Egos or economy, with other people’s money at play?

Egos or economy, with other people’s money at play?

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With interest, I noted that Fort Fumble (Federal Government) released its Henry Tax Review – Australia’s future tax system just hours before the Logies and just two days before Reserve Bank of Australia announced rates rise again. Here is what governor Glenn Stevens had to say Monetary Policy Decision.

Much like the decision to withdraw its disastrous and totally incompetent Home Insulation program which again, was conveniently announced just 30 minutes after Torah Bright won gold at the Vancouver Winter Olympics in the half pipe. As they say timing is everything! Tempers flare as Wayne Swan clashes with shock jock on air this was Gold. Then Rudd lied to us, say insulation installers in Parliament house protest. “In February the Prime Minister met a group of installers protesting outside Parliament House in Canberra and said he would restart the home insulation program by June 1.” Alas, “Courageous Kev” Rudd to defy Senate request to give evidence on home insulation program – snakes and ladders?

The Emperor (Kevin Rudd) is now running with just three policies Health, Henry and the Building Education Revolution (BER) as the rest have now (conveniently) been placed in his growing recycle bin. Both Health and Henry are less than one month old and the BER is copping plenty of flak audit slams Rudd’s primary school building program expect that to be binned also. These decisions are not just a case of ‘missing in action’, rather, policies with distractions which sends a clear message that our elected Federal Labor Government requires more stimulus to its own intelligece quotient. BER audit finds problem but ‘value for money’ of individual projects outside scope… surprise surprise. The Mad Monk (Tony Abbott) also marked the report BER delivers a fail mark.

Having been in receipt of the Henry Tax Review since late December 2009 (five months later) and Fort Fumble does it again – Did Kev and Wayne even read Ken’s Review? On Business Spectator Alan Kohler wrote It’s politics, not reform “It is a great document – probably the best tax review ever produced in this country. Amazingly, the government has almost ignored it. After five months of leaking and spinning since the report was handed to him. The Treasurer has picked up exactly 1.75 of its 138 recommendations, or a bit over 1 per cent.” Total: 1.75 accepted; 136.25 rejected or put off without any transparency. Why, am I not surprised? Rudd’s election rebate where the Henry Review brings higher superannuation, small business changes but no tax fit. Henry tax review dumped into the dustbin then Terry McCann’s explanation “Kevin Rudd is running scared – clammy palms, hair bristling on the back of his neck, whole body shivering: scared, scared, scared.”

Now it gets even more interesting – “rather than release flagged changes on savings tax and simplifying tax returns, the Government has saved those changes to release later in the year, most likely to use in the run – up to this year’s federal election.” Wayne Swan leaves door open to more tax hits from Henry tax review – From the mines to the banks, The Emperor’s ‘fat tax’ grab goes on.

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BUY PRINT

Charlie Aitken wrote on Under the Southern Cross “Robin Rudd and his merry men; banks will be next; switch to the USA. I just believe Australian banks have a giant target painted on them and as we get closer to an Australian Federal election later this year that Robin Rudd and his merry men will announce some sort of super tax on bank profits. I am very, very suspicious that the bank sector avoided any sort of punishment in the Henry Review. Ask yourself what the biggest vote winner in Australia is? Yep, you guessed it taxing banks.” Such a move to tax would remove bonuses which in turn would decimate top – end property markets. Australia is now entering the Rudd Financial Crisis – nothing achieved when policies deceive.

On Business Spectator Alan Kohler wrote Rudd’s mask is off “Kevin Rudd has done something unforgiveable in politics, and he will not be forgiven either by his party or the electorate. He has allowed the disguise to fall.” Then “the latest effort is the Resources Super Profits Tax – a national embarrassment. Those who don’t even understand why it’s a bad tax are asking: why do we need the money? We understand the need for the community to get a fair share etc, but Australia is the best performing economy in the world, so what have you guys done with all the money that you jeopardise our most successful industry to raise more?”  And “there will now be an early election – probably July. What does Kevin Rudd stand for? He is becoming an opposition leader in government, simply opposing the other side and engaged in nothing but marketing.”

