voelte sovereign risk, page-7

I doubt that the new 40% tax will come into effect. Why?

Because

1. Its suppose to be used to help fund the new mega health plan that Rudd is planning to roll out. And its now extremely unlikely that WA will sign on to that mega federal plan.

2. There's now a serious possibility that Rudd will lose the next election due to his numerous policy failures. Even Kerry O'Brien, the unofficial Labor media main man, doesn't believe in him any more. If Rudd has lost Kerry's confidence, he's lost a big chunk of Labor.

3. The chance of a constitutional challenge on the issue by affected states ie QLD, SA and of course WA. Rudd seems to forget that the resource doesn't belong to ALL Australians - it belongs to the States.

4. Rudd has really gone loose cannon - he doesn't appear to have consulted anyone else in the Labor movement over the 40% tax - one of his own ministers was even giving a speech decrying any major tax on the industry just a little while before this crazy announcement. And by all accounts, he seems to have alienated a lot of his own Party members.

I doubt there will be a leadership Hawke vs Keating style of challenge prior to this new election. Its just too close.

So Rudd will be leading his own version of the Light Brigade and will no doubt win the election but with a drastically reduced majority.

That's the likely outcome imho.