Labor and the Greens on the Carbon Tax debate

above: Less tumultuous times for PM Julia Gillard and Greens leader Bob Brown

The following article evaluates the debate on Carbon Tax reform in Australia, but also divisons between the Greens and ALP government on Company Tax and with the Minerals Resource Rent Tax (MRRT).  Starting with a preference for distributive justice and social wage expansion, the author - Tristan Ewins - tries to chart some kind of way forward for the Gillard government and its allies.
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Debate on Company Tax cuts is beginning to gain momentum in Canberra with Gillard Labor, independents and the Greens at odds over what comprises the best policy. That debate is more broadly framed in the context of the Minerals Resource Rent Tax (MRRT), and a declared intent by Labor to direct new revenue into corporate tax cuts and infrastructure (especially in the ‘mining states’ of WA and Queensland), and in the process to provide room for an increase in superannuation contributions by business.

Therefore it’s probably best to explain the background of the MRRT before going into the debates that hinge on the treatment of revenue thus gained - and how all this relates to the other crucial debate on Carbon Tax reform.

During the 2010 debate David Richardson – writing for On Line Opinion – explained that the real effective rate paid by the miners in 2010 was 19 per cent, as opposed to 24 per cent for the corporate sector more broadly. To correct this the originally-proposed tax on ‘super profits’ aimed to affect profits above the government bond rate – then at 5.8 per cent. http://www.onlineopinion.com.au/view.asp?article=10469

The aim was to garner a fair share of profits from the sector for ordinary Australians who collectively own the non-renewable resources which the mining companies profit from.

But elements of the mining industry spent an estimated $22 million on advertisements undermining Rudd Labor in an effort that effectively brought down a Prime Minister. Mining concerns would have remained viable and profitable. But the scare campaign: threatening disinvestment and job losses – found its mark.

While the original tax was to be levied at 40 per cent, the heavily diluted version negotiated by Gillard will apply at 30 per cent on profits over the long-term government bond rate plus 7 per cent. http://www.abc.net.au/news/stories/2011/03/29/3176405.htm

Allowances and concessions will see an “effective statutory tax rate [of] 22.5%.” http://en.wikipedia.org/wiki/Mineral_Resource_Rent_Tax

And the newer version will also only apply to coal and iron ore, excluding other minerals including gold, nickel and uranium.

The original Resource Super Profits Tax would have raised approximately $12 billion over its first two years. http://www.theaustralian.com.au/national-affairs/greens-join-mining-tax-deal-revolt/story-fn59niix-1226027728392

But the revised Minerals Resource Rent Tax will see a significant reduction in revenue compared to the original proposal.

To be more specific: In 2010 Gillard Labor estimated the compromise would cost $1.5 billion less over the first two years than under the original package. http://www.news.com.au/business/the-great-mining-tax-battle-at-a-glance/story-e6frfm1i-1225888848317

But Treasury estimates suppose a gap in the vicinity of $60 billion over ten years; with some others projecting that the shortfall could be closer to $100 billion. http://www.perthnow.com.au/business/minerals-resource-rent-tax-to-regain-spotlight/story-e6frg2r3-1226025450249

It is in this context that Labor has downgraded its original promises to cut Company Tax. Instead of cutting the rate from 30% to 28%, now the government is proposing a cut of only one per cent. (ie: to a rate of 29%)

However Greens leader Bob Brown has argued that even a cut of one per cent would return half of new revenue taken back to the miners. Instead Brown is proposing a ‘two-tiered’ approach to Company Tax which would see only companies enjoying profits of less than $250 million enjoying the tax discount. This would hit ‘the big end of town’: including the major banks and mining giants – while sparing small business. For Brown the money thus saved would be better spent improving wages and conditions for aged care workers, funding national dental health care, or increasing Newstart, the youth allowance, Austudy and Abstudy," http://www.abc.net.au/news/stories/2011/03/29/3176405.htm

