Why this will be a great election to win
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There’s some commentary that Tony Abbott and the Liberals might be best served by sitting back, allowing Labor into minority government and watching the ensuing chaos deliver it government at the next poll. No politician worth their salt, and certainly not a fighter like Tony Abbott, ever turns up an opportunity to obtain power. At the very least, you’re the master of your own destiny, even in minority government. Look at Steve Bracks, who secured the support of three independents, supplanted Jeff Kennett and went on to run the best government in the country in the last decade-and-a-half. But there’s a factor that makes the current negotiating process particularly critical for both sides. The economy is roaring ahead, and so are mining profits, meaning the Budget position is almost certainly going to be far stronger than forecast. Earlier this week we were hearing all about surging, indeed spectacular mining profits driven by unflagging Chinese demand. What was missing from the coverage, especially from the Australian Financial Review, which along with News Limited and some Business Spectator commentators ran a campaign of deliberate and sustained deception about the RSPT, was just how absurd this torrent of mining revenue makes the gloom and doom we were told was on the verge of overtaking the industry in the event the government imposed its tax. Indeed, it’s only a week or two since the AFR was giving front-page coverage to claims the Australian mining industry was permanently damaged by the Rudd government. Behold the damage — profits so big they’ve driven a turnaround in the current account deficit. It will also drive a rise in company tax revenue and will, assuredly, in time drive the Australian dollar punishingly high, and interest rates as well. Today’s 1.2% surge in GDP suggests the concerns of earlier this year about private sector growth failing to kick in and replace the stimulus-induced growth were unfounded, although construction is still a key growth driver. So whichever party secures power will face the advantages and disadvantages of a booming economy. The higher interest rates and skills and housing shortages will be a pain, but it will also deliver considerable extra revenue, meaning the politicians can get back to what they like best: spending and handing out tax cuts. This will have been a good election to win, although you can assume that regional porkbarrelling will have first call on those extra mining revenues. Given the stakes, Julia Gillard has played a poor hand well so far. Repudiated by voters, barely keeping an angry party in check, faced with three conservative rural independents, she has given the impression of being constructive and positive. Yesterday’s Press Club appearance seems designed simply to continue to give the impression of stability, calm and momentum. It was utterly devoid of content, with Gillard even unwilling to describe the parliamentary reforms she’d offered the independents, except for a key messages that she wouldn’t be undermining the Budget bottom line to meet the demands of the non-aligned MPs, and she wouldn’t be reversing on tariffs. Accordingly it didn’t come as much of a surprise when Andrew Wilkie declared that he wasn’t overly impressed with Gillard’s response to his wishlist, which if implemented would run to tens of billions of dollars. Any major party seriously committing funding to that agenda would wreck the Budget. Tony Abbott, who part by temperament, part by the constitutional role assigned to him, has appeared reactive and truculent so far in the negotiation process, now has the chance to garner the vote of Wilkie, which would be ironic indeed given what the Coalition did to Wilkie, and the fact that one of its MPs is said to have been instrumental in leaking the notorious top-secret report designed to damage him. The Coalition is claiming it has far more fiscal wriggle room to throw money at the independents than Labor, a claim that will probably last about five minutes at the hands of Treasury, but it’s a convenient position to take as it tries to secure government. The truth won’t emerge until after a government has been formed, by which time it will be too late to cause any damage. In any event, it doesn’t matter if there’s a multi-billion dollar fudge in the Coalition’s costings, because given the strength of the mining boom, it’ll likely swamp it with extra revenue. Which would be a nice outcome, given the Coalition has got quite a bit of the way here by insisted the mining industry was at death’s door. |
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9 Comments
If Tony doesn’t ‘win’, do you think the Coalition are going to be forgiving enough to give him another go?
Gina Rhinehart, who along with Twiggy Forrest was one of the most vocal critics of the tax, claiming it would kill new development, yesterday announced a $1.8 billion development of her Hope Downs Project in partnership with Rio.
she did this whilst there was not only uncertainty about the tax, but about government itself.
my bulls**t detector blew a fuse
Like me, Skink you find it outrageous that if Gina and Twiggy and Clive want a tax deduction for a donation made to a political party to protect their commercial interests they’d have to use their own personal money! And that if a company wanted to reduce their tax bill by making a generous donation to the political party of their choice, it would be against the rules!
Sarcasm Alert.
As Meski says, this was really Abbott’s only serious chance of becoming PM — and he knows he has lost it. But that will not stop him, if still leader, moving the attack up an octave or two in the next parliament, hopin’ and prayin’ for another early election. It will be unbearable and one can hardly believe it would not backfire, especially with the booming economy. With Senate out of reach and Barnaby only causing self-damage on the sidelines.
And most of all Gillard’s ability to remain ice cool no matter what, will become a powerful tool. In the House, in 7.30Reportland, wherever Tony turns. This could turn into a good government, better than any modern Labor government could be by itself. If only Labor would grasp the future with both hands and do the necessary in the first 6 months of the new government (carbon tax, rejig miners tax just a bit, slap down the boat people rhetoric — and watch Abbott try to ramp it up further, good grief maybe even try to deliver on those Sydney transport projects….ok, getting carried away.)
I think this article may be spak filler. My mail says a double dip global recession. PIIGS. UK skating toward depression.
You need to find less pessimistic mail, Tom.
Anyone who thinks Steve Bracks ran the best government in the country at the time was living on another planet.
Can’t agree with the “In any event, it doesn’t matter if there’s a multi-billion dollar fudge in the Coalition’s costings, because given the strength of the mining boom, it’ll likely swamp it with extra revenue.” How many people that voted for the Libs/ Nationals did so on the basis of supposed competence?
The credibility of both sides is changing. Given that the Independents are looking for a stable govt, I doubt they can now go with the Libs, who do not even appear to have guaranteed supply in the Senate.
Ah yes, it’s been a few days since the last one, so it must be time for another Keane kick at the mining industry, in which he typically wallows in his ignorance to help support the chip on his shoulder. He seems to think that the fact miners are doing pretty well at the moment somehow invalidates criticism of the RSPT proposal’s effect on the industry. Bernard, the effect of the RSPT proposal was on investment decisions. In the mining industry as in many others, investments can take up to a decade or more to come to fruition. The corollary is that profits being made now are the realisation of investments made over previous decades. Accordingly, they have nothing to do with the events of the last six months.
Is this really so hard to understand?
And never mind the fact that RSPT proponents such as Bernard rested much of their case on the mining industry not paying enough tax. Yet now they’re going to swamp the budget in a sea of black? How does that work again?