Allan Takes Aim Blog

Needs must when the devil drives

Posted on: 17 July 2010


First Published, The Chronicle, Canberra, Tuesday, July 13   

I don’t think there’s a better example of the above proverb than the new Resource Rent Tax (RRT) that replaced Prime Minister Kevin Rudd’s Super Profits Tax.

Julia Gillard who became Prime Minster following the successful coup against Rudd as Prime hopes her RRT, which replaces SPT she and Wayne Swan helped Rudd introduce, and which they vigorously supported, will keep BIG miners BHPBilliton, Rio Tinto and Xstrata off her back. She also hopes it will help counteract fears held by some true believers that the SPT would have sunk the good ship Labor at the next election and left some of them scrabbling for a lifebelt in the Sea of Political Uncertainty.

O ye of little faith. With Captain Julia on the bridge, assisted by senior coup members, Wayne Swan and Martin Anderson, all is now well. Although formerly committed to the SPT this trio now believes that “needs must when the devil drives” because, even though they wanted the SPT, they now believe that dumping some of it and renaming the remainder as the RRT, will be enough to keep the good ship Labor afloat and on course for victory at the next election.

But what did they dump? They dumped ten percent of the SPT thus reducing the SPT’s original tax impost from forty percent tax to thirty percent and also reduced company tax by one percent, not two percent. But wait: there’s more. They increased the benchmark six percent rate, above which the SPT would be payable, to twelve percent. And there’s still more: following these changes, it seems likely that Captain Julie will call an early election  

Modesty forbids me suggesting that my Chronicle column Tuesday 25 May titled “Will the tax be good or bad?” played a role in the changes. I mention the column because in it I asked the following: if six percent was an “appropriate benchmark” base for the SPT; and if the community really knew how the SPT worked, would they see it as a benefiting the community or would they see it as deterring investment in mining, causing job losses, reducing superannuation investment returns and affecting retirement incomes? Considering the changes that have since been made, I suggest these questions were the right ones to ask.

It comes as no surprise either that the BIG miners expressed a degree of satisfaction with the RRT. However many small miners and small business operators were, and still are, less than happy. The small miners say they have been treated less generously than the big miners while small business is unhappy at company tax being cut by only one percent, when a cut of two percent was promised.

Small miners also say that while the Government wants them to work their butts off expanding operations and creating jobs, it does not seem prepared to treat them in the same way as the big miners. They make the not unreasonable claim that, like the big miners, they too, are explorers and make a major contribution to the Australian economy by providing infrastructure in isolated areas not only for the men and women who work for them but also for those who have families.

In a sense however, and perhaps even more legitimately, they could claim also that they are being discriminated against on the basis of size. They could further claim the changes are a denial of the claim made by Governments of all persuasions that Australia is the land of opportunities where the sky’s the limit for those willing to work and take advantage of those opportunities.

As for Prime Minister Gillard: she hopes the RRT, and new policies on climate change and refugees will sway voters to the ALP at the next election.  Will they? They might, but perhaps not in the way she hopes.

Cynical voters might see the RRT as a cosy arrangement between the Big miners and Government to prevent a war from which neither would benefit and also think new climate change and refugee policies as less about principle than about capturing Green votes and votes of people whose principal interest is human rights, at the next election.

But the big question is: will they capture them? That remains to be seen.

The Chronicle for Canberra’s best community news. Published every Tuesday

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11 Responses to "Needs must when the devil drives"

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