As against claims lower Company Tax is needed to allow for greater competitiveness, research commissioned by the Greens shows that the current rate of 30 per cent is still very significantly below the OECD “weighted average” of 36 per cent. The same research estimates a 1 per cent cut would cost $18 billion by 2021. http://au.news.yahoo.com/thewest/business/a/-/national/9091822/greens-want-to-restrict-company-tax-cut-to-small-business/

Such a pool of money could also be critical for infrastructure, education, and mental health and aged care services. http://www.businessday.com.au/business/mining-tax-tax-cuts-are-linked--swan-20110329-1ce3v.html

But there are potential issues for Labor in drifting away further from the platform it took on these issues to the 2010 Federal election.

To begin: it is important for Labor to honour any agreements in order to retain credibility as a partner for negotiation into the future. This means that if Labor has any kind of ‘agreement’ it is a practical necessity at least that the government ought enter into fresh negotiations if seeking to change its position on resource taxation during the current term. Either that or take such action as to make the consequences ‘neutral’ for those concerned. This could boil down to a choice between either increases in corporate superannuation contributions for low income workers, or abandoning the Company Tax cut, diverting the proceeds to other crucial priorities as Brown suggests.

Further: if the government goes down the path of increasing superannuation contributions for low income earners it would be best to also ease Aged Pension means tests for such groups to enhance any real effective gain.

It is equally compelling as a matter of public interest, however, that the electorate be made aware of the scope of any agreement Gillard made with the big miners, including BHP and Rio Tinto, and corporate Australia more broadly, in the run up to the 2010 poll. Negotiations with the most powerful corporate interests ‘behind closed doors’ is anathema to democracy.

Unfortunately, the political power of the miners, and the corporate sector more broadly, is not going to disappear any time soon, no matter how it skews democratic processes, overshadowing the voices of ordinary citizens. So maintaining credibility in negotiations with those interests is crucial no matter how problematic their power may be.

However it is also most definitely legitimate for Labor to seek a fresh mandate at the next Federal election to effectively increase and widen the scope of the Minerals Resource Rent Tax; and to start canvassing support for any such move now. Given the past defeat, though, Labor would need to adopt a cautious approach.

Yet there could be a difficulty with such a move as well if not handled properly. Labor might not want to ‘muddy the waters’ by pursuing too many distinct major debates on tax reform at once for fear of leaving some voters overwhelmed.

Climate Minister Greg Combet is anticipating a “long debate” suggesting any Carbon Tax will not be implemented until July 2012. http://au.news.yahoo.com/a/-/latest/9001318/carbon-tax-will-be-a-long-debate-combet/

In that context a ‘tax summit’ (Wayne Swan prefers the word ‘forum’) is planned for October this year. http://www.theage.com.au/national/key-tax-plans-before-summit-20110320-1c2bm.html

But without putting public fears to rest – as early implementation could achieve – the debate may become a ‘running sore’ distracting from any further reform agenda.

If the Gillard government could resolve the shape of Carbon Tax reform and see the tax implemented late this year (2011), though, fear and scepticism could be put to rest well before the next election. Crucially: this could provide the necessary time and ‘breathing room’ to pursue a debate on further significant progressive tax reform.

Taking that into consideration, the tax ‘summit’ or ‘forum’ could do to be brought forward somewhat – perhaps by a couple of months.

Openness to future reform is also crucial given the scenario of profit levels in the industry waning somewhat - to the point where the government will need to consider additional changes simply to maintain revenue, and fair returns on the natural resources that belong properly to all Australians.

All this considered, what is the best move for Labor in pursuing social justice objectives, while fostering co-operation with its independent and Green partners?

The key could be in the implementation of any Carbon Tax.

In 2010 the Greens were proposing a Carbon Tax of $24/Tonne, including assistance to ‘trade exposed’ industries. http://www.greenleft.org.au/node/43138

Without some form of assistance exports and import-competing jobs might simply be lost overseas without any real reduction in emissions.

