Friday, July 2, 2010

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.
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Author
Andrew Sheldon
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