Ruddism doesn't add up

MALCOLM Fraser, now the darling of the left, has declared the Rudd Government to be worse than the 1972-75 Whitlam Government.

Previously, even many within Labor's elite saw Whitlam as unsurpassed in incompetence because of his business policy approach.

How could Mr Rudd, whose wife is a self-made multi-millionaire businesswoman, have invited such condemnation?

Partly it is due to his government's surging spending, ineptly administered.  Partly it is due to increased regulatory intrusion.

Although Mr Rudd promised to repeal a regulation for every new one introduced, the 10,000 new or amended regulations have been balanced by the repealing of only 52.

But the big difference between this Federal Government and all previous ones is Mr Rudd's total misunderstanding of how a modern economy works.

Mr Rudd sees profits and earnings as funds that can be tapped without this adversely affecting corporate and personal motivation.

This leaves him willing to grab business profits to finance a radical reorganisation of the economy.

The Federal Government has taken aggressive steps to seize company assets in three major areas.  These include the $42 billion telecommunications fibre to the home plan involving seizing Telstra's network assets;  the $18 billion-a-year emission trading system tax;  and the $9 billion-plus annual resource rent tax on mining.

With telecommunications, the federal plan would resurrect the monopoly state-owned network and protect it from competition by forcing Telstra to fold its copper wire into that network.

Telstra criticism of this has been restrained, because it hopes to cut a deal and is aware attacking the Government would bring an even greater savaging of its share price than is already evident.

With the ETS tax, the response from business was mixed.  Support came from firms receiving free carbon credits, and from those looking to profit from trading carbon credits, building wind farms and other high-cost renewable facilities.

The major losers -- households and small businesses -- are too dispersed and ill-informed to offer robust criticism.

With the resources tax, all mineral businesses are losers.

The Government's line that miners would be better off paying a $9 billion tax impost fooled nobody.

If the resources tax was levied only on new investments, this would invite little opposition.  Miners would quietly move their exploration activity offshore.  The loss would be to future living standards.

This occurred in Argentina a century ago after it adopted business-unfriendly policies that transformed it from among the world's richest countries to among the poorest.

But as the resources tax is also to be levied on existing developments, it means diverting $9 billion a year of income to government coffers from mining companies' shareholders, including superannuation funds.

Mineral executives, whose basic task is to protect shareholders' wealth, had no alternative but to campaign against this.  Mr Rudd will now counter this and use taxpayers' money to promote his agenda.

Mr Rudd's ideology was foreshadowed in his maiden speech in Parliament 12 years ago, when he expressed contempt for governments that retreated from regulation, ownership and service delivery.

Unfortunately, this indicates a rusted-on anti-business philosophy and his policy mistakes as Prime Minister have taught him nothing.

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