Recently the ABS released its annual employment statistics on Indigenous employment for 2009 and they didn’t make pretty reading.

 

Sadly unemployment for Australian Aborigines and Torres Strait Islanders rose steeply between 2008 and 2009 from 14 per cent to 18 per cent. That’s about 35,400 jobless Indigenous people aged 15 years and over.

 

The rate was highest in regional areas at 20 per cent, followed by major cities at 19 per cent and 10 per cent in remote areas. Male unemployment jumped by five percentage points and female by three.

 

The GFC explains some of the rise in the jobless rates: just as unemployment had risen sharply in the wider community – in early 2008 the rate bottomed at 3.9 per cent; during the GFC it peaked just under 6 per cent - it is only to be expected that Indigenous unemployment would also rise.

 

Given Australian Aborigines and Torres Strait Islanders are the least educated section of the community, they are more vulnerable than others in losing their slip in a weakening labour market.

 

Certainly the most significant rises in the indigenous jobless rates between 2008 and 2009 were in the resource states of Queensland (from 12 to 20 per cent) and Western Australia (from 11 to 20 per cent).

 

The rise can also be partially explained by the closing of Community Development and Employment Projects (CDEP) program in urban and regional areas which had historically hidden unemployment. CDEP is the Indigenous work for the dole program that actually paid participants a wage at the same rate as the dole and with no superannuation. 

 

The ABS has historically labelled this as employment because the participants were technically wage earners. Because CDEP is restricted to remote communities, the ABS data continues to hide unemployment in remote areas. (The wage component of CDEP will be discontinued by July 2011, so the real unemployment rate is over 20 per cent.)

 

The Keating Government deliberately expanded the program during the early 90s recession to conceal unemployment.  The effect of the program was to keep a generation of Indigenous youth non-engaged with the labour market and close to the poverty line.

 

All decent people would like to see the gap between Indigenous and non-Indigenous employment considerably narrowed.

 

The New Zealand experience at reducing Maori unemployment to single digit figures (although the rate is currently 13.5 per cent, the rate fell to about 7.5 per cent in 2007) shows the combination of targeted education programs, welfare reform and flexible labour markets do work.  

 

There is no reason bold reform could not be effective in reducing Indigenous unemployment and poverty in Australia. 

 

Agitate! is the champion of the open labour market and to all the great things it can provide to individuals and the nation.  The open labour market represents opportunity,  rewards for risk, builds skills, incomes and widens social networks and career options.

 

Perhaps the best thing about the open labour market is its ability to take people out of poverty, including Indigenous people who have historically enjoyed colonialisation’s rough end of the pineapple.   

 

Given the poor Indigenous jobless figures, ‘Closing The Gap’ and '50,000 Indigenous Jobs' targets appear to be two more of Kevin Rudd’s over-promises.

 

Jon Altman from the ANU’s Centre for Aboriginal Economic Policy Research (CAEPR) and chief critic of mainstreaming Indigenous jobseekers into active labour market programs seems to think so.

 

A vocal critic of the programs Mr Altman is a keen supporter of the reintroduction of CDEP. He recently wrote on Crikey criticising the government intervention in the Northern Territory.

 

His retro remedies to reduce the rate include the expansion of CDEP, the reintroduction of CDEP wages, increased funding for unviable, isolating outstations and softer welfare rules. Naturally enough CAEPR can only ever find sad and bad things arising from the 2007 Northern Territory Emergency Response and the Rudd Government’s normalisation process, The Closing the Gap in the NT National Partnership.

 

CAEPR is also arguing for less mining close to indigenous communities: mining jobs are apparently assimilationist (read: Indigenous poverty is good) as a recent article in New Matilda highlights.

 

During the Keating and ATSIC years, CAEPR had been extremely influential in funding the failed policies of passive welfare and suboptimal service delivery in remote areas aimed at keeping people in remote areas. The failure of these policies can be demonstrated by fact that today 70 per cent of Indigenous Australians live in urban areas. 

 

Perhaps the good news about indigenous unemployment is that neither side of politics takes CAEPR seriously. 

 

 

Kevin Rudd is struggling on many fronts not least the RSPT, but Communications Minister Senator Stephen Conroy is also in a deal of trouble over his plan to filter the internet.

 

Early this month he was tripping over his own words trying to justify the government internet censorship plan which has now also been put in the too hard basket and shelved until after the next election.

 

On SBS News he mumbled and stumbled his way through an interview trying to explain why the internet censorship filter was necessary.

“There’s a staggering number of Australians being in having their computers infected at the moment,” he said on camera.

“Up to 20,000… can regularly be getting infected by these spams, or scams, that come through the portal.”

Senator Conroy’s rather garbled justification has now become a bit of a joke in the internet realm and one company has decided to take the piss.

Australian IT company, Kogan Technologies, has come up with a safety device, the Portector, to defend the kiddies and unwary adults from the spams and scams that come through the portal.

 

The company says the Portector provides “direct physical protection from threats coming through the internet portal”.

 

View the demonstration video below to see how the Portector operates to protect you and your family.

 

 

The government appears to be conducting a series of faux consultations with the resource sector over the RSPT.

 

Advertisements by BHP in the nation’s newspapers this morning have largely put paid to claims that the government is consulting with the resource sector over the RSPT.

 

The headlines state it all: “We are still waiting for genuine consultation.”

 

That bald headline says it all.

 

Despite Prime Minister Rudd meeting with Marius Kloppers of BHP earlier this week and the anodyne statements that followed by both BHP and the government there has been no genuine consultation.

 

This should not come as a surprise. After all the government has repeatedly stated that the negotiations are principally about transitionary arrangements and not the essence of the tax.

 

Further the government, having backed itself into a political and economic corner, has very little wriggle room to manoeuvre an acceptable outcome – principally because the tax should really be scrapped.

 

The government really needs to go back to the drawing boards and open up a genuine round of consultations with the industry while doing so.

 

However the advertisement does perhaps give some indication of what the government may be trying to float as an escape clause.

 

The bracket sub head says: “(and why applying petroleum tax to mining is not a solution)”

 

The mere fact that version of the PRRT for the resource sector is being floated shows that the government has still to fundamentally grasp what is wrong with the RSPT.

 

The PRRT only applied to new projects not existing ones as the government is till proposing.

 

The 40% rate of tax is competitive world wide. The RSPT is not as Mr Swan now admits some companies will be paying 58 cents in the dollar in tax making Australia the highest taxed regime in the world.

 

The government still appears to insist that they become de facto partners in the resource sector by absorbing 40% of losses.

 

And the government is determined to apply the 40% rates across the board for all miners be they small limes quarries or the world’s largest uranium miner or thermal coal miners. For the government it makes no difference.

 

Yet there are massive differences in costs structures for all these mines which the government refuses to take into account. A one size fits all rates will be ruinous – particularly as it applies to existing mines and not future mining efforts.

