Kohler: Rudd an autocratic idiot, and Gillard shouldn’t be let off the hook
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After last week’s convulsive expulsion of Kevin Rudd, Canberra is now settling back into its normal routines. The common wisdom in the nation’s capital now is that Rudd’s systematic subversion of federal cabinet was just the work of a rogue individual and that his sacking by the Labor caucus was an affirmation, in a way, of the strength of the Australian system of governance. Well, last night I addressed a group of senior public servants in Canberra and ruffled their feathers with an alternative view of the affair. The ease with which Rudd ignored the normal cabinet process for two years has, I said, exposed a dangerous flaw in Australian governance that has merely been papered over by Mark Arbib’s and Bill Shorten’s brutal execution of Rudd and the installation of Julia Gillard. This is not merely a theoretical discussion in hindsight about proper governance: Rudd’s by-passing of cabinet resulted in the dreadful resource super profits tax, a debacle that has significantly damaged the country and which the new prime minister has now had to quickly sort out with the mining industry. The fact that this has proved possible, with a deal to be announced today, will no doubt allow everyone to persuade themselves that it’s all worked out okay in the end and let’s just draw a veil over the unfortunate Rudd era. Julia Gillard is entirely different and it’ll never happen again. In my view that’s not good enough. I invited last night’s group of senior executive service members to think about what would have happened if there had been a terrorist emergency in the past couple of months that not only made it impossible for Rudd’s enemies in caucus to remove him but actually reinforced and continued his autocratic style of government, in which all decisions were made by him and a small coterie of ministers — in the national interest, of course. Or what if he had been a more competent, more malevolent demagogue, able to manipulate public opinion and remain popular? What if Rudd had called an election in February, increased his majority and continued his ‘boiling frog’ act of gradually centralising power in his own office for another three years? In the final 12 months of the Howard government there were 64 cabinet meetings. In the first 12 months of the Rudd government there were 235 constituted cabinet meetings — an astonishing increase in activity. But most of these were not cabinet meetings — they were meetings of a subcommittee of cabinet called the Strategic Priorities and Budget Committee, the so-called gang of four, or kitchen cabinet, of Rudd, Deputy Prime Minister Gillard, Treasurer Wayne Swan and Finance Minister Lindsay Tanner. As everyone now knows, most government decisions over the past two and a half years were made by this group, and often by just Rudd and Swan (like the RSPT), and then brought to full cabinet for rubber stamping — sometimes not even that. The shift towards committee government had been justified by the global financial crisis and then it became a habit. These days company boards have to publish corporate governance statements about how they operate. Consultants are paid millions to advise on proper corporate governance and directors are fastidious about process. What we have learnt from the past two and a half years is that there is no such governance standards prescribing the way the government must work. If a PM wants to bypass cabinet and run the government as a kind of autocracy, he or she can do it. No one complains unless the opinion polls turn against the PM. And the fact that Rudd was able to be brought down by ALP enemies before the end of his first term means the flaws in the system will not be addressed — the Canberra elites are now telling themselves, in fact, it works fine. See? Rudd strayed from the path of proper governance and was efficiently sacked. What I told last night’s gathering was that they were just lucky. It turned out Rudd was a bit of an idiot who didn’t know what was going on. Even last Wednesday night he vowed to stay on, unaware that he was already dead. If he had been ‘saved’ by a major terrorist attack in the past couple of months or had been smarter, it would have been a different story. So what should be done? Preferably there should be a change to the constitution recognising the authority and responsibility of ministers. At the moment the constitution barely recognises their existence, let alone spells out what they are supposed to do and how the prime minister is supposed to treat them. Failing that, since constitutional change is nearly impossible, Gillard should ask the Cabinet Office to prepare a ‘Statement of Governance Practice’ that spells out the proper way in which the Australian government is to operate. It should set out in writing what she has promised verbally to do. This document could be passed as a law, or perhaps just affirmed, by both houses of parliament so that it binds all parties to the proper use of cabinet at all times, except in rare and specified circumstances. The policy mistakes of the past six months, and specifically the RSPT, should never be allowed to happen again. |
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131 Comments
Hallelujah!!!!! Good one Alan…especially the bit about ‘Statement of Governance Practice’ - should be enacted asap……
Hmmm. Interesting perspective. Raises a few questions for me:
a) was Howard’s way any different? My impression of that government was that Howard was in charge, and his Ministers did whatever he told them to - Cabinet as rubber stamp. At least with the Arbib/Shorten putsch, they knew everyone’s phone numbers and managed to get the knives out. Costello and his lot never even had the guts to do that.
b) give us an example of a truly Cabinet- run government - State or Federal - where the contribution of all makes for better government;
c) if it was so bad under Rudd, why did it take them so long to do anything about it? and
d) as a member of the ‘kitchen cabinet’, how can Gillard and Swan have any credibility? I’ve never thought Swan up to the job - Tanner would have made a much better Treasurer, and been a more credible face of economic policy for the Rudd government.
I’m not convinced that putting the RSPT or anything else before Cabinet would have improved the policies of the government. Surely what was needed was good policy advice, including implementation. Listening to Ken Henry might have been a good start.
Alan- I have to ask - what is the “Cabinet Office” of which you speak? Do you mean the Cabinet Secretariat in the Department of the Prime Minister and Cabinet, or do you mean the office of the Cabinet Secretary (currently Senator Ludwig)?
@Jenny - you are somewhat correct to say that the Howard government also had form on not consulting before making politically sensitive decisions - sometimes resulting in appalling policy decisions, however I do believe that there was a more collegiate approach in that Cabinet than has been in evidence the past couple of years.
Governments do not have to take the policy advice of their departments (where they request that advice) and sometimes political ends trump effective policy. An emphasis on implementation and measurable outcomes is still sadly under-represented in much policy advice, making it difficult to both deliver and measure outcomes.
Ho hum, another day another Rudd and/or Government bash. Kick him while he’s down, kicked him whilst he was up and will probably kick him in his grave.
If I remember correctly the Rudd opposition were being held to a very high standard as an alternate government throughout the last election year, to a higher standard than the sitting government.
Where is all the scrutiny and holding of the Abbott opposition to a high standard in an election year, and why are they being allowed to get away with saying and doing just about anything they please?
How about asking Abbott how he will run his cabinet if in power and then hold him to that? I won’t hold my breath waiting for that to happen though.
Alan is right.
We still have the situation where the PM can decide to take Australia to war without cabinet or parliamentry approval, regardless of how many of us “ordinary australians” object.
Successive governments have been increasing executive power to the point where we are one smart & ruthless leader away from a dictatorship, and this needs to change before it is too late.
How many mining shares do you have Alan? This piece is total bullshit from start to finish and just another excuse to bash someone you didn’t like.
To paraphrase Leonard Cohen “play another song Richard, this one has got old and bitter”. Beside all of that we only have the words of the whiteanting assassins that the cabinet structure and process is as stated by you.
what a log of garbage alan, what you and your business mining company and liberal lackeys want, is for yourselves to control australia, dont you?
ok kevin rudd made mistakes and ran a tight ship, so did john howard,
ask yourself was kevin rudds government more transparent and accountable than john howards ? im quite sure it was
kevin rudd was deposed by a coup de tat by stealth aided and abbetted by big business, the murdoch press , poor journos like yourself and there born to rule liberal party lackeys
ive watched you on the 7.30 report your no better with your commentary on tv as you are with your journalism
join your mates in the liberal party and stand for parliament if you know so much
Highly nutritious food for thought from Mr Kohler.
Does Alan Kohler still call himself a journalist? Because he and his Business Spectator Robert Gottliebson have been singing the global miners’ song so strenuously these past couple of months, one could be forgiven for concluding they were on the miners’ PR payroll.
The hyperbole of Kohler and Gottliebsen over possible capital strikes and sovereign risk obscured the fact that the multi-national miners just didn’t want to pay any more tax. With deep pockets, aided by the Australian taxpayer, they ran a successful advertising campaign persuading voters that the national interest and their own interest were one and the same.
That the public bought this and a prime minister was rolled says more about the perversion of democracy by big capital than it does about the standards of governance in the Rudd government.
Some of the most credentialled economists in this country argued the RSPT made sense, the miners themselves asked for a tax on profits rather than production and there is a strong economic case that the mining boom is of such a magnitude it is sucking capital and labour away from other industries, pushing interest rates higher than they would otherwise be and putting us at risk of Dutch Disease.
Yet according to Mr Kohler and his mining patrons this was just a naked grab for cash.
The wonder of it is this man gets a free taxpayer-funded gift to promote himself everynight on the public broadcaster as some of kind of independent sage/
Mr. Kohler - How dare you call our former PM an idiot! He is nothing of the kind. You and your business mates are the idiots. In one way or another, you are all responsible for the GFC and its aftermath on many, many ordinary people in this country and around the world. Of course, you couldn’t care less about people like us, just so long as you and your rich mates don’t lose any money.
Which brings me to the RSPT now called something else and very much watered down thanks to the mining companies and their hangers-on. You have been against this since it was first announced, but apart from your obvious view that the super rich should just be allowed to become filthy rich, by exploitation of the real owners of these minerals (the Australian people), you have nothing to say. I suggest that is because there is no justification for your view.
No doubt Queen Julia will rise in the polls, and those with half a brain will believe that everything is now fixed. Apart from iron-ore and coal, miners of our other minerals (gold, uranium, copper etc.) will pay nothing. Apparently it is okay for them to rip us off. The backdown by this PM is a joke, and a betrayal of the people. Despite what you say, Mr. Rudd would not have done this and his removal begs the question: What does the Labor party stand for, and who does it represent? - certainly not the majority of Labor voters.
I totally agree with Alan Kohler. I voted for the Labor Party - the Party not just the leader. Decisions need to be made by Cabinet, otherwise it is just a dictatorship. And these thoughts of my apply equally to the Liberal Party, The Greens and any other party that is formed in the future.
Of course, if Mr Kohler actually approved of the RPST he’d have no problem with the system of governance. Meanwhile we’ve seen Abbott announce policies without consulting with anyone - is he going to magically stop doing that if he wins the election? Will Mr Kohler condemn his approach also?
If you want to discuss a failure of the political system, try looking at why one industry can have more influence than the opposition or the senate on policy. Or how the Murdoch led media can openly and consistently ignore facts and balance in the pursuit of their own political agenda.
On the opposite tack, trying to hold corporate boards up as models of how to run things is similarly dubious. Corporate boards like Enron? Goldman Sachs? Bear Stearns? Which model would you suggest?
Pleading for consitutional reform because you don’t like one policy, proposed by one PM, which has now been scrapped is very much like squashing an ant with a sledgehammer.
Passed as law? Dream on.
The Rudd era says more about factional allegiances than it does about cabinet process.
The fact that Rudd had no factional buddies meant that he could be autocratic, but it also meant that he could be dispensed with quickly.
I think the factions provide a balance, albeit a crude one, between autocracy and partisanship.
