What Kevin took away, Kevin now gives back, but only if you're nice to Kevin - oh, and also have a mining project in a marginal electorate.
What Kevin took away, Kevin now gives back, but only if you're nice to Kevin - oh, and also have a mining project in a marginal electorate.
That is the disgracefully tacky position reached in the great Australian mining-tax farce, a time of special deals for special mates in the name of clawing back lost political support, and saving the Prime Minister, Kevin Rudd, from being dumped by his own party before the next election.
First deals, as flagged here last week, will be for Queensland's beleaguered coal-seam LNG projects which cannot be developed under the proposed resource super-tax -- and Queensland is full of marginal electorates.
Next will come a special deal for BHP Billiton's Olympic Dam copper/uranium project in South Australia, and perhaps a morsel for Fortescue Metals, if only to get its chief executive, Andrew Forrest out of Rudd's face.
Politically, deals to take the immediate heat out of the tax debate might be a smart move, though it is not a policy without risk, primarily the accusation that Rudd will be permanently tagged Mr Backflip.
For Australia, what's happening now is so utterly appalling that it's almost beyond belief that the national government fails to understand the long-term damage it is doing to the country's major export industry, and our 200 year-old reputation as a stable place in which to invest.
Special government deals for political mates is what happens in Africa, it's not supposed to happen here. But, the deals being hatched today are on such a scale, and will have such a distorting effect on business, that they would even make some corrupt African leaders blush.
Saving Rudd, which is what the Australian Government is getting ready to do, if only until it's safe to sack him, will destroy our reputation as a reputable country for decades. We will be tarred as a country prepared to sell its principles for a fist full of votes.
In the short term, some projects will be saved by winning a delay in being hit by the super-tax, or by winning some other waiver.
In the long term, capital formation will slow as foreign investors reconsider Australian as a suitable destination for their funds, and Australian investors send their money to more attractive countries.
Exploration, a facet of the mining industry which Rudd believes will benefit from his super-tax, will be hammered by the super-tax for this very simple reason - no-one, except tax dodgers, ever invests to achieve a notional tax break.
Investments are made to make profits, not face a 58% tax rate in the future, especially when the rate is half that in rival countries.
And, if anyone is silly enough to invest for a tax break then ask what happened to the savings of thousands of investors in tax-driven tree plantations. They lost the lot when government changed the rules - something which is guaranteed to happen with the exploration write-offs promised in the super-tax package.
What Rudd is doing today is the equivalent of spraying a herbicide like RoundUp in the garden. For a little while, hopefully until the next election, the plants show no obvious effect. All is calm, all is green - and then they die.