 

Also the PRRT as an industry has a completely different cost structure to mining.

 

The petroleum sector has about 85% of its investment up front and massive while that investment after it is made the companies sit on a massive cash flow.

 

The sector basically has a consistent demand for its product and while price may fluctuate somewhat but the volume of product does not.

 

The resource sector has a different capital development profile. Its investment is spread over the life of a project with equally massive sums having to be constantly reinvested in a project as mines go deeper and ore becomes harder to chase while there also needs to be a constant expansion of processing facilities.

 

Also quite different to the petroleum sector is the fact that demand and price fluctuates dramatically with the industry.

 

Demand and price is far more elastic for miners than the petroleum sector.

 

The simple fact is that the RPPT cannot be simply switched from one resource sector to another.

 

A simple transfer of the PRRT will not work. The industries are entirely separate and nor would a switch work because miners with different products from coal, to lime, to uranium to iron ore all have different cost structures which the universality of the 40$ rates does not take into account.

 

And as pointed out above a version of the 40% RPPT would still leave Australian miners the highest rate of taxation in the world with a consequent destruction of value.

 

From Agitate!’s perspective it is clear that the government has entered into a faux round of consultations.

 

They are setting up a straw man so that they can say they consulted and then release an amended proposal which is still no longer acceptable and that does an equal amount of damage to the economy.

 

The government, we suspect, actually want an amended tax to be rejected purely for political reasons.

 

Rejection would mean the government can say the miners are simply being greedy and don’t want to pay more tax. This will be a convenient argument for a government on the ropes in a lead up to an election.

 

The miners have made it clear that they are prepared to pay more tax. Their submission to the Henry Review makes this clear. But it should not be a tax that damages the national interest.

 

To Agitate! it appears that the consultation being entered into by the government are nothing but a political ploy.

 

No one should be conned.

 

PS: BHP Chairman, Jac Nasser, has today announced that the RSPT should be scrapped or redesigned and confirmed that the consultations with Prime Minister Rudd earlier this week were a farce.

 

Click here to read the article in The Australian on-line.

 

 

Agitate! has received a letter sent to the staff of Terra Search by its managing director explaining the pitfalls of the Resource Super Profit Tax.

 

Terra Search, an exploration company with a staff of 70 people, believes it already pays more than its fair share of tax its managing director, Simon Beames says.

 

He says the company would receive no benefits from the RSPT, but could be expected to pay even more in tax.

 

Mr Beames says that because of the RSPT Terra Search will have to review its operations and is wary of “significant drying up of capital for resource projects.” And warns that there are “other places around the globe where exploration is likely to be a much more rewarding activity.”

 

Agitate! reproduces Mr Beames’ lengthy letter to staff in full below.

 

Terra Search Pty Ltd

A.C.N. 011 073 939

Specialists in Mineral Exploration: Geology and Computing

 

Current Outlook for Terra Search and the Australian Mining Industry, May,2010

 

To: All Staff

From: Simon Beams, Managing Director

Date: May 10, 2010

 

Dear Employee,

 

We are hearing a lot about the contribution of the mining industry to the Australian

Economy and the Rudd Government’s proposition that the industry is short changing the non-mining sectors of Australian society. My 23 years guiding Terra Search through the ups and downs of the commodity cycle tells me that nothing could be further from the truth.

 

Since 1987, our company has grown from 5 employees to something like 70 to day.

Our annual turn over has grown from a few hundred thousand dollars to over $5 million. We have generated this turnover entirely reliant on the exploration sector of the mining industry.

 

Over the past two decades, Governments have burdened our business incrementally with impediments. In spite of this, a large portion of the wealth generated by Terra Search has been redistributed to employees in the form of wages and superannuation and to Government in the form of taxes and charges.

 

AUSTRALIA WILL FACE A FLIGHT OF CAPITAL AS THE RUDD

GOVERNMENT PUNISHES THE MINING INDUSTRY WITH THE HIGHEST TAX RATES IN THE WORLD.

 

Now we are faced with a Super Tax on the Mining Industry. Although complex, the key features of this tax appear to be :

 

 It will tax the so called super profits of all extractive industries ie. Metals, gold, sand, coal seam gas, coal, iron ore, oil, phosphate , limestone etc.

 A “super profit tax” will be payable if the rate of return exceeds the Govt bond rate (currently approx 6% - ie bank interest).

 The “super profit tax” will be levied at the rate of 40% on top of payment of corporate tax.

 Company tax will then be paid on the remaining profit at the corporate tax rate – currently 30% , coming down to 28% in the years ahead

 Companies will be able to claim the “Super Profit Tax” as deductible income but will not earn franking credits. Investors including Super Funds will be slugged.There will be double taxation paid on the super tax.

 BHP and Rio have calculated the total Government corporate tax take on mining company profits will be well over 50% !

 This will be the highest rate of tax on mining projects in the world.

 On top of this , royalties will still be paid to State Governments irrespective of whether the company pays the super tax or not. The Federal Government will rebate State Government Royalties to the company, but only to the super tax payers at the level of current royalties. There will be no rebate on any increase in

royalties from May, 2010.

 Other hefty taxes will still be paid by resource companies eg. Payroll tax to state governments, fuel excise, group tax payments on behalf of staff, GST.

 There will be cash rebates for exploration companies for exploration expenditure up to the corporate tax rate.

 The Federal Government says it will rebate failed projects the amount of super profit tax companies have paid previously. It is hard to know whether the Government seriously understands the scale of projects. For example, BHP’s Ravensthorpe Nickel project failed in the GFC and BHP wrote off a $2 billion investment. Other projects eg. Copper Co at Lady Annie, Matrix Metals in Cloncurry failed at the same time. Under this scenario , are we to believe that the Government would have used taxpayers money to reimburse BHP and others hundreds of millions if not billions of dollars? Would you trust the Rudd Labor Government ?

 The Resources Super Tax has been devised by politicians and bureaucrats that clearly do not understand the resources sector. The whole concept of a resource rent tax is that so called non-renewable resources run out quickly and are not replaced. However, the mining industry has been one of the mainstays of the Australian economy for well over 150 years. If mineral exploration is allowed to

flourish, discoveries are made and worked out resources are replaced.

 Politicians and bureaucrats are distorting the publics perception by bombarding them with the notion that a mining company with minimum effort goes out and finds resources that belong to all the Australians. Companies are portrayed as digging out resources and not replacing them. There is no mention of the enormous cost of mineral exploration, evaluation and development which is

outlayed by private mining companies, transforming barren parts of the country into economic powerhouses. This is no different from tourist investment where

developers create wealth by transforming a natural situation into a money making venture. It is never argued that tourist developments belong to all Australians and

therefore should pay a super profit tax. The mining industry contributes massively to government tax receipts and community facilities, far more than other sectors of

the economy. Yet politicians want to take their plundering to a new level and take their tax take to the highest rate in the world.

