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2010-05-23

Garnaut on interests groups

Distinguished economist Professor Ross Garnaut has joined the current debate of the government's resource super profit tax.

Garnaut is one of the most respected economists in Australia and has my highest respect both personally and professionally.

His argument that it is now dangerous time including a danger of powerful interest groups dominating and influence public policy making, though has merits, raises some questions.

In abstract and theory, public policy should not be influenced by special interest groups and should be made in the national interests as opposed to special interests of some groups.

However, the problem is that how one defines special interest groups that are most fascinating.

For example, Garnaut appears to imply that the voices from current mining companies represent voices from special powerful interest groups, and Treasury does not.

One may ask Garnaut some questions in relation to this:

1. is the Treasurer not a special interest group?

2. is the prime minister a special interest group?

3. why is Treasury not a special interest group?

4. is he not a special interest group, given that he was the author of the PRRT and the chairman of a mining company whose assets are overseas and is to benefit from a higher Australian tax on mining in Australia?

5. what about the wastes in the build education revolution programs and some other programs that the current government has got them seriously wrong and had been particularly reluctant to acknowledge and to correct until it become absolutely untenable?

6. what if the Treasury has got the theory, modeling and parameters wrong?

7. what if the mining companies are correct in their arguments?

The upshot is: while it is easy for people to argue a case using a theoretical concept and construct, it is not always clear that argument is relevant or correct or not in particular circumstances, such as the current RSPT.

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