Colin Lea's  Instablog

"I cannot overstate how the level of uncertainty about Australia's tax system is generating negative investor reaction. People don't know where it's going" ... Jac Nasser.

Read more: http://www.smh.com.au/opinion/political-news/bhp-boss-threatens-to-invest-offshore-20120516-1yrc2.html#ixzz1v3eJUSLM

AUSTRALIA'S most influential businessman, Jac Nasser, has slammed the Gillard government's record on tax and industrial relations, saying that unpredictability is undermining investment and could push BHP Billiton offshore.

Addressing the Australian Institute of Company Directors yesterday, the chairman of BHP Billiton demanded the government deregulate the industrial relations system and stop targeting the minerals sector with taxes. ''I cannot overstate how the level of uncertainty about Australia's tax system is generating negative investor reaction. People don't know where it's going,'' he said.

Mr Nasser also had a shot at the Treasurer, Wayne Swan, who has declared war on mining magnates Gina Rinehart, Clive Palmer and Andrew Forrest, claiming they are using their wealth to shape public policy for their own betterment.

''Attacking individuals and specific industries doesn't build confidence in our country, nothing good comes of this,'' he said.

Mr Nasser said that given the uncertain global outlook and the fact that some domestic leading indicators were not encouraging, the government needs to get the two key levers of tax and industrial relations right to boost sentiment and confidence.

He was critical of the federal budget for axing a promised 1 percentage point cut to company tax because it would not pass Parliament and instead spending the money on family payments. Mr Nasser said it put wealth distribution ahead of wealth creation.

Mr Swan hit back, saying ''we understand the frustration that the Liberal Party blocked a company tax cut and are instead increasing the company tax rate'' to fund its paid parental leave scheme.

The most recent tax changes affecting the mining industry are the minerals resource rent tax - which BHP helped design - and the carbon tax.

Mr Nasser's comments suggest the mining industry is delivering a warning to the government against any additional tax imposts to capture further revenue from the mining boom, especially if the mining tax fails to raise the forecast revenue - as the miners and the opposition are claiming.

Mr Nasser said BHP, like many in the resources industry, was feeling the pressure from increased costs, increased taxes and royalties from state and federal governments, continuing global volatility and ''a much more difficult industrial relations environment''.

''In recent years, it's hard not to feel as if our industrial relations system has been like a pendulum swinging from one approach to another,'' he said, adding it should be swung back towards the interests of employers.

He warned BHP had a ''diversified portfolio'' of countries and products in which it could invest. ''Given our range of options, if we can't meet our criteria in any one project, product or geography, we will redirect our capital somewhere else or we simply won't invest at all,'' he said.

The Workplace Relations Minister, Bill Shorten, said people such as Mr Nasser needed to move beyond threatening to go elsewhere unless they received favourable tax treatment and the workplace was deregulated. ''There's more to public policy than that,'' Mr Shorten said.

He said it was unfair to blame labour laws on low productivity without looking at internal practices as well and he would be happy to meet Mr Nasser.

Mr Nasser joins a growing chorus of business leaders arguing the government is anti-business and engaged in short-term policy making.

Last week, the Prime Minister, Julia Gillard, received a welcome word of public support from the Westpac boss, Gail Kelly, who urged her industry colleagues to set aside their combative stance with the Labor government.

Read more: http://www.smh.com.au/opinion/political-news/bhp-boss-threatens-to-invest-offshore-20120516-1yrc2.html#ixzz1v3ebObY1

Disclosure: I am long BHP.

That said, as much as I plan to take a break the analyst in me will be keeping tabs on the following companies, the observations of which may appear in a subsequent article:
 

• Southwest Airlines (LUV)
• McDonald's (MCD)
• Hertz Global Holdings (HTZ)
• Starbucks Corporation (SBUX)
• Walt Disney Corporation (DIS)
• Brinker International (EAT)
• Marriott International (MAR)
• Blackstone Group (BX)
• Wyndham Worldwide Corporation (WYN)

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The U.S. Federal Reserve was founded 99 years ago, as a bulwark to the banking system and an antidote to its frequent runs and panics. Strictly speaking, it was America's third attempt at a central bank. The first, organized by Congress in 1791, was allowed to expire after 20 years, leaving the young republic with only a patchwork system of weaker state banks. During the War of 1812, Congress realized its error (in the absence of a central bank, inflation had run rampant), and in 1816, it chartered a second bank, again for 20 years. The Second Bank of the United States was, in the main, a success. Its notes were circulated as currency, and it astutely managed their supply so as to keep the economy humming. Alas, President Andrew Jackson, a fierce opponent of both paper money and national banks, campaigned in 1832 against renewal of the charter, and indirectly against the bank's brilliant but impetuous head, Nicholas Biddle. Resentment against financiers was running high, and the election became a referendum on the genteel Philadelphia banker versus the rough-hewn war hero-and a referendum on the bank itself. Jackson won, and the Second Bank was, per his promise, destroyed. The U.S. economy promptly plunged into a severe depression. Biddle died not long after, in semi-disgrace, but the battle between bankers and populists never went away.

None of the invective heaped, of late, on Ben Bernanke would have come as a surprise to Biddle, and one doubts whether the Fed would fare much better with the electorate today than the Second Bank did in the 19th century. Bernanke himself certainly would not win a popularity contest. In 2010, four years after his appointment by President George W. Bush as Fed chief, he was approved for a second term by a Senate vote of 70 to 30-the slimmest margin for a Fed chief ever. (In 2000, Alan Greenspan won a fourth term by a vote of 89 to 4.) Bernanke's troubles with politicians were a direct result of his sagging poll numbers, and since his reappointment these numbers have only gotten worse. In a Bloomberg poll last September, only 29 percent of respondents expressed a favorable opinion of Bernanke; 35 percent had an unfavorable view. In October, just 40 percent of those surveyed by Gallup said they had confidence in Bernanke's ideas for creating jobs; even congressional leaders inspired greater faith.

Over the past four and a half years, Bernanke, 58, has presided over the most sustained period of crisis of any civilian official in recent history, with the fate of millions of unemployed and underemployed Americans hanging in the balance. Only recently has the economy begun to show signs that the recovery is gaining steam. Since August 2007, Bernanke has deployed the Fed as the lender of last resort to the banking system and worked overtime to furnish an "elastic currency"-that is, to keep enough money in circulation for the economy to function. These were the very tasks that the founders of the Fed envisioned. Bernanke has performed them by tripling the size of the Fed's balance sheet-to an eye-popping $2.9 trillion-and by inventing a welter of new programs to lend to banks and other private-sector institutions. For most of the Fed's history, popular opinion-being generally opposed to depressions-has favored such efforts, but today the public's disgust with government, and with banks, has cast a shadow of suspicion upon Bernanke. Ron Paul touched a chord when he asked, in November 2010, how the Fed could create $600 billion "with the stroke of a pen." So did Michele Bachmann, grilling Bernanke at a congressional hearing a few months after the crash, when she queried, "Do you believe there are any limits on the authority that the Federal Reserve has taken since March 2008?"