super tax myths and facts, page-76

Hello Mozart,

I believe the super profits tax is in the national interest and is in fact desperately needed. Australia has a classic case of economic Dutch disease and something must be done unless we are going to allow a booming mining industry to be our only source of wealth and most of our citizens to be impoverished as a result!

In economics, the Dutch disease is a concept that purportedly explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. The theory is that an increase in revenues from natural resources will deindustrialise a nations economy by raising the exchange rate, which makes the manufacturing sector less competitive and public services entangled with business interests.

However, it is extremely difficult to definitively prove that natural resource exploitation is the primary or sole cause of decreasing revenues in the manufacturing sector, since there are often many other factors at play in the very complex global economy. While it most often refers to natural resource discovery, it can also refer to "any development that results in a large inflow of foreign currency, including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment",or even a philosophy free trade and tarif minimisation.

It is my opinion applying a new tax would not be enough to correct the problem as the profits would need to be saved in a way that would immunise the rest of the economy from the negative effects of all the income! Say in our superannuation funds so that most of the funds could be used to promote a stronger manufacturing sector.

While I personally invest in the resources sector amongst others, like most Australians I do not work in it. So if it became the only job around paying a decent wage I would not be happy! I am in favour of this tax or some other that will alleviate the problems being caused the resource boom associated with our fading manufacturing and value added industries. I believe policy failure in the past and present by successive governments is why this is occurring!

Cheers