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Why Oh Why Kevin?

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The Muffin Man View Drop Down
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    Posted: 09 Apr 2010 at 7:49pm

Kevin Rudd raids future funds

THE federal government's nation-building health and education funds are being swiftly depleted, with only 40 per cent of the initial $11.5 billion in endowments retained after their first year of operation.

Calculations by The Australian show that the Rudd government's Health and Hospitals Fund and Education Investment Fund will carry $4.53bn after meeting grant commitments already announced.

The funds, whose assets are managed by the Future Fund board of guardians, commenced operations on January 1 last year.

The EIF began with a transfer of $6.484bn from the now-defunct Higher Education Endowment Fund, a vehicle created by then treasurer Peter Costello as the centrepiece of his 2007 budget. "The capital will not be spent," Mr Costello said in his final budget speech. "It will be invested. And, what is more, we will add further capital from future budget outcomes to this perpetual fund."


Last night, Mr Costello, who was appointed to the Future Fund board in December by the Rudd government, said Labor's approach was deeply flawed.

"The HEEF was set up to be a fund in perpetuity to develop world-class Australian universities and the Labor Party has now raided the capital in a short-sighted attempt to spend money today at the expense of tomorrow," he told The Australian.

In Labor's first budget in 2008, Wayne Swan announced three nation-building funds for long-term and strategic investments in health, education and the Building Australian Fund for major economic infrastructure.

But Labor decided to spend both the capital and earnings from the two funds on its fiscal stimulus and recurrent spending, while also broadening the scope of the education grants to include teaching expenses and vocational training.

By the end of December, the balance of the EIF was $5.998bn. According to the Finance Department, the fund has been debited $735 million "to be spent on infrastructure projects".

Education Minister Julia Gillard decides what research and education construction projects are ultimately approved for EIF funding.

Given she has announced $4.153bn in spending from the fund, through the economic stimulus packages and in last year's budget, the balance of the EIF will soon fall to $2.58bn, or a 60 per cent drop in the value of the initial endowment.

It is a similar story with the HHF, which received two lump sum transfers of $1bn and $4bn from the 2007-08 budget surplus in February and June last year. By the end of December, the balance of the HHF was $4.902bn.

The HHF had been debited $221m by the end of last year. Health Minister Nicola Roxon determines HHF projects, whose total value so far has hit $3.172bn and includes a new $67m cancer centre at Rockhampton Hospital in Queensland announced yesterday by the Prime Minister.

Once the remainder of allocated HHF funds is disbursed, the fund's balance will fall to $1.951bn. Again, the drawdown will represent a 61 per cent erosion of the health fund's capital.

With quarterly returns from the nation-building funds running at 1.1 per cent, interest accrued may slightly alter the rate of capital erosion, as will the speed of transfers to meet grant obligations.

The budget surpluses that formed the start-up capital for the health and education funds came from Mr Costello's final budget. The former treasurer had earmarked $10bn for the HEEF but the Coalition lost office and the funds were diverted. In office, Labor has not generated a budget surplus.

The Australian revealed this week how the Rudd government has allocated up to 84 per cent of EIF and HHF grants to Labor-held seats or those most likely to tumble to the government at the next election.

Deputy Opposition Leader Julie Bishop, the co-author of the HEEF, said Labor had "destroyed the capital base as well as the guiding principle" of the Coalition's "groundbreaking" education fund.

"Julia Gillard has turned (the EIF) into a short-term slush fund for political gain," she said. "Our goal was to have a fund in perpetuity so that we could get at least one of our universities into the world's top 10."

A spokesman for Ms Gillard said: "The Rudd government took the decision that, after more than a decade of neglect of universities by the Howard government, that in the midst of a global recession it would invest in our higher education to help keep Australians in work.

"Every credible economist has said this approach was the right one. The record capital funding in our universities and TAFE sector includes not only the EIF, but also a $1bn investment from the budget to ensure we gain the massive benefits both economically and socially that come from a more educated Australia."


http://www.theaustralian.com.au/politics/kevin-rudd-raids-future-funds/story-e6frgczf-1225851598579

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These funds were set up to operate in perpetuity, with their earnings being used to fund health and education spending. Instead Labor has raided these funds dramatically, spending up to 61% of the capital base of the funds, with an amazing 84% being spent on marginal seats.

Costello set these funds up to operate just like charitable trusts, where income is derived from the underlying capital base and then spent in the appropriate areas, but when you erode 60% of that base, you hamper the future income streams dramatically. Simply more short sighted over spending from this Government that was probably allocated to $1m shade sails and $1m one room school halls.

