Resource Rent Tax Australia | Tax Abuse | Carbon Tax

BHP chief executive 'selling out' Australia and the facts

2010-09-16T16:29:00.000-07:00

BHP Chief Executive Marius Kloppers has come out in support of a carbon tax. He thinks Australia should take the initiative because he thinks its inevitable. Really?

This is a very suspicious thing for him to say. It stands out in stark opposition to the interests of BHP shareholders....or does it. The only reason that would not be the case would be:

1. If there was some strategic benefit in BHP paying tax before Australia's international competitors. This is unlikely because it would result in a stronger AUD and a higher tax obligation by BHP.

2. If BHP is supporting the carbon tax in a 'secret deal'. It strikes me as rather coincidental that Kloppers would be supporting a carbon tax just after his company (BHP) and Rio Rinto won a huge tax concession over the Resource Rent Tax.

There is however the possibility that Kloppers is an idiot, or more specifically a 'liberal idiot', and that cannot be ruled out. There is no reason to think that bureaucratic enterprises like BHP are well-managed by critical thinkers. It would not surprise me if they accept the climate science of academics from the majority at face value, when they should be critically engaged in assessing it. Science is not a popularity contest. I have seen no evidence to suggest that critical arguments are being given the attention they deserve. Its all about having the 'popular' or political numbers.

It does not concern me that Rio Tinto is not supporting a carbon tax, because they would not have been privy to any 'possible deal'. The integrity of the BHP CEO is in question. We might ask if there is any strategic advantage for BHP in taking over a fertiliser enterprise like Potash Corp. There might be some more significant strategic game play here than I think. I can't see such a link though....so might be reading too much into it. Maybe its just another bulk commodities business it can dominate.

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Author

Andrew Sheldon

Is China really a threat to Australia?

2010-09-06T14:12:00.000-07:00

Maybe the problem with the administration of George Bush was not simply his poor policy judgement, but his choice of friends, and ‘advisers’. According to the SMH Online, Philippa Malmgren, an adviser to George Bush as well as Deutsche Bank, is suggesting that Australia should lock China out of owning Australian resource assets. The problem with this policy is:

1. Imperialistic fear peddling at its worst, i.e. The old ‘them & us’ talk of China taking over the world.

2. Poor role model. Are we not trying to encourage China to end its collectivist history of socialism, by adopting capitalism, i.e. free markets. This counter positioning of fascist imperialism is not the antidote. Intellectual integrity is.

3. Poor empirical evidence for his views. If we look at Japan, Australia was not taken over by Japan. China is 10x bigger, so it will have 10x the impact Japan did, if not more

4. How do we make China more threatening by making it depend on us less

5. Plenty of competition – if we make access to Australia difficult for China, they will go elsewhere

6. Respecting the role of China – If we respect the role of China as a processor of raw materials, we stand a better chance of being respected as a ‘reliable supplier; of minerals....it might then not look elsewhere for minerals

7. The Australian government retains the right to arbitrarily tax all production from Australia. A power it should not exercise.

8. Why would it make good policy to impose a specific tax or ‘control’ upon the Chinese. Does that not descend to the worst levels of political diplomacy.

9. China buying up a lot of resources can only be good for Australia. We will only benefit from the mass liquidation of wealth, which we can free up for other purposes.

10. Why should we fear China buying into Australian mines. It could only raise gross export revenues for Australia. Australians would be better educated to appreciate the value of iron ore and other mineral assets, so these assets are fully valued when sold to the Chinese.

We don’t need to resort to extortion in order to produce wealth...we need only do what we do best, and allow the Chinese to do the same. Capitalism is based on the principle of trading value for value for mutual benefit.

The greater issue for Australia is how we will squander the wealth that we derive from China's participation in our economy. We have to fear the prospect of 'easy money' resulting in excessive welfarism as well as decadence. The pertinent precedence in this instance is Norway.

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Author

Andrew Sheldon

Impact of the Australian resource rent tax

2010-08-18T02:11:00.000-07:00

Some mining CEOs commenting on the Resource Rent Tax

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Author
Andrew Sheldon

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com

Labor makes false claims about resource rent tax

2010-08-05T21:53:00.000-07:00

Some actual mistakes here:

1. Public information package: That must be a euphemism for propaganda. The government is justified in spending $38 million on TV advertising. That is $2 per person. Why doesn't the government spend half as much sending out detailed material along with the mining industry. Would that not be a fair way to go. Reason as the standard of value, and save tax payers $17 million. Australia Post could even make a profit.

2. The Australian people own mineral resources so they are entitled to a share of the profit from those resources. They already get a 'risk-free' share from those resources through income tax, mineral royalties, state taxes, infrastructure, social spending,

In addition, these resources have 'in effect' been sub-leased to the mining industry. i.e. The government is bringing into question the viability and undermining the wealth of Australians by taking a 'second take' at an opportune time, when prices are high. Those prices will not always be high. It is not as simple as Australians owning these resources.

3. Labour suggests that the mining industries advertising is unfair, and yet it is using taxpayers money to achieve the same. They have previously attacked such use of taxpayers funds.

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Author

Andrew Sheldon

Misconceptions about the resource rent tax

2010-07-30T22:09:00.000-07:00

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 Forum.com

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 reasons....it 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 Forum.com.

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 though...love 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 Forum.com

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 voting...so there you go. Go buy a house or drown your repressed memories of this conversation.

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Author

Andrew Sheldon

Market risk of Resource Rent Tax

2010-07-28T16:45:00.000-07:00

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 $A....so 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.

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Author

Andrew Sheldon

Foreign criticism of Australian tax policy

2010-07-28T16:29:00.000-07:00

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.

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Author

Andrew Sheldon

Gillard driving Australia to economic distortion

2010-07-23T00:29:00.000-07:00

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.

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Author

Andrew Sheldon

Andrew Forrest rejoins Resource Rent tax opposition

2010-07-22T13:46:00.000-07:00

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

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Author

Andrew Sheldon

Deal by major miners undermines Australia's smaller miners

2010-07-19T00:59:00.000-07:00

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 alternative....show 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!

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Author

Andrew Sheldon

Australia - Don't Vote!!

2010-07-17T17:34:00.000-07:00

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.

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Author
Andrew Sheldon
Resource Rent Tax Australia
Applied Critical Thinking | www.SheldonThinks.com

Seasonal tax threats care of your accountant

2010-07-15T23:55:00.000-07:00

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.

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Author

Andrew Sheldon

Andrew Forrest...the investor's friend

2010-07-02T08:33:00.000-07:00

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.

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Author

Andrew Sheldon

Henry? The solution to Australia's problems.

2010-07-02T01:16:00.000-07:00

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

Rudd is gone! Long live the Queen.

2010-06-23T18:08:00.000-07:00

Unsurprisingly Kevin Rudd has been discarded as PM of Australia, and judging by the profile of Julia Gillard, this will result in a back down on the Resource Rent Tax. If you are expecting a re-adoption of the Emissions Trading Scheme, I would not expect that either. Both were bad policy, and they will be dumped. Emissions count-down to 2013? That is just an interim number...both policies are dust.

But let's earn more about Julia Gillard....I've been living overseas, so I know very little about her. She comes across as a harsh high school disciplinarian teacher at first glance. A harsh face, but let's look at her psychology in more depth.

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Author

Andrew Sheldon

Is the media biased on the Resource Rent Tax issue?

2010-06-22T17:32:00.000-07:00

Perhaps Kevin Rudd has complained to the media companies that he is not getting enough fair play for his new tax. Maybe a bad tax was never supposed to have been heralded as the start of a new age. Phillip Wen from the Sydney Morning Herald has come out in defense of Kevin Rudd. so let us examine his arguments. Is the media biased in favour of miners? Rudd? Well, I would suggest to you that its hard to be on Rudd's side when you introduce such a sudden, arbitrary, discriminatory tax as the Resource Rent Tax. It is also poorly conceived. But let's challenge the arguments made in this article.

1. Xstrata has exaggerated the impact the tax will have on its operations, with talk of job losses and cancelled projects.

The reality is that a mining company makes money by assessing the feasibility of the project. When a government moves the goal posts in the middle of a game (i.e. After a miner has spent the money, or after a shareholder has bought stock upon certain assumptions), ought they expect the government to protect their rights rather than breach them? Is there a positive side to fascism? Only a deluded moral relativist would argue yes.

2. Xstrata was unbalanced in its disclosure of employee numbers when it closed the Windimurra mine in WA. i.e. It did not disclose the numbers for Windimurra, but not it is disclosing the numbers for its new mine.

I would argue that the mining company is obliged to act in the interests of its shareholders, and to do so in accordance with the law. It was a sad fate for the Windimurra workers. It was a strategic move by Xstrata to buy the Windimurra mine and then close it to support its other mine in Africa (I think?). This is business. If anyone is opposed to that, then an argument needs to be made to change the law. Hopefully it will be a logical argument, unlike the argument made by Rudd....which is based on gross opportunism and extortion. Clearly it is in the interests of Xstrata to re-examine the economics of a project when a government changes the rules. Even if they are bluffing, they are reasonable to use all arguments to discredit the government. It is my opinion that the mining industry is using concrete, pragmatic argument rather than ethical ones because they think that will have greater traction with the voters. I disagree, and I think the strategy can backfire because its money in their pocket. They ought to remember that after Rudd gives them a "super-kiss" he is probably going to give them a "Ruddy tax kick in the balls". That's right...Rudd has ruled out another arbitrary tax on other specific industries....but what's to stop another government, or him taxing all super funds...after everyone has placed all their savings in super...this is what happens with arbitrary rules....you don't know where you stand.

I would however argue that Xstrata did not treat Windimurra shareholders badly as "minority interests", but its a cloudy area of law. I challenged this issue at the time. Having acquired Windimurra, the company placed the project on hold. In fairness, it would have pursued the project if there was a great deal of money in it. Strategists could have seen this unfold. It was a good decision for Xstrata shareholders.

3. The Minerals Council of Australia is spending a reported $100 million on an advertising blitz against the tax.

What else can a minority interest group do other than to engage in a media campaign. Rudd is offering a 'welfare-like' carrot to voters in the form of a "super-kiss". It will take a well-funded campaign to overcome the appeal of this unethical tax upon miners and shareholders. Sadly, the nature of our political system provides a poor basis for reconciling political arguments.

4. The notion that the mining industry has used these tactics before to undermine the government's proposed emissions trading scheme, saying it would severely damage the coal mining industry, leading to big projects shutting down.

Quite rightly. The tax would have destroyed the industry. It would have placed the fate in the hands of unproven technology and subjected them to very high capital cost burdens to make the technology green. The biggest problem the mining industry has is the unproven nature of the 'anthropogenic global warming'. The most recent evidence supports the idea that variations in sunspot activity is the cause. There is good correlation between these solar flares and climate change. Satellites launched in 2006 will offer greater certainty in the next few years. The problem is that the 'liberal' media needs to defend its dire media statements about global warming. Their treatment of this issue highlights their lack of objectivity and their lack of scientific and critical thinking skills.

5. Research conducted by the Australian Conservation Foundation and the Australian Climate Justice Program last year found six companies - including Xstrata, Rio Tinto and Woodside Petroleum - made public statements on emissions trading that were not reflected in formal announcements to the stock exchange.

"The regulator did not pursue the findings, saying the companies made their statements at senate hearings, and were therefore political statements made with parliamentary privilege and not made in the course of trade and commerce".

Not only that, but from my experience submitting documents to the parliament, you are not supposed to publicly disclose the info. Why was this argument made? To make it look like the reporter had a story?

6. Xstrata's biggest shareholder is the Swiss commodities supplier Glencore, one of the world's largest privately held companies, infamous for its colourful past. Its founder Marc Rich, was cited in a 2004 CIA report for paying illegal kickbacks to obtain oil from Saddam Hussein's Iraq regime, in breach of United Nations sanctions.

In the interests of fair disclosure...just look at the track record of US foreign policy over the last century and ask yourself whether that is a fair critique. The reality is that companies have a far better track record than governments, which is weird because governments make the rules. Which can be difficult to interpret because, as we know, they are so arbitrary.

It ought also be mentioned that BHP and the Australian Wool Commission were caught up in the same type of scandal....but why would you smear all mining companies for a breach of US foreign policy. Is that the best this 'liberal' journalist can do?