The Emperor should be cleaning up his own backyard first – Kevin Rudd’s Department of Hot Air costing taxpayers $90 million. Hi – ho, hi – ho it’s off to health he goes! Australia went into euphoric celebration mode when Julia Gillard announced: Rudd will lead Labor to election. Making unpopular decisions part of my job: Rudd obviously The Emperor has policies confused with performance. In time we get the nasties – but not just yet so have a listen to what John Stone had to say to Alan Jones on 2GB about the Henry Tax Review.

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Mining tax like communist policy – Palmer on Australia’s greatest ever tax reform all 1.75 per cent. This comment on Crikey by Niall Clugston, grabbed my attention. “While the criticism of Kevin Rudd’s caution is fair, the contrast with the 1980(s) is exaggerated. The Hawke – Keating reforms were part of a global crusade of privatisation and deregulation spearheaded by the Iron Lady, Margaret Thatcher. Today there is no sweeping change of economic orthodoxy. Nor is the Pale Imitator who inhabits the Lodge likely to receive any international guidance from the incompetently honest Gordon Brown or the temporary messiah, Barack Obama.” Ouch!

Again on Business Spectator Robert Gottliebsen wrote A mammoth capital strike looms “At this stage it’s just private words to selected journalists and few decisions have been made, but Australia is on the brink of the greatest capital strike in its history and one of the largest ever seen in the world. In the vicinity of $100 billion of resource projects that were almost certain to go ahead are now headed for mothballing until the resources tax is either abandoned or severely modified. If the private words to me and other journalists are converted to action and a new mining capital strike is launched, then almost certainly Kevin Rudd will not win the next election. The economies of Queensland, WA and South Australia would be decimated.” And finally “and in the middle, we have a series of blunders led by insulation and education building and botched emissions trading scheme. Oppositions don’t win elections, governments lose them.”

Based on a capital strike trade deficit surges to more than $2bn where Australia’s trade balance remained in deficit for 11 straight months, a strike would be of catastrophic proportions.

Aussies go cold on Kevin Rudd with industry predictions that The Emperor’s resource tax will kill the golden goose prompting our miners fury at double tax burden. Coalition MPs will decide stance on mining tax next week which will be interesting given admirers suffer a Rudd awakening.

As quick as a flash first miner scraps project on tax concerns a fait accompli given logic and political reality collide. But, what about super idea, but hardly tax reform back to Business Spectator – Twiggy’s root and branch shakedown. “The sharemarket has delivered a brutal assessment of who it thinks were the winners and losers from the Henry tax review – and mining entrepreneurs are in the gun. A staggering $12 billion was wiped off the value of Australian mining shares.” Australia has moved from the global financial crisis to a Rudd financial crisis. You can trust politicians … to do exactly what’s best for them then “I’m going and now I’m back” Malcolm Turnbull wrote Memo to Sir Kevin: a brave decision, Prime Minister and where it hurts us all Super hit by resources sell – off and Rio Tinto shelves billions in projects. Common sense prevails Coalition to oppose mining profits tax.

Julia Gillard denies misleading parliament on BER cost blowout another $1.700 billion now needs to be found as it was underfunded based on the initial $12.400 billion allocation. Much of the work is yet to start – auditor rocks basis of BER stimulus boost. Obviously, a distraction as Gillard denies eyeing Rudd’s job. It just gets worse!

Property markets too have been in the spotlight this week.

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Housing market will implode warns Edward Chancellor Edward is no relation to the Sydney Morning Herald property editor Jonathan Chancellor. Australia is in the midst of an unsustainable housing bubble that could burst at any time, warns the man who predicted the global credit bust of 2007. We will see busts in the First Home Buyers Grant (otherwise known as the First Home Sellers Grant) as they buy back when mortgage defaults escalate due to rising cash rates. Another rate rise, another blow for PM and economists warn that more pain is on the way – the raw nerve being rate rise to crush 90,000 families.
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3-05-2010 12-40-14 PM

Not wasting any time the big four banks match Reserve’s rate rise and the housing industry blast RBA rate rise obviously they are not observing Australia’s inflation genie. Then the obvious Rudd attacks interest rate hikes by ‘greedy’ banks –  of course he is not. Although, he is on the springboard about to attempt yet another back flip as he may capitulate to miners appropriate that he is digging Australia into an almighty hole.