Professor Ross Garnaut, meanwhile (responsible for the Rudd Labor ‘Climate Change Review’), has argued for a tax somewhere in the range of $20-$30 a tonne. http://www.smh.com.au/opinion/politics/garnauts-carbon-tax-plan-can-kill-two-big-reforms-in-one-hit-20110317-1by5o.html?comments=148

Garnaut has furthermore estimated that a carbon tax at a rate of $26/tonne would bring in $11.5 billion in the first year alone. http://au.news.yahoo.com/thewest/a/-/breaking/9032850/garnaut-ties-income-tax-cuts-to-carbon-tax/

Assuming these levels of revenue, it is the structure of compensation that is crucial: and which provides opportunities for fairer wealth distribution.

Firstly, compensation should take the form of direct payments for low and middle income groups, and increases in welfare – including the Aged Pension, Disability Support Pension, Austudy and Newstart. Income tax cuts, by comparison, are a clumsy instrument which would compensate high income groups who do not need the assistance.

Secondly: Compensation should exclude the top 30%-35% income demographic to provide sufficient scope to increase welfare and significantly improve the final financial position of low and middle income groups and individuals.

Thirdly: In this context - by returning all such revenue gained via a carbon tax taxpayers in the form of cash payments to low and middle income groups, including welfare recipients, Labor could actually expand and consolidate its electoral support base. This could very effectively undercut Abbott’s appeal to ‘battlers’ on ‘cost-of-living’ issues.

Fourth: A carbon tax rate at what Labor considers ‘the upper end’ of the scale (including the Garnaut proposal) could actually provide greater scope to assist low and middle income groups via compensation and effective redistribution. Hence it makes electoral sense in shoring up Labor’s support base.

Finally:  The only real problem in this scheme of things is that of what happens when the transition to a lower-emissions economy is actually achieved.  The problem being that at this point carbon tax or ETS revenue may 'dry up'.  For the long term, therefore, an alternative funding mechanism will be necessary to compensate low and middle income groups.  Hopefully, though, innovation in the renewable energy sector will also drive down cost structures.  Solar Paint, developed in Australia, looks particularly promising. See: http://www.abc.net.au/tv/newinventors/txt/s3008638.htm   and also: http://www.greenlivingpedia.org/Solar_paint

As for right-wing commentators such as Miranda Devine who seem to think distributive justice measures via tax comprise some malign ‘social engineering’: do they suppose the same is true in the case of most tax 'reforms' – including the gradual ‘flattening’ of income tax – which historically have redistributed wealth from low and middle income groups to the wealthy? The double-standards are palpable.

This leaves us with the concerns of Bob Brown and the Greens more broadly that emphasis on Company Tax cuts will leave crucial areas of the welfare state and social wage under-funded and exposed. While Labor cannot be seen to be simply ‘dancing to the Greens’ tune’, minority government necessarily involves compromise. And indeed, given their significant electoral support base, the positions of the Greens ought be considered seriously regardless.

As already alluded to – early implementation of a carbon tax could provide ‘breathing room’ for further debate and further reform before the next election.

In 2009 ‘Lateral Economics’ informed the Henry Tax review that ‘axing’ dividend imputation could save the Federal government $20 billion a year. http://www.businessday.com.au/business/dividend-imputation-wont-be-cut-says-henry-20090821-etwn.html

Dividend imputation is meant to stop so-called ‘double taxation’ of profits: providing credits to shareholders to compenstate for Company Tax already paid.  This was supposed to provide an incentive for investment. But the reform – first implemented under Keating Labor – provided a windfall for the most wealthy Australians, with a massive cost to the budget bottom line, and less money for crucial social programs and infrastructure.

Without fully removing the measure, shifting to half dividend imputation – as once suggested by progressive economist John Quiggin - would be a substantial equity measure, and provide over $10 billion/year much of which could be directed to crucial social programs in aged care, mental health and education, and for social housing and infrastructure.

