Struggling govt still has happy supporters
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CANBERRA, Feb 15 AAP
February 15 2013, 1:46PM
Labor voters are a happy bunch.
As federal government ministers go through hell trying to explain the deterioration in the budget and attempting to turn around the opinion polls, their supporters apparently still have a smile on their faces.
The Westpac-Melbourne Institute consumer sentiment index for February released this week showed overall confidence jumped by 7.7 per cent to 108.2 points, its strongest level since December 2010,
With the index comfortably above 100 - indicating there are more optimists from pessimists - it could bode well for retailers if this exuberance is converted into spending.
A demographic breakdown of the survey shows those aged 18-24 years - renters, sales and clerical workers - and wage earners in the $20,000-$40,000 bracket are the most content.
It also found confidence among Labor supporters had soared by 9.1 per cent to an index of 123.8.
In contrast, sentiment among Coalition supporters managed only a 4.3 per cent rise to 105.4.
Given Labor stands some 10 points adrift from the opposition in most opinion polls, and with Julia Gillard only just holding on as preferred prime minister, there seems little reason for ALP followers to cheer.
It's a long haul to the September 14 election day and the government's performance in the past week was far from glowing.
If respondents had been polled a week later, the results might have been very different.
The sentiment survey was conducted between February 4 and 8, so it wouldn't have reflected the full impact of the February 8 mining tax bombshell.
The minerals resource rent tax (MRRT), which is supposed to help spread the benefits of the mining boom, raised just $126 million in its first six months.
As one Coalition wit pointed out, that's just $5.50 for every man, woman and child across the country.
The mid-year budget review forecast the MRRT would raise $2 billion in its first year - a prediction already downgraded from $3 billion at the May budget.
Treasurer Wayne Swan blamed last year's collapse in commodity prices for the slim returns from the 30 per cent impost on the super profits of coal and iron ore companies, as well as an increase in state royalties.
Look no further than Rio Tinto - one of the three mining giants that negotiated the MRRT with Labor - to see the impact of sliding prices.
The miner reported a full-year net loss of $3 billion for calendar 2012, a $5.8 billion net profit in 2011.
New chief executive Sam Walsh confirmed the company hasn't paid any MRRT so far and he couldn't predict when it would, despite a recent rebound in iron ore prices.
"The MRRT was designed as a tax on super profits, on the mining industry, and importantly the tax is actually operating as it was physically designed," Walsh said.
The MRRT credits back all state royalties paid by liable miners, while allowing established miners already in production to write off the long-term value of their assets.
The Australian Greens are trying to get the MRRT loopholes closed.
The problem for the government is that while the MRRT stream is a trickle, and is likely to remain volatile, there are still a number of fixed expenditure items tied to the revenue.
These include funding tax concessions from increasing the compulsory superannuation guarantee.
It puts further pressure on the overall budget, which already has to fund new expensive initiatives like the national disability insurance scheme and additional education monies.
The opposition claims the government plans to tamper with the superannuation system in the May budget, particularly super tax concessions used by the wealthy.
But a report this week by consultants Mercer found the size of the super tax concessions in Australia aren't so generous when compared with comparable pension schemes internationally.
For example, the net retirement benefits for an average British worker would be 16.4 per cent, or $43,534, higher than their Australian counterparts.
"The last thing Australians need is more tinkering," Mercer's managing director David Anderson says.
The Treasurer has now left the oppressive climes of Canberra for the G20 Finance Ministers meeting in Moscow.
Ironically - and with the MRRT in mind - Swan will be arguing for co-operation between nations to close tax loopholes used by multinational companies.
By Colin Brinsden, AAP Economics Correspondent