The most naive commentary of the week banks safe from govt tax torch, Westpac: dumb and dumber. In just over twelve months, Kevin Rudd, Wayne Swan, Lindsay Tanner and Julia Gillard have transformed a A$19.700 billion surplus into a A$32.100 billion deficit and 2010 is an election year. The majority of policies are now languishing in their much owned, self – imposed recycle bin.

Incompetence personified – where the inheritance went down the gurgler in the blink of an eye!

4-05-2010 4-03-17 PM

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Next week, (unless Fort Fumble has another policy implosion) we will explain why the cash rate still has another 2.00 per cent of increases ahead. A clue: Fort Fumble and Fort Crumble contuinue to inflate that inflation genie. Tell us what you think on the blog – is The Emperor right with his Resources Super Profits Tax? Will he be re-elected or will he end up in his recycle bin too?

Cheers ^__^

This week’s sales Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

8 Responses to “Egos or economy, with other people’s money at play?”

  • Ryan O'Grady says:

    Great read Robert, you always keep me entertained. And welcome to your sponsors Mortgageport.

  • Robbie Mac says:

    Well now! All of a sudden it is getting VERY interesting. With the election chequered flag coming at us all VERY quickly, the pace is increasing.

    Observations:
    Holistically, the mining tax makes sense, especially if it simplifies and improves on the current system, which is an inconsistent mish mash. HOWEVER, as ever with the Emporer, the devil is in the detail (refer health, batts, BER – there is a recurring theme here). The calculation of exactly how much of the tax is payable is the first part of the problem, and the second part, of the much bigger problem, is the imposition of such a tax in isolation, without taking into account the rest of the Henry reforms. Can’t have the Ying without the Yang.
    Henry, like our state premier, has become a Labor puppet. Perhaps unwittingly, but he should have known better. By all accounts, a good report (no, I have not read it in full), which may never be properly implemented. How happy did he look last weekend?
    The Orange Roughie is well placed to sneak through on the last lap. If the Emperor’s trendline continues, he’ll be so on the nose by the election and the Orange Roughie will smell so like sweet perfume to the Labor party back room gourmets that we could see a repeat of the KK super-sub.
    Where is the Mad Monk? MIA at present! Plotting his response, biding his time, gob smacked at the opportunity or frozen into inaction by the sheer terror of the opportunity?
    Does anyone see a parallel between Gough and The Emperor? Big ideas, poor execution? One term governments…?? Gough had the benefit of being a true visionary, as opposed to the present “ideas by committee”.

    I suspect The Emperor wishes he had a few more laps to fine tune his machine. He might just get to the finish line first, but his pit crew is average, his car speed is slowing, and the opposition are increasing their horsepower. It’s looking more and more like a handicap, and may yet require a photo finish.

  • Ann says:

    Robert, as per usual a brilliant synopsis of whats happening in the “Lucky Country”. Surely KRUDD is nailing his coffin with the stunning screwups. I just hope the average Australian can see through his spin, untruths and more spin to see we need urgent action.

    Can you name me one thing he has done that has worked without stuffing up and / or shown cost effective value to Australia. Its been a long week, but I can’t recall anything.

    He has given a HUGE competitive advantage to the other mining nations. The impact of his new super tax on mining, will ripple through our economy and cause everyone pain. Just look at your super funds returns since Monday.

    The Emperor is now the Joker. Who would succeed him. Thought long on this one and came up with one viable person. Stephen Smith. His semi-safe seat in WA is now under threat cause of the KRUDD mining madness.

    God Help Australia.

    So as to remain balanced, Abbott is not the answer at the moment, he needs to remove the silly smirk, and start quickly delivering robust / cost effective policies on ALL issues, especially Environment, IR, Health, Taxation, Immigration, etc etc

  • Gordon says:

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    Robert, you note The Emperor has only adopted 1.75 of the 138 Henry recommendations. But it’s worse than that. Fort Fumble has imposed two things Henry recommended against – increasing employer payments for super, and hitting miners with a supertax. Not very super at all.

    So when we deduct these 2 from the 1.75, it turns out that Fort Fumble has accepted MINUS .25 of the recommendations. No wonder Ken was looking less happy than one of his hairy nosed wombats.

    The Emperor now has his back to the wall, so is likely to announce a panic-stricken election ploy to supertax the banks. A sure winner? Well, for about two minutes. Then most people will realise that banks, like mining companies, are vital core components in everyone’s super fund portfolio. ‘Nuf said.

