Mining sector did not save country - Henry

"The suggestion that the mining industry kept Australia out of recession is curious to say the least,'' Dr Henry said in a Senate hearing.

Dr Henry said that employment and output of the mining sector collapsed during the recent slowdown, and if all industries had shed the same proportion of workers, the unemployment rate would have reached 19 per cent.

Interest rate cuts, Government spending and early action by the likes of China and South Korea to combat the global slowdown have benefitted the Australian economy, Dr Henry said.

Read full article here

What do you think kept Australia from a technical recession? Is there merits in Dr. Henry's remarks?

If not, then should we believe his views on RSPT that it will have negligible impact on Australia's mining industry.

Cheers,
Oracle.
 
Would you expect him to say anything to the contrary...?

Apparently, the Government is making policy decisions based on his recommendations. And it's going to be the people of Australia who will face the consequences of the policy (good or bad). So yes it would be worth debating about Henry credentials and his track record since it will have an impact on each and every Australian.

Cheers,
Oracle.
 
Ross Gittins has been uncharacteristically down on Rudd lately, but his column on the scary tax was good yesterday:


http://www.smh.com.au/business/lead...governments-new-mining-tax-20100523-w41a.html


Introduce a big new tax on a group for which no one had much sympathy – the big, largely foreign-owned mining companies – then use it to pay for a raft of supposed reforms, carefully chosen for their vote-catching abilities, without adversely affecting the return to surplus.

And this lucrative tax came with the economic rationalists’ Good Policy seal of approval, co-signed by Dr Ken Henry and Professor Ross Garnaut. Economic imprimaturs don’t come from any higher authority.

One small problem: the resource tax is so pure – so carefully designed to ensure it doesn’t do all the bad things it’s being accused of – that it’s almost impossible for anyone who’s not a paid-up economist to understand.

Worse, it’s most prominent feature, the allowance rate set at the long-term bond rate, makes every ignorant, lazy Fin Review reader (and most of the business commentariat) imagine they can see the glaring flaw Henry and Garnaut missed. Yeah sure.

We must assume that, unlike all the rest, the miners themselves have studied the complex design of the tax and disabused themselves of this beginner’s error. But are they going to dispel or to exploit the business punters’ illiteracy? One guess.
 
Apparently, the Government is making policy decisions based on his recommendations. And it's going to be the people of Australia who will face the consequences of the policy (good or bad). So yes it would be worth debating about Henry credentials and his track record since it will have an impact on each and every Australian.

Cheers,
Oracle.

I'm with ya Oracle....but no amount of debating on here will stop what's happening between Henry & Gov....

My point was...he's not going to say anything other than that which backs up his work as mr tax reform man.

Peter Costello summed up Henry well... http://www.businessspectator.com.au...J?OpenDocument&src=srch&WELCOME=REGISTERED OK
 
Henry is obviously a smart guy, but I have no idea what his ideological motive is. And everyone thought Alan Greenspan was smart pre GFC.

If mining benefits the broader economy, it is via higher tax revenue. I would argue mining contributed significantly to the surplus we had going into GFC, which Henry conveniently omits. The surplus was also a result of the Coalition running down public infrastructure, via not spending to upgrade, and the ongoing sell off of fed and state public assets to foreigners.

IMHO, the two prime reasons Australia didn't collapse were:

1.
Our economy is 70% services. And unlike the recession Henry says our export industries experienced, domestic consumption was buffered by ongoing loose credit sloshing around. If consumer credit hadn't loosened drastically, house prices would have fallen significantly, consumer confidence would have suffered, and consumption cut dramatically. This was the US and UK experience.

In my view, tighter credit and loss of consumer confidence leads a fall in consumption of services. Export industries, on the other hand, are led by foreign demand.

