The full title of this article is “The RDT (Rudd Dud Tax) — An optimistic future and indisputable evidence that the royalty-based tax is beneficial to the mining industry and the economy”. It’s a mouthful, but easier to swallow than some of the policies put to us by the Labor government in 2010.
Penalties for success
As Deputy PM Julia Gillard said: “There is no need for Australia’s miners and Australians generally to fear the RDT (Rudd Dud Tax).” This tax penalty will only affect successful companies still remaining in Australia. We should simply look at this new threat as an opportunity and enjoy it to the full.
My late friend Harry Browne, author of How I Found Freedom in an Unfree World and many other books, told me at his home in Zurich (in 1982) that many of us live our lives in search for the best country. He said there is no such thing.
There are three specific, quite separate variants to be looked for: The best country in which to live the best country in which to work the best country in which to invest.
Harry said: “For any single country to be the best at all three is a rare event and we shouldn’t ever expect such event to last.”
We, in Australia, have simply been fortunate. Over the past few years, we actually scored 3/3. However, we shouldn’t be alarmed that we have been struck off the register as the one of the best countries in which to work or invest, simply by the media announcements of our Prime Minister Rudd.
At least we still hold the mini-crown as one of the best countries in which to live so let’s accentuate the positive, and enjoy our lives here, a relatively safe and healthy environment for ourselves and families.
We should count our blessings as many countries don’t even score 1/3. Let’s not be greedy. Let’s simply grow to worship mediocrity, as a way of imitating our political masters in Canberra.
Our lifestyle that we can now focus on will naturally leave us less time to be productive and commercial about non-priority items like working and investing.
Offshore working and investing
Even before this Rudd Dud Tax was sprung on us, the big push for the mining industry to move toward working and investing offshore had accelerated due to the difficult approvals process in most Australian States. 65 per cent of those Aussie junior companies was already being spent outside Australia, even before the Rudd Dud Tax announcements.
There are many non-economic benefits that will flow through from the Rudd Dud Tax, among them being:
- There will be an improvement in our international relationships where many of our mining executives and technical staff will be based, interacting with various communities.
- These communities will be pleasantly surprised to find that there is an alternative to the political and diplomatic category of Australians that they have previously tolerated.
- It will be an opportunity to prove, as correct, the wise words of our former Premier, Sir Charles Court:
“The miner, the industrialist, the trader, the financier and the banker, if they play their role correctly, will do more to achieve world understanding and peace in a generation than the politicians and diplomats could do in a hundred years. Why? Because they are closer to reality, closer to their opposite numbers, closer to the community in the countries where they operate. In other words, they have more to do with real people that with institutions.”
Overseas mining and resource companies will also think very highly of Australia as we have provided them with a ready-trained labour force, at a time when such people are extremely scarce. This will be appreciated by these countries as they enthusiastically step in to take the place of Australia as a provider of essential commodities to the international markets.
A strong industry
So, as you see there are many advantages that will flow internationally from the Rudd Dud Tax but in defence of Rudd’s proposed tax regime. One might say that there may be some merit in considering it if we didn’t already have a workable, understandable, state-based royalty structure, which has given us a strong and expanding mining industry.
The reality is however, that we have all this financial structure in place, on which countless thousands of investment decisions have been made.
Anyone changing them now, on a retrospective basis, simply does not have any concept of property rights or the rule of law, on which our modern civilisation is based.
So, in summary, if we leave the structure as it is at present, the whole industry will continue to work its guts out and continue to build on the current company tax/ royalty environment which is demonstrably better to the mining industry and the Australian and world economy.