  • Snow White says:

    Snow White & The Seven Dwarfs.

    The seven dwarfs always left to go work in the mine early each morning.

    As always, Snow White stayed home doing her domestic chores.

    As lunchtime approached, she would prepare their lunch and carry it to the mine.

    One day as she arrived at the mine with the lunch, she saw that there had been a terrible cave-in.

    Tearfully, and fearing the worst, Snow White began calling out, hoping against hope that the dwarfs had somehow survived.

    ‘Hello…Hello!’ she shouted. ‘Can anyone hear me?

    Hello!’

    For a long while, there was no answer. Losing hope, Snow White again shouted, ‘Hello! Is anyone down there?’

    Just as she was about to give up all hope, she heard a faint voice from deep within the mine, singing;

    ‘Vote for Kevin Rudd, vote for Kevin Rudd

    Snow White fell to her knees and prayed, ‘Oh, thank you, God! At least Dopey is still alive.

  • Steve says:

    This blog could be interesting if it had a little more Real Estate reflection and a little less politician bashing. People want to buy / sell houses with you. If you wish to run for office, how about you start another blog? Any chance of actually providing some valable Mosman insight given you self declared preeminent position in that market?

    I think the resource tax is an excellent idea. The major miners have just slammed buyers with huge price hikes moving from longer term pricing to spot markets, with now with freight being extra, we still remain the cheapest country to supply China. Why doesn’t it make sense to tax out only true industry so we can invest in out future elsewhere, and force savings to be higher?

    Oh and if you want debt, look at Greece, the UK, anyof the PIIGS or the US, Australia’s debit is small and well managed. Your concepts of macroeconomics is somewhat interesting as if you applied you”oh my gosh” mentality of “surplus is good / deficit is bad” to your business then I assume no one would ever take out a mortgage and you would expect them to pay in cash with a wodge of cash on the side? Debt, is a very useful tool for growth if managed correctly. If not, like the countries above, it will be a disaster (Greece will default). But its hypocrytical to declare the government evil while you flog properties to people geared to the hilt.

    Any chance of you offering any wisdom yourself, memeber for Mosman, or is it easier to just sit in the stands and pour water on people who have very complicated jobs trying to do the best for this country?

  • Steve,

    Everyone is entitled to their opinion(s) and I thank you for the Member for Mosman reference – I am chuffed that you hold me with such esteem. Given I have been writing the RWM newsletter for ten years now I believe that I have gauged what appeals to subscribers as our subscriptions keep increasing rather than decreasing (via unsubscribe).

    For your own information there is not enough content to simply write about real estate week in – week out. Having said that I have already (prior to your comment) extrapolated relevant Mosman housing data for this week’s edition.

    Personally, I believe the resource tax to be a disastrous decision in light of economic international declines “Europe on the brink: the web of debt threatens the world”

    http://www.smh.com.au/business/europe-on-the-brink-the-web-of-debt-that-threatens-the-world-20100507-ujkm.html

    “Under the worst case scenario, the flow of capital between banks could dry up, bringing interbank lending to a halt. This could spark a plunge in confidence, significantly increasing global borrowing costs and ultimately damage global economic growth and recovery.”

    This all seriously affects property prices globally. We sell houses we don’t finance them – I refer you to lending institutions.

    As for additional wisdom wasting money by the millions is not the answer especially if we double – dip back into GFC 2. Bearing in mind that our political Mother Hubbard’s financial cupboard is bare! Obviously from your comments you believe Messrs. Rudd and Swan have done an exceptional job under the circumstances – just that I don’t agree.

    Having said that I am always appreciative to read and respond to other subscribers thoughts and respective commentaries pertaining to editions.

    As for flogging properties to people geared to the hilt – sorry I have been selling in Mosman for 25 years now and not once have I been asked to provide individual financial advice for finance leverage.

    At least those bronzed engraved plaques will take pride of place on our nations canteens – very stimulating indeed.

  • Nicholas says:

    Rudd Loser Temper…again http://news.ninemsn.com.au/national/1051715/rudd-defends-record-on-climate-change

    Should be an interesting few months, before a snap poll around Football Grand Final distractions

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