Kevin Rudd is definitely all about the "now." Raiding future funds to spend on marginal seats, and making policy that won't be implemented until years after he has left office, such as the gradual raising of the pension age starting in 2017 or whenever it is. He is making decisions about things he will not have to face the consequences of.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Skipper Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 5:48am
Seems the "greatest moral challenge of our time', namely climate change and the ETS, isn't such a challenge after all and has been shunted away until late 2012..LOL
 
Come on all you party pooping Labor voters - come out and play, your collective silence is absolutely deafening..Now tell me -
 
1..Why is climate change such a non issue with Kev now? (and don't blame that nasty Opposition)..What happened to the big referendum?
 
2..When can we expect this straw-man to actually follow through on a personal and party held principle?
 
3..Is this the most ineffectual Prime Minister in Australian political history? or just merely since WW11..
 
Oh, that's right, it's all about health..The great reformer fiddles around the periphery of health administration, bribes the state with a gob smacking largesse, and hangs his hat on that as success..
 
Please people, this is getting to be a rather one sided debate..
 
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote scamanda Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 5:48am
http://www.theaustralian.com.au/news/opinion/pm-delays-emissions-trading-scheme-as-inconvenient-political-truth/story-e6frg75f-1225858920473


Isn't this the same scheme Rudd said had to be done?
Didn't he say it would be incompetent not do go ahead with it?

Yeah I think Kev thought he was going to just walk in and play it by ear.
Wayne Swan  couldn't manage a household budget either, so we went from Howard and Costello to Abbott and Costello.

I started with nothing and still have most of it left
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Skipper Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 6:12am
Must admit I missed the 4 Corners (that's the ABC no less Wink) expose on the insulation shambles that aired last night..
 
If anyone saw it I'm just curious if it's worth as look at some point in the future..
 
Cheers
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Post Options Post Options   Thanks (0) Thanks(0)   Quote scamanda Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 6:44am
Skipper if he's hanging his hat on the health issue as a victory, why was he against it when Hpward suggested it.

The one thing he does and it isn't even his own idea.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Skipper Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 7:06am
Originally posted by scamanda scamanda wrote:

why was he against it when Hpward suggested it.
 
Valid question Scamanda..
 
My understanding is that during a shadow cabinet meeting to discuss it they straw-polled the tea lady..Apon realising she had some reservations they immediately shat themselves and dismissed the proposal out of hand..
 
The said tea lady has since moved on so they're feeling much more emboldened.. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote mc41 Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 8:16pm
Geee  people certainly have short memories ie  honest Johns reply when a promise was broken was it a  core or non core promise"  and from my recollection a promise not kept was non core and a promise that was kept was a core promise.
However honest John would never say at the time of a promise if it was core or non core.



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Post Options Post Options   Thanks (0) Thanks(0)   Quote Skipper Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 8:37pm
Well I've got a core question mc41..
 
Are you satisfied with the current governments performance?
 
(and really, at this stage it's got nothing to do with John Howard)..
 
Well done on having a go anyway..I was starting to think the lack of debate (and support) was just tacit condemnation from your side of the house.. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote questions Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 8:47pm
i am with skipper. thank you mc41 for commentating on the subject and putting up something. we had lots of labor supporters here when they where elected but that seems to be practically zero now. i just really want to know why labor supporters want to support this government. is it simply a "my grandfather always told me to vote labor" approach or do they actually believe this is a better government than what the liberals had produced in the past.
 
have they done anything of note. i just want to know
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Kong Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 10:16pm
Originally posted by questions questions wrote:

i am with skipper. thank you mc41 for commentating on the subject and putting up something. we had lots of labor supporters here when they where elected but that seems to be practically zero now. i just really want to know why labor supporters want to support this government. is it simply a "my grandfather always told me to vote labor" approach or do they actually believe this is a better government than what the liberals had produced in the past.
 
have they done anything of note. i just want to know


its like any issue. the minority always make more noise. Wink.



