A clash of priorities

Posted on July 20, 2010 by

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Julia Gillard has been our Prime Minister for a total of 13 days. A female friend described her as ‘completely amazing’. I struggle to feel likewise. While not to deride the prior achievements of Ms. Gillard, 13 days have been more than enough for me to assert that she’s not the leader I want for my country.

The Rudd government sought to raise compulsory superannuation to 12% – a massive 3% rise. In an impressive (for a Labor administration) recognition of the burden this would place on the business community at large they also sought to cut company tax by 2% to 28%. This cut could be argued to be centred around making Australia more ‘competitive’ in the global marketplace – but rather seems mainly concerned with appeasing the business communities concerns regarding a real 3% increase in human costs. This cut in company tax however would leave a considerable revenue gap in the budget.

To address this shortfall the Rudd government sought to implement a well thought out tax suggested by the Henry review. This tax was to collect extra revenue from the highly profitable mining sector – using a justification based around the non-renewable nature of its operations.

Briefly summarised, the proposed ‘RuddTax’ was to implement a 40% tax on profits above a given threshold. It contained generous provisions to encourage exploration – and attempted to keep the Miners on side by offering to shoulder 40% of the loss on unsuccessful projects. This tax was to be applied to most commodities – including copper, nickel, iron ore and coal.

In an blatant and offensive, in my opinion effort to bury this issue so as to protect their own electability the Gillard government has hastily agreed to amassive compromise. In brief, we now have a tax with an effective rate of22.5%. This tax only applies to Iron Ore and Coal.

While Estimates have predicted only a drop of 1.5 Billion over two years, this is not accurate. True calculations are said to be closer to around 4.5 Billion. This disparity can be explained in part to the Rudd tax being calculated extremely conservatively – on older commodity prices. This contrasts to the Gillard forecasts which have factored in predicted rises in commodity prices so as to buffer the loss and present a more palatable net ‘headline’ loss.

Kevin Rudd was not a good leader, he failed to come out strong and defend himself when attacked over (sound) measures. He addressed the Australian people as if they are all intellectuals, which they are not. His attempts at connecting, and being real sounded false and contrived (fair shake of what?). But at least he refused to bow down and cower to the interests of the billion dollar mining companies. He had our interests at heart. And for that, he’ll be missed.

Words by John Azzopardi

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