 Australia is a large continent, not a small island. There is every possibility that super sized ore discoveries will be made in the future. One only has to go back to

the Olympic Dam discovery in 1975 to appreciate that nation building ore deposits, with potentially 100 year plus mine lives, are still to be found in areas

where no one had bothered to look before. What the industry needs is incentives to explore , not a massive new tax that will force explorers out of the country.

 

TERRA SEARCH’s CURRENT POSITION

 

During its 23 year history, Terra Search has worked for all sectors of the mining and exploration industry : from individual prospectors, junior exploration companies through to major producing mining companies and the global majors such as Bhp Billiton, Rio Tinto, Xstrata and Barrick. We have also worked for most state geological surveys and the World Bank in PNG. We are a useful barometer of how the industry is faring . Having seen several capital droughts in the past, we are particularly worried about the negative impact that the Rudd Government’s Super Tax on Mining will have on the whole industry in Australia. Past experience tells us it will not just be the big players affected. Terra Search’s survival in its present form could be at stake if the downturn is as savage as the previous ones, where exploration funds dry up very quickly.

 

In the past few years , the major income streams for Terra Search have been :

 

 the traditional field activities from our North Queensland and WA base offices which stalled with the Global Financial Crisis in October,2008 and picked up in May, 2009 although at a reduced level.

 data compilation projects (mainly the Queensland Department of Mines and Energy) and other GIS work.

 

There has been a slow start to 2010, partly due to seasonal factors in North Australia, however activity is starting to lift, but not so much in North Queensland. We are looking forward to increased field activity over the coming months. However this expectation could all change if the wrong policy is implemented.

 

As an example Terra Search’s 50% interest in our drilling company All Terrain Drilling, was hit significantly by the slowdown in activity with the GFC. We also had some bad luck with equipment failures. There was no work between October, 2008 and April 2009.We finished the 2009 financial year with a break-even and an overall tax loss of $15,000. Consequently, ATD has not returned a dividend and only provided some management income to Terra Search in FY2009. The situation in FY2010 has not improved as there has been no work from December 2009 to June, 2010 . As of May 2010, ATD is recording a small loss for FY2010 with major expenditure in the months ahead in advance of receiving any payment. . We have a major contract in place which will cover the rig hopefully from June onwards through the dry season in the NT, However in light of the Rudd Government’s response to the Henry tax review and negative market sentiment, there is a lot of uncertainty now around the exploration business and a contract is no guaranty of long term work. Any cut back in exploration has a severe and negative impact on drilling companies and Terra Search and other mining service groups.

 

I have attached some figures which demonstrate the turnover, staff levels, salaries ,taxes and profits that Terra Search has generated since its formation. The cyclical and

unpredictable nature of our business is clearly evident. Set out below are points I would like to make regarding how Governments perceive companies of Terra Search’s size in comparison to other small businesses and also quantifying the contribution Terra Search has made to the local, state and national economy. I stress that we will have to work diligently to ensure that this scale of contribution is maintained and not threatened by poor Government policy.

 

TERRA SEARCH RECEIVES NO SMALL BUSINESS CONCESSIONS

 

Last year in a letter to shareholders, I made the following observation :

 

“Terra Search never seems to be the right size to receive any Big Government support we miss out on all the tax, payroll tax, unfair dismissal concessions given to small business (many of whom should be called micro-business) and we certainly are not going to receive the Big Business handouts given to the likes of Toyota, Holden or Virgin, or favoured industry status such as bio-medicals, tourism or the education of foreign students.. Companies such as ours that employ 50 or more people are the backbone of the economy but everybody else is considered more deserving”

 

This year it can be seen just how prescient this observation was. Terra Search did not receive any of the measures for small business that were provided as part of the financial stimulus.

 

We are not classified as a small business because :

 

 at $4million to $6 million per year our turnover is too high,

 at 50 to 60 employees our staff is too large

 at $2.5 - $3.5 million per year our payroll is too big.

 In the recent concessions , small business were classified as those having turnovers less than $2,000,000 and total assets less than $5 million.

 Payroll tax concessions for small business phase out with payrolls greater than $1 million.

 Because we own half of All Terrain Drilling, both companies are grouped and we couldn’t even claim these concessions for ATD even though that company is

below the thresholds.

 

Consequently, Terra Search or All Terrain Drilling:

 

 did not receive the tax benefit of writing off capital purchases up to $50,000.

 did not receive the tax benefit of delayed PAYG payments.

 Did not receive any relief from the potentially draconian Fair Work Australia Legislation.

 Does not receive any payroll tax relief

 

More recently, in the Henry Tax review, Terra Search :

 

 will not receive the early cut in corporate tax.

 Will not be able to immediately write off items that are worth less than $5000

 Will have to pay an extra 3% in employer contributed superannuation

 

TERRA SEARCH PAYS MORE THAN ITS FAIR SHARE INTO THE COFFERS OF STATE AND FEDERAL GOVERNMENT

 

We are filling Government coffers with our hard earned money. That is why it is so

frustrating to see money splurged so irresponsibly and often incompetently in the name of financial stimulus. For the past 4 years Terra Search has directly paid Federal and State Government taxes of between $1.3 million and $1.8 million every year. Terra Search’s turnover and salary and wages since our inception in 1987 are shown in the attached bar chart. This figure clearly indicates the cyclical nature of Terra Search’s mineral exploration service business. It also shows how the business has grown, with each peak so far, greater than the previous one. A lot of hard work got us to this point, whether we can really expect the next peak to be higher is dependant on the level of activity in the industry and the impact of Government policy. We are entering a period of uncertainty.

 

Peaks have been 10 to 12 years apart , with peaks in 1988-1989, 1997-1998 and again 2007-2008. Troughs are evident in the years 1991-1993, 2000-2001. The question is

whether we are currently in a super cycle which will extend the cycle past the 10-12 years or are we now dipping off the major peak. Most pundits say that demand from China and India will offset any negativity that may arise from stagnant economies in Europe, America and Japan. The major problem with this argument is that demand has to come from somewhere to fuel the Asian economies. Can we ignore the massive debts that the western governments have inflicted on their people? Can social disruption in these countries be avoided?

 

Where does Terra Search fit into the big picture discuss above? It would seem appropriate to look at a full 10 year cycle from 1999-2009, which runs from post peak to post peak, with one trough and one peak.

 

In that time ,Terra Search has had total turnover of $43.8 million, it has expended $28.3 million on salaries/wages and superannuation. The total tax payments in that period are $11 million which includes corporate tax, GST, payroll tax and employees PAYE group tax payments.

