Cry, my beloved country

I have been out of the country for a little while and the country seems to have gone to hell in handbasket in a very short time.

How could this be? There are really only three types of governments: ones that achieve real reforms (rare); unimaginative, reasonably competent, minding the shop types (probably the predominant type); and disastrous and destructive. Where does the current government fit?

I am amazed that there are no signs of resolution on the RSPT; if anything, things have worsened including the announcement of the government undertaking an anti-mining industry advertising campaign, using some sort of “emergency” power. Truly astonishing.

Perhaps even more amazing is the idea that the industry superannuation funds will go into bat for the tax. Memo to Trustees: your sole interest is to act in the best interest of the members (Governance 101). To act in any other way is to act unethically, unprofessionally and possibly unlawfully.

Superannuation members are interested in maximizing the returns on their funds under management. To use members’ funds to pay for a campaign in support of RSPT is unimaginable. Why not advocate the nationalisation of the banks next? Am I being cynical when I suggest that this may be some sort of quid pro quo for the lifting of the SGC from 9% to 12%, which was NOT a recommendation of the Henry Review.

What also happened to the idea of an old tax (the royalties) being a good tax. And don’t believe the estimate in the Henry Review of the deadweight losses of the royalties being 70 cents in the dollar; this is just unbelievable.

And what about the extraordinary compliance costs of RSPT? Where is this factored into the Treasury’s analysis? In fact, the modelling appears to assume that there are ZERO DEADWEIGHT LOSSES associated with RSPT. This must be some sort of joke.

It is one thing to levy volume-based royalty payments on a project by project basis – this is relatively straight-forward and easy to implement. It is another thing altogether to levy a profits-based tax on a project by project basis.

Many companies will not account for profits on a project basis – it makes little sense; commodity by commodity is not uncommon. The allocation of joint costs becomes a nightmare – think HUGE ATO manual. RED TAPE – wasn’t the government going to reduce this? – will escalate enormously.

Economists, including I’m sure those boffins in Treasury who dreamt up RSPT, are inclined to look down their noses at accountants. But I’m sure if you ask any accountant what they think of RSPT, they will hesitate, sputter and let you know that it can be done but with great difficulty and cost and that they will get back to you.

All up, a very sad time for a country with such fantastic natural resources as well as many other advantages. At least, the Government and the Treasury can be relieved we will not be catching the Dutch disease!

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20 Responses to Cry, my beloved country

  1. dover_beach says:

    Perhaps even more amazing is the idea that the industry superannuation funds will go into bat for the tax.

    That is simply disgusting; this government must go, it is corrupting everything it touches.

  2. JC says:

    Yea welcome back Judith. Miners are now liars and cheats according to our treasurer, Che SwanDive`.

    I see you also caught up on the fact that we have an emergency on our hands. It’s a real emergency.

  3. C.L. says:

    Hey, are we breaking a national emergency curfew being up this late?

  4. Sinclair Davidson says:

    You’ll be shot on sight. 🙂

  5. Infidel Tiger says:

    I’m right, I’ve escaped to Indonesia for a tasste of freedom.

  6. JC says:

    Is there any chance we could send the entire front bench over to Afghanistan to fight the Taliban, as they would be far more useful.

  7. C.L. says:

    Are you abroad, Tiger? Been wondering where you were this week.

  8. Infidel Tiger says:

    Yep, 2 weeks R&R in Bali. Global warming has caused it to rain for 2 days straight, so I’ve taken a Captain Cook at the intertubes. I swore that I wouldn’t even look at a newspaper while away, but couldn’t help myself when I noticed the exchange rate falling quicker than a drunk bogan in a Bintang singlet.

  9. Rafe says:

    Well Judith, would you have left your young children playing unsupervised for that long?

    Please don’t do it again!

  10. Samuel J says:

    Well said Judith. Sussex Street is running the Australian government. Rudd and Swan are taking tips from Mugabe.

  11. Pingback: Cry the Beloved Country « 38 South

  12. Adrien says:

    undertaking an anti-mining industry advertising campaign
    .
    Um-ah. Kevvie said he’d never use public money to advertise his govt’s policy. Kevvie lied! I’m heartbroken.

  13. Ded Peate says:

    I would like to comment here as before retirement I was involved in mining re
    Funds management.

    The writer has said mining companies do not allocate costs on a project by project basis. (my apologies if I have read you incorrestly).

    My experience is that this is simply not right.
    They do it all the time. Indeed most companies do this for example Woolworths allocate costs and examine profits on a business by business basis.

    As a fund manager I could make a judgement on which company to invest on on this basis.

    Indeed how could anyone understand the effect on a company unless this was already the case.

    This is why companies employ accountants.

    Perhaps I am lucky as I was able to study both economics and accounting ( the latter courtesy of Mr Whitlam.)

  14. Butterfield, Bloomfiled & Bishop says:

    So a small business using MYOB cam allocate costs to different projects but multinational mining companies cannot.

    Sacra bleu

  15. rog says:

    Yeah, when I read that I knew that Judith has absolutely no idea how business works.

    Every project is run as separate business

  16. rog says:

    Of course jc would know better, one of his internet buddies who trades in coke bottles will give him the drum

  17. Butterfield, Bloomfiled & Bishop says:

    Judith is plainly hysterical.
    Perhaps she should write something anything on the labour market her area of expertise.

    Shes does not think the RSPT is good for the macro-economy. Well others do so it not surprising to see support for it afterall anyone who is interested in rational economics support the tax.

    She then conflates a tax on super profits with nationalization. huh

    She then says mining companies do not allocate costs on a project by project basis. I guess there are no NPV on any investment decisions in mining?

    Truly quite remarkable and could only be found at Catallaxy.

  18. daddy dave says:

    Yeah, when I read that I knew that
    .
    no you didn’t. You’re repeating what someone else said earlier in the thread and pretending that you could have said the same thing. You’re as stupid as Homer.

  19. Butterfield, Bloomfiled & Bishop says:

    yeah DD no company allocated costs across projects or divisions.

    you are stupid if you believe that and moreover you patently haven’t read many financial statements

  20. pedro says:

    Homer, I believe Judith is saying that taxable income is not accounted for on a project by project basis. I expect woolies don’t pay income tax on a store by store basis. The accounts used for internal purposes assessing profitability of stores or divisions or mines is not the same as tax accounting.

    As for partial nationalisation, what else would you call it when the govt comes in and takes part of the profit and assumes part of the cost?

    Also, why don’t you explain how the tax is an unalloyed good for the macro economy. I’d be interested to see how you make that claim. Though to be honest, we all know you aren’t even going to try because you are just parroting the labor line as usual.

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