It has been public knowledge for a while now that the Australian Labour Government reached an agreement with the mining groups on the question of the proposed supertax. After all, it was inevitable. When a politician talks himself into a corner, the only way out is to negotiate from a position of weakness. That's exactly what happened after Kevin Rudd mounted his successive displays of bravado.
In a damage control exercise, the new prime minister, Julia Gillard, was able to find common ground, albeit at much lower levels. Looking at the succession of events, nobody could expect a different outcome.
It must be said that the socialist idea that a country can solve its budgetary problems by attending to the revenue side of the balance sheet, while disregarding the expense side is simply ludicrous. No one doubts that Rudd's proposal was positively business unfriendly and it would have led to a pronounced slowdown in economic activity. Anywhere in the world, if exorbitant taxation leads to the disincentive of investors, they just pick up their luggage and go elsewhere. Then, the only people left are the unproductive idiots who were hoping to sponge on them.
For business, the agreement was a win-win situation. Gillard must have given an undertaking that, if re-elected, she will not go back to the nonsensical high rates that her predecessor wanted to impose. Mining corporations, however, must have agreed in the knowledge that she is unlikely to win, in which case the supertax will simply be scrapped.
Signs of hope were mirrored by the rise in the exchange rate of the Australian dollar. If Gillard loses, it is likely to appreciate even further. Should Australians make the mistake of voting Labour at next general election, I'm afraid, that, this time, they will be really down under. Or worse, down and out.
