlight the consequences of not delcaring your income. They have more diplomacy than the Nazis, but rest assured its the same form of extortion. "We are targeting [certain] tax evaders this year". This year the target is taxpayers who understate revenue. Last year I think it was people who do not declare all their capital gains. The media campaign has the same 'feel' as religions of old, with pastors trying to scare churchgoers into giving 'penance'. Its extortion that ought to have been repudiated centuries ago.
2. Appeal to guilt: There are those appeals to guilt as well of course, with claims that you are a 'tax cheat', or a 'tax evader'. Nonsense. They are the evaders, for the reasons mentioned below. You know what it takes to 'earn' income, whereas they have to rely on extortion.
3. Appeals to utility: There is even appeals to utility, such as the fact that revenue is a basis for valuing an enterprise.

In defense of those who do understate your revenue....I say keep it up! Well done! You are a great Australian! Denying the tax office your money is the equivalent of sparing a bureaucrat his heroin, or denying a politician a pretense that he is doing some good with some stupid, ill-conceived program. Great Australians unite! Taxation is unethical. There is a plethora of reasons why. No good can come from it which cannot be derived from a moral system. It does not even benefit the exponents of the systems. These extorters will never have the pride or sense of efficacy which you derived from 'earning' wealth. Such is the nature of their need to control you. That is the source of their efficacy, to the extent that they have any ambition. They just don't have the efficacy to produce wealth in a competitive context. Just look how they spend your funds, with such schemes as Home Insulation.

Of course government services need to be funded...but they do not need to be provided at your expense, and nor should they be provided unconditionally. If the funding of these services was conditional, they would be provided with care, rather than indifference. If they were provided by the private sector, the provider would be accountable because you are a customer or a potential claimant in a compensation/legal case. For government, which is a middleman, they evade responsibility because they don't want accountability under their administration. That is why war pensioners wait half a century for compensation, when all the sick have long since died. This is the nature of their rout.
If you wonder why an accountant might be extolling the virtues of taxation, think no further than the fact that arbitrary tax systems create loopholes, which create a need for more complex tax systems, demanding an 'ever-increasing' number of tax exemptions, special provisions....sooner of later you end up needing an accountant, paying more tax than you should because you can't be bothered chasing people up for stupid receipts.
The psychological impact of this burden might slip easily off the more successful among you, but regardless, there is no question that such extortion precipitates repression. You simply don't want to consider the validity of these actions because you feel powerless to deal with them. Repression is a common response of slaves and simply people who are having problems coping with stresses they cannot resolve.
Andrew Sheldon

Friday, July 2, 2010

Andrew Forrest...the investor's friend

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An article in the Sydney Morning Herald provides a clue to how democracy works. If you are poor and don't matter, you attempt to contact your representative and hope they can help you. Unless they are helping themselves to your wealth, they can be accommodating. The system is flawed because its arbitrary. Its arbitrary because the government has to justify expropriating wealth. Common law does not allow stealing, but statutory law does. That's right....logic will support the adoption of taxation. You need political extortion or coercion to achieve that. The parliament and 'representative democracy' were merely concepts conjured to legitimatise expropriation or stealing. There is no justification for it. If you find any pretence of one, let me know, and I will repudiate it. Really folks! There is no argument. Attempt to offer one, and I will repudiate it.
People don't normally take such issues to the High Court. Maybe Andrew Forrest of Fortescue Metals will be the first. I hope he can seize upon the right arguments. This is where I fear his legal counsel will be the problem. They will not have any idea as well how to fight this battle. One of his biggest problems is a conflict of interest within the judiciary. The problem is they are appointed/selected by government, and they are paid by government, on the same basis as a bureaucrat. They are safe people by nature; generally not open to challenging a tradition of expropriation. The problem is it comes down to the spectre of a flawed philosophy of law which is based on arbitrary interpretation rather than any coherency test of conceptual validity. I would love to see Forrest test the system. I am glad there are still a few billlionaires left in the world who can afford to enter the justice system without much to lose.
That's right...we have been a culture of perpetrators and victims since well before the Magna Carta (12th century). The creation of parliaments was just a process for 'modernising expropriation'.
We must understand that Andrew Forrest is the embodiment of a asset owner. The guys at BHP and Rio Tinto are 'asset managers', i.e. CEOs with no equity in the business. They have no significant interest in the outcome. So what does it matter what they think about this tax? Nothing. Andrew Forrest is your friend because he, like you, is an asset owner. The great news is that he has more to lose than you, so he stands ready to take this 'Resource Rent Tax' issue to the High Court if necessary. But its not enough to test matters in the High Court because our legal system is flawed. It would be helpful if Australians differentiated 'asset owners' from 'asset managers'. Andrew Forrest is a fellow investor like you or I. The CEOs of Rio Tinto and BHP are really politicians or 'middlemen' only interested in taking their cut. If they can convince the board that they have no control over this issue, then they have their options incentive adjusted, and they might even come out ahead. Meanwhile, it is shareholders who suffer.
Andrew Sheldon

