Recently the world witnessed what can be conceived as possibly one the swiftest and most astonishing political resignations in recent history, that of Australian Prime-Minister Kevin Rudd. As news media would have it, Julia Gillard, his deputy, walked into his office and challenged him to a party leadership contest, upon which he simply answered “I quit”.
Now, if that is not mystifying, I don't know what is, for it is not in the power-hungry nature of the political animal to yield the reins of government, even if for reasons of gallantry. So, either Mr. Rudd is a very good soul, sensitive to the emotional needs of women, or a very a bad politician who, at his ripe age, has not yet begun to comprehend the most basic principle of the science, namely to mistrust even his own shadow.
More puzzling is the fact that, after such a wimpy response to Ms. Gillard, he is staying on in politics, with the prospect of being offered a post in next Labour cabinet.
Background to this palace drama: the proposed supertax on Australian mining groups, a topic of hot debate in the country for months now. The way matters were handled, one could only guess that Mr. Rudd, and indeed the Labour Party, must have misjudged the ease with which the matter could be implemented, the way governments all over the world expect their taxpayers to react: cough up and shut up.
Well, international miners in Australia are not normal taxpayers. So, one week you had Rudd defiantly vowing to go through with his proposal, and the next week swiftly disappearing into the sunset.
Magic? No. When the groups threatened to divert their future investments to other regions of the globe, the Labour Party realised that the matter was getting out of hand and that it was fast losing public support, which, in turn, might lead to its demise at the next general elections. As a result, it decided to undertake an exercise in damage control. Party strategists must have thought that, by giving government a feminine face, kid gloves and making a few concessions on the levels of taxation, they would be able to sweep the dirt under carpet.
They won't. For two reasons. Firstly, the Green Party is unlikely to give parliamentary support to a bill that waters down the original proposal. Secondly, international miners have already learnt their lesson and are aware that, should the Labour Party be re-elected for a further term of office, the matter is likely to come up even in a more virulent way. They will certainly make good on their threat. After all, why shouldn't they?
At a time when the economy in China is cooling down, when the Chinese are looking to lay their hands on all kinds of resources all over the world, primarily to become self-reliant, but also to get rid of some vast amounts of useless US dollars they hold, when immense mineral reserves are being discovered in Mongolia, the Australian supertax proposal can only be deemed to be the fruit of political bigotry or the result of economic ignorance. Australia risks sharing Mr. Rudd's fate: taking giant strides into the sunset.
As for the Australian dollar, put on your hard hats. At present, it seems be doing well on account of the interest rate differential, but is 4,5% enough to cover economic and political risks? I wonder.
