02/03/2004 - 21:00

Sorry tale just gets worse

02/03/2004 - 21:00


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HOW things change in a week.

Sorry tale just gets worse

HOW things change in a week.

Last week, I said I would reserve judgement on adding my voice to calls for Eric Ripper’s head over the heatwave power debacle.

The caveat I allowed myself was that Mr Ripper and business both want the same thing, a carve-up of Western Power to promote competition in the electricity sector, and therefore he should be allowed time to pursue that objective more vigorously.

I also noted that any past argument Western Power had for maintaining its monopoly – the security of power supplies – had been blown out of the water by the recent crisis.

This week we see the absurd situation where Mr Ripper, in the wake of the fiasco, has been forced by his political opponents to retreat on the break-up of Western Power.

More pointedly, we have WA’s energy minister being forced to abandon his own policy by the ineptitude of the very organisation he vowed to get rid of. Since when has negligence been a licence for survival?

No matter who is to blame for this situation, we have ended up with the very worst of business fears – a monopoly that can’t guarantee security of supply.

There is no doubt that Mr Ripper is now a lame duck at the head of the energy ministry and, unless he can pull a rabbit out of the hat, he should let someone take on the energy portfolio and try to sort out this mess before the next election.

BHPB’s news  is all good

THE expansion of BHP Billiton’s iron ore operations is good news and very much reflects our recent coverage of increasing expenditure in this commodity across all the WA producers.

It is important that resources can be developed rather than sat upon and companies should be rewarded for delivering such results.

Right now, commodity prices are up but history has shown a long downward trend. That suggests that developing our resources now would be of more value than leaving them in the ground.

Some would argue that we should keep our minerals in the ground because they will become more valuable as they become increasingly scarce.

This argument assumes that further deposits will not be found or developed elsewhere, that our commodities will always be needed and that we can afford the opportunity cost of not developing them now.

While there is some merit in these arguments, I still believe the bird in the hand is worth two in the bush.

The key is to ensure we leave a valuable legacy for our descendants, by investing the returns of development wisely rather than squandering it, as many who take wealth for granted so easily do.

Don’t gamble on taxation

THE WA Chamber of Commerce and Industry raises a very interesting point in its pre-budget submission to the State Government.

WA’s tax competitiveness is a key issue, with the chamber rightly pointing out that our ability to compete for business is being eroded by the types and levels of taxes increasingly imposed on those who wish to trade in this State.

The chamber points out that competitiveness is a key benchmark used by the State Government to measure WA’s fiscal performance.

Yet, the chamber believes that this benchmark had proved an inadequate way of imposing controls of the growth of our tax take.

The benchmark allows tax growth so long as WA doesn’t take more tax per capita than other major markets such as Victoria or NSW.

And it doesn’t compare our tax rate with those of international jurisdictions where many of our companies do business.

With this in mind, the chamber asks searching questions of the way we collect tax.

Like many WA Business News readers, not only does the chamber think that overall we pay too much but a big part of that burden is skewed towards the wrong areas.

One of the real concerns the document points out is how WA relies on taxes and imposts on business-related costs – payroll, motor vehicle and property – while rival States can subsidise these expenses with taxes on gambling.

I agree this is a real problem, though the real test for the Government is to come up with a way of reducing the tax burden on business without making gambling more widespread.

Let’s hope that’s not where the answer lies.

Call me a wowser, but the evidence I am seeing is that we have been lucky to resist widespread gambling and other States are now paying a price for their early windfall gains.




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