Such reform would mainly hit millionaires who own so much invested wealth in this country: but small investors may resent the change as well. The benefit from social investment would need to be clear before the next Federal election. And while a means test could provide fairness to small investors, using some of the money to further improve the Aged Pension could be a smart move in the context of ‘winning over' such people as well.

Furthermore: to maintain investment in the Australian economy in that context, some of the money could be diverted to a public pension fund. (to be invested locally) Not only could this support ongoing job creation: it could also sustain the Aged Pension in the context of an ageing population.

A compromise between the Greens, independents and Labor – with early implementation of a Carbon Tax, and a trade-off for half-dividend imputation in return for agreement on Company Tax – could be in the interests of Labor’s core constituency. Appealing to the material interests of most voters, it would also consolidate Labor’s electoral support base, while being well in keeping with Labor ideals.

Tristan Ewins is a freelance writer and grassroots Labor activist based in Melbourne, Australia. He maintains and publishes the 'Left Focus' blog

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The mining tax could have paid for the ASU community sector wage claim

In this week's contribution labour movement activist Sarah Howe considers the claim by the ASU (Australian Services Union) for fair pay in the community services sector.  The sector involves mainly women workers, and the union is arguing underpayment is effectively discrimination.   Many are pointing to the potential cost of implementing equal pay, but Howe argues that if the 'Resource Super Profits Tax' (RSPT) had been implemented in its original form - money would not have been a problem.

By Sarah Howe, March 9th 2011

As the media has widely reported, the Australian Services Union is currently running a test case through Fair Work Australia seeking pay rises of between 14 and 50 per cent for about 200,000 mostly women workers in the social and community services sector.

The union wage claim is well deserved-with the media and submissions to Fair Work Australia pointing out that professional front line workers such as non-profit housing support workers are often receiving as little as $18 for extremely qualified and stressful jobs. The importance of the community sector to the health of Australian society and economy can’t be emphasized enough.

The ASU campaign for equal pay for community sector workers (and the growing significance of the sector to the economy) should be seen in the context of the move by Australian government to adopt the UK Blair government model of implementing more engaged, ‘joined up’ and networked approaches to governance and policy-making in recent years- particularly in relation to social policy. This trend has led to planning and service delivery increasingly being devolved to the so called ‘third sector’ (or the community sector). This sector is made up of organizations that are not-for-profit and non-government in diverse industry sectors and is increasingly doing the work traditionally done by government departments and authorities.

In Victoria, the Bracks Governments core social policy document in 1995- A Fairer Victoria: Creating opportunity and addressing disadvantage - aimed to tackle poverty and disadvantage had a strong emphasis on ‘building stronger communities’(Victorian Government: 2005). The community building strategy in this policy often has given responsibility to the community sector to plan and implement social policy outcomes, for instance with urban renewal programs. This is certainly the case in the Carlton context, where I work overseeing an employment program assisting newly arrived refugees into jobs.

In practice today, the community sector now both plans place based social services as well as delivering services on the ground-sometimes with the help of Federal, State and Local Government grants. However, despite the responsibility given to the community sector, significant investment is now required.

The negative view of the Blair model argues that ‘local self help, volunteering and social entrepreneurship are no alternative to progressive state and national tax, income security, service delivery and labour market policies needed to create the conditions for broad and sustainable reductions in poverty, inequality and social exclusion’(quoted in Wiseman, J: 2006).

‘No amount of local community capacity building can substitute for long term investment in core public infrastructure of schools, hospitals, health centers, housing, transport, parks and meeting places that can provide the real foundations for resilient and healthy communities’ (Wiseman, J: 2006 ).

Social services are in high demand, but often woefully under-funded. In my work, I am currently establishing an occasional childcare service to support housing commission residents look for work in Carlton. Yesterday I inspected a similar service managed by a not for profit agency in Broadmeadows. The Broadmeadows service assists newly arrived migrants study English at a location close to their children.

