Wednesday, February 5, 2014

Abbott set to outsource fiscal policy to Coca-Cola Amatil?

What can one say. Sharman Stone, Liberal member for Murray, has branded the PM a liar over the SPC Ardmona brouhaha! It would be so much easier to feel some sympathy for Sharman had not her own efforts on the parliamentary committee on strata insurance in NQ been somewhat feeble.

The PM has responded to the brouhaha this week by bravely penetrating enemy lines to appear before Leigh Sales on the 7.30 report where he made this somewhat curious comparison:
"Coca-Cola Amatil is a $9 billion business in market capitalisation. In the last six months it made a $215 million after-tax profit. Coca-Cola Amatil has a better balance sheet than the Commonwealth of Australia, a stronger balance sheet than the Commonwealth of Australia ..."
It is surprising that this drew almost no comment given that it is a head-bangingly stupid and irrelevant comparison of a sovereign nation to a corporation. Having been sacked from Education perhaps CCL chair David Gonski should be doing the Commission of Audit? Hey, he may be a failure at tinned peaches and ideologically impure on the theory of learnin' but boy does he get a balance sheet!

CCL is indeed a well rated corporate with debt/equity about 90% and interest cover around 6x EBIT, but it's credit rating still remains somewhat short of the Commonwealth. It isn't clear exactly what comparable 'balance sheet' metric the PM has in mind?

Meanwhile there have been a number of reports on industry assistance in our brave new world post the age of entitlement. Peter Martin has a report today including a table breakdown of industry assistance to various sectors: Line in sand washed away by ocean of obfuscation

There are a number of other good reports, including a history of government handouts, and I may add some further links but also recently was noted a relevant IMF paper which features Australia as top of the list for tax concession entitlements: tax expenditures- we're number 1!

Go Straya! Oi! Oi! Oi! There is also a good post on this from Greg Jericho at Grogonomics: Billions lost in tax concessions exposes Australia's hypocrisy over federal aid

Meanwhile in other globally significant developments The Economist has declared the $AUD now undervalued on the Big Mac Index.

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