Curses And Silver Linings As Mining Tax Axed

THE ABOLITION — belatedly — of the mining tax yesterday is both a curse and a blessing; it allows Prime Minister Tony Abbott to add another item to the list of election promises delivered, but adds also to the growing list of “wins” achieved by the disruptive forces of Clive Palmer, with no justification and little merit, and at great cost. The outcome is not perfect for the government but it is better than nothing. And there is, of course, a silver lining.

In purely numerical terms — from the perspective of responsible management — it’s a case of getting something less than desired being preferable to getting 100% of nothing.

But in reality, the deal between the Abbott government and the Palmer United Party to abolish the mining tax, at the expense of fiddling around the Low Income Superannuation Contribution, the so-called “Schoolkids’ Bonus,” and the eventual increase in compulsory superannuation contributions from 9.5% to 12% is a mixed bag that will please few people and deliver much less than was intended of it.

Firstly, the good news.

Prime Minister Tony Abbott and his colleagues can be jubilant (if relieved) to have finally delivered on their key election promise to abolish the mining tax; not only was this an abysmally drafted piece of public policy idiocy, but the savage blow it delivered to investment in the minerals and energy sector (despite barely raising a penny from it) was compounded by billions of earmarked dollars in revenue that were spent but never materialised.

To remove such an abominable instrument from the statute books removes another symbol of the sheer ineptitude of the Labor government Abbott vanquished last September, and gives a much-needed boost to the government’s narrative of undoing the mismanagement of the regime it replaced.

Even so, the deal — to retain the LISC and the Schoolkids’ Bonus over the medium term, whilst deferring increases in the rate of compulsory superannuation contributions — robs the government of many of the savings it intended to book.

That deal, in turn, has been the price Abbott and his Treasurer Joe Hockey have had to pay to win over the Senate votes of the Palmer United Party: without it, the mining tax would remain in effect today for what little it was worth, with the prospect of getting rid of it at all greatly diminished.

Whilst the price of these concessions is less than the $10 billion over four years it might have been — estimates value the hit they will inflict on the budget at about $6 billion — it remains the case that even though there are $4 billion in savings to be banked over four years, another $6 billion in fresh expenditure cuts (or tax rises) must now be found.

For whilst “axing the tax” is a promise that has now been delivered upon twice — in relation to both the carbon tax and the mining tax — fixing the budget and eliminating the deficit was arguably the overriding election commitment made by the Coalition, and being able to meet it became $6 billion further away yesterday.

I can only reiterate my disgust and contempt for the antics of not just Clive Palmer — whose “populism” in the name of doing great damage to conservative governments across Australia is also set to increasingly cause damage to the country itself, if deals like yesterday’s are anything to go by — but also for the ALP and the Communist Party Greens, whose single collective policy seems to be opposing anything tabled in Parliament by the government. We’ll come back to Labor and the Greens in a couple of minutes.

In this case (and this is an old, old story), all three of the ongoing spending commitments that have been the subject of horse trading leave something to be desired, but the LISC and the Schoolkids’ Bonus should never have been legislated in the first place, let alone permitted to continue under any circumstances.

Oddly, given my aversion to spending the money at all, I disagree with the fact the Schoolkids’ bonus is being means tested: it mightn’t sit well with the “hit the rich” brigade, but if you’re going to pay out on a per student basis, it should apply to every student.

But this doesn’t change the fact that both the Schoolkids’ Bonus and the LISC were electoral bribes cooked up by Julia Gillard and the useless incompetent who masqueraded as her Treasurer to fling money at selected groups of people they thought could be enticed to vote for them.

It doesn’t change the fact that there was never any money to pay for these measures, courtesy of the laughable reality of a tax that raised no money.

And it doesn’t change the fact that now — as it was then, when these handouts were dreamed up — they are completely unaffordable.