 

There is no escaping the grasping hand of Big Government : all tax payments have to be made in cleared funds (cash) to Governments or incur an interest payment if even a day late.

 

Interestingly, in the 10 year period, at $1.07 million State Government payroll tax exceeds corporate tax at $0.92 million. Payroll tax is a tax at source on payrolls, it is levied regardless of profitability. I find it misleading, to say the least ,for the Rudd Government and their bureaucrats to rail against state imposed mining royalties and say they are so economically inefficient because they tax at source rather than on profit, yet we have not heard any mention of the much broader inequities imposed by payroll tax. It is a great tax for politicians and bureaucrats ,as it is invisible to the general public and workforce. The only people who are aware are the accounts clerk calculating it and the boss paying it.

 

Terra Search’s total gross profit in this 10 year period amounts to $3.6 million. After corporate tax this amounts to a net profit of $2.7 million Therefore our net after tax profit return is approximately 7 % when measured against our total turnover and an average of 6.9 % when measured against total assets since our inception , 8.5% in the past 10 years. It is worth noting that much of our profit during the downturn years leading up to 2005 was generated overseas , particularly in PNG. Like other companies in the mining industry we repatriated these earnings back to Australia and paid tax on them here.

 

Dividends to shareholders in this period are $252,000, This represents under 10% of the net after tax profit. Because of the cyclical nature of the industry, a large proportion of the money generated as profit has had to stay in the business to provide working capital to pay taxes and payrolls, or be reinvested to grow the business in a hopefully sustainable fashion.

 

Since its inception, Terra Search has reinvested 85% of its net after tax profit back in the business undertaking activities such as :

 

 purchasing income generating assets ,

 Research and Development in projects that have secured major contracts,

 raising the skill level of our staff through career developments eg short courses , seminars, conferences, professional training and accreditation

 Maintaining continuity of employment for our staff

 Investing in cash strapped junior explorers that at times have struggled to find other investors willing to risk precious capital

 

Terra Search’s net profit and distribution to shareholders are dwarfed by the voracious and growing , wealth-grabbing element of Big Government and the alarming size of its total tax take :

 

 Total tax generated and paid by Terra Search in the 10 year period is $11.3 million.

 Total tax is 4.2 times net profit . Yes! 420% of the net company income.

 In the same 10 year period Terra Search also paid $ 28.3 million in salaries/wages and superannuation.

 

Clearly, Terra Search is more than paying its fair share in the form of a huge social dividend.. Terra Search has been mostly in existence to service its employees and Big

Government. This is at a time when in spite of a massive economic downturn, we did not receive any of the benefits of being a so called small business. On top of this, Big

Government is intruding more and more into every aspect of the business through massive increases in bureaucratic procedures and compliance. You really do have to wonder why you would bother to own and run a business.

 

UNCERTAINTY NOW INTRODUCED BY A GOVERNMENT AND

BUREAUCRATS THAT DON’T UNDERSTAND THE HIGH RISK NATURE OF MINERAL EXPLORATION AND DEVELOPMENT

 

Having reached this point, we are now presented with the Henry Tax Review which has the temerity to suggest , quite erroneously, that the mining industry has not been paying its way. Mining industry leaders, professional organizations and a few educated commentators are currently correcting the falsehoods in the Rudd Government’s Spin as well as exposing the dangerous implications of the so called Resource Super Profits Tax.

 

Although not a producing miner, Terra Search is very much part of the industry and rejects wholeheartedly the insinuation that we or the industry are not paying our fair share of tax. Indeed, given the number of people in it, the mining industry’s contribution to Australian society and the economy far surpasses virtually every other sector. Terra Search is a useful barometer of the level of activity in mineral exploration. At the moment (May,2010) after surviving a a quiet start to the year, we were looking forward to increased field activity and a reasonable second half to 2010.

 

The Mining Super Tax means that all this is now under review as we have to be wary of a significant drying up of capital for resource projects. We know from bitter past experience that exploration is the first activity to be curtailed : hard nosed markets dictate that it is not worth spending money finding something that punitive taxes make it uneconomic to dig up. With massive compliance procedures, unnecessary delays in permitting and approval , native title issues, skills shortages and wages blow outs, there are already serious impediments for companies to explore in Australia. There are plenty of other places around the globe where exploration is likely to be a much more rewarding activity.

 

This time last year we were just appearing to be coming out of the GFC. We are now faced with a new set of challenges, some of them inflicted from within by a Government malaise that seems intent on making the Mining Industry unsustainable. I have said many times before that the easiest way to make mining unsustainable is to curtail exploration. The easiest way to curtail exploration is to increase the risk and lessen the reward for discovering and developing a mineral deposit. Unfortunately, politicians and bureaucrats have managed to achieve both, at the same time selling the lie that they are acting in the national interest.

 

In light of the potential impact of recent events, I repeat the concluding comments that I made to share holders last year :

 

“ Terra Search has a highly professional and highly skilled staff, many of whom have stayed with us through the boom and are strongly loyal in the down periods. This gives you a lot of confidence that a private company such as ours can have the flexibility proactively to overcome difficulties. As we have done in the past , it is always prudent to prepare for the worst and hope for the best .”.

 

Footy coaches often urge players to concentrate on factors that they can control. Our self serving political and bureaucratic masters can be curtailed by the democratic will of the people. I am trusting that the good sense of the majority of the Australian people will prevail : I am hoping that policies that destroy wealth rather than create it , will be rejected.

 

Australian cannot afford to kill off the industry that has provided a large proportion of its wealth since the gold rushes. There is a misconception amongst certain opinion makers and ruling elites that Australia will be better off leaving resources in the ground to prevent the effects of a “two speed economy”.

 

Taking away the rewards for discovery means that high risk exploration will be cut back.

 

It will be easy to leave in the ground resources that we don’t yet know exist.

 

If the Australian mining industry becomes the “dead canary in the coal mine” then we really are short changing our country’s future prospects.

 

I thank all staff , shareholders and management for their support and contributions over the past couple of successful years which have seen us weather the GFC. As a business, Terra Search has always endeavoured to create a win-win situation for our employees and clients : by nurturing a skilled workforce, equipping them with state of the art technology and providing cost effective professional services. We have withstood the cyclical and seasonal nature of our business and have proactively developed the flexibility to overcome many challenges. Let us all hope that dark clouds that are threatening our clients and our industry will dissipate before too much more damage is done. May good sense prevail and next year I am talking about the dawn of a new age and not dwelling on internally inflicted impediments to our national prosperity.

 

Yours Sincerely

 

Simon Beams Managing Director,

 

Terra Search Pty Ltd

 

 

Behind the machinations of the claim and counter claims being made over the RSPT it is worthwhile considering what appears to be the guiding philosophy behind its proponents,

 

Agitate! has been following the RSPT debate closely and believes that it must be considered in a broader philosophical context of which this government operates.