Alan Kohler makes a very good point or two!
Terrorism incidents have been used to change policy and exert greater control. Weakness in cabinet government in the representative system of government will only make such things more likely to happen.
Julia Gillard is made of different stuff but it should NOT depend upon the whims or agenda of the PM of the day.
To void jibes from the floor, perhaps a disclosure of holdings can be accessible as Alan’s comments deserve to be treated with respect?
The theory of or through the adoption of both houses of parliament sounds and looks persuasive on paper, but it makes no account of the rough and tumble of political decision making. Howard was adept at making policy on the run and then making it look like it had been given cabinet approval.
Moreover, Australians need to be informed and educated by the policy process so that they can engage in an open and proactive deliberative process that would result in a complete tangible recommendation.
The instituting of a practice of governance that is not clearly linked to how the interests of constituents are taken into consideration is simply a very effective version of a process of “closed door democracy”. The doors of federal parliament need to be swung open, not strategically closed.
As noted elsewhere by Ben Eltham: “If you need a snapshot of where politics is at in Australia in 2010, consider this: while top mining executives have the phone numbers of senior government ministers, ordinary voters don’t even get to vote on who the Prime Minister is.” http://www.abc.net.au/unleashed/stories/s2941024.htm
How would instituting a practice of governance through legislation address this huge hole in the democratic ozone of Australian democracy?
brave mr denmore and cml, the worst thing one has to do, is to keep arguing with bastards like koehler and his ilk
they are like a cancer that will never go away, with there putrid right wing views and rhetoric
i honestly think i would prefer if they could go there way and moderate people with progressive views could go theres
i dont know 2 countries what ever, just to try something different, to get away from the bastards
then again, they probably think the countries all theres like they think the minerals belong to the big mining companies and his mates
the minerals belong to the australian people mr koehler, it is there COMMONWEALTH
more to the point it belongs to the traditional aboriginal owners on whos land the minerals are underneath
but thats another story, how dare you take money from the australian tax payer under the guise of an inderpendant business analaysis
a lackey of big business you are and will remain
Howard always had the final say, especially when it came to wasting money - just ask Costello. During the GFC, caused by your financial whizkid business buddies, it was a good idea to have a small group making the decisions to get us through it. The socalled Gang of 4 did well and saved many of us from bankruptcy.
Alan - you have a vested interest which you have been pushing heavily over the past few weeks. In fact I think you should have been banned from commenting on financial matters to do with mining during your ABc broadcasts. Better still you should have stepped aside or had a disclaimer running along the bottom of the screen.
Your conflict of interest was known to very few watching ABC news. This practice is not good enough. You have breached the public’s trust in your financial reporting.
As far as the article goes it makes its point. But a flawed underlying premise is that we would be more effectively governed through an even larger committee (the whole cabinet). That’s the sort of thinking that originally gave birth to the EU and I’m looking forward to watching the coming implosion fireworks there over the next few years.
I wonder what sort of painful lessons will be coming in Australia to really understand that democracy breeds mediocrity when left to its own devices. We should actually be aiming for a system where the country administers a strong human rights charter and is unified under a single leader. But as well as giving that leader the power to really lead we should also be placing some genuine, Old Testament style accountability on the public role. We’d start seeing a different calibre of politician then, eh.
LOL… is this a joke? Rudd was turfed out on his ear like all “dictators” in a robust democracy… I wish I had known my subscription was going to pay for overreaching business “experts” lecturing on constitutional changes to the parliamentary system…. What next, Bernard Keane giving first dog tips on how to draw?
Sounds like a real fun night out when Alan Kohler is speaking… Nice food, delicious wine, and some kook at the lecturn going on about terrorist attacks being good for the PM
Well I see it is just so easy to be clever after the event. Why wasnt Mr Kohler warning the nation about all this months ago. He has Television programmes, columns he could have been yelling it out in. It was no secret the PM was different, was running the Government in a style and practise not seen before. Mr Kohler is closer to the power brokers than most. I don’t recall any warnings being issued. Now when he is gone you put the boot in.
When it suited your agenda Mr Kohler, you were only to happy to snuggle up with Ministers, who seemed to be able to talk about their portfolios without any restrictions. Many a time they were your guests on your 10am Sunday morning ABC show.
As I read your article here, you seem to know a hellava lot about the secret meetings between Rudd and Swan, the group of 4, the Cabinet rubber stamps. I find it difficult to believe if you knew, Ministers knew but said nothing,some back benchers would knowsurely, but nothing major leaked. Nope sorry, your article is a bit a of a warble and now Kevin Rudd has gone you put the boot in.
Get yourself an interview with PM Gillard and put all that to her. The result would be very interesting.
As others have pointed out, you have many vested interests. Your article says nothing new.
You don’t want to know what I think Alan
Alan, it is about time you found a new trumpet. The one you have been blowing recently sounds more and more like a vuvuzela every time you bring it out.
The record’s cracked, mate. Give up. Your opinion is only that: one opinion. By trying so hard to reach above your station you have become a bore, a whine, a vuvuzela.
@David - hear hear!
It seems Rudd was too trusting of at least 2 of that gang - the BER is a crock - thanks Julia! and Swann couldn’t even back his own RSPT policy
Swan, like his namesake, goes with the flow.
If Swan were not Deputy, I would expect him to lose the Treasurer role to somebody more competent (and actually liked by Gillard). That may yet happen in the next term, if Labor gets back.
@ SOCRATEASE…I’m with you, when Ms Gillard wins in August or whenever, Swanee will be goneee. He should be afraid, very very afraid.
“…the dreadful resource super profits tax, a debacle that has significantly damaged the country…”
Really? I’d be fascinated to learn what this significant damage might be, Alan Kohler. The only RSPT damage I can detect is that the electorate now has conclusive evidence we have a pissweak government.
Dear Alan,
Have a cup opf tea, a bex and a lie down - read the constitution and look at the freedom it affords governments - to govern!
Originally we only needed 7 ministers - do we really need any more?
We are hardly even as big as new york and it only needs a mayor
Let’s be clear about this. The worst damage caused by the uproar over the RSPT was the shrieking by the multi-national miners themselves and their hysterical spruikers like Alan Kohler misrepresenting the tax to the rest of the world.
Kohler and others played up the share price impact of the tax, when in effect it was a one-day wonder. The largest weight on resource stocks this past two months has been the worry over the sustainability of the global economic recovery and the effect that is having on commodity prices.
Kohler used his platform on ABC news every night to suggest the tax was some sort of mortal threat to capitalism when it was just a democratically elected government trying to ensure a fair share of the nation’s common wealth to improve infrastructure and raise the retirement savings fo workers.
For sure, the consultation process around the tax was poor and processes inside the Rudd government appeared chaotic. But that didn’t make the tax a bad idea.
Instead, we had a fatally compromised right-wing media, led by Murdoch’s hacks and business lobby parrots like Kohler, telling people the nation’s prosperity was at risk because the government had the audacity to point out that global mining companies were paying half the tax they were a decade ago as a proportion of profits gouged from resources owned by the nation.
And we call what we have a democracy.
@ Mr. Denmo0re, You are quite correct re Business Spectator, they have been nothing short of advocates for Captain Hooke & the miners. Gottliebsen has been a positive hysteric & today he quotes the HUN & the OZ to support his stand! Say no more & lets hope he now keeps quiet. The BS blog has become a blot & BS takes onthe other meaning.
“Really? I’d be fascinated to learn what this significant damage might be, Alan Kohler. The only RSPT damage I can detect is that the electorate now has conclusive evidence we have a pissweak government.”
THIS.
As for Alan’s idea to enshrine the Big Party system in the Constitution - you’ve got to be joking!
Dear Alan, there’s a rather sad irony watching you celebrate the dumping of Kevin Rudd. While over at Business Spectator today, the merry band of KGB dump your best analyst, David Llewellyn-Smith. He at least, wrote reasonably balanced pieces on the RSPT. Which is much more than can be said for the rest of you.
Whatever credibility you might have once had on matters financial, is long gone.
This tax killed off your reputation as well as Rudd’s.
Karma’s a bitch eh?
Dr Harvey M Tarvydas
If this is so, “Rudd an autocratic idiot” then what sort of an idiot Alan Kohler or is he not an idiot but a clever mischievous manipulator of the truth assessing the readers as being influenced by professed experts of this and that which usually means (with an occasional and wonderful exception) a spouter of clichés and babble appropriately organized and repeated so as to be accepted as intellectual discussion.
While by profession I am a scientist and a medical doctor (and there is a ready supply of similar type experts in the later profession) I have been involved in tough commercial business since 8 years old and these involvements had me driving my own E-type Jaguar to medical school (a big mistake but I was idealistic about the quality of smart people).
In business (of course a journalist for ‘Business Spectator’ wouldn’t know much about really doing business) a super profits tax (extra charges based on your success) has existed forever and all the bleating about how the mining industry and Australia would be hurt is as fictitious as it is for the business charges I am talking about hurting business and Australia. They are not in the text books so the experts don’t know what I am talking about which is exactly why they are a sort of serious idiot.
It is quite obvious to anybody with even a basic understanding of business finance the RSPT was a flawed proposal. The MRRTcompromise that has now been negotiated is what should have been put forward in the first place. If Swan was not completely financially and economically illiterate, he would not have put the RSPT up in the first place.
Such a radical shift in policy as the RSPT should have been very carefully explored before putting it in the Budget. The most sensible proposition would have been to take it to Cabinet so that the broad view of Cabinet could be gauged. I’m absolutely convinced that this wretched proposal would never got beyond Cabinet in its original form if active analysis at the Cabinet level had encouraged.
The “cockroach in the woodpile” here was Rudd and his dominance of process and the isolation of the bulk of Cabinet from any serious decision-making. Alan Kohler is substantially correct in his assessment of Rudd and the “kitchen cabinet” dominating proceedings.
The bulk of the usual cheer squad of latte-sipping socialist sycophants cannot see beyond the mantra of their own narrow preconceptions in defending the RSPT in its original form, most of whom do not have the courage to put their name to their comments.,
Alan Kohler’s analysis is myopic and reductionist. Rudd’s personal traits are marginally relevant to government-by-executive, a process underway for the past several decades. The venerable phrase “kitchen cabinet” should be a clue. “presidential” style govt. is another. What’s changed in the past 20 years is that the cliques who actually run political parties have corporatised: they’ve made media manipulation (“spin”), secrecy and authoritarian control their very own. The political class has become more detached from society, not least the ALP which is now a narrowly based and corrupt fiefdom. Membership languishes because the grass roots are now merely ballot fodder, branch-stacked and treated with private contempt by the professionals. But publicy lauded as stalwarts of the movement. Factions are now empty ideological husks. Gillard is “Left”. Joke. Look at the ALP career conveyor-belt: student politics, lawyer, party staffer, MP. Gillard failed three times to get to Level 4, preselection. She’s never been off the conveyor belt in her entire life. Shorten’s another- unheard of until a fortnight’s posturing outside the Beaconsfield goldmine. Headkicker Paul Howes will be next to arrive in Canberra.