7. The Construction Forestry Mining Energy Union is for the tax so suggests Xstrata is exaggerating claims.

Yep. I'd go to the mining industry for a balanced perspective on mining company ethics. The union movement were of course the extortion experts of the last century, so they love miners. Anyone remember the wharfies dispute in Wollongong.

8. Final point....the journalist concedes "But the concerns in the mining industry are real. It is not in debate that successful miners will take a hit to their profits".

Ask yourself what that does to investors. And the lost profits will be higher as prices rise. All those future 'opportunity losses' will be wiped off the value of mining projects and mining companies today. Is that share to shareholders in mining companies? Shareholders do not invest to lose.

9. Xstrata would favour overseas projects if the tax was implemented. ''Someone like Xstrata.

There is no question that this will happen. There will of course be some appeal to Australia because the infrastructure is already there and its close to Asia. Though there is iron ore in Asia, e.g. Indonesia, PNG, Bangladesh. Some of these countries were believed to offer greater sovereign risk than Australia, however Kevin Rudd has changed that with his arbitrary tax. In fact, it will be interesting to see if Rudd leads a resurgence of fascism around the world. Other governments could follow suit as he has given arbitrary 'fascist' taxation his 'Western government' approval. I don't even think that Obama could get away with that.

10. "Tony Maher says that as with the lobbying against the emissions trading scheme, miners have to be kept accountable for the claims they make. ''It was corporate bullying then; it's corporate bullying now.'' "

Tony is a union man...so its interesting that a journalist would quote him on a point of ethics about bullying or extortion. Geez, hopeless unbalanced media.

Congratulations Philip Wen, you have just won yourself a citation from the Australian Broadcasting Commission....my complaint is currently being processed. Rest assured, based on previous experience, they come from your side of the political fence. Interesting arguments...pity your smear of Xstrata has nothing to do with 'ethical issues' involved. You seem to share the pragmatic concerns of miners....I wish someone would get to the ethics involved...maybe some of the regulators people studied some ethics. My guess is no.

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Author

Andrew Sheldon

Who is affected by Rudd's tax

2010-06-22T17:14:00.001-07:00

I think Kevin Rudd needs to get a better sense for who is affected by his Resource Rent Tax. It is not just a case of certain people carrying an unfair burden, but the arbitrariness of the action. Ought the cost of any administration be shared across the taxpayers? Why is one industry targeted?

Ought we have greater empathy for those less fortunate than us? Ought we care about justice? On this occasion there just happens to be some billionaires affected by Rudd's new tax. Some people actually trust their whole retirement savings in mining companies because commodities are like money. i.e. When the US government debases 'paper' money, tangible commodities rise in price. So mining companies are a great way to hang on to your wealth. This is particularly the case for gold, silver and miners of other precious metals.

This tax actually attacks the 'smart money' who know how to invest. So what hope is there for anyone from 'arbitrary' government if they make decisions like this, which would breach the spirit of the Senate, if that body actually worked in protecting the rights of the minorities.

Perhaps Rudd is gaining some confidence because of the strong iron ore and coal prices. The problem is that they are the Chinese-linked commodities which are vulnerable to the Chinese economy, and in the short term, also vulnerable to a stronger AUD. We have to understand that commodity prices in real terms are falling because of the debasement of currencies around the world.

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Author

Andrew Sheldon

Kevin Rudd has no empathy for taxpayers

2010-06-21T18:31:00.000-07:00

One of Australia's richest men has died in a plane crash a few days ago. Ken Talbot was a working class guy who turned bought some pubs into a fortune. By far his greatest legacy was the development of numerous coal mines in Queensland. Until recently he was the major shareholder and CEO of Macarthur Coal. He had amassed a billion fortune from developing coal mines in Queensland. He died in a light plane crash in Cameroon, West Africa.

He was also was in court in relation to kickbacks paid to a Queensland minister. Hardly surprised. Government extortion at a state level as well. Practical people like Talbot will pay in order to do what they love doing. They carry that burden. It gets to a point though where every one has to stop, and to be vigilant. The crap we accept from governments needs to stop.

A successful Australian dies and Kevin Rudd is conspicuously silent. Why? Well its clear. How much empathy can Rudd have for a guy (or his family) when you are busy conjuring up new taxes to impose on people to extort their wealth. Not much! He would look like an utter hypocrite if he extended his condolences wouldn't he?

He avoided that. Foreign Affairs Minister Stephen Smith 'expressed' the political rhetoric. It was and always will be about the money. Government as currently conceived is cynically about money. It is not about protecting people. It is about perpetrators (govt interests) and victims (any low-flying targets). No pun intended. Google is safe for now! At the expense of small business denied access to Google Checkout.

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Author

Andrew Sheldon

Rudd selective with the facts

2010-06-21T17:53:00.000-07:00

Kevin Rudd is keen for good press releases. His latest opportunity came with the signing of a number of iron ore mining agreements. Rudd used the opportunity to highlight the fact that the mining tax had not impacted the mining industry.

"Australia and China signed more than $8,8-billion of commercial and mining deals on Monday as a senior Chinese leader urged closer trade ties, in a sign that Australia's mining tax has not deterred investment". [Mining Weekly]

The problem with this interpretation is that China needs iron ore, and in the short term it has to come from Australia, and there is no question that a great deal of it will come from Australia regardless of any imposts Rudd imposes. The problem is that Rudd is encouraging iron ore investments in Indonesia, PNG, maybe even New Zealand (despite its remoteness from China) instead of Australia.

Another problem is that the $8.8 billion in investment, is all oil/gas and iron ore projects, where Australia has a strategic advantage because of tight supplies or location advantage. Basically, this is the problem with this tax. It says that if you identify an opportunity, and the government has the capacity to extort some concession from you, it will do that. It will 'arbitrarily' tax you UNLIKE the rest of Australian industry. Meanwhile Google is paying just 0.1% income tax in Australia because the Australian government has no power to extort Google, because unlike mining, Google has the flexibility to move its operations offshore.

I would also suggest to you that small business in Australia are being denied Google Checkout services in Australia because the Australian government wants to tax Australians through Google Checkout more than it wants to encourage Australian small business. More 'authoritarian' extortion. Fair tax you think? It was always about the money

No tax is fair by definition. Any charge which is involuntarily or does not relate to the value of services rendered is 'arbitrary' taxation, and that is slavery.

Retain some sympathy for miners and investors who have seen wealth destroyed in sectors outside iron ore as well, i.e. coal seam methane, gold, copper, lead, zinc, etc. These commodities entail little in the way of strategic advantage. Investors in mining services are in limbo because they do not know the implications of the tax.

Slowly we slip into 'arbitrary' fascism and unthinking, unprincipled people say nothing. Where will it end. It always ends with killing. First it will be political activists disappearing. Don't expect any international interest, as the same game is occurring in all countries around the world. This is becoming normal. It will end in civil war. The government will make a broader imposition in terms of its implications, and you will think 'enough is enough'. By then you will think where did it start. At what point did I allow my principles to slip away.

Frankly, I would prefer to have some empathy for the rights and interests of people, because I don't want to benefit from parasitism like Kevin Rudd. I will probably benefit from Rudd's actions since I have shares in a PNG iron ore company (MGK.ASX), however its not the point. One has to make a distinction between one's financial interests and one's principles, which ought to relate to human nature, not arbitrary ideas bounced around in Rudd's head, or even parliament, which is about as rational as Rudd. Morality is not a numbers game. The concept of a Senate was never a workable solution if there was no measure to ensure reason was the standard of value.

There is a moral issue here. Kevin STRUDD is a parasite with the most deprave values. Don't wait until the next election to tell him so. Australia cannot wait. Every day this tax is under consideration is another day of lost wealth for Australians, as the stock market slowly grasps the impact of the tax.

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Author

Andrew Sheldon

Governments ought not be quasi-equity partners

2010-06-19T20:10:00.000-07:00

One of the more unsavory elements of Kevin Rudd's Resource Rent Tax is the idea that government will end up with an 'quasi-equity' stake in the mining industry. i.e. The government will bare a financial benefit, but also an obligation. If this fascist conception does not scare you, consider some implications and examples.

1. Government is a public trust, and it assumes money powers without responsibility. Taxpayers will ultimately pay for any mistakes. Governments are notoriously bad at picking winners. More problematic is that this is not a 'stake' or commitment that the government can honour without screwing taxpayers (i.e. slaves to a pretense of voter representation) or once again undermining the sovereign risk of Australia. Simply the proposal by the government to expropriate wealth from miners has discredited the Australian government, and reduced our credit rating. If the government takes the next step and executes it will be worse. If you protect forward 10 years when metal prices go backwards, and the government is dealing with obligations it has assumed under its new 'tax regime', then you can expect it to dishonour the tax AGAIN.

2. Governments have a notoriously bad record of picking winners. Being a mining analyst, I see a great many examples. Collectivism is always the cause. Consider the coal industry in the 1970s. Coal prices were expected to go to $100/tonne. The Colombian government nationalised the company Carbocol S.A. They built a very expensive rail system and port to export15Mtpa of coal. The project was a monumental white elephant, which played a major role in undermining the future administration of the government. Coal prices went the other way, reaching a low of $20/tonne, and they stayed low for over 10 years.

Another example comes from Eastern Europe. Vulcan Resources was doing some exploration work there in the early 2000s. A Soviet geological team developed 14kms of underground development and never produced any gold. Why because it was a state-funded enterprise. This later example is already evident in Australia because the Australian government does not do the basic things well - like regulation of companies.

Regulation in the form of justice (as opposed to market distortion) is the proper function of government. The government ought to be making sure companies are accurately reporting and that CEOs pay consequences for misleading the market. These deceptive practices ought to be punitively dealt with, but ASIC doesn't because it 'does not have the resources'. Analysts are in the best position to report companies doing the wrong thing.

Several examples come to mind:

a. Gleneagle Mining - Shareholders were mislead as to the financial viability of their mine.

b. Matrix Metals - Shareholders were mislead as to the true mining costs, and were even lead to expect a 60% increase in output.

c. Bendigo Mining - Shareholders were fed a rationalised grade prediction model in order to 'keep the dream alive'. The project received hundreds of millions to find gold that will probably not be mined for years.

The mining industry knows these mining projects are duds. They are talked about over beers in the pubs around the country. The information however is not communicated to government. If it was the government would not act, because government wants to 'keep the delusion alive'. Miners know because they closely scrutinise many projects before they take equity. The government in contrast intends to take equity in all projects.

Imagine how frequent these types of deceptive schemes will arise if government is a co-partner. It is not the government's money, so you can be sure it will happen a great deal. I can picture Kevin Rudd with one hand on the wheel of a 50-tonne truck, and the other breaking a bottle of champagne to officially open such mines. It will of course looking great. But such projects will end up as white elephants.

What we have learned from the 1960s is that Japan was able to create a lot of supply by seed funding mines in Australia, Canada and elsewhere. We can expect the same from Chinese enterprises, whether the Chinese state enterprises or steelmills. The Australian government ought not to be carrying the risk. There are factors which are not even on their radar screen....like ice ages, and other natural disasters. Natural climate variability...never mind the myth of anthropogenic climate change. Price predictability is notoriously difficult beyond a few years. Add to the fact that most price levels in the current market are exaggerated by government intervention in the market. For example, copper prices rose from 68c in the late 1990s to $4.00/lb in 2008 primarily because of government monetary stimulus in the USA. The same trend for other metal prices. Who knows what will happen when government powers are restrained (as they should be) in future years.

It will ultimately be the taxpayer who pays. I personally think Kevin Rudd developed this policy after going to China. I suggest Kevin Rudd is impressed by China. Being a career bureaucrat, he knows nothing about economics and finance. He looks at China...all the development and the 8-12% growth and he thinks this is what authoritarian government can achieve. In fact, China is growing at these rapid rates, not because of public administration, but in spite of it. The real reasons for Chinese ascension is:

1. Dual economy - Foreign enterprise is offered far better terms than local business. This is why a lot of Chinese domestic investment is channelled through HK and Taiwan, to get state concessions. Foreign direct investment is overstated.

2. Market disequilibrium - Markets are not in equilibrium. The sudden opening up of China in the 1990s allowed the mass migration of millions of Chinese farmers to the city for factory jobs. The mass over-supply of workers for factories was good for foreign investors.

3. Strategic market appeal - China is a huge market with very competitive costs. It was essentially a USA in the making, but without the values of the USA, at least not explicitly, though maybe it will ascend to a level where its respect for individualism in 50 years exceeds the USA. It will probably come only through revolution, with middle class Chinese forced to fight restless and envious rural farmers not getting the same benefits. Might this trend undermine Rudd's forecast for mining or metal prices?

4. Lack of regulation - China is the wild west. There is regulation, but its not as developed or enforced as the West, so it is thus less restrictive. This is a boon for honest and dishonest business people alike. Maybe this is why Chinese people prefer to deal with foreigners. Higher prices and more honest business practices. We have this idea that China is an authoritarian state, but effectively Rudd is more authoritarian than the Chinese premier because he has the 'force of law', whereas in China the level of compliance is far looser, and open to bribes.

Rudd presents a greater threat to liberty than Chairman Mao because he professes to be a champion of freedom. His conception is a distortion...which ought to be apparent after reading this blog and my politics blog. At least Chairman Mao was a consistent practitioner of his philosophy of self-denunciation.....Rudd is a pathetic, inconsistent, pale hypocrite who waited until he had power before he unleashed his true character...or lack of it.

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Author

Andrew Sheldon

When philanthropy is a dangerous concept

2010-06-16T22:33:00.000-07:00

Money is power right? Well it depends? But if we accept the governments are not debasing it by printing it too quickly, and other people recognising the value of it, then it certainly has power. So what is the impact of giving it away?

Recently some of the world's billionaires got together in the USA to discuss the topic. Bill Gates and Warren Buffett were calling upon the billionaires of the world to give the bulk of their wealth to charity. There are of course good reasons for them to do this and associated benefits:

1. You cannot take it to the grave with you.

2. You can give it to your children, but in so doing you might be denying the value of developing a sense of efficacy for your children. The same is true for any benefactor.

3. There are people whose basic needs are not being met

4. Better having successful business people giving than politicians taking.

The problem I have with this style of promotion is:

1. It tends to make a virtue out of giving - not of creating. In that respect I think we lose sight of the gift of capitalism and the underlying value of self-interest. These people I think are looking for some sense of 'social pride' which I think communicates a dangerous message.

2. These business people were good at some commercial endeavour. Might it be possible that when it comes to social policy, they are really bad. I just look at how governments deal with issues of morality, public policy, and the idea of them channelling their money into welfare is really dangerous, given the prospect of inefficient investment. It is scarier than emissions trading schemes and other community minded projects. I need only refer to my Parenting blog, where I commented on Bill Gates ideas of parenting. Do you want him bestowing mis-education upon the poor? If the choice is 'instead of government', maybe its not so bad, but I caution. You tend to expect a bureaucrat to be incompetent....you should also expect the same of business leaders. After all, its common for a business person who ventures into a new industry to lose money.

The problem with welfare is that there is no 'profit-loss' when you stuff up. There is only the greater incidence of crime when Bill Gates teaches us that wealth is not created, it grows on the trees outside the Gates Foundation for Bad Advice.

There is a problem with this program on the level of ethics.....it might actually drive us towards fascism. Always count on unthinking business people to do that. How pray tell? Well, every collectivist tyranny in history was lined with good intentions. In this scheme there is the risk that these business leaders will make a virtue out of generosity....which is fine if generosity is something you do from a position of efficacy and material surplus. But if they are saying 'selfishness is bad', we need to give more....then I say these 'captains of industry' are ethically deprave....that they do not understand their own motivations. The inherent problem is the social ethic which considers production selfish, but philanthropy as 'virtuous'.

I thought the decision of these two men to give their money a logical thing to do at the end of their lives. If they make a virtue of it, they will give me reason to repudiate that praise because they will have done far greater damage to our society. Wealth is created by self-interest, not renouncing your mind or material wealth for the sake of others. If we make a virtue out of giving, we will end up extorting wealth from people for the sake of some misguided wealth. Who am I kidding - we already are!

More problematic however when business does it because they would otherwise be creating more wealth, sustaining the growth in productive capacity which is the engine of the US and other Western countries. My concern is that Bill and Warren will flood the UD V6 engine with crappy fuel.

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Author

Andrew Sheldon

Hogan's moral rights swept aside

2010-06-16T17:48:00.001-07:00

The successful prosecution of the Australian film icon Paul Hogan and partner 'Strop' Cornell highlights the dismal state of justice in the world. From the facts presented in the media it appears that Hogan was prosecuted on the basis of tax evasion. Hogan maintains that he did not know the basis of his tax affairs because he did not personally deal with them. i.e. He had a plethora of accountants, etc.

As far as I am concerned I do not expect honest responses from 'tax evaders' on such matters. When the arbitrary force of government intends to impose unreasonable burdens upon you, I think you have no other way to respond than with lies. Fear is the proper response when reason is not the standard of value. If the mob come to your door to kill your daughter, you do not respond 'Third door on the right'. You tell then anything to get rid of them.

So what is the standard of value? Well it is of course its a pretense....based on the premise of the 'common good'. The common good has however been defined by the parliament, and we all know what credible advocates of morality they are. Politicians do not lie to protect values they have 'earned' (unlike Hogan), but in order to evade responsibility and accountability. I am quite certain no politician has earned the right to extort wealth from Australians. The political system is a game we always lose because it comprises two 'non-combatants'. i.e. Liberal-NP and Labor. Not long after federation the two parliament coalesced into two parties. Contrary to the policy rhetoric, where they espouse a belief in competition, these two parties are intent on destroying all prospects for competition where it suits them. i.e. Even poor prospects like Pauline Hanson. You might ask why politicians, who are supposed to be 'moral agents', can justify such actions. The reason is simply they are not what they are supposed to be. Why would you accept the system? Even if you concede we need government? Why would you not stand in defense of those wronged by 'the system'? Why would you legitimatise that system. I don't. I don't vote, and I will continue to challenge the legitimacy of this system. The government publishes the number of registered votes who do not vote despite it 'being compulsory to voluntarily select between two non-combatants'. That's right, you are forced to make a choice. i.e. You are forced to give legitimacy to a system which is illegitimate. Why? To preserve the status quo, to preserve the entrenched interests of the two political parties. It does not publish the number of people who are not registered. Don't legitimatise the system. A better vote is non-participation. Better still would be to actually empathise with true victims of injustice (in accordance to some objective standard), as opposed to pretenses.

I think the problem with Paul Hogan's case is that he argued that he did not know what was happening, when in fact he should have repudiated the moral foundation of the political system. In fairness to him, the judiciary is as much a creature of pretense as any other government institution. It was perhaps a big ask for an actor & producer to identify the true nature of our political system, and he has so much more to lose financially, but you would think legal counsel ought to be able to provide such advice. Perhaps moral conviction would be stronger if more in the public displayed some. It starts with a question for the tax office:

"By what moral right do you purport to expropriate the earned wealth of others".

I have yet to hear any rational defense to this question. The 'betterment of society', the 'common good' or the 'good of society' are of course the standard answers. For logicians however, this response is not very compelling. What constitutes the common good?

When we adopt the 'common good' as a standard of value, we become a nation of perpetrators and victims. We hate those who have money, and we lust after with a sense of entitlement for that which we did not earn. In the process we ignore the reasons why some fail and some succeed, and console ourselves that a bad system has preserved 'stability' at the sake of a few, but in the process we have denied ourselves something much greater - the opportunity to achieve greatness. We have also disparaged those who have succeeded in deference to our own self-indulgence. Ask yourself if individualism or fascism is advanced by such a system.

The tax office of course comprises a group of parasites who will never amount to anything - not even their parents estimates. They are the unthinking 'plodders' who depend upon the wealth and productivity of others. They are not just middlemen - but middlemen who create nothing, add nothing. We cannot even attribute an efficiency to them because the loopholes in their systems have made the tax system more complex than it need be...except it needs to be. An arbitrary tax demands an arbitrary justification, which compels people to find loopholes, which demands counter-loopholes. So you need 5 specialised accountants rather than your own common sense. This is the 'efficiency' that the tax office has extorted upon the population. It happens because they have this 'arbitrary power'.

That is not the extent of the implausibility of the 'common good' concept. In these pages I develop additional arguments for why the current political system is a variant of fascism.

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Author

Andrew Sheldon

Dr Ross Garnaut's views on the Resource Rent Tax

2010-06-15T19:49:00.000-07:00

Judging by the paper released by Professor Ross Garnaut the Rudd government did not consult widely before it adopted its proposal for a Resource Rent Tax on all minerals. Garnaut makes the argument that:

"If the Resource Super Profits Tax had been announced on May 2, 1990, the community would have been able to put it in that context". (p.1)

The reality is that the community should not be deciding taxation policy because it established an uncritical basis for policy development. These are intellectual issues and they should be determined by intellectuals. Reason ought to be the standard, as opposed to the government imposing its will upon a minority (i.e. miners), using the carrot of some concession for retirees. The broader interest of the 'common good' does not legitimatise taxes on miners. Taxes ought to be fair.... meaning they ought to apply to users of the services finances by the taxes. The role of the Senate was to protect the interests of minorities. The concept has been quashed by amalgamation of the parliament into a two-party duopoly.

"The Great Crash raises fundamental questions about the capacity of contemporary Governments of democratic capitalist countries to implement policies in the public interest that are contested by powerful private interests". (p.2)

Interesting in raising the issue of the financial crisis in the USA and Europe, he is totally obtuse on the cause of the financial troubles in the USA. Does he (like many) attribute it to bankers, or does he acknowledge the role of governments in enabling the bankers; most particularly the easy monetary policy of the Federal Reserve. Yet he seems to attribute the problem to meddling private interests. Are not politicians supposed to be the agents of morality given that they have a monopoly on the use of force. A capacity that ought to preclude the 'initiation' of force.

"The governments of democratic capitalist economies “face a constant war against almost unlimited financial demands on the state by citizens and lobby groups...”.

This strikes me as a total misdirection on his part since it was the government who initiated the tax on mining without any consultation. Not that consultation would help because ultimately coercion is unethical whether a thief gives you a warning or not.

"The essential reason why Australia is faring better is that we went through a couple of decades in which our policy-making processes were opened up for a while to influence from an informed and independent centre of the polity. This allowed the building of support for reform in the national interest, against the private interests that received benefits from the unreformed system".

Nonsense, we are doing better because the Liberals curtailed government spending. The momentum of the economy was buoyed by the minerals boom from 2001-2008. Gaunaut leaves no ambiguity about where he stands. He is a complete collectivist, as one would expect of a bureaucrat and academic. He states:

"I am saying that the Australian Government has taken a position on the basis of advice of people of knowledge and standing, that asserts some hard propositions about the national interest, at the expense of some private interests that exercise considerable influence in our polity". (p.3)

The problem with this is that the public interest ought to be considered in a framework of rights. If society gains at the expense of minority elements in the community, then we do irreparable harm to the interests of all people, both in terms of their economic interest and their psyche. I would suggest to you that publicly funded bureaucrats have no interest in such issues because a concept of rights is the antithesis of their publicly-funded existence. So for Garnaut any action against minorities is justified, even if it breaches the interests of certain interests. The problem of course is that at some point in our lives we all constitute a minority, whether its in school, the corporate work, as parents, taxpayers or foreigners abroad. Are we not inclined to expect a more intelligible, principled framework, so we know where we stand. I think it matters little whether we have 1 minutes notice or 1 year. The majority or those who represent it, ought to have no pecuniary interest in the property of others, unless there is a question of protection of counter party rights...lest we become a nation of perpetrators and victims, always picking off the weakest minority group who has no natural advantage. I have already mentioned that Google pays just 0.1% income tax in Australia, by shifting its revenues offshore to Ireland. Garnaut states:

"Australia is a country that must make its way on its own, outside the monetary and trade and
economic blocs of the North Atlantic, in a democratic capitalist world in crisis". (p.3)

This is an increasingly unrealistic expectation when you are talking about romantic, commercial and political relationships which are increasingly global. What is required is not political isolation, but engagement on the basis of some intelligible standard, i.e. Where reason is the standard of value....where reasons rather than 'numbers' or kickbacks are the standard of value. The world is in crisis precisely because of Garnaut's style of moral relativism.

"What is important is that this time, on this subject, we demonstrate that we can still discuss policy proposals with clarity and rigour, listening to interested parties, with their words having influence according to their content, and not according to the cruder instruments of political influence that accompany them".

