Death of Democracy
In amongst the local news of the moment I read this headline and story from the Sydney Morning Herald
The gist of it being the mining industry ousted Mr Rudd because of his attempt to increase the share of tax they pay in Australia. Now, even mature adults are prone to exaggeration in moments of prideful gloating, so I wouldn’t know whether the claims made by the mining industry are true or not. But to the extent their claims are true they are disturbing.
It seems to me the very purpose of organized government is to protect the weak from the strong. The assumption being the strong can take care of themselves. What we have here is the strong redirecting the government by replacing a key piece of it because it does not suit them. You could be forgiven for thinking it was a script from a Sopranos episode, or if you like a little more comedy, Fat Tony from the Simpsons. Humour aside, it’s a dangerous precedent.
If mining bosses, or any big business(es) for that matter, can replace a prime minister, who is democracy for?
I acknowledge that Mr Rudd was not popular in the polls and the voting public may have ejected him at the next election anyway. But that’s a separate issue and at no time did the voting public give away it’s rights to business executives.
Aside from this death of democracy, there are at least two large problems that stem from this event. Firstly, the debt issue and secondly the equity issue.
Firstly the debt issue.
Western governments are all in a huge debt hole, owing to the untimely demise of their entire banking system. As discussed in my post ‘Story of a three legged chair’ this has created government frenzy on a scale not seen in a long time, as they struggle to find more money.
It doesn’t take a rocket scientist to work out the search for more tax was going to lead the Australian government to an industry in the middle of the largest commodities boom in decades. And if the fastest growing, booming industry in the country isn’t interested in picking up more of the tax burden created by the global financial meltdown, does this mean the poor old tax payer is in the gun? Again.
I guess they have the right to ask government why, if they were prepared to cover the debts of the banking industry, are you targeting the mining industry? It’s a slightly infantile, but tough question. Maybe government is a club to rape tax payers and miners simply miffed they turned out not to be in it.
Secondly the equity issue.
The chief executive of the Australian Petroleum Production and Exploration Association, Belinda Robinson, said any new tax must ‘not disadvantage existing projects and those currently considering major investment decisions”, and it must deliver ”competitive neutrality in tax treatment for those competing in the same market’.
The argument can be leveled, that export earning industries like mining have a special place in the economy. Particularly in countries, like Australia, who like to spend more than they earn on the world stage. It’s a vital service to the country so they shouldn’t be penalized in any way, to do so is to weaken the country as a whole.
However, there are counters to this argument. Has this industry ever received tax help in the bad times, and if so why shouldn’t it swing the other way in the good times? Who exactly in the country does it benefit to pass the tax burden back from industry to general tax payers? Are not multinational companies already the most tax advantaged legal entities in existence today?
And here’s another look at the equity of it. If governments had not thrown in 2.8 trillion dollars of tax payers money to pay off the debts of the western banking system, what would the mining industries commodities boom look like today? In the sober light of that, doesn’t the moral burden shift from the export earner to the industry savior - the humble tax payer?
In the end, whilst governments insist on spending the simply enormous amounts of money they do, it has to come from somewhere. Perhaps if they spent less tax payers hard earned dollars to begin with we wouldn’t have large business focusing it’s power in undermining democracy.
In any case, the whole sequence of events has exposed the Australian democratic process as a farce. An emperor with no clothes. Maybe it’s only at moments like these the thin veil is lifted. When we glimpse the ugly nakedness, the mean, greedy, grasping spirit that is selfish ambition.
Why vote in a system that the strong simply pervert when it turns to it’s primary purpose, to protect the weak?
Comments
Anonymous
Now here’s a novel idea…
Instead of just ‘taxing’ miners (and/or making us all involantary shareholders in new mining ventures – wasn’t that a riot?) why not slap them with a graduated ‘net value tax’?
What’s a net value tax? You won’t find it on Wikipedia beacuse I just invented it.
A net value tax works this way. Assume you (person/corporation) dig something up, harvest it or trade it – where ‘something’ or ‘it’ is a product not yet in consumer-ready form in that you can’t buy it at Kmart – and we (the Guvermint) define that there are x processing steps between ‘it’ and consumer-ready. An example would be wheat – harvest - grain in silo - transport to mill - process to flour - bake products – say x = 5 (I know this is simplistic).
If farmer Brown sells the crop ‘in the ground’ to an off-shore entity, Brown pays 5/5 of a NVT.
If miller WeGrind sells flour to an off-shore entity, WeGrind pays 1/5 of a NVT.
If baker Tip-Top sells bread to an off-shore entity, Tip-Top pays 0/5 of a NVT.
Outcome: the more ‘processing’ that happens in Australia, the more NVT credits you earn, and the less NVT you pay.So, if you mine iron ore and export steel sheet or sections you pay a shed-load less NVT than if you export iron ore. Simple, eh?
Given that Australia has a net energy surplus (counting solar, wind, nuclear, gas & coal) then the common sense of doing more value-adding to our raw products seems to be appealing.
Or is this too logical?
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