However, loose credit wouldn't have sustained things for long. Unemployment was rising and gdp falling, helped by a cut in commercial credit. Only a quick restoration of foreign confidence stopped this trend, which was due to China's and the US's massive loosening of credit via quant easing....basically a devaluing of their currencies, a shift of bad debt from private to public interest, and a debilitating burden well into the future.

2.
credit was partially maintained by the bank guarantee; but more importantly by the bank's minimal exposure to the sub prime fiasco, strong balance sheets leading into GFC, and comparatively good credit ratings.

What helped us, and the rest of the world from going into a depression was continuing to fund the party via loose credit. Eventually, debts will have to be written off, currencies re-valued, and consumption reduced to match production. This is why I believe there's still a rocky road ahead.


Why I am suspicious of Henry is because he wants to collect more tax.
Rudd and Swan have revealed how compellingly and profoundly inefficient govt is at allocating capital. I see no reason to give them more.

If Henry has a problem with mining profits going offshore, he should apply his brain to seeing more Aussie dollars invested in mining, and less in housing. That could include reformation of our super industry and a review of why housing investment has performed more strongly than mining.
 
Apparently one dollar in 3 was going to the Australian public, now - post resources boom - its one dollar in 7.

Seeing all Australians own our resources and they can only be sold once. Doesn't the tax seem fair? Or at least reasonable?

You cant have your cake and eat it guys.
 
Apparently one dollar in 3 was going to the Australian public, now - post resources boom - its one dollar in 7.

Seeing all Australians own our resources and they can only be sold once. Doesn't the tax seem fair? Or at least reasonable?

You cant have your cake and eat it guys.

Depends on what side of the fence you are on,ask any Stakeholders in any of the various ASX top 50 miners and short term they would be worried ,longterm who knows ,but the way i see it MrRudd needs this tax to balance his Governments Books,willair..
 
Apparently one dollar in 3 was going to the Australian public, now - post resources boom - its one dollar in 7.

Seeing all Australians own our resources and they can only be sold once. Doesn't the tax seem fair? Or at least reasonable?

You cant have your cake and eat it guys.

I think most here agree that Australians needs to be compensated extra due to the non-renewable nature of minerals. But whacking 57% tax just on the name of being compensated is a bit rich especially when neither the public or the Government forked out any cash to get those minerals out.

For all the risk the miners have taken do you believe they only deserve 43% reward?

Cheers,
Oracle.
 
Well, yes, sort of. Its still $ billions in profit for them. Look at it like a JV. Between the miners and Australia, and all the people in it.

Like a JV between a builder/developer and a land owner. I think about half is fair. But i'm an un-reconstructed leftie. Albeit a capitalist one. ;)

For all the risk the miners have taken do you believe they only deserve 43% reward?

Cheers,
Oracle.
 
Seeing all Australians own our resources and they can only be sold once. Doesn't the tax seem fair? Or at least reasonable?

You cant have your cake and eat it guys.

the land that your house is built on can only be occupied once. it belongs to all australians. i want part of it, pay up.

the tax employs playground logic
 
Well, yes, sort of. Its still $ billions in profit for them. Look at it like a JV. Between the miners and Australia, and all the people in it.

Like a JV between a builder/developer and a land owner. I think about half is fair. But i'm a non reconstructed leftie. Albeit a capitalist one. ;)


It all depends if, as the miners say, mining suffers and moves overseas. If that happens the whole thing backfires. It's too big a risk I reckon, as we don't really know how much mining activity will move overseas, and if it does, it will take some time to detect how much.

We already run big current account deficites, and this is during a mining boom. If a lot of the mines move overseas the deficite will just get worse. Mining and agriculture combined are just 10% of GDP. Combined they employ just 4% of the workforce. Combined they provide 57% of our exports.

It's also shifting money from a productive part of the economy to the services sector. Mining to financials and super. Services are already 70% of the economy and employ 75% of the workforce. How far can we go with services before it is too much? The Poms reached that level. There is only so much percentage of the economy that can be services.