This quote highlights Garnaut's economic ignorance. How can we discuss policies based on coercion without recognising the influence of arbitrary policy on private interests. Investors have already lost money. The present market capitalisation of a mining stock is a function of its future (taxable) earnings. Any question of increasing those taxes is going to lead to a destruction of wealth. Why should any politician or bureaucrat have that power? This is a particular concern when they seemingly are indifferent to its impact. He appears completely oblivious to the sovereign risk issue as well. Clearly he sees any private interest as antagonistic to his 'common good', whilst any pursuit of the common good is noble irrespective of its impact or underlying motivations.

He then makes a comparison between the removal of subsidies from the car industry under the Button Car Plan with the current predicament. Clearly he misses the principle involved; that is that industry in general ought not to support an unsustainable and dependent industry. Now, the mining industry ought not to be supporting retirees. If we want to raise super provisions, we need only to reduce the market distortions by government in Australia (i.e. First home grants scheme) and abroad (US Fed monetary policy) in order to reduce their intervention in the economy. Any investor in the market takes a huge gamble these days trying to read the arbitrary whim of government and central banks. Supply & demand no longer drives the economy. The prospect of the Fed flooding or sterilising money supply is the sole distortive measure.

"An accepted ideal in any system of taxation is that it should as far as possible be “neutral”. The ideal of neutrality is that, without good reason, the tax should not alter decisions on investment, production or trade". (p.4)

This would have been a nice ideal if it was established before any tax was even adopted. We might ask the legitimacy of any tax if this proposition is to hold true. The reality is that - if you accept arbitrary taxation - it is a nonsensical proposition because change intent on achieving a "neutral outcome" could only result in a more complicated tax system. Unsurprisingly, this is exactly what we have. Its great for the bureaucrats. The practical implication however is that taxation is readily loopholed by corporations trying to reduce tax, which precipitates amendments to tax legislation, which is intent upon correcting old mistakes, but it only succeeds in creating more flaws in an already bad system. Of course capitalists are blamed, but no one reflects on the immorality of the system.

He then launches into a defense of his proposition by considering the economic rent. The problem with such economic analysis is that it is divorced from context. Why is economists so bad at predicting market behaviour? Its because economists don't understand human behaviour, so they look at some aspect of markets, and drop certain pertinent considerations. Academia is not served by their isolation from the real world. The idea of collecting a salary from the government irrespective of the 'grounding' of your research is a solid basis for economic rationalism. We see the same in all the humanities. We would not see it in medicine or engineering. So expect academics to develop animal rights which are based on some conception of utilitarianism and 'empathetic (human-like) animals', climate change models based on uncritical 'tragic' computer modelling that fails to consider the impact of the sun. Academics were not passive responders to these issues, they actually drove these issues with the help of politicians and the media.

He argues that economic rent as revenue has a lower economic costs than other forms of taxation. That might be true from a relativist perspective, however its hard to accept if its part of an arbitrary taxation system which is destined to result in greater levels of taxation. A simple low-percentage transaction tax would be far cheaper. It is however not the issue, since public administration hardly provides much incentive to reduce the administrative cost of taxation. It is simply too easy to increase tax rather than change the system.

He adds that "Many Australians would add that the recovery of mineral rent from the companies to which rights to mine have been allocated for the community represents a move to more equitable distribution of income, in a way that has lower economic costs than other measures to promote distributional equity". (p.6)

This is not a reasonable argument. You cannot leave open the moral question of whether 'common good' questions are legitimate without analysing them. I would argue that:

1. The idea of recovering rent from miners is morally benign if it is small and the tax is known before the mining company commits to a project area, i.e. Exploration title. Any time thereafter is too late because the market will have attached a value to those project interests. Thereafter shareholders suffer an unfair loss from the application of the tax.

2. Where is the logic that says that income redistribution is a desirable quality. Studies of psychology will establish that ethical redistribution models based on coercion are destined to fail because they establish a moral legitimacy to parasitism, or a culture of risk aversion, and entitlement. Economists will not consider those factors.

Garnaut on page 6 discusses the 6 forms of resource rent tax. In so far as there is no moral requirement that such taxes relate to use of resources which government has any claim to, or to the extent that they do not have any relation to any service voluntarily used by a mining company, any such rent is illegitimate, and ought not be levied. Perhaps the most compelling reason for economic rent comes from cost recovery for any work performed by governments. i.e. Geological investigations by the state department of mines. This ought however to be a state tax, and it ought to be based on user pays principles. Any use of mineral rents to fund welfare and government are really schemes to avoid accountability by government.

There is some appeal to the idea of "competitive bidding for a fixed fee for leases", however I would argue that such a policy is fraught with moral relativism since it is probable that governments around the world will align their revenue objectives so that there is a neutral impact on miners, so instead the burden would be carried by consumers of end-products.

"A disadvantage of the Brown Tax (BT) is that it entails the greatest risk to the government". (p.9)

The implication is that the resource rent tax is a burden upon government. There is the prospect that government is taking a 'market or commercial' position, and the implication setting up taxpayers for further claims when governments get it wrong by erroneously forecasting future prices, and thus expected revenues. Another concern is the difficulty of understanding the tax; particularly for foreign investors. Smaller funds will simply avoid Australia because of their lack of resources for understanding the 'unique' Australian market. It could be argued that small funds will outsource funds managers to local fund managers; but others will simply go to familiar markets like the USA and Canada.

This paper needs further consideration with respect to the mechanisms of the tax, however I will stop here, so this post is confined to the ethical considerations.

*IMG source. Wikipedia
en.wikipedia.org/wiki/Ross_Garnaut

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Author

Andrew Sheldon

Wesfarmers joins RRT opposition

2010-06-15T19:36:00.000-07:00

Wesfarmers has joined the fight against the government's Resource Rent Tax. It is in the process of mailing a letter repudiating the tax on the basis that it will undermine the cashflows for which it made the investments, and that this would result in a significant fall in earnings. There is of course nothing wrong with the argument, though it could be more comprehensively argued. The good news is that Wesfarmers support broadens the number of shareholders who will be exposed to the views of mining companies; though I am not convinced their views are so well argued. See article in the SMH Online.

The reality is that Rudd was always taking on a very powerful industry, and he had not really thought out the implications of his tax. He made the mistake of listening uncritically to his bureaucrats. It seems that even Dr Gaunaut is distancing himself from the tax. See this lecture. I want to deal specifically with his arguments in my next post. Basically I will go through the whole paper and identify all the apparent contradictions.

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Author
Andrew Sheldon
Resource Rent Tax Australia
Applied Critical Thinking | www.SheldonThinks.com

Strategy for mining industry - part 2

2010-06-15T16:33:00.000-07:00

The first issue that miners need to do is to identify who is on their side, and who is simply going to contaminate their objectives, whether in the short or long run. For this reason I am identifying a number of additional strategies for the miners.

1. Divide into 'manager' and 'owner' CEOs because your political interests are very different. Owners are in the same position as shareholders. CEOs of large corporations like BHP and Rio Tinto are essentially 'politicians', or managers with little interest in the interests of shareholders. If they fail to discredit the tax, any option incentive will be repriced I suspect. i.e. force majeure provisions in their employment contracts.

2. Adopt principled arguments as opposed to relying on pragmatic 'good of society' type arguments which really only play into the hands of politicians and the welfare lobby. The argument ought to focus on the importance of property rights to preserve personal freedom, but actually also to enable a guilt-free happiness, as opposed to the repressed lives most Australians are living, which I expose on my blogs. Highlighting philosophical arguments will avoid cynicism, but they need to be well-argued.

3. Hire about ten highly skilled creative filipinos to do emotion and thought provoking online campaigns which are capable of being passed around like on online social network channels like Facebook, You Tube. e.g. Rudd focused, mining tax focused, appeal to justice, highlight the problems in the justice system. e.g. A short film, a documentary on RRT, jingle, ebook for distribution on political angle, but also one focused on RRT. A Comedy - caricature

4. Branding strategy - bumper stickers for cars saying 'No mining tax', and give it a distinctive colour like bright blue. Offer free to people in shopping malls.

5. Andrew Forrest should read my open letter to the Governor General, then go visit her. One has to acknowledge however that the appointee was chosen by the PM, so how's that for independence. Perhaps she has her own mind. :) Only one way to find out.

6. Dedicated website for info. Use share registry info to educate all mining industry shareholders about this tax. All arguments for & against the tax ought to be placed on this site. Also place full page advertisements in the newspapers. Do this also in London, as its a centre of mining finance.

7. Provide a free 1800 number with recorded message of the problems with this tax, and details on how they can get more information. e.g. Mail out for elderly people, or emails for the young. Philippines call centre is useful for this.

8. Attacking government policy on both sides - The ineffectiveness of Senate, the amalgamation of politicians into a two-party duopoly, the lack of effectiveness of the democratic system based on representation, where no 'real' representation is really possible. Its an ill-considered myth which leads to psychological repression.

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Author

Andrew Sheldon

Oppose the Resource Rent Tax

2010-06-14T22:29:00.000-07:00

There are many issues on which I don't agree with the Liberal Party, and the same can be said for Michael Darby (Christian); however we are both opposed to bigger government, and most particularly stupid policy like this Resource Rent Tax. If you would like to register your opposition, you can do so on Facebook.

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Author

Andrew Sheldon

Rudd to make concessions

2010-06-14T18:45:00.000-07:00

There is a suggestion that Kevin Rudd is about to make concessions to miners over the Resource Rent Tax. The reality is that Rudd's leadership is in jeopardy, regardless of whether he gives in on the Resource Rent Tax (RRT) or not. There is probably enormous appeal in appointing Julliard Gillard, the Deputy PM. I forget her exact name...but she has the punitive look of a school teacher.

She will be appealing for women. I suspect the Labor Party will want to spring her on the Australian electorate at just the right time. i.e. Not so soon that she can cause embarrassment, but not too late that people will be suspicious of her capacities. The question is - has she been tested?

Ultimately representative democracy is a farce, and you will get another bad representative of your political interests.

Anyway, what concessions might we expect from Rudd? I want to make the following points:

1. Rudd should not use taxpayers money to compensate miners for any scheme it adopts. There is no justification for denying rights for one group, and then compensating them with money extorted from taxpayers in general.

2. Rudd should acknowledge the wealth realised or created by miners, whether through acquisition, exploration or retention of mining rights. No mining company ought to be worse off because of any changes it makes.

At this point I want to challenge the idea that governments should be able to assign, own or grant mineral rights to miners on behalf of the people. I see no problem with this conception if the role of the state is to facilitate development of infrastructure, or other facilities which preserve and fund the administration of mineral resources. The idea that government should use mineral resource taxes or 'rent' for welfare is abhorrent. The problem with it is that it actually is a form of extortion. The practice does not become ok even if government gives notice because:

1. Governments ought not to be supporting people with welfare, as they are actually modelling unhealthy life strategies of dependency, reliance on others and parasitism.

2. Governments will quickly use the rationalism that miners have a choice to corner the market, in the same way that MPs created the illusion that we have a choice by amalgamating into two parties. Don't you think we would have more choice if parties did not exist.

There is nothing wrong with the notion of public ownership of resources...so long as any money raised is distributed on a 'user pays' principle. I acknowledge that a lot of the wealth realised by people like Hancock Prospecting was probably only realised by them because of nepotism, incompetence of others, and that they hardly had to do any exploration to realise such huge wealth. But that wealth generation was realised under a system they did not design. Having realised it, the government should not be able to reclaim it....under the rationalisation that they are going to help Australians. Rationalisation. Its the same extortion that Hitler would have used. i.e. extort from a group for the benefit of the collective.

I suggest that any public funds might legitimately be used for funding defense, but the approach to the issue ought to be well-conceived. There ought to be no impact on existing wealth owners. i.e. Perhaps any tax would be recouped only after the share price of a company recovers to its previous levels at which the tax was applied. The problem with that I guess is that you place a limit over the share price, so it actually never gets there, until some shareholders take a long term view. That takes time. Not an easy issue to resolve. Why not just drop the whole idea. I'd be more inclined to reform the whole concept behind the existing tax.

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Author

Andrew Sheldon

The anatomy of a tax cheat

2010-06-11T15:22:00.000-07:00

First we need to dispense with the question - What is a tax cheat? Common practice is to define a 'tax cheat' as a person who does not pay their tax. In fact this is an unreasonable 'smear' definition since most people minimise, avoid/evade taxes because on some level they are against them, whether they don't support either the concept of taxation, the methodology with which it is collected, the efficiency of its distribution or the underlying premise that their lives ought to be subordinated to the collective will. No choice you think? That is a different posting.

