Knowing who your friends are.

Some of life’s lessons can only be learned the hard way, the knowledge can only come from experience, which is sometimes very painful. It can be hard to watch someone you care about putting themselves through the sort of experience that leads to these insights, wishing you could simply make them understand the reality that was before them, but knowing that they’d have to figure it out for themselves. This is exactly how it has felt to be a supporter of the ALP while they’ve attempted to introduce a new tax on mining, the Federal ALP has learnt who their friends are, sadly for them it isn’t a long list.

Oh sure, it must have felt wonderful for the last couple of years having Heather Ridout nodding on cue every time that the PM made an announcement, and I have no doubt that you all loved reading her press releases that contradicted the opposition as they were busy behaving like a bunch of injured seagulls fighting over a chip as they attempted to decide on a leader, but you should have known it couldn’t last forever. As soon as you introduced policies that might harm the bottom line of corporate Australia they showed you where they stood, and it wasn’t by your side.

The naivety displayed by Rudd and Swan was almost touching as they put together a policy which not only improved the way the Australian people are compensated for the mineral wealth that our nation holds, but also had some very positive changes for the broader business community. The ALP knew they would face a fight with the big miners, but did they really believe that they’d receive support or plaudits from the rest of the business community? Did Kevin Rudd and Wayne Swan really believe that small mining companies, who received some incredibly generous terms from the RSPT, would defend the new policy and risk upsetting the larger miners who they will one day hope to attract as joint venture partners or sell out to?

The stark reality is that corporate Australia doesn’t like the ALP. They’ll tolerate a Labor government and they’ll even cozy up to it while the Liberals are going through one of their periods of opposition induced self immolation, but it never lasts. Did the whiz kids running the ALP machine believe that all of the donations before the 2007 election were a sign that the business community were looking to forge a new partnership with the ALP? They should have known better if they did, the corporate world knows which side its bread is buttered on and was just hoping to play nice in the hope of not having to face any real reform.

Rudd has been criticised, especially in the wake of today’s agreement, for being too confrontational with the mining companies, I say that’s bollocks. If anything Rudd wasn’t confrontational enough. If the RSPT had been a basic 40% tax on profits beyond the bond rate, with no sweeteners at all, today’s deal may have ended up looking like the original Rudd proposal. There’s no point for the ALP to try to play nice with corporate Australia because their efforts will never be appreciated and they will never receive any support when the going gets tough. If you want proof of that you need look no further than the gaggle of industry groups who today came out whinging about elements of the reform policy which have had to be scrapped to allow the miners to have their way. Not one of these organisations has been heard from supporting the RSPT, they sat on the sidelines rather than helping to secure something in their own interest, and now they bleat about the fact that they’re not getting all that they thought that they would.

The question that needs to be asked is whether Prime Minister Gillard and her cabinet will learn this lesson? The ALP need to start behaving like a real Labour government and place the good of ordinary citizens first, because it’s become brutally clear that the corporate sector will not lift a finger to support this government. What makes the whole affair even more disappointing is that the government already had a template about how to deal with big business in the shape of Stephen Conroy. The way that Conroy effectively sidelined Telstra via the National Broadband Network was brilliant, he played hardball and looks to be on track to achieve the reform of Telstra that is so sorely needed. Compare that to the antics of Sol Trujilo and Phil Burgess when dealing with the previous government and you realise how effective Conroy has been.

This same lesson is playing out again with News Limited. The News Limited tabloids tentatively jumped on the Kevin 07 bandwagon because they don’t like backing a loser, but the honeymoon lasted until about December 2007 before they started going feral. The ALP needs to treat News Limited like the hostile organisation that it is and deny it the sort of access, and government advertising, that it craves.

It’s time for the ALP to remember its roots, to sell their policies based on what they will do for the Australian people, and prepare for the onslaught from self interested lobby groups who will never be truly satisfied while we have a Labor government. It’s time for the ALP to remember who its friends are.

Why we love a handout

I’ve been thinking a bit about tax today, mostly prompted by listening to a spokesdrone from the Business Council of Australia outline their submission to the Henry Review on Radio National this morning. Unsurprisingly he was arguing that the company tax and capital gains tax rates should be slashed and the GST increased, the same tune that the BCA usually sings, but it was enough to start me thinking.

Continue reading “Why we love a handout”

Tax Cuts Suck.

The Coalition’s tax cut looks like a desperate act, I’m not sure why they think that it’ll have any more impact than it did during the budget. What I’d like to see is a commitment to index the tax brackets along with the CPI so that the impact of bracket creep is reduced, along with an increase in the tax free threshold to especially help low income earners.

Changing the tax rates is just fiddling at the margins, what we need is actual structural change in the tax system to remove some of the inefficiencies (bribes) that are built into it. What is frustrating is that there are groups out there who are making submissions on this stuff full time and they are constantly being ignored by a Government who doesn’t have the balls to explain complex policy to the populace.

The ALP has a big opportunity here to show the $34B tax cut up for the crap it is with a real tax policy. What’s better is that they have so much money to throw around to achieve this without a Government scare campaign, thirty billion dollars could buy a lot of tax reform.