As for Kohler extolling “corporate governance” in corporations as a model for democratic government…Jesus, Alan, we’re not that gullible. Stick it up your BP.
Did I mention conveyor-belt? This from William Bowe’s blog on Crikey today:
“The Socialist Left faction of the Victorian ALP, which dominates the local branches, has chosen ACTU industrial officer Cath Bowtell as its candidate for the federal preselection for Melbourne, to be vacated on the retirement of Lindsay Tanner. The faction’s secretary, Andrew Giles, had been favoured by some for the position, but agreed to stand aside in favour of Bowtell, whose endorsement is now considered a fait accompli.”
Greg you don’t have the first idea what you are talking about. The moguls made many submissions to the Henry review and asked for a profits based tax but they preferred a rise in GST for the rest of us muggins.
They then put out releases in February saying the opposed any new tax for themselves.
Do get a grip on reality.
Marilyn…our mate Greg is having his usual 2 or in this case 3 bob each way. He likes the new negotiated tax , negotiated by among others the ’ financially and economically illiterate ’ Mr Swan. However he dislikes the RSPT also negotiated by Swan but agrees with Kohler. I’ve heard of sitting on the fence but Greg must be doing a Rolph Harris job on this one, 3 legs all swinging in the breeze.
Dr Harvey M Tarvydas
@GREG ANGELO – the idea of paying more or extra (tax) for the privilege in business for better or more profitable opportunity (super profit) is nothing new except for business illiterates. It is as radical and flawed as the idea of wiping your pretty pink bottom after a pooh. Go for it baby, it’s healthy.
It looks like my comment has drawn the crabs. Whatever one’s political position one has to look at the economics of taxation including the possibility of disinvestment as a consequence of alternatives being considered. He may not have noticed that Kevin Rudd was named Canada’s mining man of the year because of the potential impact of the RSPT on Canadian mining. You also may not have noticed that the definitions of mining had not been properly thought through and now the current proposal targets only two minerals and smaller mining companies have effectively been taken out of the net.
The other element of this arrangement which has not been thought through is that this appropriation of mining profits is not a free good. Was it my balanced Swan’s budget, it will reduce the income stream available to dividends and will impact on every Australian was mining shares in their superannuation portfolio it will also impact on the future cash flow available for mining reinvestment. Such a decision should not have been taken as lightly as it was and was such a narrow lack of consultation within the government.
Greg Angelo, I assume you include among those “latte-sipping socialist sycophants” who defended the RSPT the likes of the International Monetary Fund, the Commonwealth Bank’s research department, the Financial Times and 22 of the leading academic economists in Australia, as well as Treasury.
All of these institutions and people, none of whom could remotely be described as of a left-wing persuasion, said the profits tax made perfect sense and was a rational solution that combined equity and efficiency.
The point of this argument is that the hysteria was almost wholly confined to those attacking the tax on principle. This was naked self-interest at its worst and the notion that Canada offered an alternative was just nonsense.
The reason that the mining industry attacked this tax so vociferously was BECAUSE it made so much sense and BECAUSE other governments, now looking to buttress their sagging fiscal positions, could be expected to emulate it.
But you go on making yourself feel good by labelling everyone who doesn’t agree with you as economically illiterate.
Dear Greg
for every dollar that would have - shock horror - “disinvested” there would be 10 lined up to take their place (perhaps just a few from china and india?)- have look at the way Norway has dealt with such threats - they say fine piss off and we’ll take it over or give your lease to someone more ammenable - because they do not have cultural cringe that foreign business must know best.
Well put, Mr Denmore.
SHERPERDMARILYN please stand for Lindsay Tanner’s seat!
Note also, that at least 2 of Canada’s Provinces have been reported as extracting just this style of tax. It is not at all novel.
Also, note Mr Angelo’s statement “Kevin Rudd was named Canada’s mining man of the year because of the potential impact of the RSPT “. What a surprise! It is FALSE.
The correct quotation is: “Gordon Peeling, chief executive of the Mining Association of Canada, told The Financial Times the tax ‘probably makes Kevin Rudd the mining man of the year in Canada because he’ll bring a lot of investment our way.’ “
Sucked in again, Mr Angelo? Been reading the Australian again? A man of your knowledge about anything and everything should not fall for yet another mis-quote in The Australian. Surely, you are not so stupid as to believe everything they publish?
Correct, Mr Angelo? Ready to apologise and retract, Mr Angelo?
@BH
What is this conflict of interest that you allege against Kohler that, you suggest, should disqualify him from his public podium.? What is there that should be known to those who might otherwise be taken in by him but is not generally known or readily inferred? You are not suggesting, are you, that someone who has a long term fairly consistently articulated set of economic and business principles should not be inhibited in his arguing his case in public?
@ David at 3.25
You have managed to combine factural error with inconsistency.
You criticise Kohler for his stance on Rudd’s autocratic style but also for not knowing about it earlier.
As a matter of fact Kohler would, like most of us, have learned in the last week or two that Rudd and Swan kept the RSPT to themselves until it was a fait accompli that Gillard and Tanner had to go along with.
I think the “Cabinet Office” has already published the Statement of Government Practice. It is called the Cabinet Handbook. You should read it sometime. You might learn something. Cabinet Handbook (Sixth Edition)
It would be contrary to Westminster traditions for Parliament to resolve how the Cabinet system operates. The Cabinet is a nothing more than an internal decision making process for the Executive Government - The Cabinet’s main role is to determine the Government’s policy, much of which will be included in legislation bills put to Parliament. Separately, Parliament scrutinises the bills and passes, amends and/or rejects the laws (and policy) contained in the bills.
Unpopular though the thought might be, it is up to the Prime Minister how Cabinet operates - as this is pretty much the Prime Minister’s ‘portfolio’. Always has been. If Ministers don’t like the PM’s decisions they can raise their concerns directly. If the PM is unresponsive or dismissive when a number of Ministers raise concerns, then it becomes a leadership question for those MPs and Senators who sit on the Government benches in Parliament. Who knows how strong the dissent was to KRudd’s management of Cabinet during his stint as PM? We can but speculate about whether it was a prime mover for the challenge…
SES public servants would benefit from Kohler’s talk as anyone with a bit of experience of the isolation of public servants and the relative sophistication and wide contacts of AK would know.
Whether or not one agrees with his prescription he makes an interesting point about the chanciness of the countervailing controls - like factional intervention - when he nominates a number of possible events which could have left the dud PM unassailable.
“Business principles?” Is that what you call it? I would have thought Kohler was just defending the rent seekers of the mining industry, for whom even $1 of tax is too much. These aren’t principles.
I suspect Kohler and Gottliebsen’s online business ventures aren’t going that well and they have consciously decided to take an extreme position on this issue to draw attention to themselves and try to drive traffic to their site.
But if you are asking about conflicts of interest, perhaps reflect on the situtation where Kohler presents himself on the ABC news every night as an impartial market reporter while campaigning against a major policy reform.
The ABC, which strangely seems to have no single journalist among his hundreds of staff that it considers worthy of doing a simple market report, makes no mention in its bulletin of Kohler’s proprietary interests with Business Spectator and the Eureka Report.
Plus, Kohler is given a platform in Crikey to stir the pot further. This man is the Molly Meldrum of finance.
@John Bennetts
I don’t know what point you think you are making against Greg Angelo. The substance of what was said in Canada is the same either way.
Your point about resource rent taxes not being without precedent (apart from our own resource rent tax applicable to offshore oil projects begun after its introduction) is a slight one given that a resource rent tax as one of the rational ways of getting value for licensing the right to exploit a state’s (including nation’s) mineral resources is an old and well known idea. That doesn’t make the money grab from investors (many small, including retirees) whose investments in long-established miners were to be greatly reduced in value in the interests of transferring (as former Labor Senator John Black put it on Counterpoint) money from Liberal voters to Labor voters anything but grubby self-interested politics.
If you are one who doesn’t recognise that SOVEREIGN RISK was a perception actually created by the government’s demonstrating that it was willing to change therules after big investments had been maded then you are simply uninformed and probably inattentive. Sovereign risk, BTW, translates into higher costs of equity and loan capital for Australian businesses, governments and individuals (including mortgages). That is so even if the main direct effect is the reduction in the number of willing foreign (and domestic) investors in mining investments that are not evidently and securely very profitable.
In case the point is hard to grasp as a general proposition, just consider how these wickedly self-interested big multinational mining companies (self-interested on behalf of all shareholders large and small) are likely to respond if they make the calculation that putting the African president’s family members on the payroll for ten years will be much cheaper than the known and newly uncertain exactions of the great Australian vote-buying democracy.
@Julius…you state Kohler would have learned in the last week that Rudd and Swan kept the RSPT to themselves until it was fait accompli. I said given his contacts, he isnt the general public and has far more close contacts within the Govt as you would well know, given his contacts and his general interest and close association with Ministers he would have known earlier.
If you believe that Rudd and Swan kept this major tax event to themselves, even from Gillard and other senior Ministers, I do not accept that. So on this we will disagree. I still am not convinced this was the big secret. You know something, we all are entitled to opinions and now I have to zip
ROTFLMAO
You can be wery cwuel Mr Denmore.
Cwuel but accuwate.
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@Julius, 9.29pm:
I see a lot of words from you to try to explain why black is not white and why lies are not false.
I made my point, which I will spell out again for slow readers.
Greg Angelo stated that Canada had awarded some prize or other to Kevin Rudd. The facts are that one person, whose quotation I provided above, Gordon Peeling, chief executive of the Mining Association of Canada stated that “the tax probably makes Mr Rudd Canada’s Mining Man of the Year.” Clearly, this is has not happened.
It has not and will not, in part because at least 2 Provinces of Canada already levy a similarly calculated tax on miners who have struck it lucky with the people’s resources.
There is a significant difference between truth and fiction. If you “don’t know what point you think you are making against Greg Angelo”, then I suggest that you go back to Sunday School and learn about False Witness. We grown-ups call it lying.
BTW, as a retiree of sorts, I have no truck with your emotional plea for new taxes not to be levied because they may just impact on a resource rich retiree or two. I probably qualify as the latter, but who gives a Continental?
As you have stated yourself, “… resource rent tax as one of the rational ways of getting value for licensing the right to exploit a state’s (including nation’s) mineral resources is an old and well known idea.”
Had a look at the value of mining shares recently? Now that the dust is settling, there are many public pundits whose rantings about the approach of the end of the earth as we know it whose words should be shov ed back into their well-fed mouths. BHP, Rio and company are doing quite well, thanks, all things considered.
Regarding sovereign risk, I suggest that you check your dictionary and come back later. Not only do the current circumstances translate directly into sovereign risk, but the responses of the various markets verify that this is so. Go on… prove me wrong. It will be interesting to see you try.
