Gina Rinehart: it's her party and she'll cry if she wants to
IN A week where markets have started to turn feral on ferrous mining companies, and a few groups that provide them with services, about the last thing it needed was Gina Rinehart's voice pleading for tax breaks and the ability to cut wages to insure the industry.
IN A week where markets have started to turn feral on ferrous mining companies, and a few groups that provide them with services, about the last thing it needed was Gina Rinehart's voice pleading for tax breaks and the ability to cut wages to insure the industry.Insider would have far more faith of the accuracy of her assertions and home-spun economic philosophy if the article printed this week in an industry magazine had her accurately naming her home state (and that of Insider's) as Western, rather than "West" Australia.Frankly, she does an important industry a disservice with chalk and cheese comparisons of Australian and US labour rates (Insider would much rather live in a country that tries to offer its people a more comprehensive social safety net), and citing as her friends only those who are multi-millionaires.You would have to wonder how her employees feel about being seen only as a means to her ends.Her rosy and self-serving view of Australia's past somehow neatly avoids its origins as a convict dumping ground, but instead invites more of a US-style pattern of development by pioneering capitalists. That is almost as mythical as her $29 billion of worth.Insider suspects that Rinehart might be better focusing on tying off the funding for her $9.5 billion Hope Downs Iron Ore Project as quickly as possible, because if iron ore prices continue on their current trend, nailing nervous bankers to commit to the financing will become even more difficult.At least she is sole shareholder and does not have to serve the short-term objectives of quarterly returns-driven managers of superannuation funds.Rinehart has been banging on for some time about the excessive costs of labour, tax and bureaucracy in getting mines up and running and even blamed them as the reason that she sold almost 80 per cent of her stake in Queensland coal prospects to India's GVK, rather than a lesser amount.In reality, the costs of getting things done are rising, not just because labour costs have hit dizzying heights, but because commodity prices have made so many more mining prospects bankable propositions increasing the demand for (and therefore prices of) equipment and services.Rinehart is simply frustrated that she is not getting the adoration she feels businesspeople like herself deserve, and is not yet able to cut the ribbon to open her own major mine.Her Hancock Prospecting website reeks of insecurity of someone desperate for recognition as a mining heavyweight, not just a custodian of a family investment portfolio. Insider hopes her skills do lie in mining, because her investing forays into Fairfax Media and Ten Network have so far been duds.No real choiceINSURANCE companies are always fascinating, if for no other reason than that they seem to make more money from investing the punitive premiums levied on customers, than from actually pricing their product accurately.Rusted-on customers always seem to be subsidising discount wars on general insurance premiums for cars, houses and the like.Insider recently switched vehicle insurers after receiving renewal notices pitched at prices that could have bought the cars in question.The old insurer, having been told by Insider they were dumped after obtaining several online quotes, asked if there was anything that could be done.Given that every quote was cheaper than the renewal notice including the old insurer's by a margin of more than $200 the answer was obvious: "Yes no matter how sheep-like loyal customers are, they will eventually work out they are being fleeced".Investment markets are more pragmatic, and Insurance Australia Group has been rocketing up the charts in price and volume terms for the past fortnight from $3.70 to a peak this week of $4.16 a 12 per cent gain.Most of that was its strong results a week ago, but the shares began turning a week or so beforehand, helped along by analysts' assessments that IAG and other insurers have been able to justify increasing their premium charges after all the recent flood and fire disasters not that they would have had much choice.Companies that reinsure those risks i.e. bet on their bets have borne the brunt of claims and would be demanding higher prices, so IAG and its competitors can either push back on customers by passing on the extra costs, or cop thinner profit margins. And that is no real choice.Fond farewellTHIS Insider is going outside, and may be gone for some time. Thanks to all those urgers, purgers, readers, writers, colleagues and friends, who have offered direction, correction, threats, laughter, abuse and letters from their lawyers.It has been a privilege.
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