Personally, while I've lost from my mining shares, I'm benefiting business wise from this tax. It's obvious that Australia's dollar is crashing hard due to this tax and Australia's new risk. I've just started selling sorghum for $170 on farm, and that's from a low of $150. The lower dollar is good for agriculture anyway.


See ya's.
 
Well, yes, sort of. Its still $ billions in profit for them. Look at it like a JV. Between the miners and Australia, and all the people in it.

Like a JV between a builder/developer and a land owner. I think about half is fair. But i'm an un-reconstructed leftie. Albeit a capitalist one. ;)

I can accept this logic if the taxpayers are willing to stump up for losses from failed projects. You can't be a JV partner only when a profit is made. Rudd is a fair weather JV partner - your smiling friend when you are makign profits, no where to be found when the only thing spurting out of the ground is mud.

Still unfair for old projects tho
 
Rudd isnt the JV partner. We all are. Australia is.

And we all subidise loss making projects, in the same way we all subsidise negative gearing. Even non investors.



I can accept this logic if the taxpayers are willing to stump up for losses from failed projects. You can't be a JV partner only when a profit is made. Rudd is a fair weather JV partner - your smiling friend when you are makign profits, no where to be found when the only thing spurting out of the ground is mud.

Still unfair for old projects tho
 
Still unfair for old projects tho
Does anyone know what happens to all the old projects that made a loss & have since died ? Are they eligible for 40% tax rebate ? Or is the tax retrospective for profitable projects, but not the rebate for the long dead losers ?
 
gday TC, i think the miners will still be here while they are still making billions and there's still stuff in the ground.

Same as the oil/petro guys.

Actually i think the Ruddster should nationalise the whole box and dice......mining, fuel, property investing......anything he likes.

And why not become a dictator while hes at it. Now we're talking!

We've all had enough of you namby pamby, complaining bloody cockies and liberals. :D What we need in this country is a good old leftist revolution!


It all depends if, as the miners say, mining suffers and moves overseas. If that happens the whole thing backfires. It's too big a risk I reckon, as we don't really know how much mining activity will move overseas, and if it does, it will take some time to detect how much.

We already run big current account deficites, and this is during a mining boom. If a lot of the mines move overseas the deficite will just get worse. Mining and agriculture combined are just 10% of GDP. Combined they employ just 4% of the workforce. Combined they provide 57% of our exports.

It's also shifting money from a productive part of the economy to the services sector. Mining to financials and super. Services are already 70% of the economy and employ 75% of the workforce. How far can we go with services before it is too much? The Poms reached that level. There is only so much percentage of the economy that can be services.



Personally, while I've lost from my mining shares, I'm benefiting business wise from this tax. It's obvious that Australia's dollar is crashing hard due to this tax and Australia's new risk. I've just started selling sorghum for $170 on farm, and that's from a low of $150. The lower dollar is good for agriculture anyway.


See ya's.
 
I don't think it works like that. Like all this type of stuff, you have to look at the overall result, and on that basis, they are so far ahead $$$$.....daylight second.

Like the tax system relating to business. Businesses cant claim for loss making projects/jobs/whatever one off - on an individual basis - they look at the their overall position at the year end. And miners are a business.

Not a bad try tho ;)

Does anyone know what happens to all the old projects that made a loss & have since died ? Are they eligible for 40% tax rebate ? Or is the tax retrospective for profitable projects, but not the rebate for the long dead losers ?
 
Actually i think the Ruddster should nationalise the whole box and dice......mining, fuel, property investing......anything he likes.

And why not become a dictator while hes at it. Now we're talking!

We've all had enough of you namby pamby, complaining bloody cockies and liberals. :D What we need in this country is a good old leftist revolution!


Communism has been tried. It was a great social experiment that sounded good. Everyone living a prosperous life with no poverty, all working for the common good.

It failed mate. Didn't work.



Anyway. I'm sure your joking.

See ya's.
 
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