 

The RSPT cannot be viewed as errant behaviour by the government, but rather as part of an overall matrix that sees the government as ‘central” to the Australian economy, the behaviour of the Australian populace and society.

 

This government by its very nature is managerialist and interventionist.

 

Look back, for example, at the attempt by the government to establish the “Ruddbank” which would have seen the government effectively becoming a player and partner in the financing of the commercial property sector.

 

This scheme would have had the government underwriting the losses of shareholders.

 

Or we can view the disaster of the government’s attempt to build a “Greener, Stronger Australian economy” that resulted in the failed Home Insulation Scheme and the Green Loans Fiasco.

 

On a personal level the government is intent on dictating the way we live our lives and to see this you have to look no further than the recommendations of the National Health Preventative Taskforce which would have government interfering in virtually every aspect of a citizen’s life.

 

Nor should we ignore the failings of the Building Education Revolution where government once again saw fit to try and “manage” the economy with a $16 billion programme.

 

Perhaps yet another example of this managerial interventionism is with the motor vehicle industry where the government is throwing billions to ensure manufacturing in Australia.

 

This is a very “managerial” government and we should not be surprised. After all Mr Rudd has repeatedly said that where there is market failure the government should step in.

 

Yet there has been no significant market failure by any standard in Australia, but it has not stopped this government from intervening or attempting to intervene with disastrous consequences.

 

Using the so-called Global Financial Crisis as a shield the government has seen fit to try and shape the Australian economy with a form of statism.

 

In light of this sort of philosophy it is then not surprising that the government has so warmly embraced the RSPT.

 

The RSPT effectively makes the government a partner in every mining venture – a view that has repeatedly been confirmed by Treasury Secretary, Ken Henry.

 

This is why the government is so shrill in its denunciation of those that oppose the tax. It is not just the tax itself or the huge revenue stream it generates to reduce the budget surplus: it is a defence of a political philosophy that is only mentioned in a sotto voce way amongst the Labor cognoscenti.

 

It is a philosophy of statism which if expressed publicly would have people reeling.

 

This is obvious from the initial defence of the RSPT by the government which talked of using the tax to “manage” a two or three speed economy.

 

The government sees its role to manage industries and the economy not merely to set the parameters in which a business can grow and prosper or where people can be responsible for their own decisions.

 

The birth of the RSPT should also be seen in light of an article in the AFR’s Boss magazine a few months ago.

 

In the article here Mr Henry, a well know environmentalist, wrote that “The maintenance or enhancement of our community resources involves investment. Investment means postponing consumption. One area in which we have a poor history of postponing consumption is in the management of our natural resources.”

 

Mr Henry continues with an anecdotal story about his father’s life as a timber getter and how the forests of red cedar were wiped out. He paints a poignant picture.

 

He writes that “The fate of the red cedar is an environmental tragedy recorded all too frequently in Australia. Governments have custodial responsibility for our natural assets on behalf of the people they represent including future generations.”

 

This then is the emotional driver behind the RSPT which is well met by the Labor Party. It combines the religiosity of the environmental cadres with the ability to impose a form of managerialism on the economy.

 

It is a heady cocktail for those in the Labor movement: taxation as a form of environmentalism, managerialism and interventionism.

 

It is for these reason that Labor is so shrill in its defence of the tax. It is why they are prepared to distort the debate with falsehoods and why they are prepared to overturn their own promise not to run political advertising campaigns with taxpayer money.

 

The RSPT is really at the heart of the way this government operates and meets all its rationalisations as to the reason for its very existence.

 

For the resource sector they must understand the emotional gravitas that the tax has for the Labor government is they are to defeat it.

 

This is a fight about soul, not just about tax.

 

 

The Minister for Education was interviewed on the 7.30 Report last night to defend the so-called Building education Revolution.

 

The Minister for Education, Julia Gillard, is attempting to absolve herself of responsibility for any waste and bungling in the $16 billion BER which she administers.

 

Ms Gillard told Kerry O’Brien that “I am concerned about value for money” yet admits she knew from the outset that the programme would have problems.

 

“We always acknowledged that when you're doing something that big, that quickly, something the nation had never done before to support jobs, that there would be problems. I want to work through the problems, I want to learn, I want to make sure we're getting a dollar, you know, a great dollar's value for every dollar spent on schools. That's why I've put in place the implementation task force.”

 

Ms Gillard only implemented the taskforce after the bungling became apparent, yet she admits that she knew all along that there would be problems.

 

If she knew there were going to be problems from then outset yet still rolled the programme out then she is directly responsible for the waste and bungling of the scheme.

 

Hiding behind a taskforce is a bit cute by half when you know there are problems.

 

As a responsible minister Ms Gillard should have been overseeing the programme from them outset, but she appears to have washed her hands of responsibility.

 

When pushed by Mr O’Brien Ms Gillard again tried to hide behind the taskforce.

 

“Look, there, there are always lessons to be learned and one of the reasons I've got the Implementation task force is I want to learn lessons from that Implementation task force. I want dollars spent on schools to count”, she said.

 

She says “I want to learn”  and that “there are lessons to be learned” but the public deserves better than an “L” plate minister or even a “P” plate minister when it comes to spending taxpayer’s money. In fact we should have a mature minister that accepts responsibility for her portfolio expenditure.

 

Ms Gillard repeatedly stressed that she “wants to get value for money” but somehow seems to place any responsibility for loses on the states rather than accepting responsibility for her own portfolio maladministration.

 

“Now in terms of rolling out economic stimulus quickly to schools, we relied on the way in which schools deal with capital. State schools deal with capital through State Education Departments, independent schools deal with it themselves, Catholic schools deal with it through their Catholic education offices.

 

“What made sense was for us to rely on the machinery that was there to deal with school capital. Now you are saying is that machinery flawed, has it been a long time flawed? Well people will have that debate but put yourself in the chair of someone who needed to deliver urgent economic stimulus to support jobs, you use the machinery that's there. That's State Education Departments.”

 

So there it is. A minister who acknowledges from the outset that there would be problems with the programme, that hides behind a taskforce, that admits she wants to “learn” but accepts no responsibility while duckshoving blame to the states.

 

Overall not a very good endorsement for the government or the minister herself.

 

The hallmark of this government is one of administrative incompetence and waste and a lack of accountability.

 

Taxpayers should be rightly concerned.

 

Yesterday in Parliament the Minister for Finance danced on the razor’s edge of the truth while attacking the Minerals Council.

 

The Minister for Finance is playing fast and loose in Question Time with his defence of the RSPT.

 

In reply to a question yesterday he made an astounding claim about so-called misrepresentations made in advertising by the Australian minerals Council.

