03/06/2010 - 00:00

Talk about de-incentivisation

03/06/2010 - 00:00

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Historically, a super profits tax would have stopped WA’s progress before it started.

STATE Scene doubts if anyone other than Prime Minister Kevin Rudd could cobble together an argument contending that Western Australia would have reached its present standard of living if a super profits tax had existed over the past 120 years.

Why 120 years, two lifetimes?

Simply because that catches the 1890s gold rushes, the first time since Captain James Stirling reached our shores, in 1829, that WA was noticed internationally and began prospering.

Since then, WA has been noticed internationally only twice more, during the 1960s, as a major grain and iron ore exporter, and again since 2004-05, exporting the latter and LNG.

And both times this has been due to the mining undertaken across the Pilbara and offshore waters.

The 1890s gold rushes, as well as markedly boosting WA’s then-miniscule population, meant the townships of Perth and Fremantle started growing to become a single city by the 1950s.

Until the 1890s, WA had a few small coastal townships – Fremantle, Bunbury, Geraldton and Albany – which serviced a handful of tiny inland farming settlements that were basically English-style villages, places like York, Toodyay and Guildford.

Between 1890 and 1900, WA’s population leapt four-fold, from a dismal 47,000 – a fair crowd at an AFL game – to 180,000, because of gold.

Those rushes therefore dramatically changed everything because anyone who found the royal metal, and not all did, made – relative to what workers earned elsewhere – what Mr Rudd would undoubtedly dub ‘super profits’.

What someone should tell our multi-millionaire leader is that, to paraphrase Gordon Gekko, super profits are not just good, they’re essential for economies to grow.

If such profits don’t exist, or cannot be generated, people stay poor, which means living squalid lives, something State Scene knows neither Mr Rudd nor his wife, Therese Rein, aspired to.

So-called super profits have always been and always will be required for the simple reason that they’re the incentive, the engine, for development, economic growth, and prosperity.

If Mr Rudd finds that difficult to comprehend he should step aside and ask why his wife ceased being a housewife and decided a decade or so ago to establish a company that went on to make tens of millions of dollars, that is, super profits, from government contracts in job placement.

I’d be stunned to hear Ms Rein claiming she launched her government-dependent employment agency, not for the money, not for super profits, but for the love of finding work for job seekers.

But back to struggling WA after about 1901, or nearly a decade after gold was first found in the parched Coolgardie-Kalgoorlie wilderness.

What happened over the next half-century or so, up to about 1965?

Although it would be exaggerating to say absolutely nothing, the fact is that that description is fairly close to the mark.

WA, over the first half of the 20th century, was, to use a well-known WA phrase, “a fine place to starve in”.

Apart from the opening-up of the Wheatbelt – the creation of farmlands across the triangle between Geraldton, Esperance and Albany – that was carved out of uninviting scrub country between 1910 and about 1930, little else occurred.

Again, someone should tell Mr Rudd that the main reasons many thousands of early WA families ventured into that uninviting hot and dry bushland was because they not only dreaded the thought of vegetating in the state’s few poor coastal settlements, but because they hoped to make super profits.

Clearly he needs reminding that, over those 60-years – 1901 until the 1960s – an understandable but now forgotten restlessness prevailed across the entire state.

Although WA accepted about 20,000 refugees from displaced persons camps across Germany during the late 1940s, into the 1950s, many Western Australians left for other parts of Australia to find work commensurate with their skills and ambitions.

Western Australians, in 1901, had very reluctantly joined what they knew was destined to be a Sydney-Melbourne dominated federal Commonwealth.

The major point of contention remained the federally imposed tariff, which can legitimately be viewed as a super tax upon all Western Australians, since it meant more expensive eastern states manufactured goods had to be bought.

That, more than anything, sparked and sustained WA’s moves to breakaway from the Commonwealth via a 1933 referendum that registered 138,653 in favour to 70,706 against.

“The Commonwealth Tariff Board, in its 1924 Report, described Western Australia as being ‘on the road to serfdom’ under the tariff policy, and predicted that Western Australians would become ‘hewers of wood and drawers of water’,” writes Thomas Musgrave. (The Western Australian Secessionist Movement [Macquarie Law Journal, 2003, Vol.3.])

Then came WA’s ‘Cinderella era’, being a mendicant political entity, dependent upon Canberra’s largesse, something most Western Australians disliked.

What reversed that undignified status was imagination, enterprise, and most of all, ambition, which ultimately resulted in the development of the Pilbara’s iron ore industry and, soon after, its offshore oil and gas sectors.

These together have virtually underwritten WA’s prosperity since the mid-1960s.

Would that prosperity have arisen if all those ambitions had been thwarted by a Rudd-style super tax imposed in, say, 1965?

So why has Mr Rudd moved to thwart the second wave of expansion of WA’s economy that began only in 2004-05?

Surely he’s familiar with ambition and what it can bring about?

If not, State Scene urges he reads the revealing book by his one-time leader, Mark Latham, The Latham Diaries, especially the entry of Friday October 22 2004, at page 364.

“Another slice of caucus chaos: Kevin Rudd. On Wednesday, The Australian, carried a front-page story saying that if Rudd didn’t become shadow treasurer he would go to the backbench,” Mr Latham wrote.

“My thoughts went back to December last year and his tantrum over his title. He’s such a prima donna.

“Rudd came around to see me yesterday morning, lobbying to be shadow treasurer. He went into a long explanation of why he’s so wonderful.

“When he finished I put my cards on the table: that I regard him as disloyal and unreliable, and he only holds his frontbench position because of his media profile and public standing among people who have never actually met him.

“I also told him that if the newspaper report was true, he should get ready for the backbench, as there was no way I could give him the shadow treasury.

“He appeared surprised, protested his innocence and then broke down badly, sobbing over the recent death of his mother, just before polling day.

“I told him to leave work and go back to Brisbane to rest with his family. But he wouldn’t give up. Even though he was crying, he kept on lobbying to be shadow treasurer.

“It was becoming quite sad. Then he said words that I will never forget: ‘I swear on my mother’s grave that The Australian story is wrong, totally wrong, and that I’ve been loyal to you and will continue to be loyal to your leadership.’

“I don’t mind people bullshitting to me in politics, but not like this.”

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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