Deferring increases to the superannuation guarantee levy does go some way to ameliorating the damage this unwarranted spending will cause, with the government set to make some savings as a result. But the reality is that the bulk of the cost of superannuation contributions are paid by business, not government, and those who complain about “reductions to retirement savings” should also consider that employees in line to suffer those reductions would otherwise be in line for flat (or non-existent) real wage growth for several years to claw the cost of them back.

In other words, where ordinary non-government sector workers are concerned, it’s a zero sum game — or one of smoke and mirrors at best when considered against the storm of outrage it is already generating from the Left.

Simply stated, there is little merit and no justification in retaining the LISC and the Schoolkids’ Bonus at all, let alone in the truncated state this deal sees them continue in.

I acknowledge that the reality of numbers in the Senate have conspired to enforce this outcome on the government, and note — after all — that getting part of what Abbott and his ministers wanted was and is preferable to getting 100% of nothing, which is where this would have ended up had the compromise struck with Palmer yesterday not been reached.

That fact in turn presents yet another argument in favour of the pressing need for Senate reform: not something I propose to engage comprehensively in at this time. But as I pointed out yesterday, the Senate in its current state is neither democratic nor representative; it no longer functions as either a “States’ House” or as a genuine “House of Review,” but as a rival political power centre to the elected government of the day.

It has, as such, ceased to serve the constitutional purpose for which it was created, and this has everything to do with the way it is elected after repeated fiddles by Labor governments to render it more hostile to conservative governments. We will come back to this question at a later time, but the problem with the Senate isn’t the Senate itself: it’s the tampering that has been perpetrated upon it, and at some point either the government (or a genuine popular movement demanding change) needs to tackle the difficult but essential challenge of significantly overhauling it, for the Senate is a potent driver of modern public hostility towards politics.

It doesn’t have to be so, and it shouldn’t be.

Still, there is a silver lining.

Sydney’s Daily Telegraph editorialises this morning that in the wake of yesterday’s vote to rescind the mining tax, the Greens have been left “fuming over their new and utter irrelevance.”

Apparently their sanctimonious, pious hypocrite of a leader, Christine Milne, is enraged by the fact that government and Palmer Senators walked into the chamber, moved their bills, and voted according to the arrangement they had struck — and that the Greens were excluded from this process altogether.

I would make the observation that if the Greens want to legitimise the clear sense of entitlement they feel to be involved in drafting (and ideologically distorting) every law enacted in Australia, then they should start finding ways to appeal to more than about 10% of the electorate: all they have ever been is a rump, and deservedly so, and until or unless that changes, a rump is all they will ever be.

And without enough Labor bums on seats to give any weight at all to their own, the Greens aren’t theoretically entitled to be involved in anything.

Still, it’s curious that Milne should profess fury at the process deployed by the government yesterday; it is, after all, exactly the approach her party took when it came to legislating the mining and carbon taxes in the first place, and Milne and her colleagues were quite open at the time in their view that anyone who disagreed with what they had done could take the proverbial running jump.

And while we’re on the point, there’s a critical difference, the merits of Schoolkids’ Bonuses and the LISC aside.

What the government engineered yesterday was at least done in the name of keeping an election pledge to abolish the mining tax — whether the Greens agreed with such an outcome or not.

In their complicity in the mining tax and their insistence on the carbon tax as the price for supporting Gillard after the 2010 election, Milne couldn’t even claim that: neither policy had a mandate, the carbon tax had arguably been ruled out by the major parties and that position endorsed by voters, and the Greens’ stated position is one of refusal to ever permit the abolition of either.

In fact, they are already in cahoots with the ALP to reintroduce either or both next time the Left is able to form a government irrespective of the wishes of the electorate at that time; good luck with that.

In any case, if it’s genuine principle or decency voters seek, they aren’t going to find it from the Greens, and Milne — with her petulant tantrum over not being consulted — has proven as much yet again.

The reinforcement of that reality can never occur too frequently, and at some point it’s to be hoped the Greens’ supporters wake up to the fact, and find someone else to vote for.

I’d call that a silver lining, on any measure.