Rudd’s Resource Rent Tax.

With attribution to Ron Kitching.

Some commentators writing about Rudd’s 40% Resource Rent Tax, are saying that he is the greatest social reformer since Whitlam. The term ‘social reformer’ is used to infer changing the basis dynamic of individualism from being the basic element around which society is formed to one in which the individual is subservient and reliant on society.

Gough's social reform taught people that they did not have to pay for their education and health services. He was one of the great believers in the theory that by increasing social welfare spending at the expense of the productive sector, it would stimulate the economy. The Whitlam government was so inept, corrupt, incompetent, and out of control that he was able to make Fraser electable, in the same way Rudd has done with Abott.

It has taken the Labor Party 35 years to produce a worse Prime Minister than Gough was.

Ken Henry is a trained interventionist. State interventionism in all forms destroys the impartial co-ordinating ability of the market and turns what may have been profitable investments into malinvestments.

Xtrata has made $44 billion in Australian revenue since 2002. Of that, $27bn was paid to employees, to suppliers, the stake holders in communities and towns and to the states and commonwealth tax offices.

The remaining $17bn, and another $1bn outside the country, has been invested in Australia to develop or acquire new mines and infrastructure. That is a fair share for Australians.

There is no such thing as a windfall profit. Huge profits indicate that a producer is serving its customers well. Profits have a social function:

* Profits induce competitive producers to enter production.

* Profits generate new capital.

* New capital generates exploration activity.

* Exploration activity generates new discoveries.

* New discoveries generate production and jobs for the entire spectrum of society's workers.

The Rudd government's RRT is a capital destroying exercise and as such becomes a production and job destroying activity.

It also leaves countless millions of tonnes of otherwise profitable ore in the ground. Low grade producers are wiped out completely.