 

Mr TANNER—“I thank the member for Kingston for her question. It is very important to counter misrepresentations regarding the government’s tax reform package, and there are an awful lot of misrepresentations going around, both from the opposition and from sections of the mining industry. I mentioned a couple yesterday and I have a few more to mention today. The Minerals Council have had ads on radio recently, and they feature a self-funded retiree saying that the government’s

tax plan:

 

… may be good for paying off the Government’s debt, but it’s not good for me.”

 

Well, there is one problem with this assertion, one big problem: the proceeds from the resource super profits tax are being dedicated to cut company tax, to cut taxes

on small business, to cut taxes on superannuation, to invest in infrastructure and to ensure that people who have deductions of up to $1,000 do not have to put tax

returns in.”

 

Mr Tanner’s claim that the proceeds of the RSPT is being “dedicated” are simply false.

 

The proceeds flow directly to consolidated revenue and not to specific programmes as he claims.

 

if they were to flow to specific programmes then that amounts to hypothecation of the tax regime  - where funds from specific taxes are earmarked and flow directly to specific programmes.

 

This does not happen with the RSPT or with any other tax.

 

There is good reason for this. If taxes were earmarked then those programmes would suffer the vagaries of tax that ebbed and flowed with the dictates of the economy both local and worldwide.

 

This is particularly so of the RSPT which would wax and wane and the strength of the sectors profitability.

 

No government would hold a programme to ransom such as this. If it did it would mean perhaps that the company tax rate would have to be altered to suit the changing income stream form the RSPT, or that depreciation allowances would have to be adjusted each year and so on.

The simple fact is that all programmes and payments are funded from consolidated revenue. Not one dollar is earmarked from specific taxes to pay for specific items.

 

Thus, when the Minerals Council advert makes the claim that the RSPT will be paying off debt then that is absolutely correct because the payments come from consolidated revenue as do payments for every other programme.

 

Mr Tanner knows this – or at least he should if he is across his brief as the Minister for Finance.

 

So Mr Tanner’s claim that the RSPT will be “dedicated” to pay for tax cuts is false as s his claim that they will pay for the increase in the super guarantee levy which is being funded directly by employers.

 

And people should also be wary of his claim that the RSPT would pay for individuals not to file tax returns and get $1000 in return.

 

Far from paying for this so called largesse the government could well be making money from the scheme as Agitate! has pointed out previously. The average tax return is approximately $3000 so many people who avail themselves of this scheme could be costing themselves money while lining the government’s coffers.

 

And yes, that money “saved” by people not availing themselves of the full benefits of their tax return would be money kicking around in consolidated revenue that would of course be used to pay for company tax cuts, investment in super and of course debt repayment.

 

He will also know that in 2013 the government will have to pay approximately $16 billion in interest and debt repayments – and that money will come from consolidated revenue which the RSPT contributes $9 billion that year.

 

Mr Tanner needs to be nailed on this falsehood. Either the tax is hypothecated or it is not and we know that it hasn’t because like any other tax it simply goes into consolidated revenue.

 

 

Anglogold Ashanti CEO, Mr Mark Cutifani, appeared on the ABC's Business Lateline last night and made some telling observations about the RSPT.

 

Anglogold Ashanti CEO, Mr Mark Cutifani, has confirmed that the RSPT will make Australia a less viable place for investment.

 

Australia, he said, already had high labour and energy costs and was because of its geology an expensive place to explore.

 

The RSPT “basically blows us out of the water in terms of taxing competitiveness across the globe”, he said.

 

Below is an excerpt of his interview:

 

TICKY FULLERTON: Australia accounts for about 10 per cent of your production at this stage with Sunrise Dam in Western Australia. What do you make of this resource super profits tax?

MARK CUTIFANI: Well certainly it makes business a lot tougher in Australia. I mean, Australia is already an expensive place to do business. The cost of labour is up there, the highest cost jurisdiction with Canada in the world. Energy's very expensive. You've got deep exploration projects, so, tough exploration. And infrastructure's very expensive, not to mention we're the second-highest taxing regime in the world, and with the resource tax, it basically blows us out of the water in terms of taxing competitiveness across the globe.

TICKY FULLERTON: Is that going to impact your decision as to whether you go ahead with Tropicana in Western Australia?

MARK CUTIFANI: Well, the uncertainty makes it much more difficult for us to deal with. We've had discussions on carbon tax, increases in royalties. Now we've got this super tax, and quite frankly, no-one in the industry knows exactly what it means because there's virtually been no consultation. So the next three months will be important, just to try and work out what the Government means.

And then we'll head towards an approval decision towards the end of the year. So depending on what comes on out, that'll impact on how we think about Tropicana against its global competitors. It's about one of 15 projects we've got available to us. Prior to this announcement, it was ranking in the top five. My guess is it probably moved down the pecking order fairly significantly, but how far, we're just not quite sure.

It's probably even more tough on our exploration strategy. We were looking for Australia to be an important part of our growth strategy, but because of the high taxing nature that's being proposed, you're taking away a lot of the potential upside, and exploration is a real risk game. So, making it very difficult for us to think about Australia as a favoured exploration destination. That's probably the bigger issue.

 

The government’s RSPT advertising campaign could breach the advertisers Code of Ethics.

 

The government is plumbing new lows in its stoush with the resource sector by wilfully running misleading political advertisements to bolster its case.

 

However no one should be surprised by this because the government has been economical with the truth in its debate (and others) from the outset as Agitate! has pointed out in previous posts

 

Remember the Treasurer dodged up graphs to prove that under the Petroleum Resource Rent Tax the industry had thrived. However the graphs were just plain wrong as they included data from companies that were not subjected to the PRRT.

 

Mr Swan at the outset of the debate also said that the RSPT was not needed to bolster the budget bottom line saying that statement was “a complete furphy” a claim that now has proved in itself the be a “furphy” as the government is now grudgingly admitting.

 

Now we have the government running advertisements that leading miners and resource sector companies are claiming are misleading.

 

The government’s newspaper adverts only discuss royalties, not the totality of tax paid by the resource sector which is very misleading at best.

 

Not only is this misleading, but it would appear that the government claims made about the royalties are also misleading as an article in The Australian today by David Uren makes clear.

 

Uren points out that even the claim by the government about the royalties received and how they have collapsed is basically misleading.

 

So where does this leave the government?

 

Agitate! believes that the government could well be in breach of the Code of Ethics of the Australian Association of National Advertisers which is administered by the Advertising Standards Bureau.

 

Section 1.2 of the Code states: “Advertising or Marketing Communications shall not be misleading or deceptive or be likely to mislead or deceive.”

 

It strikes Agitate! that the government’s propaganda is definitely in breach of the Code however given the misleading nature of all that has been said by the government we doubt that Mr Swan or Mr Rudd will lose much sleep.

 

After all they have already severed the thread of trust that is meant to bind the community with their politicians and the call to overturn their own advertising standards to allow taxpayer political advertising will do nothing to rebuild that trust.

