Rudd claims; Miners a risk to economy.

Cartoon: By Nicholson.

In the wake of a revolt by mining companies and a scandal involving the misuse of taxpayer funds for an improper advertising campaign, Rudd has gone into histrionic mode. Imagine the loss of reality it has to take to accuse the mining industry whose buoyancy was the catalyst for the survival of our economy through both the financial crisis and the government’s misguided reaction to it, of endangering the economy.

The Australian Financial Review today published an article, “Miners a risk to economy, says PM,” which seems to indicate that not only is Rudd losing it, but is as mad as a cut snake and has twice as many twists and turns as one.

Prime Minister Kevin Rudd has blasted the mining industry campaign against his government as a risk to the economy as he faced a parliamentary assault on his integrity yesterday for approving $38.5 million of advertising to sell his proposed resource tax.

The Prime Minister insisted on the need to spend the taxpayer funds as the federal Coalition turned the argument over tax reform into a debate on Mr. Rudd's honesty and his breach of a 2007 election vow to restrict government advertising. ….

The Australian Financial Review has also learned that the government paid $350,000 for market research and polling in the weeks before announcing the controversial 40 percent tax on resource company super profits. ….

This is totally dishonest in that the mining industry campaign is not specifically against the government but against a 40% tax imposed on any profit made by a resource company in excess of 6%, which has been picked for some odd reason for being the yield from long-term bonds. Why, has not been explained, probably because it can’t be.

Opposition Leader Tony Abbott stated, "This is a government which is looting the Treasury because this Prime Minister cannot do the job ordinarily expected of a prime minister - that is, to explain, justify and defend the policies of the government," Mr. Abbott told Parliament.

The government faced new attacks from the mining industry as well, when Rio Tinto likened the 40 percent tax on resource company profits to the surprise policy changes by Third World governments that undermined investor confidence.

"Financial assets are held by most Australians, particularly through their superannuation funds. "To the extent the impacts are based on misinformation or misunderstanding of government policy they represent an avoidable disturbance to markets and ultimately a reduction in Australian welfare. ….

So lets just try to work this one out. The government is launching a new huge tax burden on an industry, but believe that will not impact in any way on that industry. In fact some of them along with a couple of collectivist economists are even suggesting that the tax is beneficial to mining.

Treasury Secretary Ken Henry, extolled the tax, claiming that it effectively made the government ''a silent partner in each investment.” There are no prizes for guessing what political ideology that comes from. Professor Garnaut regards it as “elegant,” but he’s the guy who came up with the Ration and Tax scheme, (RATS) to combat people using energy.

The Treasurer, Wayne Swan has stated that it will lower shareholders returns, but still, they insist the drop in the market is caused by all those selfish mining companies, not their big new tax. Seriously they cannot be so economically illiterate as not to know what shareholders do to companies, which give lower returns. These guys are not only blatantly dishonest they are stupid as well or think we are.