The Manager of the service told me how difficult it was to run the childcare centre, off a low funding base - including paying the current award wages. As we walked to the childcare centre, she joked that they call it the Hawke building- it was paid for under the 1990’s Federal Government capital grants scheme. This scheme does not exist now. Many parents wish it did, as childcare shortages are legendary, and the Local Government and community sector are struggling to provide these vital social services to families in the community. These services are critical for women seeking to re-enter the workforce.

The Federal Government’s response to this investment shortfall is to continually reiterate its desire to ensure fiscal sustainability and return the budget to surplus. In relation to the ASU wage claim, the initial response by the Federal Government was to say that any additional wage costs would come at the expense of other government funded services (Commonwealth Government in The Australian: 2010).

However, in December 2010, the Federal Government at the instigation of the PM intervened to clarify that Fair Work Australia should not award or discount equal remuneration because of the potential impact on the Commonwealth - however despite this reassurance, not much detail was provided on how the wage claim or ongoing capital investment costs of the sector would be met in the future.

While the Federal Government clarification is a positive development for the wage claim, I agree with Kerryn Williams’s recent article in Green Left Weekly in arguing that mining company BHP Billiton’s $10.5 billion profit for the second half of 2010 ‘highlights the shameless greed of those making a fortune out of Australia’s valuable resources’ and underscores the loss for social policy associated with the enormous reduction in revenue associated with the watered down Minerals Resource Rent Tax (MRRT). Recent Treasury estimates indicate that the MRRT will reduce the original RSPT’s 40% tax to just 30%, and will bring in well under half the revenue (Williams: 2011).

“The original tax was supposed to raise about $99 billion starting from the 2012-13 financial year until 2020-21. But it now looks like this figure will be only $38.5 billion. That’s $60.5 billion that could have been spent on health care, education or the shift to renewable energy” (Williams: 2011).

We could add to Williams list of social policy funding needs- the costs of urgently needed community infrastructure and labor costs (the wages bill from the ASU case estimated conservatively to be worth Victorian tax payers $200 million and at the most $1.7 billion over four years). In the absence of reform of the taxation system, the phased in strategy for labor cost increases will have to suffice.

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References:

The Australian, ‘Government warns on women's pay rises’ November 19th, 2010

The Age, Equal pay case could cost Victoria $1.7bn, February 2, 2011

Wiseman, J. ‘Local Heroes: Learning from Recent Community Strengthening Initiatives in Victoria’, Australian Journal of Public Administration, Vol. 65, No. 2, June 2006, pp. 95-107

Williams, K, Mining profits reveal true greed, Green Left Weekly, March 6th, 2011.

Why Gillard could lose: It's an ‘economic rent’ election

above: the author Gavin Putland

Guest post by Gavin R. Putland of Prosper Australia. 


Prosper Australia is a self funded NGO (non government organisation), inspired by the economic justice that can be achieved by distributing the wealth produced from land amongst the entire community.

See: http://www.prosper.org.au/

nb: pls also check out our earlier articles relevant to the Australian Federal Election;

Click 'Left Focus' at the top of the page; and scroll down for analysis on the election, and the policy issues at stake!

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In this article - on the eve of the 2010 Australian Federal Election Gavin Putland argues that if Julia Gillard loses that election it could be as the consequence of Labor 'taking on' powerful economic interests.  Here's hoping that isn't that case!! - but this account of the influence of economic rent in Australia is well worth reading.


Charles Richardson (Crikey, Aug.17, item 15) offers three rules on federal elections. The second rule, which held in the last six out of nine cases, is that first-term governments are re-elected (albeit with a reduced majority, according to the first rule). The third rule, which held in the last 12 out of 13 cases, is that close elections are won by incumbent governments.

These rules point to a Gillard victory on Saturday. So does Malcolm Mackerras's whimsical law of electoral history, which has held in two out of two cases to date, and which states: “Winter elections are always called by Labor Prime Ministers who are always rewarded by the vote of the people on polling day.”

