By: Dr. Mike Campbell
Australia is a vast country; in fact, it is the sixth largest country in the world with a surface area of some 7.7 million square kilometres. The nation is blessed with an abundance of raw materials and is the world’s leading exporter of coal, supplying nearly a third of global needs. It has a population roughly a third that of the UK at just over 22 million people and a workforce of approximately 12 million people. Unemployment in Australia is currently at the 5% mark.
Demand for raw materials, notably from China has surged, helping Australia to emerge from the global financial crisis earlier than any of the other democratic economies. The government has just voted through a contentious tax on the profits of the mining companies which comes in at a whopping 30% (it had been negotiated down from 40%). Contrast this to the UK’s absolute refusal to contemplate levying an EU wide financial tax to be set at just 0.1% of the transaction value for fear of driving financial businesses away from London!
The tax, which is expected to raise about $11 billion per annum and the proceeds are to be used to fund a 1% cut in corporation tax from 30% to 29% to help boost competivity amongst other purposes. In another major contrast to northern hemisphere countries, the Australians are also planning to raise the amount paid to people’s retirement savings to 12% of salary by 2020 – currently the provision is 9%. In much of the world, governments are trying to rein-in pension bills and ask citizens to retire later.
The new tax may be short-lived since the opposition has promised to repeal it if they form the government after the 2013 election.