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Post Options Post Options   Thanks (0) Thanks(0)   Quote questions Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 10:21pm

i was excited when i saw you had commented kong.

 
and then you perfectly summed up the labor party. you have nothing to say. nothing on offer just like the labor party.
 
and yes i am trying to bait you into an argument
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Whale Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 10:30pm
Originally posted by questions questions wrote:

you dont honestly believe that they dont realise this. that the buying power of money changes over time. you have some of the most intelligent economic minds managing these funds and you think they dont know economics 101, seriously
Are these the same intelligent minds that presided over the financial crisis and mismanagement by banks.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote The Muffin Man Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 10:40pm
Originally posted by Whale Whale wrote:

Originally posted by questions questions wrote:

you dont honestly believe that they dont realise this. that the buying power of money changes over time. you have some of the most intelligent economic minds managing these funds and you think they dont know economics 101, seriously
Are these the same intelligent minds that presided over the financial crisis and mismanagement by banks.


No they are not. What Australian Banks have been mismanaged? Australian Banks are some of the most well managed and regulated in the World.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote questions Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 10:42pm
Originally posted by Whale Whale wrote:

Originally posted by questions questions wrote:

you dont honestly believe that they dont realise this. that the buying power of money changes over time. you have some of the most intelligent economic minds managing these funds and you think they dont know economics 101, seriously
Are these the same intelligent minds that presided over the financial crisis and mismanagement by banks.
what do you mean. we have the best banks in the world and the financial crisis was completely a result of falling property prices in the usa so no they are not at fault.
these are the people that help create such a beneficial forward thinking fund and have been apart of a banking system that was in good stead to handle a gfc. so yes these are the same intelligent minds but no they had nothnig to do with the gfc or mismanagement of banks. you would have to go overseas for that
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Kong Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 11:07pm
hmmm... I baited you and you then baited me..

I have concluded debates or arguments on politics is useless cause neither participant has an open mind (yeh mine included) which can be changed by the others arguments.

so the discussion is pointless unless its purpose is to vent and make you feel better. mind you nothing wrong with that.


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Post Options Post Options   Thanks (0) Thanks(0)   Quote questions Quote  Post ReplyReply Direct Link To This Post Posted: 28 Apr 2010 at 11:16pm
i did not think it would get this way but i am at the venting stage.
 
i want someone to argue with me as i am curious to see how anyone can vote for labor. i do believe they will win the election and worse than that the votes they lose will prob go to the greens as they picked up on plenty of green votes last election running the ets joke.
 
i just wish someone could justify it.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Whale Quote  Post ReplyReply Direct Link To This Post Posted: 29 Apr 2010 at 12:51am
yes the crisis originated overseas but what I am saying is don't be seduced by intelligent minds,there were plenty overseas and look what they did.Intelligent minds are capable of corruption,stupidity,incompetence and pride so I don't automatically accept everything they do.
As for voting Labor well maybe not everyone is a young go getter with a good job and excellent prospects so maybe they need some help by the government.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote questions Quote  Post ReplyReply Direct Link To This Post Posted: 29 Apr 2010 at 1:34am
i would never dare to say that we should openly trust those people that head these organsiations. my point was on the benefit of having future fund set ups and the quality of the people running the show.
"it's not gambling if you're absolutely sure you're gonna win" Barney Stinson
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Kong Quote  Post ReplyReply Direct Link To This Post Posted: 29 Apr 2010 at 1:44am
q, perhaps the other reason people will vote labour is because they believe Abbott and co are a realistic alternative.

apparently today he wants to fight the election on climate change. labour will have that much amo for their election advertising campaign. his radar isnt working that well.




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Post Options Post Options   Thanks (0) Thanks(0)   Quote womble Quote  Post ReplyReply Direct Link To This Post Posted: 29 Apr 2010 at 7:02am
Pretty ordinary effort by Rudd with all the back flips / delays / stuff ups  - it's frustrating and annoying but life goes on.  They are obviously clearing the decks for an election - we get Henry this weekend, the budget 9 days later - my guess is there won't be big tax cuts but there will be plenty of changes including cutting back Howard's middle class welfare and some sweetners for the main stream.

Either way, they kept us out of recession and that in itself will get them re-elected, well that and the fact Abbott is too far right for even some Liberal supporters to vote for.  I hope Rudd is happy with a term and a 1/2 as PM though, the sooner Julia takes over the better.

Note - the biggest shame is that the Greens don't have a Nick Mckim instead of a Bob Brown leading them federally - they would do MUCH better.


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Post Options Post Options   Thanks (0) Thanks(0)   Quote Dichez Quote  Post ReplyReply Direct Link To This Post Posted: 29 Apr 2010 at 7:54am
We only look like we are out of a recession....... the only money being spent is by the government..... well you all know where that comes from.... any body who thinks Rudd the Dudd is  ok is a d ick head...........or barracks for collingwood
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Post Options Post Options   Thanks (0) Thanks(0)   Quote mc41 Quote  Post ReplyReply Direct Link To This Post Posted: 29 Apr 2010 at 10:25am
Why do Qld continue electing Labor ?
why will we Federally re elect Labor ?

