Retirees big losers in Rudd's mine plan

PRIME Minister Kevin Rudd and Treasurer Wayne Swan have outdone Pauline Hanson with their attacks on "foreigners" since they introduced their big new tax on mining companies last Sunday.

Once the Big Australian, BHP is now just another awful foreign mining company intent on ripping super profits out of the hands of all Australians, including those who don't actually work in or invest in the high-risk mining industry. According to Rudd and Swan, filthy foreigners like BHP-Billiton, Rio and others should pay extra taxes on top of those they already forfeit because they are exploiting Australian resources. Is this just Labor Party xenophobia or will Labor next look at additional taxation for others who profit from resources - the fishing industry, perhaps, or the bottled water industry, agriculture or forestry? Mrs Hanson was accused of stooping to gutter level by opening an immigration debate, but the Rudd Government has gone even further to whip up anti-foreign anger toward the major mining companies. Like Big Brother in George Orwell's epic 1984, it wishes to create a hated public enemy that it can subsequently punish through its latest tax regime. It is a naked and craven populist ploy, typical of the unprincipled Rudd Government. Whether the hate campaign will bear fruit is yet to be seen but the announcement of the Rudd Government's mooted super profits tax rocked markets globally as investors moved capital away from stocks exposed to these neo-socialist policies. The first casualties in the Rudd Government's war on success were the nation's workers and retirees, who have lost more than $14.5 billion from their superannuation funds since news of the attack on profits first broke last month. Super funds invest nearly 30 per cent of their assets in Australian shares and while it is difficult to determine what proportion of those shares are held in mining stocks, the overall proportion of the Australian stock market made up of mining shares is about 31 per cent by market capitalisation. Assuming that Australian superannuation funds roughly mirror the overall makeup of the stock market, super funds hold about 9.5 per cent of their assets in mining stocks. The value of those holdings has been slashed by up to $6 billion in the past week. The Rudd Government claims it will raise about $9 billion a year from its big new tax - almost exactly the amount it will have to pay in interest on its burgeoning debt. So, in demonising the mining industry, and foreign investment in particular, the Rudd Government has wiped out the gains it claimed from its stated goal of increasing superannuation contributions from 9 per cent to 12 per cent, and reduced its capacity to pay off its debt. The extra slug on mining companies represents another broken promise by the Rudd Government, as, by the way, does its plan to increase super contributions. Throughout 2007 and '08, Swan and assistant treasurer Senator Nick Sherry assured voters that reports the Rudd Labor Government would increase the 9 per cent superannuation guarantee were incorrect. "Employers will not be required to contribute any more than the existing 9 per cent," they said in a joint press release issued on November 5, 2007. Senator Sherry underlined that promise in an interview with Sky News journo David Speers on March 16, 2008, saying: "Again, we've committed that we would not increase that and increase the payment burden on employers." The Henry Tax Review, which Rudd claimed would "address the adequacy of social welfare payments, including the age pension, so we get it right for older Australians who have helped build this nation" has been debauched and debased by the Labor Government. Rudd told his 2020 rearview conference that the review would build a tax system to give Australian business the platform to flourish domestically and on the global stage. It has failed that goal so magnificently that the Canadian Government is using the Rudd Government's flawed example as a reason to invest in Canada. Far from rewarding employees and providing them with incentives, the Rudd Government has skewed the Australian tax system toward the unemployed and low-skilled and has failed to take into account future economic trends. The parameters for the review were ambitious but the Rudd Government's approach has been to punish the successful, the risk-takers, and reward those who contribute least to the nation's prosperity. As one US investment adviser wrote in a newsletter circulated Monday: "Never ever, ever discount governmental stupidity." The Gartman newsletter went on: "We have always been strong supporters of almost everything that the recent administrations in Australia have done but we are shocked, dismayed and stunned by the decision on the part of the Australian Government to impose a huge 40 per cent tax on profits on the nation's mining industry! "What in the world is this Government thinking? What purpose shall this serve other than to get an increase in tax receipts this year and perhaps for another year or two, but as the same time chase a highly productive, highly important and highly labour intensive industry out of the country and send it elsewhere?" It attacked Rudd's rhetoric as the sort of nonsense to be expected from Venezuela's Hugo Chavez, Ecuador's Rafael Delgado and Bolivia's Evo Morales, but "never did we expect such nonsense from Australia". Other investment analysts made the same points, pointing out that the super-tax grab went against principles that had made the Australia's economy the world's envy. It even contradicted Small Business Minister Craig Emerson, who last week told a CEDA conference in Perth that "slowing down the development of Australia's mining and energy resource industries would be a scandalous wasted opportunity to lock in future prosperity and achieve social and environmental goals such as supporting school students in disadvantaged communities, Australians with disabilities, those with mental illnesses ... " As he said: "Easing the constraints on our mining and energy resource industries is by far the better way to go." Rudd has again shown that there are no depths to which he will not go in order to prop up his flagging support base. In a globalised world in which the Australian economy is dependant on foreign investment for jobs and revenues, he is the Ugly Australian. Oi,oi, oi.