There are a significant number of people who don't believe there is a legitimate reasons for the imposition of taxation. They ought not to enslave people to achieve their values. In a democracy, we can consider this to be 'the tyranny of the majority'. Really it makes very little difference whether a tyranny arises from a minority or majority, coercion is not the basis for resolving conflicts. i.e. It is the origin of conflict - a lack of respect for the interests of others. It arises due to desperation for survival, a lack of empathy or self-respect, that one would undermine another's rights or values in order to satisfy some personal pretence for legitimacy or validation.

In the following dialogue I will demonstrate an example of a person who lacks self-respect. The forum conversation starts with an American who is interested in migrating to Australia. I weigh in with some critical feedback. My statements are in blue, the counter-parties are in red (for communists).

"Australia has the same fascist politics as America, in fact we are worse. But its a nice place to be coerced, abused and to pretend you have political freedom. Some people go to the beach to quash their anxiety, but because of the universal need to work, most simply repress any feeling of anxiety, and engage in unthinking love and social discourse.

Enjoy your stay. Let me save your time. NZ is worse. There is no escape, so I guess you're one of the suckers who is not going to change the system, given that you're a 'runner', so I guess you are a repressor".

[In fact he might not be a repressor. Given that he is leaving, he might simply not have the intellect or the time to identify the nature of the problem in the USA, or to appreciate that Australia is probably as bad].

A different forum poster weighs into the discussion....so a new contributor:

"You poor repressed thing you. I'll be sure to dodge the fascist death squads when I go to the shop. And you can be sure that the next time I feel some anxiety....I'll go to the beach".

You missed the point because you don't think. Please explain if you have rights why PM Rudd has the power to apply a new arbitrary tax on the mining industry, which has already cost investors in mining assets dearly. No warning. Perhaps you misunderstand the actual nature of fascism...

1. Initiation of force - wrong whether by government or private persons

2. Arbitrary rule or action - wrong because government has the moral sanction of force

You're decision to move to a beach is appropriate...you have a choice between immersing yourself in the water to wake yourself up, or burying your head in the sand.

Another characteristic feature of fascist regimes of a concrete nature since you are poorly versed with ideas is the use of price controls. The First Home Buyers Grant was such a scheme. Now you say...what about all those people who cannot afford homes? Ask yourself why homes are so expensive...because land development and sale is arbitrarily regulated by government. i.e. One of the least populated countries in the world prevents you from buying subdivided land. Why? To keep taxes high since land taxes are based on the value of property, which is kept artificially high by such restrictions.

PS: I suggest you look up the meaning of repression. By drawing attention to an issue tends to preclude me from being a repressor [....unless you can show I am a rationalising].

"That's the silliest thing I've read for a while, are you confusing Australia with Austria?"

Really? You are a classic case of repression. You say things are silly, but you present no argument. Convey to me please my contradiction. Please point me towards your beacon of freedom in Australia....perhaps the unfairest tax system in the world? Miners pay 54% because they can't escape persecution, meanwhile Google pays 0.1% in Australia, so they can pay 10% in Ireland.

Arbitrary rule. Persecution of those who pay the most because the federal government cannot catch the others. What of the property owners in Parramatta, who had their property expropriated by the NSW Labor state government so you could have a nice facade at the train station.

Please enlighten me. Maybe you ought to start by defining what you consider freedom.

"You have a very nice way of distorting the real meaning of fascism with your poorly driven semantics. By your example, there is no real thing as freedom".

Actually it is the conventional definitions which are very poor. They are poor because they are concrete-bound. They fail to convey the nature of fascism. Why? Because most people don't understand the nature of fascism...which is why we are destined to drift towards it AGAIN! I could use a better (more fundamental) word like 'collectivism', but it entails no value judgement or association with fascism, which is ultimately considered the cause of the problem. The problem is people don't make the abstract connection, so I use the world fascism.

Please define freedom for me. There are two basic definitions:

1. Rights which are an imposition upon others rights, e.g. Your right to an education which is an obligation on others to teach and finance it.

2. Rights as a protection from [the initiation of] impositions or coercion.

Clearly I support the latter. The former is a contradiction. Nothing semantic about that. I'm still waiting for an answer to my previous arguments.

"Oh how beautiful, someone who still believes that there are such rights which protect us from coercion or impositions. The only way to enforce those rights is through impositions and coercions, so it is just as coercive as the former. You call Australia fascist whilst missing the irony that you have the ability to do so".

I believe I am arguing that there are no such rights, but there should be, because the alternative is some degree of fascism or 'collectivism'. Any tolerance breaches a principle which enables only more.

The reason we live in a fascist society is because under 'representative' democracy the values of a single person, or non-substantive minority do not matter. The government therefore has no reason to listen to me because the media are a pack of liberals who don't. Even if by some miracle I was published, I would be discredited, misquoted or smeared as an irrelevancy. And I would be by the intellectual values of contemporary society. I would be in the minority. That is fascism - 'the tyranny of the majority'. The system does not work. The Senate is not working. The High Court seldom works, and too late.

In fairness to you I could have been clearer. By 'rights as protection', I mean that force should only be used by government as a defense measure. They ought not to initiate force. This was my original argument. If you want to get more fundamental. I am saying that values ought not to be gained by force. i.e. A person who protects their wealth does not seek to gain from others by force or fraud...the thief does.

Not true. The only way to take away all forms of governmental coercion is anarchy, but that just leads the way to individual coercion, which is far worse.

I did not suggest taking away all forms of coercion. I am saying that the only morally legitimate role of government is the protection of legitimate rights. Of course I support police, common law, courts, a military force, and even the instruments for regulating markets, so long as their role is protection, and not violations of rights, i.e. distortions of markets, which lead us to the current recession.

The logic of your point would be true, if I was arguing government ought to have no coercive powers, but I did not make a case for anarchy.

Think about it. Would you allow someone to take your kid without due process/reason/objective legislation (i.e. court determination).

But you argued that the government was fascist because it had coercive powers. You can't then say that the government is allowed some coercive powers without accepting the fact that that too would be a form of fascism, by your earlier argument. And then, you also have the argument of what constitutes a 'legitimate right', since for all people, their opinions differ on the matter.

Actually I argued above that government arbitrarily initiates use of force. That is the basis of fascism. Actually I can argue that...if I can base it on more fundamental values, i.e. A Theory of Values. I gave you a snippet of that. Fortunately, you are arguing towards fundamentals. You allude to the fact that there needs to be some sense of objective truth. Which I believe. Everyone at some level does, which is why they accept that science has some legitimacy. It is also why they don't walk in front of speeding cars.

I disagree that it is an arbitrary use of force. Our government basis its laws and regulations on the desires of the majority of its constituents. It's the basis of the Westminster system. You may argue that it would be a 'tyranny of the majority' but that is merely hyperbole, because if it were a tyranny, who is being terrorised?

I am not suggesting that all govt coercion is arbitrary, just some of it. Voluntarism or negotiation are important elements of accountability, even if they are the last measure through the court. The legislative process was created I believe with the expectation that it would achieve reason as the standard of value, but there was never any assurance or protection that it would. Implicitly the High Court, which is implicitly supposed to hold reason as the standard, gives arbitrary statutory law greater standing (than Common Law) based on the argument that its the democratic desire of people. Really people don't know, or reflect on such issues.

Why is democracy based on coercion? Because it does not seek to reconcile differences of opinion. Instead politicians make concessions. e.g. Senator Haraldine takes a kickback for Tasmania in exchange for Telstra privatisation.

The majority is almost almost destined to be wrong because they are passively represented by non-analytical people, who seek 'numbers', not principles based on fact. Of course they cannot avoid the most self-evident concepts, but they are not judicious in their scrutiny or analysis.

You think its not tyranny because you concede. You accepts its outcomes. But on some level everyone is frustrated with government; its just that few people choose to understand why. The reason is that they have no reason to believe they can make a choice. The tyranny arises because you have no effective choice about that. i.e. If I decide the tax system is immoral, and I choose to renounce my support by not paying. There is no negotiation where reason is the standard of value. I go to court, and the judge says 'the law is....'. I argue points of law. He decides the will of the majority is more important (i.e. statutory law), so my fate, and the fate of any individual is subject to the 'tyranny of the majority', irrespective of the validity of my arguments. Maybe he gives me a soft sentence, as is customary in cases where the law is considered outdated. There is the prospect of course that the judge might take an interest in my whole philosophical treatise if he hates the legislators, but there is a dim prospect of him investing the time. Its too much of a stretch. The flaw goes back to 1100AD, so the Westminster system has little standing with me.

The only other option is to base actions of the will of the minority but then I would argue that enforcing the status quo on the majority is just as much the basis fascism.

This is a false alternative. Your choice is not simply between being a perpetrator and a victim. There is a choice of being a trader, the same basis upon which you participate in voluntary agreements, i.e. By way of contract if specific and careful protection is required, but more importantly, a system where reason is the standard of value. Democracy is only legitimate if its consensus based (not representation) because reason must be the standard of value. Whose reason? Everyone's....with objective reality the final arbiter. Just like for science and the court system.

There needs to be a healthy mix of objective views but the majority of beliefs tend to be subjective, for example, one's belief on abortion is subjective, one's belief on economic is subjective and the fact is that there are no objective truths when it comes down to those situations, there is ONLY opinion. Most 'truths' as it were, tend only to be a basis, not definite.

I agree, most people are subjective, but what do you expect when:

1. Objectivity would cause you moral conflict, manifesting in anxiety/anger or repression/cynicism.

2. Government is the highest level of organisation. If reason is not the standard of value, it conveys a certain 'impracticality' to 'being real' and the practicality to faking it. Of course society as a whole cannot fake reality, as it confronts it in ways like reduced productivity, slower growth, financial crises, etc. We are forced to wake up at some point. It can take generations, e.g. Sweden. It will be the same for Brunei and Norway when they run out of oil & gas. The problem is people accept democracy because we were born into it. People don't trust a new conception. Galileo was killed for his efforts.

3. Rationality alienates you from people in society. Most people by accepting 'subjectivity' are undermining their cognitive development, and thus their respect for facts, and in the process diminishing their self-esteem. They can impress friends by a relative standard, but it does not 'mean' the same. They will therefore shoot the messenger or whistle blower who holds truth above perceptions.

If you analysed the issue of abortion and economic theory, you would find objectivity. You don't think there are patterns of behaviour to those issues. I don't want to deal with these specifics because that it going backwards. I'm trying to break you down to your basic philosophical premises. We started with politics, then ethics, then epistemology, now we are discussing the most fundamental values (metaphysics) - the nature of reality - objective or subjective. I kind of have you 'caged' and you want to jump from the 'metaphysical' bath water into the 'political' sea. You can do that...if you want to choose those philosophical set of implications.

You can explore these issues at my blog www.sheldonthinks.com. I am a writer. My blogs are poorly developed argument because they are unedited, but I deal with a plethora of issues in the media.

This issue seems to have winded up. Credit to the guy for his 'relative' honesty. Most people would not debate me to this level of philosophy. They would either me smearing, or more commonly simply walking off whilst cursing me. Occasionally people threaten to beat me up. :)

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Author

Andrew Sheldon

Replies to common misconceptions about RRT

2010-06-11T08:02:00.000-07:00

This blog post is intended to respond to some of the misconceptions I have seen with respect to the proposed Resource Rent Tax.

"Mining creates the two speed economy, heating up the Queensland and Western Australian economies while leaving New South Wales, South Australia, and Tasmania out in the cold. This presents an impossible choice to the RBA of either tightening monetary policy and depressing NSW or loosening it and allowing QLD and WA to boom, along with the inflation and bubble problems that booms entail. This is exacerbated by the inherently volatile nature of the resources industry, where prices can soar during times of high global growth and plummet during slumps, leading to structural unemployment. But how do we prevent these mining booms from making a bubble in WA without exacerbating the unemployment in rough times? This is where the beauty of a super-profits tax comes in. The tax only kicks in during the booms, and leaves the industry alone when it’s down. This is fondly referred to by economists as an “automatic stabilizer”.

This is flawed reasoning….a blatant rationalisation. Higher prices for plant, labour and equipment to service the mining sector reflects excess demand, as opposed to inflation, which reflects a relative increase in money supply. Higher prices are needed to justify new capacity since China, India, Brazil and Russia among others were growing so quickly.

The challenges of Australia's East Coast are in fact a blow-over from the property market traumas, which has more to do with the VERY easy monetary policy by Liberals & Labor, plus the distortive First Home Buyers Grant and artificial escalation of land prices through zoning restrictions.