Your suggestion that Australia should institute a tax regime that is balanced wrt un-named African ripoffs is beyond disdain. Of course, that kind of comparison is both nonsensical and unethical.
Your contribution to this debate has, in toto and like that of Greg Angelo, been both negative and unethical. Please feel free to come back when you are in the real world and using real, not false, facts and logic.
OOPS!
3/4 of the way down, add the capitalised word.
Not only do the current circumstances NOT translate directly into sovereign risk, but the responses of the various markets verify that this is so
@ John Bennets
If you can’t see that the whole point being made about Kevin Rudd and Canada was just that a Canadian of some standing to say so was indicating that Canada would benefit from diversion of mining investment from Australia by reason of the RSPT then perhaps you are beyond reason or understanding.** However let me take up another of your fallacies.
You say “Regarding sovereign risk, I suggest that you check your dictionary and come back later. Not only do the current circumstances translate directly into sovereign risk, but the responses of the various markets verify that this is so. Go on… prove me wrong. It will be interesting to see you try.” Now with “not” inserted where needed.
The “current circumstances” were that the Australian government was showing determination to change the rules in relation to existing investments made on the faith of Australia’s famous stability and relatively honest government. They could, previously, afford a lower risk premium in Australia so that the cost of capital for Australian projects would be less than would have been the case if the government were not regarded as trustworthy. You obviously understand very little about markets if you think the “various” markets were verifying that sovereign risk was not perceived by investors and likely to affect investment decisions.
Initially the stock markets (comparing Canada’s with Australia’s for example as many brokers’ and investment banks’ reports were doing) were consistent with the damaging effect of the RSPT proposal on investor sentiment. Then - that is the way markets work - estimates of what was actually likely to happen once the mining industry’s campaign bit with the “Sussex Street death squad” if not Rudd and Swan began to affect the market and push prices up again. As the RSPT proposal had also apparently been instrumental in pushing the $AUS down below 83 US cents (at any rate had contributed, if it matters) the $US price of Australian mining stocks (and, even more, GBP prices in London) became more attractive for investors despite the RSPT risk.
The “current circumstances” are not as bad for sovereign risk but foreign investors who pay close attention to Australia, and sensible Australians who know how far to trust our politicians, will still think twice about taking big risks with their money in Australia if it could be affected adversely by decisions of a government which is still the one which proposed the RSPT.
Judging by your comments on the point I made about African presidents and families being less of a financial risk for global mining companies than vote buying democratic politicians you have trouble reading and understanding what is written. My point was to illustrate for those of limited abstract cognitive ability the reality behind commercial calculation when making investments. Do you doubt that Chinese mining companies are calculating to cost of maintaining stability for the taxation of their mining investments in Third World countries and comparing that, weighted by all the estimated probabilities, with the risks presented by opportunism in a democracy like Australia? As I do invest in a Third World country where there is corruption and all sorts of difficulty with proving and securing titles I don’t have to imagine how many rational investors will approach the management of risk.
** (That one or two provinces may have somewhat similar taxes is neither here nor there from a national point of view).
@JOHN BENNETS
Sorry. I don’t think I have made things clear enough for you. I should probably have spelled out in words of one syllable that you indicate a total failure to understand the point when you write
“Your suggestion that Australia should institute a tax regime that is balanced wrt un-named African ripoffs is beyond disdain. Of course, that kind of comparison is both nonsensical and unethical.”
I make no suggestion or recommendation ethical or otherwise in making the point that sovereign risk is real and counts when the kind of commercial calculations business makes takes all kinds of relevant reality and real alternatives into account, as they normall do.
Level, I don’t think I could stand the company I would have to keep. I was a political staffer once, that was enough to cure me of politicians.
I would suggest that everyone read Lenore Taylor and David Uren’s “Shitstorm” followed by Laurie Oakes column today and tell me then who was the lousy operator in the Rudd cabinet.
Hint, it was not Rudd.
Good on you Mr. Kohler.
Gee, I’m surprised people are still listening to Kohler. Classic ‘grab a cuppa’ time between news and weather. Unless you get a chuckle out of daffy graphs, but that wears off pretty quickly.
Gee what has got up Mr. Kohler’s nose. I can’t believe that he is so upset about Mr. Rudd”s demise, if you think about it Mr. Howard must have held his cabinet by the throat no one disputed anything he said except his wife who did a lot of the decision making for him.
Even his deputy Mr. Costello didn’t have the guts to challenge him he must have been a formidable opponent.
There are a lot of ‘if’s’ here. I have no doubt what so ever that KRudd was a snag short of a barbie. He was an arrogant, disrespectful, interfering, parliamentary bully and the Labor caucus had enough of him. K Rudd was a nutjob, not of the Bob Brown or Greg Barber kind of nutjob, but a nutjob just the same. No point in asking the people about these things, KRudd had a popularity rating of more than 70% less than 12 months ago, he was the king of spin and the Australian public failed to pick the turn. I’m not a huge Abbott fan so i’ll give Julia a chance, unlike Labor douchebag Philip Adams who has jumped ship and taken his bat and ball and gone home. I jumped off the ship when KRudd became leader of the Labor party, i wasn’t falling for his nonsense. I’m back onboard. Good riddance Mr Adams.
I agree Kohler was too pro-miner. I too was against the tax as first formulated, but I simply posted that the kick-in threshold needed to match a ‘normal business return’ not the government risk-free rate.
So, excluding his demonstrated bias re the tax, he has a point about documenting (or regulating) how control of our Westminster system ought work at the executive power level. In particular, ministerial accountability to the parliament is not well-defined. Ministers seem to account only to the PM, and not the Parliament, yet most acts place large responsibility on the relevant minister. But as another poster has noted, Howard had MORE control over his cabinet than Rudd. The issue of Howard deciding on a personal belief system to take Australia to war, despite overwhelming public opposition to the war, stands as something requiring codification. What Howard claimed as the “hard decisions” were in fact the anti-democratic decisions. If Australia was attacked, clearly any response has to be immediate, and made by the executive. However, in the case where Australia is neither attacked nor under any direct-immediate threat of attack, I believe a decision to go to war (or any substantial overseas troop/forces deployment) ought require approval by a super-majority (say 75%) of the House, or a simple majority of the combined House+Senate, as that level of approval requires broad community support. And if that regime was implemented, our allies would simply understand that this was our internal approval system and would not break any treaties if any particular deployment failed to gain approval. The Bush+Blair Second Iraq War decision highlights the shortcomings of having a system of world stability based on personal commitments made between a couple of leaders of the day, neither of whom had broad support for that decision within their own countries. If such controls spread internationally, we would achieve protections against potential totalitarian leaders.
But any discussion of Rudd’s overthrow is not complete without mentioning that the ALP has jettisoned its only visionary. Rudd did not pander to the factions. And now the factions have won, arguably for a life-time. No future Labor leader will challenge them for decades. This leaves the ALP as an entity solidly controlled by the unions, putting our democracy back some 3o years, during which the ALP sought to lessen such control. Having Federal Labor emulate NSW Labor in this regard is a case-study in how to disenfranchise the voting public via cabal-squabbling. The one thing Labor politicians fail to undestand is that the more a candidate for pre-selection (or an existing MP) looks like a typical ‘ALP type’ (coming up through the ranks, understanding why you have to sell your soul, and how favours are repaid), the LESS that person appeals to the swinging voter.
And Kohler’s proposal only deals with the symptoms of undemocratic actions at an executive level. The root cause of the mining tax furore was a fight between a democratically-elected government and private for-profit concerns seeking to ‘pay their way’ to change public policy. The Australian taxpayer already pays for about 65% of the political party’s costs to run an election campaign. Someone has to pay for the other 35%, so they court all sorts of interests, corporate and union, to pay for it, with an implicit promise of favours to be rendered in return. It would be far more democratic for the taxpayer to willingly pay the other 35% and then cap it to CPI-only increases, then outlaw any political party accepting money or resources from ANY external entity. Let the national broadcasters offer significant pre-election policy coverage on TV, radio, print and internet, to ensure a level playing field (including a platform for independents). Any politician then accepting money forfeits his/her seat and his/her pension. We’d still have to limit amount spent by others on ‘overtly political’ ads, without silencing opposition - an independent watchdog like ACMA might monitor caps on such spends.
With no political funding by outside sources, the ALP would no longer be as beholden to union interests, and the Coalition might cease to be a spokesperson for the mining industry. They would each remain worried about the interests of ‘typical voters’ of their respective parties, but at least the electorate could trust that they were not influenced by donations. Under the current system, donations are critical, as the amount spent on an election determines the outcome. And so the favours are disproportionate. As little as $1m donated to political party can deliver a favourable treatment of a whole industry. I’d estimate that $10m in political donations can sway at least $10b in public policy outcomes… so our current system is as ‘easily corrupted’ as the types of third world countries with endemic bribes, about which we laugh. The only difference in Australia is that, provided you send the money to the party headquarters, rather than in a brown paper bag direct to the person, the bribe is entirely legal. Within days of the SMH publishing my proposal, NSW Premier Morris Iemma committed to outlawing all political donations in NSW… then got rolled. The change needs to be national, and cover all three levels of government. Then we’ll see our reps representing the interests of voters, not their respective paymasters.
Graeme Harrison (prof at-symbol post.harvard.edu)
Julius, I understand exactly what you are saying. I happen to disagree with all of it on logical grounds and several parts of it on factual grounds. Let’s just leave it.
Actually John he was not arrogant enough - it was frigging Gillard who made all the bad decisions and forced him to live with them.
Come on Marilyn, how can you possibly know that? You have expressed you complete hatred of Ms Gillard on these pages frequently in extremely harsh terms, so I regret your opinion is completely biased.
@Marilyn:
Labor?
Julius,
“the Australian government was showing determination to change the rules in relation to existing investments”
A ridiculous statement. According to this theory no government in Australia can ever implement any form of economic or financial reform EVER because then it will be changing the rules in relation to existing investments. That’s the whole point of reform. I mean do you just not get the fact that reform means the rules are deliberately changed? I am missing something here?
“You obviously understand very little about markets if you think the “various” markets were verifying that sovereign risk was not perceived by investors and likely to affect investment decisions. “
I’m going to refer you to someone who I trust a little bit more than you to explain the situation:
“S&P’s associate director Kyran Curry said the mining tax would have no implications on Australia’s credit rating, which is a barometer for a nation’s sovereign risk. “We don’t see the proposed tax on miners as having any material risk to Australia’s sovereign risk outlook,” Mr Curry said.
“The rating is in place because of the strength of the governments’ fiscal position.
“If the mining tax was to weigh on the investment environment or export growth, then that may be something that will weigh on the rating. But there are too many other factors in place right now like the fiscal position, low debt.”“
The only soverign risk that existed was in the lying words of Tom Albanese and the minds of those who believed him.
