According to Yes Minister, there are two sorts of decisions that governments make. ''Controversial'' decisions cost votes. And then there are those famous ''courageous'' ones that cost elections.
But none of the 38 episodes of the comedy series describe the sort of the decision Kevin Rudd made about the resource profits tax. For the Labor Party the decision to pursue the tax was worse than courageous -- it verged on crazy. The tax had diabolical electoral consequences, while its policy merits were arguable at best and non-existent at worst. For Rudd, the personal consequences were devastating. lf it wasn't for the tax he'd probably still be living in the Lodge.
Of the three people who most vigorously promoted the tax he was the only one who suffered any retribution. Ken Henry, secretary to the Treasury Department has (for the time being at least) kept his job, while Wayne Swan actually got a promotion and became Deputy Prime Minister. Such is the fortune of politics.
Kevin Rudd will have plenty of time to contemplate the lessons of the resource super profits tax from the back bench. The entrails of the episode will be examined for years to come, and the mining industry campaign against the tax will join the Australian Council of Trade Unions campaign against Work Choices in advertising and marketing textbooks. Inevitably the history of the tax will be rewritten. Which is why it's important to dispel the three myths already starting to take hold.
The first myth is that ''reform'' is now dead. Supposedly we've now got proof that the era of grand economic reform is over. And we're supposed to think this because the government wanted to impose the highest mining taxes in the world, and after an advertising campaign against the tax the government backed down.
So let's correct a few misconceptions. For starters, simply calling something ''reform'' doesn't mean it is reform. The resource tax was not reform. Reform is when government cuts taxes. Increasing taxes on one of the few internationally competitive industries in this country is not reform. Only Kevin Rudd would have the temerity to claim that collecting billions of dollars in additional tax was reform. If increasing tax is the definition of reform then Gough Whitlam was Australia's greatest economic reformer. Lowering the corporate tax rate doesn't qualify as reform if the price is higher taxes elsewhere in the economy.
The story of what happened to the resource super profits tax doesn't tell us too much about reform. Instead, it tells us what happens when politicians unquestioningly endorse the theoretical modelling of econometricians that bears no relationship to the experience of the real world.
The second myth about the resource tax is that the changes to it announced by Julia Gillard are another victory for big business. In fact the reality is that the government's back-down was a victory for a handful of big mining companies. It was hardly a win for the small and medium-sized explorers and miners that still don't know what sort of tax regime they face. And it was hardly ''another'' victory. Since the election of the federal Labor government in 2007 it's difficult to spot what are all the other victories that big business has supposedly won. The abolition of Work Choices was hardly a triumph for corporate Australia.
Kevin Rudd's delay of his emissions trading scheme had nothing to do with big business. Big business supported the scheme because it allegedly provided ''business certainty''. Those wanting to discover a big business conspiracy behind every government decision conveniently forget that there are many instances of business supporting higher taxes and more regulation -- and the emissions trading scheme is just one example of this. Many companies are not averse to higher taxes if those taxes can be passed on to consumers and if those taxes don't affect the companies' profitability. Which is what occurred with the emissions trading scheme.
The difference with the resource tax was that the higher taxes the mining companies had to play could not be passed on -- and the tax did affect the companies' profit margins.
The third myth is that it was somehow illegitimate for the mining companies to campaign against the resource super profits tax. The mining companies had just as much right to run advertising campaigns against Rudd government as the ACTU had to run advertising against the Howard government. It's true that sometimes the more money you have the louder your voice. But that's freedom of speech.
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