The best regulation of the Australian economy comes by way of the currency. If imports exceed exports the AUD falls. Commodity prices are denominated in USD, so there is a ‘natural balance’. The implication is that a super-tax is not needed for balancing the economy. In addition, its not the role of governments to regulate mine supply since they are not market participants. This tax proposal highlights their lack of understanding.

So the choice is being an extortionist or parasite on or over mining…I’d sooner advocates eat their own carcass.

"The mining sector also has a negative impact on other export industries. Mining has a significant effect on the AUD exchange rate, making it harder for our agricultural and manufacturing sectors to compete internationally. As these other sectors shrink, we risk becoming dependent on mining, an inherently temporary industry, as our only export industry".

This is nonsense. Food prices are just as volatile as minerals. The implication of this argument is that we should all retire, allow our currency to collapse so farmers can have an easy time. Mineral prices are volatile because of historically poor price discovery. Markets are getting better at forecasting future prices & responding to demand. We need to remember that high prices are needed to foster new capacity...in fact over-capacity is good because it results in development of stand-by mining projects ready to match future demand.

The mining boom’s effect on our exchange rate has made it much harder for our agricultural and manufacturing sectors to compete internationally. Manufacturing benefits from being able to import cheap raw & semi-finished products, which offsets the impact of lower prices for finished product. It also benefits from strong local sales, and the ability to buy/develop manufacturing capacity offshore.

Furthermore, our exchange rate is excessively volatile because we are a small country...one of the smallest with a free-floating currency and good sovereign risk rating, up until it was undermined by Rudd's new tax scheme. We are also a speculators delight for that reason. i.e. Carry trade with yen.

What will replace mining if we sabotage the industry. Look at the high unemployment in NZ for a sense of why NZ'ers migrate to Australia, and what the impact will be if we do the same. Mining creates few direct jobs, but look at the indirect impact.

"There seem to be hardly any credible economic arguments against this tax. The only cries I’ve heard from Abbott on this are that it will decrease the value of super investments and that it will force mining companies overseas".

The most pertinent argument is the fact that the tax proposal and possible execution have caused great loss of wealth to investors without any warning. Mining sector investments embody assets valued on the basis of future earnings. The upside has been trimmed, and thus their net present value (NPV) cut accordingly. The types of governments that perform such actions ought to be recognised as fascists.

"The share prices of mining companies may take a small hit, but because they’re only hit with the tax when they are making large profits, they should still maintain relatively high share prices. If anything, the tax will help stabilize their share prices at a stable and consistent level of growth".

Investors buy mining stocks despite the VERY High risks...those risks are offset by commensurate attractive gains, which are often already moderated by govt taxes, existing resource taxes, infrastructure demands, exploration costs, pre-mining, high costs. Take away the upside and investors will buy government bonds, which do not create wealth. Shareholders don't buy shares for stability, they buy risk-free bonds for that. Rudd and his supporters lack a basic understanding of finance. I might add that Rudd has increased the risk and cost, so now we need a higher return, so he should reduce the tax rate now.

"The offshore outsourcing argument doesnt make any sense at all when talking about the mining industry. Labour intesive jobs, like telemarketing and computer programming can be moved overseas, but our soil cannot be moved. So long as Australia holds such a large share of the world’s minerals, mining companies are going to continue to mine on Australian soil".

Yes, for some commodities the Australian government has the power to use extortion to tax miners because they can't move their mining projects (i.e. tax). Should they be allowed to tax you higher because your company cannot post you overseas. Should Google pay just 0.1% tax and miners 53% because they have no choice. Sounds awfully like slavery.

"The finite nature of resources means the price is going to keep on going up and up in the long term, until eventually we run out of it all".

Actually the long term trend in metal prices is down. This is mostly due to competition and productivity gains from ever-more efficient mining practices. It will rise for a few years because of the insatiable demand of China, India and others, but supply will respond. Metal prices will be higher if the government applies the proposed imposts, and that will flow through to higher finished product prices. But it will not be an efficient allocation. Metal prices were down for 12 years before they rose. Mining is not always profitable...so it may well be a protracted drain on the economy. More importantly, no one is served by governments making commercial decisions. Remember when the NSW state government locked itself into expensive power contracts.

Resources are not really finite since resources are conditional or contextual. It depends on price. If there is a demand, they will be found, whether in lower intensity consumption, recycling or lower grade deposits, or even substitutes.

"The tax is to pay for the stimulus package, and consider this a perfect example of counter-cyclical fiscal policy. It is wholly appropriate for our government to spend in the slumps to hold up the economy and save in the booms to reign it in".

This is of course the wonderous Keynesian economics which is failing us because politicians have no self-restraint. i.e. The governments of most Western countries are indebted at the end of the current 20-year protracted cycle (1988-2008). Australia is slightly better (just 60% public sector debt of GDP) paradoxically because of mining. Thank you miners. We love you so much, we thought we'd kick you in the teeth for the risks you take.

"I am worried that this tax is being used to fund other government expenditure and it might make Australia’s budget particularly vulnerable to fluctuations in global demand. Do you think this tax will make any future GFC-style loss of revenue (causing a budget deficit) more likely or more severe?"

Good point. The govt wants to opportunistically lock in some of the gains from China & India demand expansion. The problem is that no market expands as you want, so the Aust govt is taking an investment gamble. More importantly, it is adopting the policy relatively late...the boom started 10 years ago. Once again miners & shareholders will pay if he gets it wrong because he will AGAIN chop & change his arbitrary tax.. Investors will just ignore the sector. Australian mining depends on foreign capital. If we don't use foreign capital, projects don't get funded, as Australian fund managers would otherwise be over-exposed to the resources sector.

Source of these posts comes from http://thebrisbanite.com. Amended for brevity.

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Author

Andrew Sheldon

High Court action not the next step - ask the GG

2010-06-09T23:50:00.001-07:00

I am pleased to see that Andrew Forrest of Fortescue Metal Mining has flagged High Court action. I have written emails (contained herein) to the Attorney General and Commonwealth Governor-General on this issue. This is not an issue that should wait until an election is held in order to decide the fate of the mining industry, or investors. This policy idea has already cost investors money. It ought to live not a bad longer.....and it should certainly not hang over the next election. Personally, I wish the issue had the opportunity to test the 'moral fibre' of the Australian people, if only to wake them up from their self-imposed exile of repression, however its not worth the risk.

I wish mining executives would stop saying the tax will drive the economy into a 'swamp'. Such pragmatic arguments are not the issue. Anything can be justified in the name of pragmatism. i.e. If I was PM I could kill all retirees to save the community money on pension benefits. It ought to be an issue of justice. Maybe some people will say that Andrew Forrest has a vested interest in this policy because a lot of his wealthy is at stake. It ought not to make a difference. This is a moral issue, and people ought to have some respect for facts and principles, in so fact as those principles reconcile with the facts of reality. There is no justification for arbitrary impositions of this nature which destroy the wealth of asset holders.

The mining industry ought to be asking the WA and Commonwealth Governor Generals' to take action. Dismiss the Ruddy bastard!

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Author

Andrew Sheldon

Open Letter to the Governor General

2010-06-09T23:31:00.000-07:00

Attn: Her Excellency Ms Quentin Bryce AC

Governor-General of the Commonwealth of Australia

Government House

Dunrossil Drive

YARRALUMLA ACT 2600
Email: governor-general@gg.gov.au

Dear Her Excellency,

I would like to register an official complaint against the way the Australian government is conducting itself with respect to the Resource Rent Tax. It is clear to me that the Resource Rent tax is an act of extortion by the Australian government against the mining industry. Great wealth has been lost because the government has conjured up and released plans of this new "excessive" 40% tax. More concerning still is that it has discarded the bulk of the findings by the Henry Committee, and that it is intending to use this tax to finance an 'entitlement' to a broader group of Australians prior to an election. It is clearly the government's intent to use the tax as a populist policy in order to win the election.

I suspect that the Labor government has in fact no intent to adopt the tax, knowing that it will be blocked by the Liberals. It will however use the tax to win the election. Rudd knows that he is not going to win the next election unless he appeals to the 'short range' interests of Australians. This strategy has already cost many Australians a great deal of financial loss, it has jeopardised the sovereign risk rating of Australia, and it will probably result in a decline in our sovereign credit rating, even though nothing has in fact been done. This will undermine investment in Australia and probably result in an increase in interest repayments.

This policy initiative came from nowhere. The parliament is acting with contempt for the good governance of Australia. In India such practice has resulted in judicial activism, with a positive impact on the standards of conduct by the Indian judiciary. I sincerely hope you will act before we descend further towards fascism, which I consider to be the arbitrary and coercive use of force or expropriation. Little surprise that there is already talk of succession in WA. I regard this as a serious breach of parliamentary conduct. I have discussed the matter with other people, and they also consider this matter to exceed the excesses of the Whitlam government.

This is not the first issue. There has been a general decline in parliamentary conduct, including the First Home Owners Grant under the Liberal Party. This is comparable to price controls in its implications. The Rudd government came to power and 'doubled up' the First Home Buyers entitlement under that scheme despite the already high household debt levels and inflationary outlook. That would have sparked calls of fascism years ago. These acts involved arbitrary policy to prop up certain sections of the Australian community at the expense of others. Was not the Senate intended to protect minorities from such behaviour? Is not the High Court intended to protect the people from such breaches, or the Governor-General?

I think your intervention is warranted because a delayed High Court action will cast dispersions upon financial markets for the interim period. It will be another year before the High Court will be called upon to deal with this issue. The High Court ought to hold reason as the standard of value, i.e. It interprets evidence according to logical standards, and one would hope those principles are grounded in the facts of reality, as opposed to the arbitrary rule that seems to be underpinning the government's actions, as it underpinned the democratically-elected Nazis. I am not suggesting we are about to see fatalities in the streets, but there is a serious decline in ethical standards, and this is a precursor to 'emergency' actions which escalate moral interests and desperation. It strikes me that we are currently in a period such as the late 1930s, in the wake of the depression....as our own financial crisis unfolds.

The paradox is that I have already lost a great deal of money because mining companies are not properly regulated. Regulation (i.e. justice as opposed to the unnecessary, arbitrary government intervention like price controls, welfare, home grants) is at a low point. I complained as a mining analyst against the conduct of corporate executives and I was told that they don't have the resources. The basic functions of government are not being adequately carried out. I don't even bother to vote because the process is flawed. i.e. Forced to vote among a duopoly of alligned political interests. Who does that serve?

I would like to establish how I might make a formal complaint against the government with respect to these issue. It is clear in my mind what is required with respect to parliamentary reform. I am an intellectual, so I utilise my mind. It serves me best to live outside my cherished homeland because of fear of political reprisals. Paranoia? Surely this email will place me in even greater harm. Some things are just too important.

Regards,

Andrew Sheldon

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Author

Andrew Sheldon

Greatest wealth expropriation coming

2010-06-09T22:29:00.000-07:00

During the next few years Australians are going to be exposed to the biggest government-imposed expropriation of wealth they have ever seen. The reasons are the following:

1. The decline in Common Law and ascension of 'arbitrary' statutory law as a means of achieving political ends. We have seen Western governments attempt to retain government through one form of stimulus to another. They have run out of stimulus tools...all countries are fully indebted, so they need to look to new taxing powers. They will target the rich as well as corporates. Many corporations around the world have (unlike households) a high level of savings.

2. Interest rate squeeze: The rise in interest rates are going to place a lot of households under pressure, and this is going to prompt political parties to compete in terms of its measures to 'protect' those households encouraged by governments to buy houses when no one ought to have been buying houses. Western countries have huge household debts.

You might have thought that trade liberalisation was about less fascism....wrong. Fascism is the result of declining intellectual standards. Look at the quality of education and the media, what people are reading, and it is apparent that people are:

1. Poorer thinkers today because compartmentalised, specialised, repressed, less critical, less conceptual, sceptical of conceptual assertions, less able to anticipate problems. i.e. Shorter range thinking, concrete-bound.

2. Less self confident because they have been raised in a culture where critical thinkers have been alienated, fewer negative consequences for immoral acts, more collectivist/social identity, less respect for facts or objectivity, more beholden to collective values, i.e. More likely to accept coercion and expropriation as a measure to achieve these values. More likely to respond to fear-based campaigns. More likely to seek government action to problems, even if they caused the problems.