“The “current circumstances” are not as bad for sovereign risk but foreign investors who pay close attention to Australia, and sensible Australians who know how far to trust our politicians, will still think twice about taking big risks with their money in Australia if it could be affected adversely by decisions of a government which is still the one which proposed the RSPT.”
Rudd clearly (if roundaboutly) said during question time that they were only introducing the tax on the mining industry because they deal in non-renewable resources (you know…those things that will be gone one day along with all the investment and jobs that they purport to create), he ruled out introducing one on banks, supermarkets, little old ladies who sell vegetables on the weekend (well I actually made up that last one).
Like John Bennets said, don’t let the facts get in the way of your partisanship.
Oh and by the way, sovereign risk definition - “Sovereign risk is the risk of a government becoming unwilling or unable to meet its loan obligations, or reneging on loans it guarantees.”.
What everyone misses here is the head of Rio Tinto’s Board is lately from British American Tobbacco - just consider the shameless record of disinformation and denial of truth in that Company regarding the effect of smoking on cancer. Past masters at the red herring and wild goose chase - same tactics here - there was never any hint of sovereign risk - but huge advertising budgets…..
I have some clippers to help cut a bit off that massive right wing, Alan.
Perhaps that’s why you’ll never soar like an eagle.
I would suggest you rapidly read the book “Shitstorm”, then you will know that I am right.
Gillard is not and never has been a decent human being, she is a dogwhistling monster who loved fabulous Phil.
Look at the statements since she stabbed Rudd in the back.
“keep out the wrong people”, “fears of boats”, “make the neighbours do our job”, keep them out.
I was in the room twice when she devised the policy we have today and this policy was rejected all over Australia by ALP congress but she prevailed.
Rudd’s problem was not that he was a dictator but that he wasn’t.
And in the book Shitstorm she says clearly that she formed the deal with Rudd because they had almost identical thinking, not because they didn’t think alike.
@ David Byrnes
You would be OK as a literalist nit-picking bush lawyer as long as fellow inmates didn’t rely on you for their defences.
Just because you can find someone who defines “sovereign risk” narrowly in an unspecified, but presumably limited, context doesn’t make it difficult to understand it when extended to the consequences more generally of a government not being trusted. The point about “sovereign” is not that it has anything to do with government debt but that the source of the risk is not commercial or contractual but the ability of a sovereign government to make damaging changes without legal redress.
Obviously - and it hardly needs to be said - these things are not absolutes and matters of degree count in an uncertain world. However, if investors have hitherto believed they could count on conditions A, B & C all being reliably permanent in the absence of war or equivalent unforseen catastrophe and suddenly condition C is negated it is hardly surprising that they either refrain from investing where they had previously relied on all three conditions or, if they do, that they insist on higher profitability or interest rates. The tendency, in either case, is for capital to cost more though it is probably true to say that Australia’s AAA rating wouldn’t be affected. It might affect the banks, e.g., at the margin because foreign creditors would be thinking that the kind of government which reaches into the Henry reports five million recommendations to pluck out just a juicy one that will help with the necessary bribing of voters in marginal seats could think it clever to grab some money from the unpopular banks who have (here comes the government’s rationalisation) a state supported oligopoly.
In the case of the mining taxes the departure from assumed principles would be the discrimination between different kinds of corporate businesses in the level of taxation on their profits. The point is that governments must be able to reform all sorts of current laws including tax laws but that they will raise all sorts of difficulties if they do it without discussion (but that is a related but slightly different issue) and, to the present point, if they take an unexpected bite based on no generally accepted or acceptable principle out of one rather arbitrarily defined set of businesses (I add in “rather arbitrarily defined” because the revised version is even more of a dog’s breakfast than the original in some respects - as was pointed out to me last night by someone with a much smaller new iron ore mine that he now doesn’t think can get finance and will inevitably be taken over by one of the global majors).
Legally, constitutionally, they probably can do it. It doesn’t stop investors who have plenty of alternative places to put their money from being doubly put off investing in Australia. The 40 per cent, now 30 (or 22.5 per cent) would have been bad for future investment, but not a matter of “sovereign risk”. The application to existing projects without at least allowing, as has now been promised, the revaluation of assets to market value, was clearly perceived as a matter of “sovereign risk” as sensibly understood in relation to the consequences of what governments can do unchecked. Assuming you are not confining your thinking to the irrelevantly narrow field of government borrowings you will see that Ms Gillard has obviously accepted the argument that a perception of sovereign risk (and therefore actual sovereign risk) had been created. Why else would she back down over the de facto retrospectivity by allowing revaluation to market value? Of course you may know better.
As for those who suggest that we might be better leaving our minerals in the ground - and undiscovered so we don’t even know what we are leaving there? - what assumptions are you making about the value of iron ore etc. in 50 years time, and why; what discount rates are you using and why; why are you assuming that we will have a big market for coal in 50 years time; how many years supply at current export rates do we have of iron ore; and, not least, why do you think we might be justified in putting a brake on the development of the Chinese and Indian economies by limiting our export of raw commodities?
@ Marilyn…then on the other hand , The Making Of Julia Gillard by
Jacqueline Kent, differs greatly to your opinion of her. Guess it is a case of some do and some don’t. One fact we can all agree on…she is here and she is the PM.
@Julius:
Sorry, mate, but I simply cannot allow without comment your atempt to redifine a clear term “sovereign risk”. It is what the dictionary definition says that it is, not what you choose it to mean.
That is, of course, unless you happen to be the Mad Hatter.
3510 characters, 728 words later, you have not come back to basics.
If we are speaking English, please agree to use this language. If not, please take your contribution somewhere where meanings don’t matter.
Quite simply and, for the third time, sovereign risk is not an issue except for Tom Albanese, who is not Australian and who clearly has determined not to adopt the language of my birth and of Australia.
@Jon Bennetts
Nitpicking quibbling doesn’t imply the ability to think intelligently and relevantly even if the quibble is correct.
Why? Because…….
Your quibbling totally missed the point. The issue was whether Tom Albanese was making a defensible point, not whether he shouldn’t have used an expression in a sense not known to ignorant pendants.
Clearly he, and others, have been pointing to the consequences which might flow from investors big enough to matter deciding that a sovereign government may no longer be as reliable and predictable as was previously assumed when investment decisions were being made. (And, remember, this applies to the retrospective aspects of the RSPT which Gillard has now effectually junked, so, if Albanese’s point has been accepted, and he chose to express it in terms of sovereign risk it is pretty idiotic to say we won’t discuss the issue in the terms which the main players use and understand).
Take comfort in your ability to read a dictionary of your choice. No practical person who has had to deal with the issue finds such a contribution valid or in any way valuable.
A: Tom Albanese is no friend of mine or of Australia. He is a Yankee parasite with no reason to speak for Australia or Australians. hy you are a sycophant of this fellow is not for me to worry. March with him, wear hius uniform, be painted with his colours and reputation.
B: Sovereign governments are just that. They are entrusted and empowered to run their countries. There is no need for comparisons with other points of view, especially those of Julius and his ilk, who clearly do not understand the basic tenets of democracy. Not a citizen? Then don’t bother trying to vote. Our government is our government is our government is out government, etc. Tom Albanese, again, must wait outside patiently, as would the sdame fellow wish us to do whilst the USA decides its own political issues.
C: I object to being called an “ignorant pedant” on a public forum, as Julius would presumably resent being called a brain-dead fu_kwit, so I will not do so. Julius, you are Australian, aren’t you? Actually? If so, then why attempt to have us all kneel at the foot of a corporate deity (a CEO of a Corporate God Company) instead of contributing to a democratic nation?
D: I will not repeat here why I am so sure that there is NO element of retrospectivity involved in a tax change implemented by a government, with notice, after democratic procedures have been satisfied.
If you want an example of a government which is out of control, look no further than Fiji and their demand that News Ltd and all other publishers demand that they fold their operations in Fiji, or at least reduce their share to 15%. That is interesting. Your opinions re sovereign risk in relation to the proposed changes to the taxation regime for miners are not.
OK, I understand… you probably have shares in mining corporations but not in News. Private self interest again?
Take two, after corrections:
A: Tom Albanese is no friend of mine or of Australia. He is a Yankee parasite with no reason to speak for Australia or Australians. Why you are a sycophant of this fellow is not for me to worry. March with him, wear hius uniform, be painted with his colours and reputation.
B: Sovereign governments are just that. They are entrusted and empowered to run their countries. There is no need for comparisons with other points of view, especially those of Julius and his ilk, who clearly do not understand the basic tenets of democracy. Not a citizen? Then don’t bother trying to influence our vote. Our government is our government is our government is our government, etc. Tom Albanese, again, must wait outside patiently, as would the same fellow wish us to do whilst the USA decides its own political issues.
C: I object to being called an “ignorant pedant” on a public forum, as Julius would presumably resent being called a brain-dead fu_kwit, so I will not do so. Julius, you are Australian, aren’t you? Actually? If so, then why attempt to have us all kneel at the foot of a corporate deity (a CEO of a Corporate God Company) instead of contributing to a democratic nation?
D: I will not repeat here why I am so sure that there is NO element of retrospectivity involved in a tax change implemented by a government, with notice, after democratic procedures have been satisfied.
If you want an example of a government which is out of control, look no further than Fiji and their demand that News Ltd and all other publishers fold their operations in Fiji, or at least reduce their share to 15%. That is interesting. Your opinions re sovereign risk in relation to the proposed changes to the taxation regime for miners are not interesting.
OK, I understand… you probably have shares in mining corporations but not in News. Private self interest again?
@ John Bennetts
Albanese doesn’t sound like a “Yankee” name to me but I suppose you mean that he is a US citizen which perhaps he is.
Your willingness to be frank about your virulent xenophobia, not to say “racism” in the current cant, by calling Alabanese a “Yankee parasite” is refreshing it its way but has perhaps made it difficult for you to see the point that Albanese and Kloppers have been speaking for hundreds of thousands of Australian shareholders, many of them of modest means, as well as those who invest in mining through superannuation funds.
In fact they may have done a better job for the government than for their shareholders. It might depend on whether a diversion of investment to other countries could have been good for shareholders (compared with the RSPT) but, as it would have been, bad for employment in and revenue from Australian mining.
Albanese and Kloppers speak for their companies, as by law they are bound to do.
Nobody should give a hoot about your continual attempts to change the subject, to follow minor paths and to avoid the issue. If this country had a corporate regulator with teeth, these mouthpieces woud have been warned off and then charged long ago for their dangerous, intentionally misleading and quite scurrilous language. Their statements in the public arena are consistently and frequently at odds with their statements via the Stock Exchange and this puts them in breach of their corporations’ listing rules. Yet they still are trading. This is a scandal which a future government must right.
Quite clearly, the mining companies, which are duty bound to NOT represent Australian citizens as a whole or as a subset of their shareholders are NOT the ones who should be selecting PM’s of Australia. In their efforts to prevaricate and distort the facts, which you, sir, are also trying to do, they have displayed an ignorance of the term “sovereign risk” and an unwillingness to accept democracy.
