On industry assistance

Comments on Paul Kelly “No time to rest on our laurels”, 15/12/2010, http://www.theaustralian.com.au/news/opinion/no-time-to-rest-on-our-laurels/story-e6frg6zo-1225971162407
Paul, as you pointed out, "Labor's double dilemma is to deliver fiscal restraint post the global financial crisis yet to manage the structural pressures arising from the mining boom."

In that context, it is interesting to see how to interpret and apply correctly one of Banks' listed items, namely "less industry assistance", as well as the introduction of a new mining tax MRRT.

Broadly speaking, the introduction of the MRRT and the lowering of company tax rate is a form of general industry assistance, isn't it? That is because they assist all other industries against the mining industry.

So to manage the mining boom and the two speed economy does require differential treatment to different industries and that is broadly industry policy or assistance.

Someone may say that is not the same as industry assistance, but that betrays the underlying logic of the MMRT and using the proceeds to lower company tax rate. That is no less than or no different from using spin in argument.

In a sense, that would not necessarily to increase or decrease productivity, given that it is our export market customers that pay for this adjustment through the high prices they have to pay for our minerals.

However, that does illustrate the dilemma of the indiscriminate argument against industry assistance.

Governments everywhere do it, albeit in different forms and guises. Needless to say some are good and some are bad in their effects.