Henry? The solution to Australia's problems.

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I would suggest the Resource Rent Tax (RRT) is far from dead. It will merely be presented in another form. Why? It was always a game of perceptions. Consider that Ken Henry retains his job for introducing such a stupid 'fascist' tax that wiped the wealth of many Australians who could not afford to lose it, and then they restore the status quo.
Julia Gillard was reluctant to fire Ken Henry as federal Treasury secretary in the tradition of 'all for one (bad case), and one for all'. This government-inspired 'taxation crisis'....which comes after a government-inspired financial crisis. No...the banks were not to blame. They were no more capricious than the governments system of arbitrary statutory law allowed. Listen to Gillard's defense of Henry:
"Although Dr Henry’s review of taxation had spawned the troublesome resource super-profits tax his work had to be put into perspective".
"Dr Henry was one of the people who had ensured Australia kept afloat during the financial crisis".
That is funny because Labor's solution for the financial crisis was to throw taxpayers money at more final consumption. After all who would invest in a crisis, other than in gold and debt collectors. More importantly Henry was part of a government that failed to anticipate a financial crisis which had really been spawned about a decade earlier. It was government 'slight of hand' which allowed it to go on for so long, i.e. Tax cuts, first home grants. The Australian government was not the main player, it was merely a loyal deputy who facilitated it. The Liberals are also implicated. Perhaps they are more guilty because they are supposed to embody freedom. Well I once read that on their website. Chuckle :) She continues:
"Leaders from other developed countries were thinking how nice it would be to halve their budget deficits by 2013". ‘‘We’ll be in surplus".
This indeed strikes me as a paradox. On the one hand Gillard is taxing the mining industry and applying an arbitrary tax, and undermining business investment. Then in the next instance, she is in a sense proclaiming the virtues of mining exports and mining-related business investment. These two virtues are why the Australian economy is in such a strong position. The Liberal & Labor government's indifference to the Australian financial crisis was the reason why domestic demand is so weak. So both parties ought to be banned from politicking for 10 years. Oh, we can't do that. So maybe we ought to have constitutional reform. Except unlike the flawed system developed in 1901, and the flawed Republic referendum a few years ago, maybe the major parties ought to be precluded from participating from that. Better still, let them participate, but make reason the standard of value, as opposed to some useless democratic principle. The majority is always wrong. Critical thinkers be praised! No rebuked.
"The budget was the government’s projections for revenue and expenditure".
‘‘Growth forecasts were based on sound Treasury advice".
The problem with Treasury forecasts is that they depend upon the unreliable forecasts of the Department of Primary Industries....a government instrument who are not terribly reliable. The budget forward estimates are based on revenue from a resource rent tax or "resource super profits tax", which the government plans to impose on mining companies from 2012. So the solution to public sector incompetence, whether it is government policy, government forecasting or maladministration, is to expropriate from the only sector of the economy which is strong, and destroy our sovereign risk rating across every sector. I am expecting Gillard to say at some point: "You cannot make an omelette without breaking a few eggs". This is the disregard of rights which 'is fascism'. Fears of financial crisis make it all plausible to an unthinking Australia.
Andrew Sheldon

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