Check out this article from "today's" Australian.. one of the best summations I have yet read.... Singleton couldn't hope for a better advertorial and his spending hasn't even started yet.
When vanity hits political reality
The Australian June 02,
THE resource super-profits tax is yet another chapter in a short history of the Rudd government crying out to be written:
When Vanity Collides with Reality.
Kevin Rudd's mining tax is a poor policy concocted by those with pasty hands and clean fingernails, oblivious to the workings of the mining business. Only a dirty dose of reality will make the policy workable. Add it to the growing list of policies dreamed up in sterile Canberra offices by Rudd ministers completely disconnected from the real world.
How remarkable and disheartening that the Prime Minister appears to learn so little from his government's previous blunders. Again and again, dangerous policy overreactions have been driven by overblown rhetoric and then deflated by the forces of reality. This amateurish way of conducting government reeks of hubris or insecurity. Either way, Rudd's ledger of political and policy misjudgments will not make for a pretty read.
Early chapters were written long ago. When the Rudd government announced its botched tax changes to employee share schemes last year, you didn't need to be a market whiz to predict the consequences. Share schemes were immediately shut down. And the changes threatened to kill off schemes completely. More hubris - or insecurity - will be recorded when Rudd overreacted to the global financial crisis with inflated rhetoric and funding the $16.2 billion schools building program. A basic understanding of supply and demand was all you needed to foresee the outcome: taxpayers footing the bill for a sorry story of cost blow-outs, pumped-up prices, unwanted buildings and lack of consultation with schools.
A chapter will be devoted to the home insulation debacle, of course. It will trace how the government, using the modish lingo of green politics to pump a few more billion dollars into the economy, refused to accept reality even when it was laid out on a platter in the form of advice from state governments, law firms and other highly paid advisers.
House fires and deaths will be recorded as the high cost of the Rudd government's vanity that it knew better.
Another chapter will document the government's politically motivated dumping of what it claimed as "the great moral issue of our time". While Rudd ministers point the finger of blame at the opposition and the Greens for opposing the emissions trading system, the Prime Minister could take the same policy to the coming election for voter approval. He won't. Rudd's rhetoric, this time about climate change, has been defeated by more reality. This year, fewer and fewer Australians - especially the working families that Rudd won over in 2007 - believe his hype.
And May will provide yet another chapter. Let's call it: Reality bites. Again. More puffed-up language about "fair share" with winks to a class war to slug big mining companies, especially foreign companies, with a new tax. It's another policy hatched in the nation's capital that bears no relationship to reality beyond its grassy knoll. This time Rudd's moral vanity collided with multiple realities: moral hazard, human nature, sovereign risk and so on.
"Miners are gamblers: it is the nature of the beast." How different things might have been if the Rudd government and the bookishly clever Canberra bureaucrats, had read just the opening line of The Big Fella: The Rise and Rise of BHP Billiton. This year's winner of the Blake Dawson prize for business literature begins with a fascinating account of the spirit of adventure and risk-taking that started on a "baking hot day in 1883 when Charles Rasp pegged his claim on the broken-backed hill near the NSW-South Australian border".
The Rudd government's 40 per cent mining tax - devised with a government promise to pick up 40 per cent of "reasonable costs" - is the trade-off no one in the mining industry seems to want. Not big mining companies. Or even small ones. Why? Because miners are still gamblers, driven by optimism, exciting finds, big returns. They don't expect government safety nets if they fail. New Rio Tinto chairman Jan du Plessis described it best. Small miners want to "hit a home run", he said last week. They don't want mop-up costs for failure. It's called human nature in the mining industry, he said.
Instead of applauding the mining spirit that has fuelled Australian prosperity, filling government coffers to finance government programs since the 1880s, Rudd knew better.
But when you start promising to subsidise costs in an industry, you can expect to see more shonky operators taking even greater risks. It's called moral hazard. Ever heard of the home insulation scheme, Prime Minister?
And do Australian taxpayers want to mop up the costs? Remember it's all sunshine and roses from the super-profits tax when the economy is booming. But when the economy slides and the government has to start paying up, imagine the uproar when mining companies put their hands out for billions, and we are talking billions of taxpayer dollars to reimburse shareholder losses. You can see why mining companies - and the banks - are dubious about the government keeping its side of the bargain against a voter backlash.
That's called sovereign risk. While Trade Minister Simon Crean is out there selling the Australian Unlimited brand in a competitive global world, the Prime Minister is destroying it.
In fact, Rudd's moral vanity over mining delivered him a double whammy: poor policy and political miscalculation. He rejected important details laid out, even by his trusted Treasury boss Ken Henry: a 25 per cent company tax rate that would coincide with the new mining tax.
And he refused the suggested lengthy consultation period for a big new tax. Again, Rudd knew better. When voters proved to be smarter than Rudd, baulking at the economic costs of the mining tax, Rudd started his $38 million advertising campaign, breaking another promise made in 2007 that he would never, ever allow the cancer of government advertising to continue.
Capriciousness will feature large in any Rudd government history. There is no political conviction that cannot be turned on its head; no policy that cannot be dumped when reality strikes. Inevitably, when Rudd is long gone and his history is being written, Rudd ministers - and the media - will lay the blame at Rudd's feet. But let the record also show there were plenty of others within Rudd's kitchen cabinet - Education Minister Julia Gillard, Wayne Swan and Finance Minister Lindsay Tanner - who share the blame. So rework this for the first page: someone close to me liked to say the difference between monkeys and men is men learn from their mistakes. The Rudd government was led by a barrel of interlinking monkeys.