BTW, the suggestion that any part of the proposals, whether Rudd’s or Gillard’s, are backdated in any way is also both wrong and intentionally misleading.
Julius, you are riding a dead horse. Good night to you.
John Bennetts and Julius,
This is all very interesting, but it’s a change of subject. The question raised by Kohler is not whether the RSPT was good policy or not. The question is whether a Prime Minister should be allowed to govern single-handedly, without involving Cabinet beyond rubber-stamping his or her decisions.
Praise the RSPT all you like, but isn’t it disturbing that Resources Minister Martin Ferguson was not involved in its design?
His involvement in the later revision of the tax seems to have been quite helpful, such that Prime Minister Gillard referred all the technical questions to him at the press conference. This was not only correct protocol; Ferguson was the only minister who knew the answers.
How could he have been left out in the first place? How could that happen?
If we want the Prime Minister to be a dictator - who may consult Cabinet or not, at his or her discretion - then we really should be voting directly for a president, on more of a Napoleonic Code model rather than Westminster.
@Powerisnotstrength:
Agreed, up to a point, however I can not let pass unanswered the nonsense which has com e from certain directions.
Regarding Cabinet and Ministerial involvement in decision making, I have little faith that the current leader of the Opposition even begins to understand what this means. His rodent-like predecessor, when in charge almost certainly did know what he was doing when he circumvented Cabinet and his Ministers on a regular basis - it was no accident, just a matter of personal style, which stood him well for a decade or more.
And your point is what, exactly? Liberal PM as dictator and/or mining conglomerates as dictators OK, provided that they do as you wish - you hope.
John Bennetts,
My point has nothing to do with ALP vs Coalition. It seems John Howard established much of the dictatorial precedent which Kevin Rudd inherited, along with a complacent senior public service.
If, say, Phillip Ruddock becomes the next Prime Minister, then he in turn will inherit the unchecked powers of a president.
I also find it disturbing that while this has been going on, the Commonwealth has been hamstringing the state governments for some years. A significant proportion of the funding Kevin Rudd provided to the states this year was special-purpose grants, and other components were pork barrels to Qld and WA for the upcoming federal election. The Commonwealth is in the process of taking over state education, state hospitals, and state transport infrastructure. It is reclaiming telecommunications infrastructure from the private sector. It will soon move into the state criminal justice systems.
You may like the idea of Kevin Rudd being dictator of all that. But do you want a Phillip Ruddock inheriting the same power?
We are running in circles re dictators.
You and I both seem to agree that dictatorial presidential-style PM’s are not ideal. Good.
You and I also agree that this applies not only to Rudd Labor but to recent and putative future Coalition PM’s. Good again.
So we agree on the main things. So why continue this point and counterpoint stuff?
@ John Bennetts
I find it odd that you can call Tom Albanese a “Yankee parasite” and me his sychophant (both without any evidence adduced except your own bile) but have a problem about being called an “ignorant pedant” when you have so enthusiastically poured out the evidence from which anyone reading your contributions could make their own assessment.
As you have a problem apparently with Rudd’s dictatorial ways but wanted him - still unchecked by his caucus or even Gillard and Ferguson - to be able to proceed with the RSPT without let or hindrance from any quarter no matter how knowledgeable or likely to be affected your air use of the word “democracy” becomes stranger and stranger. A true Humpty Dumpty word for you which allows you to suggest that someone who has probably had far more depth of involvement in the political process over many years than you have doesn’t understand it because they have read the recesses of your mind to find out what your use of it means from time to time. As far as can be readily gleaned from your outbursts it would have been unacceptable for RIO to attempt to speak publicly in favour of their employees in Shanghai (presumed to be innocent) being given access to proper immediate legal advice. It would have been wrong for an American company to threaten to withhold investment in Hitler’s Germany while the democratically elected Nazis mistreated the Jews.
And if you really think that RIO and other major mining companies have made misleading statements that should be dealt with by ASIC, the ASX or the ACCC which actually have rather a lot of teeth have you formulated your complaints and put them to any of those bodies? If not why not? Are you too lazy to do more than fulminate wildly on blogs.
Rudd was not a dictator, I did not work for the ALP. I worked for the democrats when Janine Haines was the leader.
I would not stoop to being a politician.
SOVEREIGN RISK
I see lots of naughty people have been refusing to limit themselves as J Bennetts demands in the use of the expression “sovereign risk” to cover the sort of problems generally which result from governments being able to do things to you which enjoy the immunity of the sovereign if you want to complain or seek redress. For example, in The Weekend Australian
1. “THE decision to soften the resource tax and offer miners concessions is expected to reduce international sovereign risk concerns. ” That’s under Scott Murdoch’s byline. Then within the same piece
2. “According to Fortescue Metals chief executive Andrew Forrest, the appetite to invest in Australian miners had already improved, as the news of the government’s backflip was digested internationally. “The RSPT, stillborn though I believe it was, caused vicious damage to international financiers’ perception of Australia. That is now healing,” he said.
“The healing started almost immediately. We had emails and phone calls from bankers saying Fortescue, we’re prepared to talk to you again.”
“Senior investment bankers and fund managers said Australia’s reputation as an investment destination should be restored after it was damaged by former prime minister Kevin Rudd’s design of the resource super-profits tax.”
3, “A critical point also is that Australia has always had a great standing for sovereign risk and that has been battered in the past four to six weeks. This is a big step forward in restoring that.”
He said the international community would think that Australia had gone through an aberration and “we are back to ‘this is the Australia that we know’.”
4. “The RSPT did create a lot of negative sentiment across the market from offshore investors,” he said.
All quotes are from different people within the one article. But no doubt John Bennetts knows better what is acceptable language to use when making a point about something that is their, but not his, professional business to talk about.
Julius an interesting excerpt from the Australian there. In a globalised world as ours, sovereign risk is an important economic factor to consider and the basic law of comparative advantage explains a lot.
Comparative advantage, yes. Sovereign risk, not really. Two different and complementary concepts.
The terms “retrospectivity” and “sovereign risk” have both been thrown into this debate by the miners. They have been misused so frequently that they have become cliches. The snide remark about my professional business is neither relevant nor accepted. These blokes who were quoted by the article in the Oz are simply following an unfortunate trend in english usage which blurs the meaning of words and thus bluntens and devalues the language.
@ Julius
Would some of those “senior investment bankers and fund managers” with “international financiers’ perception” have been involved in making decisions which almost scuttled the world economy in 2008? That recent track record of top echelon financiers should make us extremely wary of any opinions they might express - particularly about Australia’s sovereign risk. Their CVs don’t read very well, do they?
@ John Bennetts (10.32pm)
I agree with your comments. The mining magnates were playing it both ways with misinformation - running with the fox while hunting with the hounds is the old expression. Why this is ignored by the ASX or not prosecuted by the ICCC is nothing short of a mystery.
@ John Bennetts and Fireflying
I daresay if I used “the Phlogiston Theory” to describe your approach to economic and political matters JB you would look up your preferred dictionary and say that I was talking literal nonsense, indeed was incomprehensible despite the fact that quite a number of readers would chuckle and agree. It really must limit your understanding of what goes on around you if you rule out finding meaning in other people’s convenient modes of expression even if it happens to be well understood by others and not vacuous.
As to “comparative advantage” I think I can see the logical connection but haven’t followed it through in detail.
“Retrospectivity” is a convenient term for changing the rules which someone thought were (morally) agreed or implied at the time of making a relevant decision. There is no one form of change to the law which gives a unique definition to retrospectivity. A reintroduction of death duties at a high rate could reasonably be regarded as retrospective if one was concerned to catch the moral element (contestable I acknowledge) as would certainly be an element that some would be likely to emphasise with feeling; e.g. a rich Chinese investor in Australia who lives here and regards our absence of death duties as a significant comparative and competitive advantage - as directly said to me.
Just to try to put the whole issue of what ‘sovereign risk’ means in this context to bed; this is from Edna Carew’s The Language of Money:
It seems that this clearly covers what is meant by the miners’ use of the phrase, and that the definition proffered by David Byrnes is either too narrow, in the wrong context or both. It would probably be better and avoid confusion if the mining industry used ‘country risk’ instead, though.
Zut Alors: “almost scuttled the world economy in 2008”
I am getting a bit weary of some of the “end of the world as we know it” exaggeration. The world economy got a bit ahead of itself and had a setback.
Show me massive increases in starvation and wars, leading to catastrophic population decrease, then we can talk about the world economy being “almost scuttled”. Otherwise, let’s leave the hysteria to the politicians and journalists.
@ Powerisnotstrength
Fair comment - I was impersonating a New Ltd editor by using that term.
Let’s substitute ‘seriously impinged’ and my remark remains valid.
Financiers responsible for imprudent decisions in banking policy should not be given sufficient credibility to put the frights on our nation. As we have seen, their perceptions can be seriously skewed.
@Powerisnotstrength:
It ain’t over till it is over. The word “almost” is important. There is a long way to go yet before the international banking climate returns to normal, whatever that may be.
Let’s all hope that your optimism is rewarded.
i posted a comment on this article soon after i received it
what appears to happened since is one big silly argument about who is right and who is wrong with sovereign risk etc etc
may i suggest that all of you are wasting your time arguing about semantics
kohlers article shows that he is a biased reporter pandering to his mates in the mining industry , and his liberal party lackeys right wing rednecks etc
lets get something straight these minerals are australias COMMONWEALTH if not the aboriginal owerns on whos land they are upon
they do not belong to the greedy mining company bastards, who give out the impression that they somehow invented these commodities
in recent years they have reaped massive windfall profits from the el dorado that they have been given by the australian people
they should pay MORE than there fair share of tax on these riches otherwise the government should get somebody else to mine and develop these riches
if the government with the support of the australian people were fair dinkum there would be only one outcome
there mines should be NATIONALISED
John Bennetts, that’s a fair point. And the ability of countries with chronic starvation problems to buy food is linked to their ability to build export industries and global markets. So the sooner we can return to global growth, the better their chances.
Also everyone, while we’re having a party with definitions, can we please be precise about “comparative advantage” because it confuses some readers.
“Competitive advantage” refers to an entity (eg country) doing a certain thing (eg mining) more efficiently than other entities (competitors) do it.
“Comparative advantage” would perhaps be better named “relative advantage” since it refers to an entity doing a certain thing (eg mining) more efficiently than it does other things (eg manufacturing). It’s related to the (again exaggerated) concerns about a “two speed economy” and “Dutch disease”. Neither of which are in evidence in Australia, whatever politicians and journalists may say.
@ Cairns50
Weeks ago when the RSPT was first announced and comments were flying on the Crikey blogs, there were accusations that the mining industry was in danger of being nationalised. I asked the innocent question” what would be wrong with that?”
