25 May 2010

The return of class struggle

Unfortunately for the chances of what could have been one of the great Australian reforms of all time, the establishment of a well designed resource rent tax, it did not take long for the case for it to be couched in terms of the class struggle. The big miners aren’t paying their fair share of tax, they are big multinational corporations, they are foreign owned.

These are emotive, populist arguments and none of them supports a case for a resource rent tax. Nor does the prospect of all of the wonderful things that we could spend the money on – lowering the company tax rate, increasing the superannuation contribution or whatever. The case for a resource rent tax rests solely on the fact that the mining companies, large or small, Australian or foreign owned, are being granted access to publicly owned finite resources, the exploitation of which will in some cases yield economic rents, i.e. super-normal profits. The public is entitled to a share of those super-normal profits. It is as simple and unemotive as that.

Unfortunately, running the case on emotive, resource nationalist lines undermines the prospect of successfully achieving the reform, as does the abject failure to prepare the ground (see Resource rent tax: what happened to the nemawashi?).  I am all for resource nationalism, and have more than a few scars to prove it, but we have to be smart about it.

The government’s inept handling of a series of major and complex reforms has landed it in deep trouble with the electorate just months before an election – trouble from which only Opposition figures Tony Abbott, Joe Hockey and Julie Bishop are working effectively to save it.

Failure to get this one up and being swept away on the electoral tide may help Mr Rudd to go down in history as a great Labor hero in the tradition of Jack Lang, Ben Chifley or Gough Whitlam, but it won’t do much for the rest of us.

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