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August 04th 2014 print

Michael Kile

Your Pocket, Their Money

The carbon tax is gone, finally, but the compensation that was supposed to ease its sting remains. Perhaps the time has come to honour a convention revered in many parts of the world and admit that baksheesh is now part and parcel of Australian life and politics

cash in handBaksheesh rules the world. Australia is a long way from the Middle East, but one of the region’s traditional customs has found its way to Canberra. Baksheesh, it is said, can move mountains and even cure constipation. But will it move the blockages in the Senate? God giveth and God taketh away (Job1.21), but apparently not on Capital Hill. Instead of adding more debt to the nation’s balance sheet – and burdening present and future tax-payers – our political class must have the courage to say – ‘Mafish’. The trouble with baksheesh is getting rid of it.

Mafish: ‘There is none’, equivalent to ‘I left my purse at home’.Richard Burton, 1865, A Secret Pilgrimage to Mecca and Medina

An outbreak of baksheesh – aka compensation-mania — has infected the body politic. Labor had a bad attack while designing its (abandoned) Resource Super Profits Tax (RSPT) and (flawed) Minerals Resource Rent Tax (MRRT). The Liberal Party succumbed while promising to scrap the carbon tax during the 2013 Federal election campaign. Palmer United Party (PUP) now has a nasty case of it, opposing removal of at least $8.3bn of “unfunded promises” linked to the MRRT and also key agencies administering the Carbon Con.

Compensation, n., 1. Act or process of making amends for something; sometimes confused with constipation.  2. A reparation for loss, injury, etc; indemnity. 3. An attempt to conceal or offset personal – or political – flaws by exaggerated exhibition of qualities regarded as desirable. 4. Syn., baksheesh. A term used to describe tipping in the Middle East, a gratuity; may also refer to charitable giving or certain forms of political corruption such as bribery. C17: from Persian bakhshish; related to Sanskrit bhaksati. Eg: (i) A “fee or present which Arabs claim on all occasions for services you render them, as well as for services they have rendered you” (Richard Burton, 1865, p5); (ii) “Lavish remuneration and bribes, rudely demanded but ever so graciously accepted by the natives [voters] in return for little or no services rendered” (Leo Deuel, 1966).

Compensation can be a painful condition. Some of us prefer to keep it to ourselves. But whether you take a vow of silence or ‘come out’ on your first day in the Senate, the impulse to give away what you don’t have – forcing someone else to beg, borrow or steal from others equally deserving — can affect your mental health, as well as the nation’s credit rating. Fortunately, it is something that can be treated naturally and at home. Many of the lifestyle changes that help to control it (diet, exercise, etc.) will make a happier and healthier you.

The Senate mining tax shambles had its genesis four years ago, when Labor linked several big baksheesh spending programs to its proposed RSPT.  Additional programs were introduced later to be funded by the MRRT, introduced in July 2010.

Current MRRT spending includes an annual $1.3bn on the Schoolkids Bonus; $1bn for a low-income superannuation contribution – which gives a rebate on superannuation to those earning less than $37,000 a year; an Income Support Bonus costing an annual $300 million and a tax write-off on company assets totalling about $900m a year.

Described by The Australian’s Paul Kelly, as ‘one of the greatest public policy failures in decades’, the poorly designed tax failed to generate sufficient revenue to support them. Its architects woefully over-estimated the MRRT cash inflow.

According to Kelly, “the first version [RSPT] was supposed to raise $12bn across the first two years, the second version [MRRT] has raised $340 million net in its lifetime. Yet huge multi-billion programs were legislated on the basis they were financed by the tax (The Weekend Australian, “Crisis deepens as Senate players refuse to deal”, Inquirer, p17, July 19-20, 2014).

Their repeal would save $13.4bn over four years as the MRRT is expected to generate only $3.3bn over this period, while commitments would cost $16.7bn.

It gets worse. PUP wants to have its baksheesh-cake – to maintain this largesse – while simultaneously basking in the kudos of repealing the MRRT. Treasurer Joe Hockey and Finance Minister Mathias Cormann, however, have said: ‘Mafish’.

In a joint statement they stressed the government would “not accept amendments which support these unfunded spending measures remaining in place. The Government cannot afford to keep borrowing money to pay for this kind of unfunded spending. By voting to keep many of the associated spending measures, senators have effectively voted to keep the mining tax.”

The Senate also voted 39-32 to scrap Labor’s carbon (dioxide) tax/ETS. PUP senators – apparently moved by recent apocalyptic rhetoric from Al Gore and others – finally gave their support, but to only one part of the bill.

“Old white men [OWM] out of touch with science and ruled by greed” had won the day, Larissa Waters told the Senate (16 Jul 2014).