3. Less responsible: They are more likely to look to governments to solve problems, and blame others for their problems.

The implication of this is that over the next few years, as government receipts dry up, and we start eating dried biscuits and tin food, the government will be looking for new sources of revenue to support the poor and those subject to the mishaps that it caused. The government to this end will target the rich. The wealthy in the first instance will be those who are not able to move their investments offshore, e.g. Miners. Eventually other cashed up corporations will be taxed.

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Author

Andrew Sheldon

What ought the mining industry do on the RRT

2010-06-09T21:55:00.000-07:00

To date I have been very critical of the mining industry peak bodies because their strategy for fighting the government has been 'highly counterproductive'. So what ought they be doing? I would suggest many of the answers are contained in this blog, but let us summarise:

1. Historical perspective: They need to educate Australians about the historical significance of these moves. The increasing shift away from Common Law to Statutory Law has resulted in an increase in arbitrary, often which is opportunistic, as opposed to based on any coherent principles (like Common Law).

2. The nature of fascism: Fascism is not simply mass murders and goose-stepping Nazis, it is really more about coercion and arbitrary power. The death squads came later. Nazism was the result of an intellectual decay. The Western allies squashed the Nazis, but they did not eradicate the cause...which was collectivism, i.e. Subordination of the individual to the state or the collective. We are moving towards China and North Korea.

3. Tax in perspective: They ought to be comparing this tax to the nationalisation of the Venezuelan oil industry and Zimbabwean white farm holdings, and the Saudi oil industry. This imposition ought to be compared with previous government actions, e.g. The Stolen Children Generation, etc. No joke! This is serious.

4. Cost of the policy: They ought to be talking about the higher sovereign risk attached to Australian (household) debt thanks to Rudd.

5. Legacy of financial mismanagement: They ought to be attacking the Liberals & Labor for their combined financial complicity with the EU and US governments in facilitating the current financial crisis.

6. Secession of WA: The secession of WA from the Commonwealth is an extreme measure, however it is an extreme act...so well-justified. A comparison ought to be made with the Boston Tea Party in the USA.

7. Enlist all business: They ought to be trying to enlist ALL Australian business in their camapign to eradicate this tax, as other sectors will be targeted next.

8. Enlist the governor general: They ought to be complaining to the G-G about this unprecedented act of expropriation. This tax is contrary to the spirit of the law.

9. High Court action: They ought to be taking action in the High Court to have this idea set aside or ruled upon as unconstitutional. A lot of other law has been enacted which is likewise unconstitutional. This policy is in breach of the spirit of the Senate, contrary to the 'reason as the standard' basis for parliamentary debate, and the provisions for 'good government'

Basically I am saying that the miners need to mount a combined conceptual-concrete policy which will thoroughly embarrass the Liberal-Labor government. Don't just single out the Labor government, as we were left with a Labor government because of the moral indifference and fascism inherent in the Liberals. I see no difference.

They ought to abandon their prior strategies of pragmatically arguing that Australia needs a strong mining industry, attacking the banks because they pay less tax, etc.

If the mining industry needs a ethicist to argue these points for them...they have my email.

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Author

Andrew Sheldon

Non-conceptual mining industry a problem

2010-06-09T21:30:00.000-07:00

The problem in the mining industry becomes ever-more apparent with the following quote by Gina Rinehart, of Hancock Prospecting. Forrest is right to imply that they are communists (or fascists), but listen to her struggle with concepts...

"It's very difficult talking to Treasury officials who don’t really have non-theoretical concepts [of how the mining industry works]."

Concepts are theoretical. I don't think its a case of the Treasury not understanding mining. I think government has been moving in this direction for years...the mining industry is so concrete-bound that it is only waking up to the problem because the Resource Rent Tax is being considered. This is not the first imposition...it was not long ago that the government was looking to impose a 'green tax' based on the greenhouse scandal. That issue will probably slowly disappear with the recession....as science shows the global warming was always a natural phenomenon.

We need to get the mining industry thinking more conceptually...and long range. It starts with business, as they are really the defenders of freedom in the Western world.

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Author

Andrew Sheldon

Peak mining body ready compromising

2010-06-09T21:15:00.000-07:00

Another reason why Australia and other countries move towards fascism is because of their short-range thinking and lack of principle. They simply don't see the long term implication of their ideas. Its truly remarkable.

When a man comes to your door and demands $100,000. You do not give it to him readily, unless your life is at risk. If he suggests another proposition... "ok I'll let you give me just $50,000"....do you consider that a good compromise.

The answer is 'NO'. That is not a good compromise for several reasons:

1. You would have conceded an important principle...the right of government to make any arbitrary imposition upon you...for any dubious reason.

2. The government originally intended to make an outrageous claim with the expectation that you would compromise.

3. You will have established a precedent for the government to attack other industries by the same policy initiative. i.e. The old strategy of 'divide and rule'.

4. You will have given the government the legs up, as far as coming back in future for a larger slice of the cake.

Mr Hooke said the minerals industry was not against paying more taxes as it became more profitable, but the design of the government's proposed new tax was flawed.

Contrary to commonsense, the Minerals Council of Australia is ready to give the government what it always wanted...an increase in tax on mining. The Resource Rent Tax will do two things:

1. It will make government effective 'free carried' owners of capital

2. It will expose the government to financial risk, i.e. the govt will have benefits and obligations

3. It will have extended the hand of government into industry

This is the most courageous act of fascism since President Chirez of Venezuela nationalised the oil industry and Mugabe of Zimbabwe nationalised the farms of white landowners.

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Author
Andrew Sheldon
Resource Rent Tax
Applied Critical Thinking | www.SheldonThinks.com

Teele raises sovereign risk issue

2010-06-09T21:04:00.000-07:00

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

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Author

Andrew Sheldon

Mining industry is not prepared for the RRT battle

2010-06-09T20:35:00.001-07:00

The peak mining industry bodies are indeed stupid...judging by Rudd's ability to muster community support, they are even more naive than Rudd, or the voters. For years I have been writing about the escalating fascism in Australia. This has of course fallen on deaf-ears. Today, we are seeing Andrew Forrest identifying Kevin Rudd as a fascist. In the article he is seen giving Rudd a warm hug. He must be a smart guy. Right? After all he has made a lot of money. He was Australia's richest man. He has been cut down to size by a tax he did not see coming.

This is precisely the problem with business people - their anti conceptual thinking. They think conceptual knowledge, and subjects like philosophy (i.e. ethics) are a waste of time. The consequence of their lack of conceptual efficacy and short-range thinking, we end up with fascism. He says 'communist', but really it makes no difference....its the 'will of the majority' to coerce or expropriate from the minority'....that's right. If it sounds like democracy...it is. Democracy is a dangerous concept. If you thought the tyranny of the minority was bad...ask yourself what the tyranny of the majority is like.....that's right...its no difference. If you are wondering what has changed...it was something not on your radar...it was the ever-increasing expansion of statutory law at the expense of Common Law. Under Common Law Rudd would be a thief...he is empowered by arbitrary statutory law.

Wasn't the constitution..i.e. The Senate supposed to protect people from such persecution. Well, yes, but when concepts become a bit 'iffy', if people become morally ambivalent, you would be surprised how quickly you can move towards fascism.

The mining industry deserve this result. The government was better prepared for this debate then they were. The mining industry is using the same arguments as they have always used...the utility of a strong mining industry. These 'relativist' arguments are what the government is going on. No doubt the Rudd government has been calling all the resource producing (i.e. mining-based) countries suggesting that they apply a new resource rent tax. This is after all how taxes increase and taxation takes hold. i.e. Facts of reality don't matter. So the mining industry uses concrete based arguments like 'all the investment will go offshore"....so Rudd counters that other resource countries are going to apply a mining/resource tax. So we have the ultra-fascist regime of China now supporting a resource tax. Funny isn't it....China is taxing fascist tax ideas from Australia. Did you think democracy was a nice balance between capitalism and fascism. He he...the compromise is always worst. Collectivists can't do anything...they are inefficacious thinkers. They depend on the enslavement of thinkers...free thinkers...business people. Rudd is a compromise...so China looks to people like him (lacking integrity) for ideas on how to keep their economy going. Understand China is in trouble, but it has the benefit of a large market and cheap labour. Those benefits will evaporate in 30 years.

We fall into this comparative value argument....which children use. i.e. Mommy, but all the kids in school have one, why can't I. Clearly the mining industry have no graduated from conceptual school yet, because they are still using such arguments as fully 'mature' adults. If you are wondering why Twiggy Forrest is particularly focal consider that he is one of the few owners of mining, as opposed to his compatriots who can pass on the cost to shareholders. This is why the government is going after miners...the superindustry has no 'direct' shareholders, and most shareholders are fund managers or 'manager' CEOs who can pass on the cost. Rudd of course knows this.

So given that governments appear likely to follow Rudd's lead around the world...what is the mining industry's next argument.

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Author

Andrew Sheldon

The problem with lobbyists

2010-06-03T18:49:00.000-07:00

One of the great problems with the way lobbyists deal with government is that they lack the integrity they need in order to win arguments. The implication is that they make a less than convincing case. The problems which I observe is:

1. They are condemned by their own contradictions

2. They are condemned by their moral ambivalence

Nowhere is this more true that with respect to business people. I mentioned on another post my conversation with a business CEO. He's great making money, but then making money is not so much about thinking. One of those great fallacies is that if you can make money, you are worth listening too, or you must be good at everything. Its the same logic which has Australians appointing sporting heroes to intellectual roles like 'chairman of some commission'. They are supposedly defenders of Australian values. Ha.. Of course sports people should not be precluded...but neither should these people acquire the position of saints.

Basically in the debate over the Resource Rent Tax - business leaders will be their own worst enemy. They will fail to recognise that government has a number of benefits up its sleeve:

1. Moral monopoly - they are perceived to act in the public interest - this presumption has to be breached.

2. Moral legitimacy - there is an expectation that what the majority of Australians want, or their representatives want, is

The problem with business leaders is that they actually cave into this folly. It is inappropriate, a blatant flaw with representative democracy, that miners appeal to the Greens Party for resolution on this issue. It is suicidal! Why? The Greens would be happy to see the mining industry implode, and they are going to do a deal with them? Go figure. The miners need to attack the legitimacy of the system. Why should a minority party be able to extort some political concession from the miners? The same is true for majorities. Extortion or coercion ought be banished from the parliament...after all that is why the miners are in this problem. Yet, here we have the miners selling out to Greens. They are conceding an 'own goal'. This is why we end up with fascism...because the 'productive' class of society, the wealthy cannot think. They keep offering concessions. They concede the most precious thing 'principles' to people. Some business people never had principles, but others simply have no respect for objectivity. They tend to be goal-orientated by nature, running business systems in a way that makes the least impact on their bottom-line. The problem is they tend to be short-range thinkers in this respect, and very concrete. This makes them practical people in the short-range, but when it comes to politics, they concede too much.

The Resource Rent Tax is an ambitious action for the Rudd government to make. Kind of courageous decision for Rudd...but then I guess its the desperate type of decision you make when you are a loser confronting an election loss. But he's the most powerful person in the country you say. How can he be a loser? The reason is that he is not convinced himself. He needs to control your life to feel 'almost human'. Such is the life of a middleman too scared to act. He has to charm his way into his wife's money rather than make his own. No doubt she was impressed by his power. Women love manipulation just as too many lack self-esteem.

Well I guess 'collectively' men have a lot to answer for in that respect. If we are going to have leaders with principles, first we need to elect people with principles. If you place any of your existing candidates on a TV screen, and you shine a UV light on them, all you will detect is 'liar'.

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Author

Andrew Sheldon

Miners cancelling projects by the dozen

2010-06-03T18:08:00.000-07:00

The Rudd government's plan to expropriate wealth from mining sector investors is the most opportunistic grab for cash we have probably seen in the last 100 years. Oh, there was an attempt by a Labor state government to seize the private property in the name of the public good in Parramatta a few years ago. That issue when to the High Court. Clearly this issue is heading in the same direction.

Rudd is clearly dividing the country on an important issue. It is a surprising issue. One would have hoped that we would have developed a respect for people's property centuries ago, but because of the intellectual ambivalence or inefficacy of a great many Australians, the prospect of individuals or governments stealing wealth from others is just controversial. We might have some sympathy for a person without moral guidance, if they resorted to stealing, then we might appreciate their 'grab for cash' in order to feed themselves.