To my surprise the question was ignored but you have raised the proposition again. I recall the days when the PMG was our nationalised telecommunications service, then it transformed to Telecom - it was a good service and the infrastructure well-maintained. And, if I recall correctly, it was a Great Little Earner. Telstra, privatised, is an abysmal substitute for the standard of service Australians once enjoyed.
Therefore, why is nationalisation a word which sends us scurrying for cover? Imagine how munificent our government could be to the less fortunate and needy if we ‘owned’ the mining boom 100%.
Zut Alors and Cairns50, suppose I am a landlord with several commercial enterprises renting land from me. I ignore the struggling ones, but one of the farms is making spectacular profits. I send in the lads and announce that I now own 40% of that farm. Don’t worry, I tell the farmer, I will bear 40% of your losses as well as 40% of your profits.
The farmer could of course appeal to the law. But suppose I am the law, and there is no superior power to appeal to?
What do you suppose the chances are that any really good farmers will rent land from me in the future?
@Cairns50, you’re not a relation of the late former Treasurer Jim Cairns, are you? You and he certainly seem to have a similar grasp of economic reality.
@Zut Alors “…why is nationalisation a word which sends us scurrying for cover?”
Short answer: it’s been demonstrated time and time again to send things pear-shaped, certainly as far as mining industries are concerned (and your representation of good old telecom days is arguable at best). We’ve been through this before, here.
@ Powerisnotstrength
If I was a clever landlord why not farm my own land and keep 100% of the profits? Sounds like a solid business plan to me.
But mining is not actually farming, is it? In mining the tenant is physically removing the value from the land, taking something buried which actually belongs to the farmer. The land is being depleted not ‘farmed’.
When the tenant one day leaves the land it will be worth far less to the landlord than when the lease began. Is that fair practice? Only if the landlord is silly enough to agree to it.
It’s equivalent to saying: “Look, money! Let’s loot it!”
I find it especially ironic that Rudd did not provide any assistance to mining when the commodity markets slowed, before being revived by the Chinese stimulus.
The UK largely took over some of its banks, by buying shares in those banks when they desperately needed capital. That’s not nationalization, that’s bail-out.
In contrast, Rudd made no attempt to bail out mining — say, by buying shares for the Future Fund when they were cheap, or purchasing stockpiles of ore and coal.
And he actually caused private money to flee from the share and bond markets by providing collossal taxpayer and legislative support for the secondhand housing market, tilting the capital markets away from the kind of investments that actually employ workers.
So to wait until they are profitable again and then cherrypick industries for increased tax, looks very much like nationalisation. If it looks like a duck, swims like a duck, and quacks like a duck …
Correction: it should read…
In mining the tenant is physically removing the value from the land, taking something buried which actually belongs to the LANDLORD.
Then the time for the landlord to realize that was before he signed the lease, knowing exactly what the miner was going to do with it. You don’t go back and change the contract retrospectively just because the tenant gets a better price than you expected.
Some of the investors made speculative guesses about commodity booms before they happened. What’s the point of making these sort of speculative investments if the government is going to leave you alone when you’re struggling, but change the rules when time proves you right?
Nationalization is really a euphemism. The more honest word is “looting”.
to power and strength
you obviously are not too intelligent
nationalisation is not looting, it is ownership of something by the government on behalf of the people
then again you would probably not agree with me when i state that the miners basically carried on like stand over men and thugs when the government tried to make them pay some more tax as they are entitled to
one thing about you name power and strength, did you get that off the miners or did they give it to you, or are you just on this blog as there lackey and stooge
@ Powerisnotstrength, 11:56am today:
“In contrast, Rudd made no attempt to bail out mining — say, by buying shares for the Future Fund when they were cheap, or purchasing stockpiles of ore and coal.”
How, exactly, do you suggest that Rudd direct the Future Fund to purchase shares and stockpiles? For very good reason, the FF was set up at arm’s length from political influence. John Winston Howard at least got that right.
Yes, I know that the law or regulation or whatever could be changed, but only at great cost to the credibility of the government concerned.
As to the credibility of speculative guesses by the miners in relation to the future prices of ores, I suggest that you either link this to disclosures in prospectuses or to the markets via the Stock Exchange or forget this notion, after all… our largest and best miners wouldn’t be guilty of non-disclosure. Or would they?
Thank you Cairns50, I’ll take that as a concession of defeat.
I’ll sum up: Rudd, as I said above, did not use any of the available options to provide investment support to the mining industry when it was in trouble. Far from it; he threw almost everything into supporting the secondhand housing bubble, making things even worse for those asset classes which actually support employment.
This was chiefly a pork barrel for the millions of Australians who are now committed to that unproductive price bubble. It was also a favour to the Big Four banks, who whispered about the risk of mortgage defaults rising as they had in the US — a laughable claim, since American borrowers who hit negative equity can walk away from their mortgage and owe nothing, but Australians do not have that option.
Rudd was a dictator and an economic barbarian, and his claims of saving us from crisis are extremely dubious. Australia’s economic strength, superior work force, and optimistic culture, saw us through 2008 with only slight damage (some of that damage caused by the government). The Chinese stimulus added to these positive forces in 2009.
In May-June this year, when mining companies felt they were being unjustly looted, they did not whisper half-truths behind closed doors as the Big Four banks did; they openly appealed to the public, using freedom of speech exactly the way it is supposed to be used in democratic country. Allegations of deceitful advertising have so far not come up with anything to match the government’s ridiculous claim that they were paying only 13% effective tax.
And Kohler is right: if circumstances had been a little bit different, there would have been no stopping Rudd from doing anything he wanted to do.
@ powerisnotstrength
You say
“Nationalization is really a euphemism. The more honest word is “looting”.”
But you oversimplify.
It will facilitate rent-seeking by labour. You won’t be looted unless you think government might pay you in money it has already allowed to depreciate or in bonds which, like Greek government bonds, are only good as long as you win the pass-the-parcel game so German and French banks can end up with the dud bonds.
After that we all suffer because you have previously competitive businesses which had to be run so they didn’t go broke and paying attention to each available marginal improvement to save costs, now run by management appointed directly or indirectly by politicians and bureaucrats with neither skill nor temperament for running complicated commercial businesses.
And we suffer because you have a vastly expanded public sector labour force which knows that politicians can be pressured to guarantee its perks until, at close to the extreme, you get the Greek situation where someone has to be dudded to enable even a pretence that the government (and its nationalised businesses) can meet its obligations. It will be Greek bondholders who are dudded eventually when the Eurozone crisis is recognised as not just a liquidity crisis but a matter of solvency in the great vote-buying democracies of the southern periphery.
Maybe Zut Alors hasn’t noticed that human nature isn’t designed with an internal program that compels the organism to seek to work 12 hours or more a day with devotion to the interests of the employing organisation or for the good of the tribe’s future monument building. Why don’t most healthy people in their 70s work at least a 35 hour week? Because they don’t have to. And do you seriously regard the behaviour of the trustafarian playboy as a gross aberration from normal human nature? If you don’t know a few young people, now at ages where a few decades ago they would be expected to be 9 to 5 working family men (mostly men) but actually living cheap on very modest income while they enjoy surfing in the tropics then you live a very sheltered life. The great thing about hunter-gatherer life where food was/is plentiful and easy to obtain was the amount of leisure time available - often used for warfare with others that needed lebensraum. But to generalise less, and use just observation in the equatorial tropics where fish are still plentiful and fruit trees mulititudinous, people don’t have a great inner compulsion to work as modern competitive societies require of at least a large majority of those of working age. If you could get a pleasant easy life by the efforts of your public sector union, as in Greece, why would you exert yourself to be a strenuous productive element in society from 20 to 65? Some would, but, in the absence of many examples of people being rewarded for living that sort of life why would you expect many to follow that productive course?
John Bennetts:
Really? I wish someone had mentioned that to Rudd before he directed the Future Fund to invest $16 billion of taxpayer funds in the collapsing Residential Mortgage Backed Securities sector.
2010-11 Budget Paper 1, Statement 7:
Sorry John Bennetts, you’re right about the Future Fund: it’s not managed by the Australian Office of Financial Management.
So it was the AOFM, not the FF, which I accuse Rudd of using for political expedience. And it’s the AOFM, not the FF, which could have been used to shore up productive investments instead of favouring an unproductive bubble.
Thanks, PINS, I had a bit of an O Sh_t! moment there, thinking that I had stuffed up. Equilibrium restored, I will get myself a cuppa.
Julius, your factoring in depreciation and risk discounting is highly relevant, but out of sight and out of mind to the average voter. That’s why Keynes was wrong: his entire rebuttal of Say’s Law was predicated on the labour force refusing to accept nominal pay cuts during a downturn, even though they have no choice but to accept an even worse cut in real pay. Today’s union leaders are not fools, many of them are better economists than you find in Treasury.
Your points about overwork are also pertinent, but as I’ve argued elsewhere, it doesn’t have to be this way in a capitalist economy. What’s happening is that workers are paying about 1/3 of their wages in direct federal taxes, 1/3 of the remainder in indirect federal taxes, and 1/4 of what’s left from that in state and local taxes.
And then, if the worker buys a home at today’s prices, he or she ends up paying about half of what’s left to the bank and to the lucky property vendor who had the brilliant business sense to be born a few generations earlier and buy his home cheaply.
John B., would ‘legislative risk’ or ‘country risk’ satisfy your nitpicking red herring?
cairns50 - the minerals belong to no one, until someone/some entity invests the time, capital, labour & risk into extracting them. If you (or any other Australians for that matter) want a share of the reward reaped from said effort, it’s only fair your partake in the risk involved; hence you and your rent-seeking buddies should go buy some company stock.
Buying stock is not an action confined to the upper echelon of socio-economic classes, but merely to those who are motivated and not lazy.
Oh wait a minute, most Australian’s Superannuation DO have an asset allocation in the resource sector. The electorate has spoken.
But then again, as your insults towards PINS show, for disagreeing with you I am probably considered some ‘not intelligent mining lackey/stooge’.
“Telstra, privatised, is an abysmal substitute for the standard of service Australians once enjoyed. “
Because the privatisation was done incorrectly and an avoidable monopoly (i.e. concentration of market power) was setup. Howard should have separated the wholesale operations from the retailing arm, then we wouldn’t have the mess that we call “Telstra” today.
This does not discredit privatisation nor does it prove governments perform better than the private sector, but merely reinforces it; in attempting to privatise Telstra and improve its performance, the government screwed it up entirely.
Also consider that Australia is a low, sparsely populated country with large swathes of land - the cost of telecommunications infrastructure & service is naturally higher than in other countries.
“Therefore, why is nationalisation a word which sends us scurrying for cover?”
It’s a euphemism for theft and Australia is a Liberal Democracy, not a Kleptocracy.
