The latest 'super product' bursts
TONY Abbott has got it wrong regarding the mining tax. And so did Labor. The so-called mining boom is, in fact, an example of a primary production bubble, such as alpacas or tulips, where a new "super product" comes on the market. The cost of the stock soars, people make and lose vast sums of money, and the whole things settles down to just another minor industry.
In the case of the mining bubble, dozens of new projects started up in a very short time. This inflated the already high cost of infrastructure so that potentially viable projects such as BHP Billiton's Olympic Dam now mothballed (The Age, 23/8) have become uneconomical. The mining super profits tax as it was originally proposed had the potential to slow down the worst of this excess. It is more likely that this project would go ahead if the original design had been implemented. Certainly Australia's GDP may have taken a bigger hit from the global financial crisis, but our manufacturing industry would not be on life support as it is now. When this blows over, schadenfreude will be small compensation for the long-term damage to our society caused by this outpouring of greed.
Kyle Matheson, Mont Albert
Don't blame victims
IN THE tradition of Marie Antoinette, ANZ Bank chief executive Mike Smith has ignored the realities of poverty (The Age, 22/8). The poor have low credit ratings, and transferring interstate to rent in boom towns with no guarantee of unskilled employment is irrational. The reason that mining industries insist on importing skills is because they lobbied hard to reduce the mining taxes that are required to help skill the unskilled. Mike Smith's vaunted United States he says mobility by workers is higher there than in Australia has 1.5 per cent of its population in prisons because often a choice must be made between starvation or crime. Cutting the oats of the horse to make it work harder is ratbag economics, but blaming the victim eases the conscience.
Brian Collingburn, Albert Park
Study in contrasts
HOW timely was the news about former Commonwealth Bank chief executive Ralph Norris' good fortune. In his final five months there, he received a total package of $9.61 million. I received my annual superannuation statement from his old workplace the same day I read your article (BusinessDay, 21/8). My statement was not brilliant, to tell the truth. My money (sadly) is in the "growth" fund. To make it simple for me, there is a handy little table which lists the growth fund's one-year compound average return of zero per cent.
Ah yes, you are right, it is important to take a long-term view, so I check the return for the last five years. Again, it is zero per cent. I will not mention the fees. No, I am not bitter and will continue working. I do not have much choice, really.
Ron Garlepp, Warranwood
The global swindle
IT IS reassuring to see that some CEOs are "earning" $60,000 a day. The Global Financial Swindle continues unabated as they procure their salaries by legalised theft.
Kim van den Berghe, Highton