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May 03rd 2010 print

David Flint

Henry Review: another BIG tax

This government has wasted billions of dollars and put us into debt. Their massive incompetence means taxpayers have to pay billions of dollars in interest each year and somehow repay the capital. And what is there to show for this?

It seems the Rudd government’s appetite will never be satisfied. Australia has never known such a big spender, at least in peacetime, or one which has demonstrated such consistent incompetence.

Since the failed attempt by the Chifley government to seize all banks in 1948, governments have realized that they don’t have to own assets to control them and more importantly, to extract a good part of the return. The unfortunate farmer who went on a spectacular hunger strike, Peter Spencer is only one of a whole class of latter-day kulaks despoiled by a rapacious government. By freezing his property through a conspiracy between federal and state politicians, the government was able to claim some kudos among the international elites that it was reducing carbon emissions. Not theirs, only the unfortunate farmers.  All of this is very satisfying for the luvvies who dine by candlelight each year in sumptuous restaurants during Earth Hour, but soul destroying for working farmers who are trying to feed a nation.

Now the Queensland government is doing the same to Aboriginal people of Cape York to placate city based environmentalists.

In 1973, the Whitlam government, relying on a UN Treaty seized all offshore assets from the states and vigorously exploited them with High Court approval. Now the Rudd government plans to seize not the nations’ onshore mines, just the better part of the financial return from them.

They have had this taxpayer funded recommendation to do this – the Henry Tax Review – for months, but they have denied  the media, the opposition and the nation any chance to debate it before the government decided what to do. Governments are normally reliant on the public service for advice on their response to similar reports, so what was the point of having the very person who would advise them, the Treasury Head, conduct the review? And why deny the media, the academy and the opposition an opportunity to examine and debate the report before the government came to its response? Once again, as with the health plan, this government announces its decisions and expects everyone to roll over. This is not the way a democracy should function.

This proposal will encourage mining investors to move to our competitors, those countries with lower labour costs and taxes. And it is not as if the miners haven’t been paying their federal and state taxes, and ensuring a very good livelihood for their Australian employees and contractors. But to Kevin Rudd they are nothing more than a flock of geese which have each laid a golden egg, and will continue to do so. So why not have Messrs Rudd, Swan, Tanner, Garrett and Ms Gillard show how much more money they can pour down the drain?

The government proposes to extract large dividends from each miner without buying any shares, a form of highway robbery. This goes under the fancy name of a federal resource rent tax. They promise a rebate for state mining royalties and substantial infrastructure spending.

But can the states trust the government? Just look at the GST.

Mr. Howard risked his government in asking the people for a mandate to impose a GST for the benefit of the states. This was to replace the taxes the High Court had found invalid.

When John Howard won the election and introduced the GST, Mr Rudd denounced it by saying “When the history of this Parliament, this nation and this century is written, 30 June, 1999, will be recorded as a day of fundamental injustice – an injustice which is real, an injustice which is not simply conjured up by the fleeting rhetoric of politicians, it will be recorded as the day when the social compact that has governed this nation for the last 100 years was torn up.” 

That distaste did not stop Mr. Rudd in government from trying to claw back one third of the GST. Only the Western Australian Premier Barnett has had the strength to stand up to him.

Now he’s saying to the states to trust him to allow a rebate for state mining royalties, just as the states trusted the federal authorities over the GST. We are already being told the rebate will “cost” about $1.1 billion in the two years from 2012/13. “Cost”? The tax isn’t in place yet and already they are pointing to the “cost” of the rebate. Guess how long it will take to renege on that in the next tax “reform.”

We’re also told the new tax will be used for a new infrastructure fund, chiefly to benefit the resource-rich states, with new roads, rail and ports to be ready for future mining booms. In addition it will be used to reduce company tax, help small business, lower thresholds – it is to be the new magic pudding. How long will it be before it is put up and the rebates removed or watered down?

Those great premiers Sir Joh Bjelke Petersen and Sir Charles Court were too wily and too protective of the interests of the people of WA and Queensland to have ever agreed to such a confidence trick.

A central government who could not put pink batts into roofs without tradesmen being electrocuted, houses burning down and vast amounts of money being defrauded is not the authority to trust to handle this.

In addition, centralising and standardising financial measures means that we are stuck forever with one model which may turn out to be the worst. Remember it was only because the odious death duties were state based, that Sir Joh Bjelke Petersen was able to abolish them, thus forcing the other states and the Commonwealth to copy him. (If you think death duties are a good thing you are obviously not a farmer, nor are you likely to belong to be one of those hard working people who are neither welfare dependent nor rolling in wealth.)

This government has wasted billions of dollars and put us into debt. Their massive incompetence means taxpayers have to pay billions of dollars in interest each year and somehow repay the capital. And what is there to show for this? 

The government’s plans to impose a considerable new tax on the mining industry should be resisted.