Renewable energy companies apparently have nobler motives – like saving the planet and creating a Goldilocks climate – even if they too are managed by quite a few OWM with an eye on public baksheesh. For the sector’s very existence depends on having an immense and sustained supply of it.

According to recent Deloitte Access Economics research, the Renewable Energy Target (RET) “penalises electricity consumers by underwriting expensive renewable generation – a gross ‘wealth transfer’ of $17 billion to 2030.”

The intended target of the RET scheme was to deliver 20% renewable energy by 2020. Lower demand for electricity has meant that, if allowed to continue on its current trajectory, the RET will deliver at least 28% renewable energy by 2020 at a large cost to Australia.”

It is no surprise, then, that Senator Milne wants a ‘climate criminals’ website to parade the following OWM – Dick Warburton, Brian Fisher, David Murray, Maurice Newman, Mitch Hooke, Chris Mitchell, Innes Willox, Ian Plimer, Rupert Murdoch, George Pell, Andrew Bolt, John Roskam, Martin Ferguson and so on and so forth. Come Judgment Day, Milne said, they would be unable to deny ‘the role they played in tearing down the climate bills’.

Milne also had a message for ‘all those people partying around the corridors’:

Enjoy it because it is your last stand. The fact is you have misjudged the temperature … When we look at the temperature of the planet rising, let us look at the climate science. The fact of the matter is we are on track for four to six degrees of warming. That means people will not survive. Part of the world will be uninhabitable. There will be one million deaths per week for the next 90 years if it gets to 4 degrees.”

With regard to temperature ‘misjudgements’, some global warming might be welcome in eastern Australia, where Brisbane recently experienced its coldest morning in 103 years. Meanwhile, the Southern Hemisphere Sea Ice Anomaly – as measured by the US National Snow & Ice Data Center – confirmed Antarctic sea-ice currently covered 16million sq km, about 2.1 million more than usual this time of year.

But the Senate vote was a Pyrrhic victory, and not only because PUP opposed dismantling other climate-change agencies (CCA, REFC) and any modification of RET before the next election. For the Liberal Party also promised voters billions in baksheesh in its 2013 campaign. It would “keep the current income tax thresholds and the current pension and benefit fortnightly rates” even though it intended to scrap the carbon tax funding them.

“This means that Australian workers, families and pensioners will keep the tax cuts and fortnightly pension and benefit increases provided in Labor’s carbon tax package, but without the carbon tax.

As a result these tax cuts and fortnightly benefit increases will become genuine cost-of-living relief, worth around $4 billion a year, rather than partial compensation for Labor’s damaging carbon tax hit.”

Richard Denniss, economist and executive director of the Australia Institute, noted in a recent interview that the government decided to do “an incredibly populist thing. We were very well compensated for the introduction of the carbon price. But in the middle of an alleged budget emergency, it is now scrapping a $7bn source of revenue – but leaving $5bn worth of compensation in place.” (Listen here at 3.25 minutes.)

Anxious not to be depicted (again) as a climate-change ‘denier’, Prime Minister Tony Abbott insisted the government was still in the business of emissions reduction – and presumably the folly of global ‘climate control’.

We are a government that absolutely appreciates we have only got one planet, but we should pass it on to our children and grand-children in at least as good a shape as we found it. We are a conservationist government and we will do what we think is the sensible thing to try to bring emissions down. What’s gone today is not a policy to reduce emissions. What’s gone today is the world’s biggest carbon tax.”

As for blockages in the Senate, fortunately for PUP senators – but not the national interest – there is compelling evidence for the laxative effects of baksheesh.  In Agatha Christie’s non-fiction book, Come, Tell me How You Live (1946), the famous crime-writer recorded the following incident while on a dig with her archaeologist husband, Max Mallowan, in 1930s Syria.

“Today has definitely been Constipation Day. Abd es Salaam’s health has for some days been the burning topic. Every kind of aperient has been administered to him. As a result he is now, he says, ‘much weakened’. Even more parlous is the condition of one Saleh Hassan, whose inside has resisted all treatment, from a mild beginning with Eno’s to a half-bottle of castor oil.

Max has recourse to the Kamichlie doctor’s horse medicine. An enormous dose is administered, and Max then addresses the patient, telling him that if his inside ‘moves before sunset’ a large baksheesh will be given him.

It is a near thing. His friends and relations keep an anxious eye on the declining sun. With quarter of an hour to go, we hear cheers and cries. The news goes like wild-fire! The floodgates have opened! Surrounded by an enthusiastic crowd, the pale sufferer is escorted to the house to receive his promised reward.”

PUP may well get its baksheesh, but the Christie Cure (CC) suggests that if it must come it should do so only after a big dose of horse medicine – or its canine equivalent – a gift from indebted future tax-payers.

Michael Kile                               1 August 2014