However, a Gillard victory August 21 would defy a much older rule, which says roughly: “Those who upset the tables of the money-changers get crucified.” In terms of Australian electoral history, the precise statement is:

Of the major parties, only Labor has been courageous/foolhardy enough to contest federal elections on a platform of increased taxation of economic rent. In three out of eleven cases, it has lost.

So what is economic rent? Let's begin with the most general definition, which also happens to be the most relevant to the present election campaign, and then look at special cases that figured in past campaigns.

What accountants call “profit” includes the necessary return on capital (“normal” profit), without which an industry will not attract investment. Competition tends to reduce the return on capital to the normal level.

Sustained super-normal returns therefore indicate some sort of protection from competition; for example, the exploitation of land, petroleum, coal or iron ore enjoys such protection because the supply of the resource — at least for any given quality and accessibility — is limited. The benefit of that protection is economic rent. So normal profit is a cost of production, while economic rent is the surplus after all costs, including wages and normal profit, have been paid.

Hence a tax on economic rent, unlike a tax on wages or normal profit, is not a cost of production, but merely cuts into the margin by which the protected price exceeds the necessary cost. If the tax is implemented so as not to reduce the expected rate of return below the normal rate (where “expected” is meant in the statistical sense), it does not deter investment.

A profit-based resource-rent tax (RRT) estimates the economic rent of a natural resource as the margin by which accounting profit exceeds normal profit. To minimize the impact on the expected rate of return, and hence on the incentive to invest, the tax on super-normal profit must be offset by a tax credit for sub-normal profit.

Under the aborted “resource super profits tax” (RSPT), unused credits were to be refundable with interest at the 10-year federal bond rate, which was assumed to be the price of the risk that Parliament would repeal refundability of existing unused credits. On that heroic assumption, the same bond rate was to be the allowance for normal profit, because a more generous allowance would amount to a minimum-risk return above the minimum-risk interest rate.

Whereas the RSPT made insufficient allowance for normal profit, the existing company tax makes no such allowance at all. Therefore, had the mining companies been concerned about maintaining Australia's ability to attract investment in mining, and not about defending their economic rents, they would have campaigned against the existing company tax, not the RSPT.

Under the existing petroleum resource rent tax (PRRT), which has the same 40% rate as the RSPT, unused credits are not refundable, but are carried forward at a more generous interest rate after a correspondingly more generous (and more realistic) allowance for normal profit. So the obvious answer to complaints about the RSPT was to turn it into a clone of the PRRT. There was no need to reduce the 40% rate. That the mining companies focused so heavily on the rate is further evidence that they were more jealous of their economic rents than of their necessary profits.

Gillard's “minerals resource rent tax” (MRRT), with its effective rate of 22.5%, is a partial sell-out to the rent-takers. But by comparison with the status quo, it is an increase in taxation of economic rent. Tony Abbott, of course, opposed the RSPT and opposes the MRRT. So Gillard is promising to increase taxation of economic rent while Abbott is promising not to. According to the precedents, that means Abbott will probably win.

Why only “probably”? Because the PRRT was Labor policy at the time of the Hawke landslide of 1983, was announced during the Hawke government's first term, survived an apocalyptic advertising campaign by the oil companies, and was a point of difference between the parties at the 1984 election, which Hawke won. Since then, however, the Superannuation Guarantee has turned even low-paid workers into (among other things) small shareholders in mining companies, so that they can be duped into thinking of themselves as shareholders first and workers second. That makes life harder for Gillard than for Hawke. Moreover, the PRRT was in Labor's platform for the 1977 and 1980 elections, which Labor lost.

In principle, the economic rent of land can be captured by a profit-based RRT with a deduction for normal profit. In practice, however, as the value of land per unit area tends to be a smooth function of location, it is more convenient and more accurate to value land from real-estate transactions. This method is used for land tax and site-value rates, which might be described as valuation-based RRTs.