 

The Cabinet Secretary, by invoking a “national emergency, extreme urgency or other extraordinary reason” to bypass the guidelines that administer government advertising the government has not only broken its own solemn pledge to the electorate not to run party political advertising at taxpayer expense but it has now been caught out in another lie – and a lie that rests at the feet of the Prime Minister.

 

Mr Rudd told Parliament that the RSPT was not impacting on financial markets yet this is the rationale that the government has given for breaking its pledge.

 

It is clear that the government is in desperation mode over its ill-conceived tax and will say and do anything to save its hide. It’s abysmally low primary vote of 35% as revealed in Newspoll today will not help it on the road to truth – in fact the reverse will be the case.

 

Agitate! is reminded of Sir Walter Scott’s famous line:

 

“Oh what a tangled web we weave when first we practice to deceive.''

 

Clichéd and overused it might be, but for this government is proving to be aptly correct.

Agitate! is no real fan of the Resources Super Profit Tax. We think it is a dog that, in its current format and construction, will damage Australia's national interest.

 101 things that are wrong with the RSPT and its introduction.

 

1.                  It is retrospective.

2.                  It creates sovereign risk.

3.                  It is a bastardised form of the Brown Tax which Ken Henry admits allows the government to become a virtual and silent partner.

4.                  It distorts economic activity because it encourages “marginal mines.”

5.                  Taxpayers will have to stump up millions of dollars propping up marginal mines.

6.                  Marginal mines should only come on stream when their ore reaches a price point that makes them viable.

7.                  It distorts the natural and comparative advantage that Australian miners have.

8.                  Australian miners will pay the highest rates of taxation in the world.

9.                  Foreign investment in Australian mining will be harder to organise and more expensive.

10.              Investment will flow to other countries.

11.              Mining exploration will and has been put on hold.

12.              Jobs will be threatened.

13.              Exploration is already drying up.

14.              It will dramatically impact on smaller country towns that rely on mining and investment.

15.              Small towns will lose income and jobs.

16.              It is a tax grab, not tax reform.

17.              It treats capital intensive operations in the resource sector differently.

18.              The PRRT is not retrospective.

19.              In effect the taxpayers will subsidise losses.

20.              The government is using it as a form of class warfare.

21.              It is being used to demonise foreign investors when the country is in need of foreign investment to expand.

22.              Its downstream impact will affect manufacturing.

23.              Innovation in mining will be stymied.

24.              Australia will lose its comparative advantage as innovation and research is scaled back.

25.              It is being used to prop up the budget because the government will not cut spending adequately.

26.              The government is using it to “manage” the economy.

27.              It is based on the fallacious argument that mining is creating a two, or even three speed economy according to Ken Henry.

28.              No other country in the world has this sort of super profit tax.

29.              Australia has always had an economy that operates at different speeds.

30.              The argument that a two speed economy needs managing is false.

31.              Victoria is one of the fastest and strongest growing economies in the commonwealth which puts paid to the “two speed” argument.

32.              Its introduction will have a downstream impact on housing.

33.              Farmers and other agricultural industries will be hit with extra expenses.

34.              It will have other unintended consequences.

35.              It distorts the federal budget by allowing the government to rely on taxation rather than savings to get its house in order.

36.              It cannot be relied upon to get the budget in order as no-one can adequately foresee future demand.

37.              Another global crisis would see the budget even further in the red because of the reliance on the RSPT.

38.              If the economy slips and mining contracts the budget will face even more pressure as literally hundreds of millions of dollars will be lost as the government pays out for 40% of the mining losses.

39.              It makes the government too reliant on a narrower income stream.

40.              It is not adequately compensated for in the cut to company taxes of only two percent.

41.              A 40% tax on one of Australia’s key industry sectors will cascade negatively through the economy.

42.              Ken Henry and the government are making spurious claims that any changes to the tax would cost up to $500 million or more yet this income has not been ‘lost” as it yet to be earnt. A lower rate and/or higher uplift factor as in the PRRT would simply earn less money.

43.              Why is it OK for the PRRT to have an uplift factor of the bond rate plus five percent and not the mining and resource sector?

44.              The government is just grabbing cash with by the RSPT cutting in above the bond rate as it is happy for the NBN to make a profit of six percent or more and not call that a super profit.

45.              The tax is inconsistent when viewed in light of the RSPT.

46.              It creates complexity rather than simplicity which should be the essence of any tax.

47.              There is no reason for a government to subsidise losses in one industry and not another as is the case with the RSPT versus the PRRT.

48.              Why is the PRRT not retrospective while the RSPT is?

49.              For simplicity shouldn’t the RSPT simply mirror the PRRT.

50.              The commonwealth is centralising more taxation power via the RSPT.

51.              States “own” property not the commonwealth.

52.              Capital markets have already warned that capital could flow elsewhere in the world at a cost to Australia.

53.              Small miners don’t like it.

54.              Big miners don’t like it.

55.              Bankers don’t like and weren’t consulted about it.

56.              Individual mining companies were not consulted about it.

57.              The government justifies the RSPT v the PRRT because losses are offset by the taxpayer.

58.              Taxpayers should not have to cover company losses.

59.              Markets operate more efficiently than government’s trying to manage an industry.

60.              Markets more efficiently allocate resources than government, thus the RSPT is fundamentally flawed.

61.              If the RSPT goes ahead in it current form there are no guarantees that it may be amended yet again as budget losses mount.

62.              The government is treating the resource sector as a fattened pig with the RSPT, but pigs cannot be fattened over night. Once it has gone to market it has gone for good.

63.              The government claims the design of the tax is “appropriate” but it consulted no one about the nature of the tax it was going to introduce.

64.              The RSPT is claimed to be world’s best practice – except it doesn’t exist anywhere else in the world.

65.              The government is deliberately confusing resource rent tax elsewhere in the world with the RSPT to justify its introduction..

66.              The consultation process is a farce as the government and Ken Henry will not concede any quarter on its fundamentals.

67.              The government claims the RSPT will fund superannuation increases, but this is false employers pay the super increases.

68.              Resource companies will not only be slugged with the RSPT but also a large share of the $20 billion cost of introducing the extra three percent super guarantee levy.

69.              The RSPT has savaged superannuation funds and wiped billions of dollars from the investments of all Australians.

70.              Stripping 57 percent off the profits of companies in the good times will not encourage projects to get off the ground.

71.              The RSPT is about wealth redistribution not wealth creation.

72.              Wealth creation creates jobs, wealth redistribution discourages investment and initiative.

73.              The government claims that the RSTP is largely about replacing royalties when in fact it is about a massive increase in the overall tax burden on the resource sector.

74.              Negotiations with foreign investors are being negatively impacted.

75.              The Chinese have expressed concern to Trade Minister Simon Crean about the RSPT and its impact on investment and returns.

