Prolonging the agony. Perhaps the Labor Party should keep away from Ross Garnaut for a while. The Party’s economic thinker of choice has a tendency to come up with plans that are complex to explain — like the emissions trading scheme and the resource rental tax — and complexity clearly is a difficult thing for politicians to handle. Not that the politicians make things easier when they start meddling with the purity of an economist’s  idea and start tossing in compromises for this pressure group or that.

The fate of emissions trading showed us that with the Government ending up with a scheme that pleased no one and was eventually put where the electoral strategists hope it is out of sight and hopefully out of the electorate’s mind. Now Labor is having similar difficulties in handling the mining super profits tax or resource rental tax or whatever it wants to call it.

Surely Treasurer Wayne Swan and Prime Minister Kevin Rudd are not surprised by the reaction to their proposal. Groups hit with a tax increase always scream. Presumably the pair and their small coterie of ministerial colleagues in the inner circle believed they could sell benefits from hitting miners that outweighed any electoral cost. The problem, then, comes in the salesmanship with the biggest mistake probably being too cute in specifying what the extra revenue gained would be spent on.

Lowering company tax rates has no appeal at all to most voters and goodness knows what this infrastructure stuff means to a couple struggling out in Blacktown. No kudos either for telling me I will be paying less tax on my savings bank interest when I don’t have any money in the account. And as for a few extra per cent at some time in the future in a superannuation account well most people are less concerned about the better future than the better now.

The best message is the simple one. When it comes to tax would you rather the mining companies paid or you paid? Toss in, by all means, the argument that the Government has at last started to use that the resource dug up by miners is not theirs but ours.

But don’t confuse things by getting into an argument about actual tax rates by different kinds of companies and certainly stop giving the impression that you are open to any substantial compromise. That kind of talk is just making the Government look like it doesn’t know what it is doing.

Tales of drinking habits. Blame a Benedictine is the Scottish Labour Party’s latest catch-cry. The tonic wine produced by the monks of Buckfast Abbey is facing prohibition. Members of the Scottish Parliament are soon to vote on the Buckfast ban after Labour made the measure the keystone of its plans to tackle the country’s binge drinking epidemic.

27-05-2010 buckfast

The problem, says Labour, is the caffeine content of the drink. Jackie Baillie, the Party’s health spokesman, said: “Caffeine in alcohol creates wired, wide-awake drunks and that’s where the problems are. If you don’t take the early opportunity to do this then you will end up as America where there is a huge number of drinks with caffeine added.”

While he’s on the subject of drinking and health, spokesman Baillie might like to consider what to do with the latest Californian fad drink — the “PB&C” which a Daily Telegraph reporter describes as “a monstrosity of a milkshake” that is a “heart stopping ensemble of ice cream, peanut butter and heavy cream” that is “presented in a giant 24 ounce cup the whole gloopy, gooey mess contain[ing] 2,010 calories, the total recommended daily allowance for a woman and only slightly fewer calories than are suggested for men.”

Following the Seven News example. Perhaps the Seven Network News keeps better company than I thought! It’s recent story on the outing of a NSW Cabinet Minister for frequenting a gay club would clearly have been newsworthy for the supposedly very proper New York Times. That paper today covers at length the claim by a former staff member to once having had an “inappropriate physical relationship” with his female politician boss who is now seeking to become Governor of South Carolina. If that activity is ever deemed in Australia to make a person unfit for high office there will be a lot of vacancies in Federal Parliament!

Labo(u)r’s international trend. It is not just in Australia that a once great political party of the working class has turned to a new kind of leadership that is a long way removed from the kind of people it still claims to represent. This is from today’s London Daily Telegraph:

The Opposition is embarked on a leadership contest in which the four front-runners are male, white, forty-something, Oxbridge-educated, football-daft former special advisers, who worked for either Gordon Brown or Tony Blair before becoming MPs. They all have dark hair. Westminster is having fun with rumours that they even once shared a girlfriend.

Funny about that — politicians bow to self-interest first. The theory behind that Euro joint currency is that all the participating nations will stick to the rules, two of which are that government debt must not exceed 60% of GDP at the end of the fiscal year and the annual government deficit must not exceed 3% of GDP. It is not just Greece where the politicians have ignored this harsh fiscal discipline. Only two nations — Finland and Luxembourg — stuck by the agreement as their peers broke ranks in an effort to save their own electoral necks.

27-05-2010 eurozoneperformance

With that record to look at it’s little wonder that there is so much scepticism about Europe’s economic ffuture.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey