Other Politics

In my opinion, the existing Labor Government in Australia has an addiction to spending and an inability to manage the budget. They are inventing as many taxes as they can, as fast as they can, under the guise of schemes that are supposedly good for Australia. So many of their policies have failed dismally, usually with the squandering of huge sums of money and often with the deaths of innocent people.

Compared to John Howard’s Liberal Party

This government stands for nothing. They have no high level philosophies. They make it up as they go. You may or may not agree with the Howard government’s ideas, but that is besides the point I am making now. At least he stood for something. He would remain firm on his principles. He had some general philosophies that he would apply consistently when deciding government policy. You could guess what his strategy would be on any given issue, his philosophy was so crystal clear. He knew how to run a business and how to manage budgets. This is in contrast to the existing government.

Mining Super Tax

This is third world politics. Get our fair share? For doing no extra work? Changing the rules on successful businesses to milk them for all they’re worth is poor government. In third world countries, corrupt governments will change the rules on successful businesses so that the government can become rich. It works in the short term, but what happens long term? Investment disappears. Companies are scared away. The country remains third world.

Once a business signs up for an investment under a given set of rules, you don’t change the rules. This is common sense. Changing the rules on successful business is terrible politics. What sort of philosophy would support such an idea? Penalize the successful so we can get more money in the short term? Scare away future investment? Businesses need the opportunity to make massive profits. That is why they exist. Otherwise why would they take the risk? Why would they make huge investments? If businesses see that in Australia the rules will be changed on them if they make massive profits, they won’t invest here. What we need is a stable government that encourages success, so that we have a steady flow of investment in good times and bad times. Massive profits won’t always come, but the opportunity needs to always be there without government impeding that opportunity.

We are already seeing diminished mining investment in Australia. It’s becoming too expensive. From an already high cost base, the government is adding to it.

What about the argument that we should tax businesses that tap into finite resources? What resource is not finite? Every resource is finite, and every business consumes finite resources. Whether you dig the ore out of the ground, or buy the steel that they make with it, or you buy the car that’s made with the steel, or you’re the bank that funds it. Every resource in that chain is finite. Why should one business in this chain be targeted? It’s arbitrary.

Energy is the ultimate finite resource. You may say growing trees in a plantation is not a finite resource. Actually the finite resource is energy. The business of growing trees consumes energy, no different to the business of mining consumes energy. Any resource can be produced from energy. If we run out of ore we can dig the hole deeper, at the expense of greater energy costs. This process can continue indefinitely, as long as we have energy. Similarly we can’t run a business of planting trees without energy. The only finite resource is energy, and it is consumed by every activity.

If we are concerned with protecting our finite resources, we wouldn’t drive to work in a 4WD. We wouldn’t turn on our air-conditioning so often. We wouldn’t build an 8 bedroom home to show off our wealth. We wouldn’t have 6 plasma TVs in our house. It’s people who are consuming finite resources. Businesses are just providing a service, and one business in that supply chain being targeted over others does not abide by any consistent philosophy, especially when it means changing the rules on successful businesses.

Carbon Tax

This is just another tax invented by the government to cover their spending addiction. Manufacturing is decimated in this country due to high costs. Tourism is on terminal decline for the same reasons. We are a one trick pony – mining. The government is creating a system where we rely completely on mining. Diversification is not worth it. Other industries are not competitive. It’s not profitable enough. Nearly every week we see on the news another factory closing down. When mining eventually declines how will our economy fare?

From an already high cost base, the government is adding to it with more taxes. I worry about our economy’s competitiveness in an international market, especially when mining eventually declines. The rate of mining decline will be increased by the mining super tax, as mining is no longer as profitable.

In an international market, the government won’t reduce carbon by introducing taxes. People want to drive to work in 4WDs and have 6 plasma TVs, so they will just buy their materials elsewhere. There is no net reduction in carbon, just a shift in supply from Australia to overseas. Australia becomes uncompetitive due to high taxes. Supply shifts to overseas markets to satisfy the demand. Carbon emissions stay the same and Australia’s economy suffers.

Carbon reduction comes from a change in culture in the people. People are the ones consuming carbon. A business will spring up somewhere in the world to satisfy that consumption. If Europe has a carbon tax as well then China will satisfy the demand. The government needs to educate consumers that we are depleting energy at an unsustainable rate, and that we are contributing to global warming which could devastate world economies and the environment. The government needs to provide incentives to instigate a shift in culture. A system where companies adopt energy efficient solutions for economic reasons rather than being unwillingly forced to pay taxes that add to their already high cost base.

Other Tax Hikes

Before the labor government, individuals could work overseas tax free under certain conditions. This served as an incentive for skilled Australian labour to execute overseas projects. Why would you go overseas and take that sacrifice on your family life, when you can earn the same in Australia? The labor government removed this incentive. The end result is fewer Australians working on overseas projects. A net reduction in employment, and a net reduction in money coming into our country. Basically, Australia has lost that market of work. Someone from another country will perform that role instead. This is one example of the short sighted nature of labor’s tax hikes. Here are a few more taxes that have been introduced or increased by labor:

  • Alcopops tax
  • Cutting tax free super contributions
  • Restrictions on business losses
  • Changes to Employee Share Scheme
  • Cigarette tax increase
  • Ethanol tax increase
  • LPG excise increase
  • Tightening restrictions on medical expenses before you can claim them on tax
  • Increase in luxury car tax
  • Flood tax
  • Tax increase on company cars
  • Abolition of Entrepreneurs’ Tax Offset
  • Phasing out of Dependent Spouse Tax Offset
  • Disallowance of deductions against government assistance payments
  • Removing minors’ eligibility for the low income tax offset on unearned income
  • Deferral of Tax Breaks for Green Buildings
  • Increase tax on cheap wine (proposed)

Disclaimer: Do not participate in tax avoission. It is illegal.

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