76.              If one tax is made retrospective then what guarantee is there that others will not be made retrospective when the government is strapped because of excessive borrowings.

77.              The complexities of the RSPT will create a compliance nightmare for small and large companies.

78.              Foreign investors could be subsidised by Australian taxpayers to run projects at a loss just to guarantee supply.

79.              Marginal mines, if they get up at taxpayer expense, will undermine the pricing and sales of existing companies.

80.              Undermining the prices of existing mines could see a fall in taxes for the government.  

81.              The RSPT could see downstream industries such as the construction and services industries decline as mines are shelved and exploration halted.

82.              The so-called Dutch Disease is a furphy in Australia thus the RSPT is not needed to manage the so-called two or three speed economy.

83.              The Australian resource sector generates positive spill overs such as software for geological exploration and modelling of mining operations which could be put at threat as investment heads overseas.

84.              With the RSPT threatening investment in Australian mining these spillovers could be lost as we lose our comparative advantage.

85.              The RSPT is an unnecessarily complex tax that penalises success and our most profitable mines.

86.              It distorts economic theory by undermining Australia’s comparative advantage.

87.              Virtually every Labor state has criticised the tax either publicly or in private.

88.              The universiality of it imposition will impact on different sorts of similar ores, ie thermal coal v metallurgical coal.

89.              There is more thermal coal available worldwide and an extra impost would put Australia’s market share at risk.

90.              Similarly our real advantage and market share of metallurgical coal would be under threat as the world’s dominant supplier.

91.              The NSW treasurer has warned the government about the different cost structures that the different types of coal operations have and that NSW would be badly impacted.

92.              The RSPT is badly designed.

93.              Prof Ross Garnaut, Lihir Gold Chairman, who has previously said the tax was “elegant in design” has today said the detail now needs a “lot of analysis.”

94.              Mr Garnaut has also said: “You have to be sure that you are actually taxing economic rent and you are doing it in a way that doesn’t distort investment or production decisions, and that’s what the questions are all about.”

95.              Labor’s own supporters are now turning from the tax.

96.              Botswana has a five percent tax on gross market value of metals and minerals and three percent on coal. Australia will have a rate of 57% tax.

97.              Canada has a company tax rate of 25% and 10% tax rate levied in a variable manner on metals and minerals and a 15% coal tax on mine mouth value. Australia has a 40% RSTP and a company tax rate of 28% and an overall tax rate of 57%

98.             The RSTP will tax Australian resources at an unfair rate from one side of the globe to the other and from richer or poorer countries.

99.             Investment flows follow return on capital which in turns flows to the markets that generate the best return. The RSPT has opened a tap that will see investment flow from Australia.

100.          The RSPT is a dog of a tax and it will bite the Australian economy’s resource sector costing jobs, growth, investment and wealth.

101.          The RSPT is a tax slug, not tax reform. It is a cash grab to prop up a budget deep in the red. It should be abandoned.

 

The RSPT and its shoddy design, coupled with a lack of consultation now has the government backed into a corner. It is clearly demonstrating a government that mistakes intransigence for leadership, class warfare for advocacy and a cash grab for reform.

 

Real leadership would see the government abandon this tax and go back to the drawing board and enter into genuine consultation with the industry about an appropriate and effective tax that does not damage the national interest.

 

 

Over the past week Kerry O’Brien of the ABC’s 7.30 Report has interviewed the Prime Minister and the Opposition Leader. Both were revealing in the manner in which they were reported.

 

There has been a media meltdown and the government is hyperventilating* over the interview last night between Mr O’Brien and Opposition Leader Abbott.

 

Below is the exchange that created the media and government volcano that erupted this morning.

 

TONY ABBOTT: Well, again Kerry, I know politicians are gonna be judged on everything they say, but sometimes, in the heat of discussion, you go a little bit further than you would if it was an absolutely calm, considered, prepared, scripted remark, which is one of the reasons why the statements that need to be taken absolutely as gospel truth is those carefully prepared scripted remarks.

KERRY O'BRIEN: So every time you make a statement, we have to ask you whether it's carefully prepared and scripted or whether it's just something on the fly? No, seriously; this is a very serious question.

TONY ABBOTT: But all of us, Kerry, all of us when we're in the heat of verbal combat, so to speak, will sometimes say things that go a little bit further.

 

Agitate! believes that Mr Abbott was stating the bleeding obvious; that in the heat of debate people may go too far with what they say and that in a calmer, more reflective state they may not say the same thing in the same way. That is true of all of us.

 

His further comment that the “gospel truth is those carefully prepared scripted remarks” is in itself not so remarkable taken in the context of what he said earlier that in the heat of discussion you some times go too far.

 

Now the media dn the government have been all over Mr Abbott’s comments and have been wilfully misinterpreting his comments as him being “dishonest” and of “lying.”

 

This is stretching credulity Agitate! believes. Mr Abbott’s statement makes sense in its context and in fact he is now being pilloried for his honesty.

 

That is a little bizarre when you see the level of deceit practised by the government and as pointed out yesterday on Agitate! that invokes little or no outrage.

 

In the same way that Mr Abbott is taking heat today the Prime Minister also took a pounding last week when he had a minor hissy fit while being interviewed by Mr O’Brien about the backflip on the ETS.

 

Now the opposition went in boots and all and said Mr Rudd had the same madness of Mark Latham and foul temper to match and so on.

 

And of course the media rallied to the case as well because this was the first public manifestation of what anecdotally people had heard of Mr Rudd that he had a short fuse etc.

 

Now again, from Agitate’s perspective, this hyperventilation by the media and the opposition was quite over the top as it is today.

 

It is still a long haul to election day and over reacting to statements such as these will serve no one’s interest.

 

What is required is for the media, the government and the opposition to take a deep slow breath before they blackout!

 

 

*1.  excessively rapid and deep breathing.

  2.  a condition characterized by abnormally prolonged and rapid breathing, resulting    in decreased carbon dioxide levels and increased oxygen levels that produce faintness, tingling of the fingers and toes, and, if continued, alkalosis and loss of consciousness.

 

PS. The ACTU have just issued a media release attacking Mr Abbott over last night's interview claiming he will reintroduce WorkChoices and he is lying if he says he isn't.

In their attack on Mr Abbott the ACTU and Jeff Lawrence are guilty of the same sin that they accuse Mr Abbott of - that is lying. In their media release they state that:

"He has also promised to allow employers use individual contracts that undercut basic award conditions like minimum hours of work."

This is untrue and the ACTU knows it. Mr Abbott has repeatedly said that no one can be worse off under his individual agreements and that the government's minimum standards will be maintained.

Now if the media are concerned about dishonesty they should really get stuck into Mr Lawrence and the ACTU!