The logic of PINS’ farm anecdote is similar to that of price controls on rental housing. Hypothetically the government sets a price ceiling (i.e. a cap on profits) for property renters, thus creates disincentives regarding renovation and the maintenance of the property, as one cannot extract rent higher than the ceiling set. Additional under-the-table payments (i.e. black market activity is encouraged) occur in order to secure the lease, by those who can afford to pay more. The motivation for home-owners to improve the quality of their asset, in hope of a return, has been seriously undermined.
Furthermore, investors (domestic & international) might reconsider if they were going to invest into Australian property indices, perhaps they’ll direct their funds elsewhere now.
The lesson we learn here, is that governments interfering with the price mechanism disrupt the relationship between risk & return, thus impinging upon the efficiency & effectiveness of said disrupted industry.
mr fireflying, i see you duck for cover and try to pretend that the telstra privitisation did not go to plan to expain how that company is now nowhere near how good it was when it was in government hands, its common knowledge that the company is a disgrace, by the way who was its chairman for quite a considerable period of time, oh thats right donald mcgauchie a howard stooge from the national farmers federation, the same can be said for the federal airports corporation, the commonwealth bank, qantas etc etc
fyi i have super and are not lazy, but what i am is somebody who beleives that the commonwealath of the country should be shared where possible
trying to argue with right wing morans like yourself only shows how divided this country has become between big business, the miners, news ltd and there liberal party lackeys etc etc and people who regard themselves as decent and progressive
go back under your rock, ive got better things to do with my time than to keep having to post replys to people like yourself and those of similiar ilk, end of the section for me, good afternoon
Dear Fireflying, in answer to your question re acceptance of the term “legislative risk”, the answer is yes. As to whether or not my stance is nitpicking, etc - if the language contains defined terms, especially when defined for technical purposes, it is unnecessarily reduced when these definitions are ignored by those who know better, especially when this is for emotive public purposes.
In this case, the pro-mining lobby have committed this offense in relation to two terms, as discussed above. It is not off topic to attempt to prevent repetition.
See also “stake holder” and “decimate” if you want additional perspective on this principle. Intentional destruction of the sharp clarity that is possible with our language is nothing short of cultural vandalism.
Cairns50, if you win the lottery, I want 57% of your prize money.
Don’t worry, I’ll spend it wisely on things that benefit working families, such as inflating the house price bubble so that they can’t afford a home. (I’m not sure how that benefits them, but Wayne Swan says it does and he would know, so that’s good enough for me.)
“i see you duck for cover and try to pretend that the telstra privitisation did not go to plan…”
That is not what I said. The Telstra privatisation was a BIG F*&# up, I said - “the privatisation was done incorrectly… we wouldn’t have the mess that we call “Telstra” today.”
I openly admitted the privatisation was a disaster and then went on to describe the reasons why. You did not read what I said.
I won’t further indulge your need for attention given your proclivity to partisan ad hominem attacks.
JB, I knew exactly what was meant by ‘sovereign risk’, even though a more specific and technical term could have been used in place. Looking at other posts here, I see numerous others who have no problem deciphering what is meant by the term.
Just because laypersons are easily fooled by loaded language & sensationalism, doesn’t mean shareholders and investors are. I tend to agree with the idiom, ‘a fool is easily parted with his money’; those clever and ambitious enough to invest in the stock market are fairly astute when it comes to conducting a SWOT analysis of their investments. If not, their asset manager/financial planner is.
I disagree that clarity was ever ‘sharp’ to begin with, nor was it intentionally undermined by the mining lobby.
The underlying point still remains; a country that consistently provides X level of return in mining is now considering only allowing a return of X - Y, that is the simplest I can break it down. The relationship between risk & return is linear and as I posted above, interfering with this relationship promotes inefficiencies in our economy.
This above line of reasoning, NOT the press releases about ‘sovereign risk’, in my opinion is what spooks investors; they don’t care much for emotive posturing by Statesmen and the Fourth Estate - the bottom line is all that matters.
My apologies Fireflying. It’s a bit like Rudd’s and Clinton’s apologies actually. It’s just that I am embarrassed by my association with Cairns50. I am almost sure he is the chap who turned up at my school after his obvious dyslexia (which you can see persists to this day) had kept him in a school for the retarded for several years. Sadly he never developed any enthusiasm for conventional clear thinking or attention to evidence or logic and, as he now makes apparent on this blog, resentment at the status to which circumstances and peer opinion has confined him is almost the sole wellspring of his utterances.
It won’t do any good to reply to him and probably is bad for him. Though it may keep him awake, and that may or may not be a good thing, he really needs to be kept calm.
Fireflying, you are really so far beyond the bounds of civilization, I hope that I am carrying a gun if I ever meet you.
Your lack of rational discourse is unacceptable in normal society. Your assumptions about the remainder of the human race and their perceptions of reality are a shame and an insult.
Mate, if you wish to converse in English, please adopt the norms of that language. If you choose not to do so, please stay in Cessnock or whichever 6-fingered, two-headed town you inhabit and concentrate on learning the two surnames of its 40,000 inhabitants.
There is a polite way to consider and to resolve issues. And there is your own, stupid and mindless way. Best of luck… you need it.
Excuse my bemusement Mr Bennetts. I’m just an Arts/Law graduate (a major in economics in that) with an MBA who is trying to make a career in a bank and I’ve been following the interchanges on this blog and becoming more and more puzzled.
You seem to be the one off with only the company of Zut Alors and Cairns50 outside the ordinary realms of discourse of educated people in a liberal democracy.
You may have trouble understanding the largely courteous, and certainly remarkably restrained, contributions of people like Fireflying, Powerisnotstrength and Julius, but from my point of view, not too long past the student politics which encompassed every issue and every opinion but now in the front line of serious competitive business activity, it is you that is on another planet and they who are (a few quibbles set aside) lucid and logical.
mr cremin, one of the first things my mother taught me was to never speak bad of the afflicted
you obviously had no such upbringing ,
mr webb, so you have a major in economics and want a career in banking
i hope they taught you about greed and how to steal off governments, people etc when you decisions go haywire and you need the peoples monies to bail you out
come on you 2 drop kicks, post in some more smart arse remarks about my posts
all you are doing is confirming that people like myself john bennets, zut alors etc have a grasp of what the ordinary person is thinking on these matters, and that people like you are WRONG
So a certain poster has an MBA. Whoopee-do. Perhaps, like Geoffrey Edelston, he obtained said qualification via mail order or from the back of a pack of Wheeties, but I will give him the benefit of the doubt and imagine that it was obtained in Australia, from a reputable university.
I not only have established myself in a career, but at a mature age, after developing some perspective on life, completed a management master’s also. I am no economics major, but I have studied economics at 2 unis and been a watcher of society for a bit longer… I have grown to the age where I now wear long pants.
But Crikey and the GFC and so forth are not about me or about Mr Webb’s CV. In this instance, it is about the real world, where people try to use our language do discuss things, perchance to disagree, hopefully to gain insight.
These insights are somewhat clouded if the language is used Mad Hatter like to mean not what it meant yesterday but what some chancer wants it to mean today. Perhaps that seems pedantic or just plain wrong to some people. It is both logical and essential that our language not be abused by corporate bullies as they attempt to wrest the business of government out of the hands of those who were elected to govern.
As a trainee banker, Mr Webb is no doubt now an apprentice corporate bully and is drinking at the tainted fountain of big bucks corporate wisdom. Fine. He has shown his hand. Presumably, he also now wears long pants. Perhaps it is not bankers per se that are the root of the problem. What if it is the act of wearing a suit to work, a kind of uniform, a straight jacket, which acts to filter out non-corporate thoughts? There’s a PhD waiting for somebody, perhaps Mr Webb, who researches the effect of corporate dress on corporate mindset.
Disclaimer: John Bennetts does not own a suit, nor does he possess shares in a manufacturer of suits.
I too am unimpressed by the phony “kindness” of Mr Cremin.
Cairns50’s point of view is one held by a large component of the population. Personal attacks on him do nothing to address the millions of others who feel the same.
That said, Cairns50, I will not pull my punches in regard to what I see as your claim that the many have a right to the wealth of others, just by outnumbering them and having more need of the money. This is the logic of looters. Its underlying principle is rule by the gun rather than by law, even if the gun is kept politely hidden from view.
I repeat: if the Rudd government had used the AOFM to provide more support for the mining and other industries (apart from insulation installers, school builders, and car dealers) when they were being butchered on the stock exchange and in the business credit markets in 2008, I would have a lot more sympathy now for the government’s claim to cherrypick this one business sector for heavier tax.
And if the humble workers want a bigger share of the wealth flowing from it, I can only say I completely agree. Most workers are receiving much higher real wages than they did before the mining boom, in gross pay. It’s not the mining companies’ fault if the federal government takes around half of your wages in direct and indirect taxes, blowing much of that money on inefficient political pork barrels, and deliberately pushing up the price of houses so high that you end up with very little of that money in your own bank account.
You think you’re being ripped off? You’re absolutely right. By the federal government, not the miners.
JB, you’ll have the “long pants” when you stop using loaded language and emotional appeals to get your point across.
“I hope that I am carrying a gun if I ever meet you… There is a polite way to consider and to resolve issues.”
Anyone else see how insane this is, does this guy have bipolar or something? (no offence to other bipolar sufferers out there).
What a lot of verbal diahhorea, why don’t you all get a life.
Oh thank you Aunt Lorraine! You’ve made my day. I know Cousin Jim won’t see what you have written but I was betting you might be provoked if you saw his 0h-so-verbally-precise contribution. Lucky he’s at work and, I trust, not blogging because otherwise he’d be tempted to pick you up on your spelling of diarrhea (Greek for “through flow” Jim might say). But…..
Here’s the big question: what are you doing with your time which makes you so certain it is all verbal diarrhea? You haven’t actually been wasting your time reading Crikey blogs have you Aunty? If you have, let them all know what your really think.
@Phillip Webb:
I note that this fellow is somewhat derisory about Aunt Lorraine, who, kin passing, did me no favours either. Point taken, Aunt.
However, noting the times of day that Mr Webb’s contributions were lodged, 12:48pm and 3:58pm, suggests to me that the bank which employs him has failed to keep him busy today.
Thanks for the own goal, Phil.
@John Bennetts and any others equally confused.
I’ve only just got home to heat up the steak and kidney pudding so have only just learned of Mr Bennetts’confusion of mind.
I see the person whose contribution was at 12.48pm was “Fireflying” whoever that may be and that my cousin Philip (actually step-cousin: I’m sometimes ambivalent about the idea of sharing genes with him) was the one who wrote at 3.58 pm. I don’t know about Fireflying but I can almost guarantee that Philip wasn’t at work, let alone a bank, because he doesn’t seem to aspire to the role of honest toiler. Amusing gadfly perhaps, trustafarian (Oh, envy!) but banker no, not even like T.S.Eliot.
What is this, a canned episode of “Everybody Loves Raymond”? You guys need a new script writer.
Apologies to all. In my efforts to be half smart re the Webb clan I totally stuffed up. What a waste of space!