At the 1910 federal election, the Labour Party (as it was then called) under Andrew Fisher won majorities in both houses of Parliament on a platform of introducing a federal land tax, with a £5000 threshold and with no exemption for the family home. As the alternative sources of federal revenue at that time were indirect taxes, it was as if Kevin '07 had won by promising to abolish the GST in favour of an all-in land tax.

The federal land tax was duly introduced in the Fisher government's first budget, and remained in force until it was abolished by the Menzies government in 1952. Restoration would be difficult because the rise in the rate of home ownership — from 40% in 1947 to 70% in the 1960s — produced a large majority of voters who could be beguiled into thinking of themselves as land owners while downplaying their interests as consumers, workers, and land users.

Restoration of the tax remained Labor policy until 1964, when the tax was unconstitutionally omitted from the published version of the party platform without any authorization from the 1963 national conference. It was never reinstated. (Clyde Cameron told the story in the speech “How Labor lost its way”, delivered at the opening of the South Australian headquarters of the Henry George League on May 13, 1984.) The elections lost by the Labor Party while the restoration of federal land tax remained in its platform were those of 1954, 1955, 1958, 1961 and 1963.

Land and natural resources tend to appreciate due to growth in effective demand. Capital, in contrast, normally depreciates due to wear & tear and obsolescence. If the real value of an asset rises, it induces production of more such assets until competition enforces the usual depreciation — unless, of course, the assets cannot be produced or their production is protected from competition. So a capital gains tax (CGT) overwhelmingly captures economic rent rather than normal profit.

The last leader who sought a mandate to increase or extend CGT was Kim Beazley, who in 1998 proposed to raise an additional $200 million per annum by bringing pre-1985 assets into the CGT net. Only capital gains accruing after 1999 were to be taxed; but that didn't stop opponents from branding the tax “retrospective” — just as the RSPT was branded “retrospective” for taxing future super profits of existing projects.

On ABC radio in Brisbane on October 1, 1998, Beazley declared: “The only retrospective tax in effect in this election campaign is the retrospective impact on savings of a thirty billion dollar GST... If you're in a room with a gorilla and a chihuahua, on whom do you focus? You focus on the $30 billion gorilla, not the $200 million chihuahua.” Beazley won the popular vote (two-party preferred), but failed to win a majority of seats. Australia got the gorilla.

The introduction of the CGT by the second Hawke government was not a departure from the rule, because Hawke did not fight an election on it, and because the package was sweetened by the elimination of double taxation of dividends, including those from corporations whose “profit” was mostly economic rent.

The spectre of CGT figured in the 1980 election campaign, for which Labor had the PRRT in its platform. In a TV debate with Primary Industries Minister Peter Nixon, Labor's Senator Peter Walsh was asked about Labor's policy on taxing capital gains and inherited wealth. According to his memoirs (Confessions of a Failed Finance Minister, Random House, 1995), Walsh gave the standard response which had been stated in the party platform, and which had been repeated by Shadow Treasurer Ralph Willis a few weeks earlier, namely that a Hayden Labor government would review the tax system. In the hands of the Coalition parties and the Murdoch press, in the last week of the campaign, this non-answer was transmogrified into a wealth tax on the family home, and cost Bill Hayden the Prime Ministership.

The MRRT, like the PRRT, targets economic rent. If the PRRT was the motive for hobbling Hayden, the phantom tax on the family home was the means. The MRRT is certainly a motive for hobbling Gillard. We can expect the means to become apparent in the last days of the campaign.

The money-changers in the Temple of Jerusalem were protected from competition: they had the monopoly on the supply of the only coinage in which pilgrims could buy sacrificial animals. So at times of high demand (like Passover), they could rake in more silver than they paid out. The difference, less the cost of coining, was their economic rent — for which Jesus branded them thieves. It doesn't matter that Gillard is no messiah, no prophet, and no saint: she is threatening the tables of the money-changers, and they will crucify her any which way they can.