Because there is no alternative

What I want to see Labor fix, if its the only thing they do is fix the health system
Next term no matter who it is I want Justice system fixed,Education

Then I be happy

Because at the end of the day not much difference between the 2 parties.
Labor is full of chardoney socialists and libs are full anti unionists from the secret society home based in Tasmania run for John stone & Hugh Morgan.

So really other than Industrial relations a vote is like pis sing in the wind.




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Post Options Post Options   Thanks (0) Thanks(0)   Quote The Muffin Man Quote  Post ReplyReply Direct Link To This Post Posted: 06 May 2010 at 7:25pm
If you want to see any further example of this Government's incompetency, just take a look at the Henry debacle and the "sweeping reforms" the Government has decided to implement. Even David Koch had a swipe at Rudd, and he usually sits fairly and squarely on the fence. Rudd & Co seriously have no idea.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote scamanda Quote  Post ReplyReply Direct Link To This Post Posted: 06 May 2010 at 8:39pm
I think Kevin's last money grab from mining is a trade off so he still gets 100% support from unions in the next election.

With Capt. Blight losing face with unions in Queensland , Kev is consolidating his shakey foundations. He won the last election off the back of the Queensland vote, and he needs to show his solidarity to unions here again.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote The Muffin Man Quote  Post ReplyReply Direct Link To This Post Posted: 06 May 2010 at 9:32pm
How much are the Unions going to appreciate miners possibly transferring their investment capital to overseas projects? This is such a short sighted smash and grab policy.

http://www.theaustralian.com.au/business/mining-energy/rio-tinto-shelves-billions-in-projects/story-e6frg9df-1225862783233

MINING giant Rio Tinto has shelved plans to spend $11 billion expanding its massive iron ore operations in Western Australia because of the wave of uncertainty sparked by the Rudd government's proposed tax on super profits.

As Kevin Rudd faced down industry executives in Perth for a second day yesterday, it also emerged that fellow miner BHP Billiton was reassessing the viability of its iron ore and coal projects in NSW, Queensland and Western Australia.

And Origin Energy said yesterday the proposed 40 per cent "resource super-profit tax" would push up "retail energy prices" by making gas and coal to drive power plants more expensive. Origin said "wholesale energy prices are also likely to increase with any increase in resources tax".

-------------------------------------------------------------------------------------------------------------------

Brazil, Canada, and developing African countries would be extremely happy with the river of money that will flow into their economies if this proposed tax becomes reailty.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote scamanda Quote  Post ReplyReply Direct Link To This Post Posted: 06 May 2010 at 9:55pm
I know a few people employed on the mines in Qld.
None are in unions.

It has to make me wonder. Would they have the same reforms if all the mines employees were in unions?

It seems every time the news is on lately it has a story of someone losing huge amounts from mining investments because of the proposed reforms. This has to hurt the economy.
Which has to hurt employment.

If no economist ( either is Rudd or Swan ), but is it smart to bite the hand that feeds the country?


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Post Options Post Options   Thanks (0) Thanks(0)   Quote Skipper Quote  Post ReplyReply Direct Link To This Post Posted: 06 May 2010 at 9:55pm
Just astounding that basket case African nations such as Sierra Leone are now seen as having less sovereign and regulatory risk than Australia, just astounding..
 
Countries that have similar economic strength in this sector, and are competing for the same foreign investment dollar, are just laughing at us..And if it wasn't so serious I'd be laughing myself..
 
And for what? A few extra sheckels in our super' funds (the same ones that have been devastated in the last couple of days as a result of this extraordinary tax), dropping company tax by 2% (far less than Henry recommended), and of course more spending..Spending, spending ,spending..Not a single razoo is to be dedicated to paying back our spiralling debt..Not a cent!
 
No reason to ramp up the hyperbole about this government, even the 'rusted ons' are now shuddering..
 
Absolute disgrace..
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Run For Fun Quote  Post ReplyReply Direct Link To This Post Posted: 06 May 2010 at 10:09pm

Thursday, May 06, 2010

So this idea of a super tax on mining profits... who raised it with the Henry Review?

