Quick prime minister, there?s not much time
23 June 2010
Sean Russo
DEAR Prime Minister, congratulations on your recent elevation. You must be exhausted after a day like that. We were exhausted just watching it.
My 11-year-old son was excited for you but quite sad at the same time. He felt rather like someone had died unexpectedly and he hadn’t had time to prepare. Usually the changing of guard at the Lodge is the triumphal climax at the end of a well worn path so forgive us if we take a little time to catch up.
I see the mining magnates are credited in the press with the demise of your old boss. They wish! All that money still can’t get them that kind of power. I’d like to think it was people power – good old fashioned democracy – but we know that’s not the case.
It seems to me you are the short term beneficiary of a very common trend, but you are almost certain to be the victim of another one.
The good news story is women, while still struggling to crack the boardroom of ASX 200 companies, are rising to the top of all layers of the political spectrum. This is a great thing and I would like to think it will continue for some time. Fewer wars will be fought while women are in charge; genuine consensus will be sought. Perhaps most importantly much needed compassion will be directed towards those in our community so disenfranchised by so many years of having our country run by men who really secretly wished they could be directors of ASX 200 companies (and earn so much more for doing so much less) and never got the chip off their shoulder long enough to do the right thing.
If only someone had told them at uni what the 80s and 90s would bring they would have called it quits at student politics. (No wonder so many of them dislike Malcolm: he got to do both!)
So I truly wish you well but I fear your days are numbered because the only current trend that seems to be stronger than giving women go is the desire of the electorate to announce they are truly pissed off. Unfortunately, the best way they have found to do this is to vote out the incumbent. This is where your numbers men have really let you down. The polls weren’t just anti-Kevin they were reflecting this broader theme that we are seeing express itself all over the world: we blame the incumbent for our woes.
Given what that might mean for us, the voter, it’s not rational I grant you but we are not rational. You only have to look at the stock market to figure that out.
Look what UK voters did to themselves and recall that old expression that a camel is a horse designed by a committee. Heaven help them.
Thanks very much for getting those ads off the telly, although I think the truth-in-advertising people weren’t far behind you. Good luck dealing with the mining industry. A word of advice if I might. The big mining companies aren’t that representative of the industry, so please don’t imagine those guys speak for everyone. In fact don’t even make the mistake of thinking they are representing their shareholders’ interests. They just like getting bigger because the profits generally get bigger; the bigger you are and the easier it is to justify those salaries that so rankled your male colleagues, even if the shareholder returns are woeful. Check it out for yourself. They have actually taken in more investment money in the last generation than they have paid out in profits. You probably thought only a government could get away with that for that long!
I actually think you need to consider the fact that by definition you are actually trying to shut the mining boom gate long after that horse has bolted. That you the government want a share of super profits means that super profits are past tense. You never get on to themes early – it just doesn’t happen. You react to market themes like most of us do (after all you were one of us before you were one of them); you start to recognise them when they are nearly over or have already rolled over. Think of how many books that were published about the Japanese way of doing business in 1988, how many books we could have read on “Peak Oil” 18 months ago, etc.
There is a strong school of thought that magazine covers are the ultimate contrary indicator because the story only warrants the cover when it is so widely known that editors believe it will sell well. The unfortunate fact is that if it is so well known it usually means there is no-one left to get on and the smart money is already getting off. I could show you dozens on the US housing market three years ago, the US dollar a year ago and if you want to go back to when Scullin (the other redheaded Victorian PM apparently) took over in 1929 you will find no end of headlines about the good times ahead and how politicians had saved the world after the Great Crash of ’29! It’s a great way to sell magazines but it’s a lousy way to construct taxation policy!
So you see if you are chasing big mining, you are likely flogging a dead horse that just doesn’t know it’s dead yet. They will just keep building supply and mistreating buyers until they kill the markets that they rely on. Even if you win on RSPT you likely lose because the profits you think you will share in are highly likely to be illusory.
Can I ask you instead to attack those things that they do that undermine the overall strength of our mining industry?
Force them to free up land that smaller entrepreneurial companies could turn a buck on. Stop allowing them to tie up infrastructure that should be shared. Consult broadly with the mining industry, not just big mining, and find out how to make it a more vibrant industry regardless of whether there’s a boom or bust ahead. If we do get a boom then you will get better royalty returns and broader tax base from a more vibrant and diverse industry. If we don’t go back to the boom time numbers you let slip past you, then at least you stand a chance that the broader industry will survive and continue its important contribution to the economy on so many levels, albeit off a lower base.
Please hurry. If I am right you don’t have much time and a man, whatever his politics, could never make this happen.