THE DISTILLERY: Wayne's wrong song

Wayne Swan cops criticism for his off-target billionaire jibes, while Tony Abbott is also in the firing line over paid maternity leave.

Either Treasurer Wayne Swan still doesn’t understand the forces that brought down the Resource Super Profits Tax and his former prime minister – both of which he once supported to varying degrees – or he’s betting that readers of The Monthly, and Australians generally, don’t know what the Minerals Council of Australia is and who backs it. There’s little else than can be drawn from Swan’s decision to target vocal mining billionaires specifically as a threatening source of vested interest and not the subtler multi-billion dollar mining companies. The Sydney Morning Herald’s Elizabeth Knight explores what looks like a cynical play at the ignorance of Australian voters – and indeed readers of The Monthly. The same newspaper’s Malcolm Maiden highlights the sense of unease within the electorate that Swan is trying to exploit, while The Australian’s David Uren says this sense of unease is almost exclusively felt in the western world, as many Asian nations are benefitting from market economies. And the SMH’s Phillip Coorey says Tony Abbott isn’t escaping criticism, with business figures smacking his parental leave scheme. All in all, it’s not a good morning for senior Australian politicians.

But first, The Sydney Morning Herald’s Elizabeth Knight says Australian billionaires have great name recognition in the electorate when it comes to the campaign against the RSPT, but they weren’t the key players.

"What is more interesting is that the businessmen that mounted the most effective anti-tax policy campaign in Australia were not even mentioned in Swan's Monthly essay. The money to fund the anti-mining super tax came from the Minerals Council of Australia, a body dominated by BHP Billiton, Rio Tinto and Xstrata. What proportion of the general public know the names Marius Kloppers, Tom Albanese or Peter Freyberg? The companies these blokes govern did actually manage to push an electorally weak Labor government into watering down a mining tax to such an extent that its revenue-raising credentials are now seriously questionable.”

Knight’s colleague Malcolm Maiden agrees that Swan’s targeting of billionaires is too simplistic, but does say the treasurer is pitching to a very real sense of misgiving in the Australian electorate and the broader western world that capitalism no longer works for them no matter how hard they work themselves.

"This is an issue with many moving parts, most easily seen in the northern hemisphere. They include a widening gap between average income earners and the super-wealthy, crisis responses that have lowered economic growth, the growing tendency of baby boomers to save, crippling unfunded social security debts in the northern hemisphere OECD and post-crisis fears that the markets are neither well understood nor well managed and supervised. And it is manifesting not just in the Occupy Wall Street protests and their offspring and predecessors, but in sub-par credit growth everywhere and in low consumer sentiment and investment. There is no serious alternative to a mixed market economy, so it's quite possible that the global economy will not right itself in a sustainable way until the consensus around capitalism is restored.”

Of course, by framing the discussion that scepticism towards capitalism is being felt in the western world, Maiden implicitly acknowledges that free markets are still the rage in the developing world – something that The Australian’s David Uren picks up on.

"Capitalism has certainly had its issues in the past five years. The financial crisis sparked by banking excesses has inflicted enormous costs on the US and Europe and brought a backlash against the extraordinary bonuses that the bankers pay themselves. However, these have also been years of capitalism's most spectacular success, with close to a billion people lifted out of poverty across China, India, Indonesia and many other nations of Asia, Latin America and Africa. The bankrupt politics of state socialism, which became an excuse for channelling the meagre returns from the labour of masses to tiny corrupt governing elites, has given way to the redistributive power of entrepreneurialism. Not only is there the emergence of a middle class in countries such as Rwanda and Kenya, but the stark indicators of poverty – infant mortality and life expectancy – are improving as capitalism takes hold."

And while Swan’s essay hasn’t won much praise amongst business commentators, The Sydney Morning Herald’s Phillip Coorey says that the discontent in the business community towards Opposition Leader Tony Abbott’s paid maternity leave scheme is now firmly entrenched.

"Business leaders have expressed concern at Tony Abbott's promise to increase company tax to fund a paid parental leave scheme, arguing it could hurt productivity and competitiveness. As Mr Abbott and his senior frontbenchers found themselves defending the policy for a second time in a week, both the Australian Chamber of Commerce and Industry and the Business Council of Australia expressed misgivings. Peter Anderson, the chief executive of the chamber, said he believed the policy was a ‘mistake’ when Mr Abbott announced it two years ago and ‘we still continue to hold that view’.”

Sticking with economic matters for the rest of this morning’s Distillery, The Sydney Morning Herald’s Michael Pascoe says the Reserve Bank of Australia’s monetary policy statement would have said "suck it up, things aren’t nearly that bad” if the central bank were allowed to really speak its mind. The Sydney Morning Herald’s Maiden points out in a separate piece that this is just the first stage of our monthly rates review process, with ANZ’s interest rate decision to follow. The Age’s Asian affairs correspondent Peter Cai says global markets have clearly become more hesitant after China’s projected growth figure slipped to 7.5 per cent – territory where social unrest becomes harder to contain – but the news has barely registered in the country itself. Analysts within China are confident actual growth numbers will top official estimates.

In company news, The Australian’s Bryan Frith says the changes to the Gloucester Coal-Yancoal Australia merger have largely come at the expense of shareholders in the former. The Australian Financial Review’s Chanticleer columnist Michael Smith says the next step for Yancoal is to convince the Foreign Investment Review Board to give it a pass on some of the undertakings it's made to buy Felix Resources in 2009.

The Herald Sun’s Terry McCrann suggests that James Packer will remove the family’s interest from media completely by selling out of Premier Media and Foxtel in order to pursue his dream of building a gaming empire for Asia. Fairfax’s Insider columnist Ian McIlwraith finds another major shareholder notice popping up for Echo Entertainment, this time from National Nominees of National Australia Bank.

The Australian’s Richard Gluyas finds an increasingly heated battle in the Victorian Supreme Court between shareholders and National Australia Bank, while colleague Tim Boreham takes at look at Customers, Macquarie Radio Network and Harvey Norman in his Criterion column this morning, with recommendations of avoid, long-term buy and speculative buy, respectively.

The Australian’s Barry Fitzgerald finds that while expectations are growing for the gold price to be supported through $US1650-$US1850 an ounce, shareholders an unlikely to see much in the way of dividends as producers make up for declining reserve and production profiles.

And finally, The Australian’s John Durie says the superannuation industry is playing smart politics in the lead up to a finalisation of terms for financial advice rules by Bill Shorten.


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