In the Herston Report they say ?The Australian equity market and the Australian dollar are hesitating, while the rest of the world gets back to business.?
The thing investors and markets are wary of is of course taxes, especially when they can appear retrospective and out of the blue, as the original mining tax proposal was. Also any government in the world that is seen to have a penchant for increasing taxation generally whenever there is a problem, is treated with caution by markets. The playing field should be stable, as well as level.
The Australian government has in a relatively brief period of time, stated it will impose a new mining tax, a flood levy, and a carbon tax, and discussed a bank tax. It is not only the clear willingness to tax more, but the growing concern overseas as to where does it all end, that is raising eyebrows. Is there going to be a bank tax, or other taxes on any industry that out-performs? The mining, and discussed bank tax, appear to some to be an institutionalised version of the tall poppy syndrome.
Australia?s track record to date on taxation is already a concern to global investors. When we add to this the high rate settings of the RBA, we start to see why the global investment community might shy away from Australia in the medium term.
