Old school politician Macfarlane tells it like it is on carbon tax
Western politicians these days are masters of the 30-second sound bite, and spin prevails over substance. So it was refreshing to encounter an old school politician who tells it like it is in the form of Ian Macfarlane, Australia's minister for industry. He was speaking at the Asia Mining Club in Hong Kong yesterday where he was interviewed by Lai See.
Although the current coalition government is intent on repealing the carbon and resources taxes, we wondered if the genie hadn't been let out of the bottle and that for potential investors an element of uncertainty had been injected into the tax framework surrounding the mining sector. He began his answer by recalling a recent meeting with some business people who'd been discussing an investment case. It turned out the choices were between Australia and Kazakhstan. "Of course it was a no brainer," said one of the businessmen. "Kazakhstan won."
Macfarlane observed that it only takes a few years of bad government to destroy an investment reputation and conceded that Australia did have a sovereign risk issue. However he was at pains to assure potential investors that the government intended to change the investment environment for the mining sector.
In addition to tackling the carbon and resources taxes, the government had started to tackle red and green tape, which was slowing the granting of exploration and mining permits along with addressing inflexible working practices that were helping to drive up labour costs and reduce productivity. "The message we want to give to investors is that there is a very significant change going on in Australia. We are open for business," said Macfarlane. However as we all know talk is cheap and the proof of the pudding is in the eating.
Only the best can join the party
We see that the number of new members joining the communist party declined by 25 per cent last year, the first time in 10 years there has been a decline. The official reason for this, Bloomberg reports, is that the party is looking for higher standards from its members. According to Liu Xutao, professor of public affairs at the Beijing-based Chinese Academy of Governance, the past decade has seen the party become bigger and more bloated, with many members being underqualified and prone to corruption. We can't help feeling that with the new more stringent requirements, party membership may seem less appealing than previously. Under new guidelines party members will be required to actually serve the people without being able to help themselves to the perks that traditionally went with the job.
Lack of jail time is not justice
The eye-watering US$8.9 billion fine BNP Paribas agreed to pay to US regulatory authorities is the latest and the biggest in a number of big fines in excess of US$1 billion the banks have paid to regulators to avoid being tried for their misdeeds. In May, Credit Suisse was fined US$2.6 billion for helping Americans hide money from the taxman. In January JP Morgan paid US$1.7 billion to settle US claims related to its involvement with Bernard Madoff's Ponzi scheme.
In 2012, HSBC paid out US$1.9 billion on money laundering charges. Interestingly it's the bank's shareholders that have taken the hit. Nobody has gone to jail. Meanwhile, individuals that don't work in banks are routinely given severe jail sentences for much smaller levels of money laundering. As we have said before there is no quicker way of curtailing wrongdoing in the financial industry than by sending senior figures to jail. The current arrangements aren't good for the justice system.