Is Rudd Capable Of A Double Back-Flip?


The debate over the Resource Super Profits Tax (RSPT) grinds on. Today, Kevin Rudd is in Queensland, another post on his whistlestop tour to try and sell the benefits of the new tax.

Earlier this week, the Prime Minister was in Perth, where he spent time with some of the mining executives upset about the new tax.

Wayne Swan told Fairfax Radio that the talks were "constructive and genuine". Fortescue boss Andrew Forrest slammed them as "a charade". Executives who are complaining about not being consulted seem to have no trouble getting a face-to-face meeting with senior members of the Government, including the Prime Minister himself. It’s yet another example of the hypocrisy of the mining industry in this debate.

Meanwhile, as Rudd met with Forrest, Marius Kloppers and other less senior mining executives, the mining industry laid on one of the most spectacular examples of astroturfing in recent memory.

The term "astroturfing" has gained prominence in the United States in the wake of the "Tea Party" demonstrations when the Democratic Speaker of the House of Representatives, Nancy Pelosi pointed out that the bulk of the funding and organisation for the Tea Party protests was supplied by the US Republican Party and its wealthy donors. "We call it astroturf, it’s not really a grassroots movement," she said of the Tea Party protests. "It’s astroturf by some of the wealthiest people in America to keep the focus on tax cuts for the rich."

Exactly the same thing is happening in Australia with the RSPT debate.

Images from Western Australia this week show two of Australia’s richest people, Andrew Forrest and Gina Rinehart, leading a motley protest of mining industry executives and bussed-in "protesters". Take a look at the neatly printed signs the protesters are carrying and you can see why these protests are the opposite of a grassroots campaign. As the British newspaper The Independent put it in a headline: "Australian billionaires take to the streets for tax protest."

But just because the revolt from the mining industry is hypocritical and disingenuous doesn’t mean it hasn’t hurt the Government. Michelle Grattan observes today: "the tax debate is still making it nearly impossible for Rudd to get other messages aired." In fact, it’s worse than this: the RSPT controversy is derailing Labor’s re-election campaign, sucking up media oxygen the Government would rather be using to sustain carefully prepared announcements tailored to marginal seats. It can’t do this when the Prime Minister is travelling around regional Australia campaigning for the Government’s position.

You can see why political insiders insist the Government will eventually give ground, and make concessions on certain aspects of the RSPT — if only to try and take some heat out of the issue. Joe Hockey even claimed that mining companies had been briefed to expect an announcement to that effect.

For its part, the mining lobby is refusing to compromise. Key lobbyists like Mitchell Hooke clearly believe they can win this debate — and considering the recent record of the Rudd Government when faced with sustained political pressure, who can blame them? The Government caved early and often to industry rent-seeking on the CPRS, issuing concessions on pollution permits to nearly all sectors of Australian industry. And then it postponed the scheme entirely.

The sheer power of the mining lobby to sway the public debate on this issue has begun to worry some commentators, from both the left and the right. After all, if the Government can’t convince the majority of Australians of the benefits of a mining tax — levied on hugely profitable multinational corporations to help the retirement savings of all Australians — then the power of these vested interests may indeed be stronger than many have realised.

Former Liberal Party leader John Hewson argued this point yesterday in a column for the ABC. "It is a very real question whether our governments can actually govern anymore, with the power of vested interests, the shrillness of minorities, short-termism, and the superficiality of much of the media," he wrote.

Economics commentator Peter Martin made a similar observation. "If our government can’t pull this off, can’t exercise its sovereign right to introduce economic reform in the same way as have other governments when they reduced tariffs, taxed offshore petroleum and taxed goods and services, it will have diminished what is seen as possible," he wrote in his blog.

Hewson and Martin are right. But the seriousness of the issue also shows why Rudd may now be unable to back down. The hardball tactics of the mining industry have painted the government into a corner, giving it little room to manoeuvre and few options but to stay the course on the RSPT. A backflip now would be politically devastating for the Government, and particularly for the Prime Minster.

I think the big mining companies have overplayed their hand. They have little real support in the community. The outrageous claims being made by the likes of Forrest and Palmer will slowly reveal themselves to be hysterical and dishonest. If Labor wins the election, Big Mining will face a government hankering for revenge. And if the Greens control the balance of power in the Senate, there will be ample opportunity to exact it.

On the other hand, if the Government loses the election, it will be in no small part because of a well-organised campaign by the forces of capital — the mirror-image, if you like, of the well-organised campaign by labour against the Howard government and its industrial relations laws at the last election.

An Abbott government would almost certainly stymie any attempts to introduce emissions trading or other carbon regulations, and the interests of large corporations would enjoy favour and consideration.

This stark choice between capital and labour reminds us why debates about government policies are important. It also reminds us just how much power money can bestow. No wonder the current debate seems like a replay of earlier decades. When some of Australia’s richest people are calling the elected Treasurer a "communist", it’s hard to believe you’re living in 2010.

Ben Eltham is New Matilda's National Affairs Correspondent.