The problem is that such arguments are not about 'needs' trumping rights (or wants), but about the litany of non-thoughts, non-decisions which manifested in that person needing to steal. Why did he become a thief when he could have become a productive person. No positive influences. So what type of role model is the Rudd government when it seeks to expropriate the wealth of Australians, and why is it opportunistically stealing this cash after just having passed through one of the most glorious market conditions the country has ever seen? Its not even short for cash. This is all about power over money. Rudd is not content to marry a multi-millionaire, he has to extort a thousand more besides. Legally of course. Its a fine line under fascism. All you have to do is offer the 'appearance' of a concession to enough voters, and they will sell their souls for some short range benefit. The strategy is old - divide and rule. This month the target is miners. In a few years, the Rudd would have diminished the ego of Australians by another quart, and the extent of their repression would have sunk another decibel. The number of productive members in society would have shrunk another 0.5%, and tax receipts will need a kick up to help all those extra cases of mental illness and anxiety that have been added to the cues because Rudd and a litany of other political middlemen have offered 'carrots' to those who did not deserve them, and effectively bludgeoned the productive people in this country.

We owe the productive class in any country a great deal. We do not honour them by expropriating their wealth. The reason they evade taxes, the reason why your claims exceed your generosity, is because you did not earn the right to enslave them. You never will. It is an indefensible principle. Your justification that the 'common good' trumps the individual is an illusion long since dispelled. You are not convinced because no one has appealed to your better interest at the level which you need. There are two arguments:

1. Self worth: There are those who argue that personal self worth is intrinsic or unconditional, and those who argue that its conditional or earned. This debate is mostly conceded to the collectivists or socialists. There is a great deal of rationalism here and equivocation. Right to life should not amount to claims on others rights.

2. Cognition: So long as people think cognitive efficacy is based on intuition, the collective will, there will be no chance of achieving any sense of mental efficacy, and thus no prospect of anyone retaining self-esteem.

Kevin Rudd is undermining the intellectual capital of this country. The foreign capital which will find over markets is just the start. Australia's brightest minds will head offshore. They already have. There are already a million-odd Australians living abroad. They have left the 'lucky country'. I dare say, most of them did it for the money....a very concrete reason. Rudd has given them a more compelling reason....a desire to find a country where thinkers and achievers are valued, and not bludgeoned, both financially and intellectually.

If you want an example, of what life under Rudd will be like, look no further than NZ. NZ very much lives under Australia's shadow because it cannot attract skilled people. It therefore has problem with business starts. It therefore has to substitute departing skilled NZ'ers with semi-skilled imports from Asia with collectivist values. The problem with collectivism is that its indulgent and non-intellectual. They are the basis for simple jobs like waiting on tables. They are not the values which underpin business. To be fair to these migrants, they are the best in their country. The implication is that there is a brain drain from Asia, and then we have 0.5 million NZ'ers in Australia. This is a brain drain as well. They are not just chasing money, the underlying values are different.

NZ is not a country you would associate with aspirational values. The aspirational ones leave. This of course concentrates the parasitical souls who think it is acceptable to renounce responsibility and live off the efforts of other people. As parents, we know that life is about teaching kids the consequences of their actions. Its also why we don't spoil them. If we spoil them, these cease to value, they cease to achieve. Only humanity, the 'conceptual animal' possesses the stupidity to do that. Animals cannot afford it, no species can afford to renounce its only self-worth...its too fundamental. That is what Kevin Rudd is doing, by giving people an ultimatum between:

1. Perpetrator - if you support or suspend your judgement about this Resource Rent Tax

2. Victim - loss of wealth, loss of efficacy, disempowerment, brain drain if you allow the Resource Rent Tax to be adopted.

This is not a single issue...it is a principle that has to be grasped. The line should have been drawn not at some arbitrary point, but a principle - respect for property rights. This breach was made possible by the judiciary which sanctioned the enactment of arbitrary rule. This was a departure from Common Law, which is based on principles. When 'the people' allowed that, when the judiciary allowed that, government became capable of anything. Now we have a plethora of publicly-funded spineless academics advocating far worse. Yes, miners are forced to support a whole industry which because of their concrete-based thinking, will end up destroying them, or punishing them offshore.

The problem is that governments around the world are reducing the standards of value all around the world. There is no where to find. Eventually the internet transactions will be taxed. Google on 0.1% tax rate in Australia...it will have no where to hide. Google I think pays a 10% tax in Ireland. Not in future. There will be a litany of new regulations to stop it. And you will support this new tax or law because its in your 'narrow', 'concrete' interests. You will give no thought to the more abstract principles involved. By that point the number of intellectuals will be a fraction of a percent.

Basically there is not going to be anywhere to hide. You can confront the parasites in your government, or you can confront the parasites in Asia, where you might be compelled to live because money goes further. The problem is - they know you have money. The paradox is that they want to get out of their country. There is literary no where to hide from arbitrary government. On forums, I warn Americans coming to Australia or NZ of their false hope...they have this expectation that they can escape the parasites in their government...there is no where to hide. These people have to be confronted.

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Author

Andrew Sheldon

Minara Resources criticises resource rent tax

2010-05-25T06:45:00.000-07:00

This article by the SMH highlights some of the mining industry response to the Rudd government's resource rent tax. Minara Resources is threatening to move investment offshore, and says it will pay a 58% tax rate on its profits. This of course far exceeds other nations and industries.

The Canadian government has welcomed the Australian move to higher tax rates as it moves in the opposite direction.

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Author

Andrew Sheldon

2010-05-13T02:31:00.000-07:00

Perhaps a good measure of just how attractive mineral exploration is in Australia compared to other countries is to compare companies:

1. The following stocks have projects outside Australia:

AMX - http://www.google.com/finance?q=ASX:AMX

GRY - http://www.google.com/finance?q=ASX:GRY

PRU - http://www.google.com/finance?q=ASX:pru

2. The following list of stocks have projects in Australia:

IGR - http://www.google.com/finance?q=ASX:igr

NAV - http://www.google.com/finance?q=ASX:nav

AAM - http://www.google.com/finance?q=ASX:aam (now mining)

The reason why foreign miners perform better is:

1. Foreign governments are probably less likely to adopt tax impost than fascist Western governments in the 'modern era' as we profess to be saving these poor countries who we think are 'uncivilised' because they have less money and 'unsophisticated' governments that don't intrude into every aspect of their lives.

2. Developing countries are more prospective - miners can get large tracts of land with greater certainty of discovery, i.e. The companies above control hundreds of kilometres of attractive geological terrain. Such of it is as prospective as Western Australia 'used to be'

3. Australia's easy resources have been found. Miners/explorers have to go deeper to find good deposits, and most already found.

The reality is that Rudd has wiped out a great deal of wealth from Australians by unilaterally unveiling a tax which has wiped off their balance sheets. How irresponsible! He clearly does not realise that most Australian miners have projects overseas, or have already realised the wealth. He is too late to tax it because he causes untold wealth by trying to tax it.

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Author

Andrew Sheldon

Gary Morgan's disdain for the Resource Rent Tax

2010-05-11T15:42:00.000-07:00

As much as I share Gary Morgan's disdain for the Resource Rent Tax, I agree with the ASX that his political views as expressed through the ASX were legitimately 'censored'. It is not a restriction of free speech, it is a quality control requirement. He ought to highlight scientific evidence or render philosophical deductive analytical inferences to support his views. Fortunately, the role of this site is to provide philosophical justifications for why this tax is illegitimate.

Partly the reason why media and political commentary is so bad is that participants do not recognise reason as the standard of value. It is easy to get emotive about such issues, but at the end of the day opinions have to be substantiated. The argument that the mining industry is going to be injured by this policy can be argued in terms of:

1. Pragmatic loss of money

2. Ethical or philosophical terms

I find the first solely relied upon by the miners, when in fact the ASX is looking for the later. That is what we have attempted to do on this website. We will provide more subject to the miners interest.

Full story at SMH Online.

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Author

Andrew Sheldon

Understanding the proposed Resource Rent Tax

2010-05-10T00:29:00.000-07:00

Here are some links to information on the Resource Rent Tax:

1. Allens Arthur Robinson website

2. Critique of neutral impacts of Resource Rent Tax - see website

3. The Resource Rent Tax - sample application to petroleum

4. Description of petroleum resource rent tax

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Author
Andrew Sheldon
Resource Rent Tax
Applied Critical Thinking | www.SheldonThinks.com

Resource Rent Tax to slow growth

2010-05-09T22:27:00.000-07:00

Investment bankers are starting to come out with preliminary statements about the Resource Rent Tax slowing Australia's economic growth. The SMH media article cites a 0.5% reduction in growth by UBS, but this ignores the other impacts which we cited in our article, i.e. Sovereign risk deterioration and cost of capital increase, in addition to the reduced investment. They also ignore the lost capital gains from subdued interest in capital acquisitions. Their estimates were preliminary.

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Author
Andrew Sheldon
Resource Rent Tax
Applied Critical Thinking | www.SheldonThinks.com

Tax grap prompts WA secession talk

2010-05-08T19:12:00.000-07:00

This article on ABC News highlights the anguish that Kevin Rudd is causing. Australia was one country before Rudd exerted his power. Now there is talk of seccession of WA from the Australian Federation. I am from NSW, but I would happily move to WA if this is the way the Federal government wants to go, and I think its a very clever move, because its easier to blackmail a state population than the whole country. Kevin will lose this one.

This is clever politics in WA, and I fully support the move. Maybe the new nation of WA can be called "Ruddless" and the rest "Ruddy-Hell". But I would prefer to see Rudd step down, or the Governor General remove him. Unbelievable that he thought he could get away with this cheap politics. I also think the mining industry has the capacity to seek a High Court resolution to this under the Constitution. I think Rudd has breached the 'good government' spirit of the law. This is indeed thought provoking for Australians. I hope they come to reflect more on ethical matters, and stop living off the miners back. REMOVE RUDD!!!

We all owe a great debt to the mining industry for creating so much wealth. I personally think its not just owned by miners. I think there is some justification for some of the money going back to the public, but not Rudd's hands, not his way, and not the amount he wants to take. He is an extortionist preying on the interests of the a minority.

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Author
Andrew Sheldon
Resource Rent Tax
Applied Critical Thinking | www.SheldonThinks.com

Rudd election promises are paid by persecuting miners

2010-05-08T18:53:00.000-07:00

Kevin Rudd is offering Australians a swag of benefits if they accept his proposal to tax miners by an 'added 40%', taking their tax burden to 53%. This has to go down in history as the most vile appeal to short-range parasitism ever conjured up by any political party. This is the type of cynical politics which occurs in the Philippines and other developing countries. I hope Rudd is not appealing to the mantra 'Smart Australians' because this really treats us like we are really stupid, short range, parasites living off the government's every concession and entitlement. I hope Australians have more self-respect than to take this path.

Here is a list of Rudd's election promises. Its all contingent upon the tax. I don't even think Rudd plans to implement it. He is doing it merely to get elected. I think he has put up some an aggressive tax upon a small minority - the mining industry - knowing that the Liberals would knock it down. He knows that 'throwing the mining industry under the truck' will deliver him a spending budget bigger than the Liberals who cannot follow them, or force them to compete on the same lunacy. Its a clever ploy, if it were not so utterly evil.

I would ask people to empathise with the mining industry. Yes, mining profits are high, but consider that commodity prices were at record lows for 15 years in the 1990s, and that a significant amount of gains are eroded by the strong $A, since commodities are priced in USD. Also the high cost of services in the mining industry is placing huge pressure on miners. Basically a lot of the benefits are already flowing to the community in higher wages and population growth.

Another reason for empathising is that - by supporting Rudd's cynical politics of 'leveraged' extortion of the majority over a minority, you are going to be next to feel the impact of government. Rudd will happily see 90% of Australians living on mining-funded welfare in order to keep him in power. I hope Australians see through this type of vile strategy, and recognise that pride comes from earning one's income, not expropriating it from the mining industry. If anyone feels persecuted by the mining industry, speak up now, and ask Rudd to actually support a better justice system...sorry but he is too busy persecuting minorities. Yes, the mining industry is a minority, as it employs less than 5% of Australians directly, but it finances a lot of downstream economic activity.

Rudd really wants to dictate what is good for us. In order to do that he is placing money in our pockets which we did not earn. If your parents did that, Dr Phil would say you were the worst type of parent - an indulgent, abusive parent. Why is it alright for Rudd to do the same? This is utter abuse!

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Author

Andrew Sheldon