17/06/2010 - 00:00

Robbing Peter leaves everyone the poorer

17/06/2010 - 00:00


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ROBBING Peter to pay Paul is a time-honoured tradition in politics.

Robbing Peter leaves everyone the poorer

ROBBING Peter to pay Paul is a time-honoured tradition in politics.

Especially when an election looms and it is possible to argue to the myriad of long-suffering Pauls that Peter is really the town bully and has been stealing their lunch money.

That is fundamentally the argument being pitched to the public by the prime minister in justifying his proposed resource super profits tax.

According to Mr Rudd’s logic, miners have been enjoying unreasonably good profits during the past few years at the expense of most ordinary Australians, other than the lucky well-paid few who either work in the industry directly or are wealthy shareholders pocketing the dividends.

Instead, the vast majority of Australia’s ‘working families’ have been forced to suffer incessant rises in the cost of living because of the pressure placed by industry on limited community resources.

And given that the miners are profiteering from non-renewable resources that belong to “all Australians” – irrespective of the Constitution explicitly enshrining such rights in the states – it would seem only fair that the industry be forced to hand over 40 per cent of all that booty.

After all, who says ‘lifestylers’ in Nimbin have no right to a share of iron ore sales from Newman?

Armed with a plan designed by an authoritative-sounding economist, it can even be argued the miners will also be better off in the long term, because economic modelling somehow shows that raising their industry’s cost base significantly will actually encourage them to invest more money.

Unfortunately for the Pauls, that is where it all starts to unravel.

The RSPT is fundamentally built on flawed foundations, which depend on the conceptual assumptions used by architect Ken Henry actually bearing some likeness to reality.

But Dr Henry’s glib denials of the key role played by Australia’s mining sector in navigating a path through the global financial crisis must leave his analytical aptitude open to question.

As the numbers from the Australian Bureau of Statistics and Treasury clearly show, the mining industry was absolutely pivotal to Australia’s relatively smooth passage through the downturn.

If Dr Henry is less than credible on that score, how can any weight be attached to the rest of his assertions? Especially in the face of repeated and sound argument from a broad spectrum of business and industry that the one certain impact of the tax will be a slowing of investment as investors turn to more attractive opportunities elsewhere.

That in turn can only mean falling export earnings, falling employment, declining government tax receipts and less of everything for Australians across the board.

Little wonder then that opinion polls consistently indicate most Australians recognise that robbing Peter to pay Paul will only leave everyone the poorer.



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