#fullpost {display:none;}


You wouldn't think it


What the mining industry now says is "an unprecedented double-tax" that will hit workers, share-owners and small businesses, it once championed - in its submission the Henry Review.

The submission from the Minerals Council of Australia, dated November 2008, explicitly argued for a shift away from the existing complex system of more than 40 different state-based royalty charges to a national "profits-based" tax.

Quoting its own submission to a Ministerial Council on Mining as long ago as 2005 it said the new regime should be seen as "a return to a joint venture where the State brings the resources to the joint venture and the minerals company the expertise to convert it to a salable product".

It argued for a "sharing of the profits that arise from a saleable product," saying the government should "try to extract a share of the joint venture rents"...

By contrast at present no state had the same rate for the 42 minerals mined, with "the method of levying royalties for the same mineral differing across states, rates differing for the same mineral across states and in some cases rates differing for different mines extracting the same mineral in the same state."

It suggested the government use the proceeds of tax reform to cut the 30 per cent headline company tax rate and assist with the tax treatment of capital expenditures, also measures ticked off by the Henry Review and adopted by the government.

So sensible did the government find the Mineral's Council's suggestions that at a conference in 2009 the head of the Treasury's revenue group David Parker thanked it for "quite properly" pointing out that the best way to look at resource tax was as a "partnership or joint venture between private capital and community owned resources".

He showed the conference a graph showing that if 40 per cent excess profits tax had been in place instead of state royalties during the past decade the industry would have paid less between 2001 and 2004 and more between 2005 and 2008.

He even referred to it as a tax on "super profits."

So what went wrong? Why is the Minerals Council now opposing a change it sought?

One view is that the market changed. It became apparent that there would be many more good years than bad years in the decade ahead, making the switch to a an excess profits tax less than it seemed in 2008.

Another is that what the government now proposes is different to what the Minerals Council thought it would propose. The rate is the same, but it will apply to existing projects rather than "prospectively" to new ones only as the Council wanted.

Its submission spoke of the danger of "sovereign risk" if that happened, a contention David Parker derided at its conference observing that governments often made decisions that changed the tax treatment of existing businesses.

"I cannot recall anybody arguing that then existing investments should not have been able to access the reductions in the company tax rate in the early 2000s," he said.

Or it might be that what the Minerals Council and the government are really arguing about now is price, specifically the hurdle rate at which the super tax will apply. Like unions and employer groups fighting over wages they are talking as if the sky might fall in while calmly getting the best deal on the details.
Peter Martin - The Age 5 May 2010
It's hard to soar with eagles...

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Post Options Post Options   Thanks (0) Thanks(0)   Quote The Muffin Man Quote  Post ReplyReply Direct Link To This Post Posted: 06 May 2010 at 10:27pm
So what you're saying RFF is that the Minerals Council supported an effective tax rate of 57% being levied on miners instead of 43%? Is that the point you are trying to get across? The Minerals Council supported making the mining industry less internationally competitive? Because this is the situation we find ourselves in now. Or did the Minerals Council of Australia propose a "profits-based" tax as one cog of a wider sweeping reform within the industry?

You can't cherry pick one recommendation from a submission, not implement the rest of the submission, then claim the whole idea came from the group that brought forward the submission in the first place. That's outright ludicrous, and very deceitful, and even you could see that.

Can I ask, why would the Minerals Council of Australia lobby for a change to taxation that would see their constituents effectively subjected to a 57% tax rate instead of a 43% tax rate?

Canada, Brazil, and Africa (Guinea, Cameroon, etc) are all looking like much more enticing investments at the moment. Couple this tax increase with hugely complicated IR policy, and a CPRS hanging over miners heads, and you have to wonder whether the flow of investment funds will start to evaporate in Australia.








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Post Options Post Options   Thanks (0) Thanks(0)   Quote Skipper Quote  Post ReplyReply Direct Link To This Post Posted: 06 May 2010 at 10:44pm
I can understand the MC trying to rationalise the taxing regime Runfer, and I'm sure you'd agree that it makes sense..However, I can't see anywhere in the article that stipulated a 'super profit' would be deemed anything above the current government bond rate (currently 5-6%)..Are we expecting the big employers to take on the costs and very substantial risks of developing projects with the expectation of paying 57% tax on any profits over 5%?
 
You and I both know that Rudd will buckle on this..He'll give plenty of ground, then spin the final result as a great reform..He's a coward...My only concern now is that the damage has already been done as far as the perception of Oz being seen as a safe place to invest..
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