HEAD QUOTES TO ASSIST PERSPECTIVE

When the legislative changes for the GST were back in the House of Representatives on 30 June 1999, a little known Queensland Opposition backbencher, Kevin Rudd, told the Parliament: "When the history of this Parliament, this nation and this century is written, 30 June 1999 will be recorded as a day of fundamental injustice – an injustice which is real, an injustice which is not simply conjured up by the fleeting rhetoric of politicians. It will be recorded as the day when the social compact that has governed this nation for the last 100 years was torn up. It will be recorded as the day when the nation’s taxation system moved from progressivity to regressivity. It will be recorded as the day when the Parliament of the country said to the poor of the country that they could all go and take a running jump."

From "The Costello Memoirs", 2008. Hyperbole in magnificent dimension from our former PM.

This model, not good luck, is the reason Australia has enjoyed a fifteen year expansion…. It is defined by a floating exchange rate that operates as a shock absorber, a credible medium-term inflation target that governs interest rate policy at the discretion of an independent central bank, a shift towards a more decentralised wage-fixing system, and a permanent budget surplus strategy set at about 1 to 1.5 per cent of GDP.

Paul Kelly, The Australian, May 2006.

Tax reform will fail because there is no leadership on the issue.

A sub-optimal Prime Minister carrying a litany of fiscal disasters on his curriculum vitae cannot be trusted to formulate proper tax policy nor to implement his misguided efforts in a near-enough-to-viable way. At Mr Rudd’s current level of fiscal recklessness Australia will gravitate towards the parlous state of fiscal folly currently in view in parts of Europe and the United States of America. You cannot run policy through the prism of a PM’s ego. Australia has tried that before, and failed. All countries that try it fail.

Prosperity is the tide that carries us all to fulfilment of our material and social goals and aspirations. You cannot be anti-business and pro-jobs.

Mr Rudd uses weasel words like "working families" without definition, prefaces his remarks about "long-term sustainability" and "Australia’s national interest while I am Prime Minister" whilst being engaged in short-term waste and misallocation of resources. He was elected, not ordained, yet continues to give interviews outside of his church. Presumably Jesus Christ has given prior approval. He talks in platitudes of ‘stronger, fairer and simpler’ as layers of bureaucracy and complexity are added to an already stressed tax and fiscal expenditure system. In 11 years of absolute and relative prosperity John Howard ‘did not meet the challenges of government’ according to Mr Rudd. Boy oh boy, does this guy have a self-esteem problem.

In terms of primeval salesmanship, immediately upon Mr Rudd becoming Prime Minister, the neo-conservatives were responsible for our manifest fiscal and social folly. Now it is the turn of ‘the greedy miners’ where years of toil, often speculative exploration, overcoming extraction, production and transport difficulties and having to sell into often volatile and cyclical markets. But expertise and positioning over time count for nought. Mining companies re-capitalise themselves in the good times to sustain development in the bad times. Many developments do not produce a viable return for years and years.

In looking at the rhetoric coming from Mr Rudd on the tax "reform" package, the paras immediately above and Kevin’s quoted response to the GST in 1999, it seems certain that even when the PM is putting on his trousers each day it is an historic event. The nonsense never ends!

Ecinya Insight article "Ken’s Crusade" 5/5/2010

This has been written to attempt a brief articulation of a major concern that far from saving Australia from the ‘global financial crisis’ the actions, rhetoric and policies of the current Australian government are going to totally immerse us in it, or delay our recovery from it, or both. We are just 1% of the global economy. Time is needed to see where the stimulus packages of China, America and Europe will lead the world. Current local policy prescriptions seem to be pre-emptive, excessive, and poorly targeted.

Ecinya has suggested that payroll tax relief, personal tax cuts being brought forward, and some relaxation of capital gains taxes for long-term residential property holders upon sale would provide sufficient short-term relief. We are totally opposed to the $950 per person hand-out which apparently will cost about $11 billion and we don’t understand the pre-occupation with direct infusions for commercial property as opposed to working through the banking system. We are strongly in favour of infrastructure spending, but the schools programme is blatantly political and can unfold more slowly than currently envisaged. Some of the ‘green’ programmes seem also to be politically inspired.

Ecinya private article written February 2009, re-produced under Insights 1/9/2009: "A reflection: Australia and the global financial crisis."

Quotes above: The Core Messages (note old journalistic adage – ‘90% of the message is in the head-note’)

1. The GST was a gigantic and productive taxation reform, not just a tax grab. It was both fair and balanced.
2. Certain economic reforms under Hawke and Costello underpinned a substantial amount of economic progress. These reforms were real policy.
3. From Ecinya’s response to the Rudd government’s response to the Henry tax ‘reform’ package.
4. From Ecinya’s response to the Rudd government’s response to the global financial crisis.

 

A VISIT TO OUR COLLINS DICTIONARY

The dictionary is always a source of wisdom and inspiration. Politicians are as fond of the word ‘fair’ as they are of ‘working families’ , ‘ordinary Australians’ and ‘sustainable outcomes’. ‘Fair’ is defined in our dictionary as "free from discrimination, dishonesty; apparently good or valuable". Just 14 words later ‘fairy tale’ is defined as "a highly improbable account".

In the world of tax reform, that ageless and enduring pursuit of the earnest and aspirational politician, whenever the word ‘fair’ is repeated ad nauseum as if it were irrefutable logic, one invariably realises on closer examination, that it really is a ”fairy tale’…… "a highly improbable account". Such a politician invariably needs the money to pay for his fiscal misdeeds, and propensity for recklessness, wrapped in the cloak of good intentions.

Such is clearly the case with the Resources Super Profits Tax, and prior to this episode, the GFC – the global financial crisis.

 

BUT THERE IS MUCH MORE TO THIS FAIRY TALE

A rich and generally unloved father dies after a long illness lasting nearly 12 years. After the funeral and a brief period of false mourning his 4 surviving children begin to criticise their father’s personal legacy that gave rise to his fortune, his cars, drivers, premises, status and his abundant cash. His children inherit the estate after intensive discussions with his executor and subsequently go on a spending spree with not a lot to show for it. Pretty soon they are out of money and have to mortgage assets and future cash-flows to maintain their profligate lifestyle. In their defence a few of their good mates benefited enormously from their good fortune and bountiful generosity. The children are, of course, the gaggle of four – Kevin, Wayne, Julia and Lindsay. They were, with just one exception, decent people that having not earned the fortune themselves, and having not liked their father benefactor, just got too excited at first, then careless. The executor was, of course, Ken Henry, who replaced his old and wise boss, Ted Evans, and Ken was pleased to be able to keep the children happy and fulfilled.

Ecinya is of the opinion (well documented in past Insight articles) that ‘climate change’ and ‘THE global financial crisis’ were convenient episodes for Mr Rudd to demonstrate his capacity to strut the world stage and offer solutions ostensibly beyond most of the capacities and capabilities of the other 19 countries in the G20. Note that Australia bats at about number 17 out of that 20 in absolute terms and at about 8 in per capita terms. The above table demonstrates clearly in our view the need for Australia to be modest when it seeks to be persistently loud on global issues. Hyperbole can easily be counter-productive on the global stage.