Agmates

Freelance Journalist and Agmates member John Mikkelsen writes:

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John Mikkelsen

A fog of uncertainty still surrounds Gladstone’s Rio Tinto workers after the company last week finally rejected the Chinese bid to acquire a $27 billion slice of the action.

On face value, it seems the best solution to Rio’s financial woes. The formation of an iron ore production joint venture with old rival BHP Billiton, combined with a rights issue to shareholders, should raise enough to meet Rio’s scheduled repayments on its $57 billion debt following its costly merger with Alcan in 2007.

There had been widespread opposition to the Chinalco offer, which would have delivered the Chinese Government – owned company 18 percent of Rio.

More significantly, it stood to gain 50 percent of the Yarwun alunina refinery plus significant stakes in Boyne Smelters Ltd, Queensland Alumina Ltd and the Gladstone Power Station, which collectively employ more than 3000. It would also have gained control of the company’s bauxite leases in northern Australia.

Chinalco was also scheduled to decide whether it would finance the $2 billion Stage 2 expansion at Yarwun by June 15, also the date the Foreign Investment Review Board was expected to reach a decision on the Chinalco offer.

If all that sounds confusing, that’s because it is. And unfortunately at this stage, the Gladstone workers seem to be the meat in the sandwich in what otherwise could be seen as a good deal.

When Rio was actively promoting the Chinalco offer only a few months ago, it warned there could be up to 3000 job losses if it did not proceed. Gladstone had seemed largely immune up until mid- April, when the axe suddenly fell on 600 Rio workers and contractors.

In a letter to shareholders last week, Rio chairman Jan Du Plessis said the expansion would proceed under the proposed new arrangements, but

“at a slower pace than previously announced”.

Who knows what that means? In the wake of the last job cuts, the company had already announced the expansion would be delayed by two years, rather than dropped. Last weekend a company spokeswoman told the Observer the Gladstone operations were not in the clear yet.

“We are facing challenging economic times and keeping a close eye on the market.” she said.

Back on April 25, I wrote,

“Naturally there is a concern there could be further cuts if the Chinalco bid is rejected.

However, Rio recently hinted of a Plan B …..This could involve selling shares, bonds, assets and rescheduling debt repayments; and BHP Billiton is watching…”

Obviously, they were watching very closely and the rising markets seem to have played into their hands, with Rio shares now about twice their value when the Chinalco offer was first raised. This would have made the offer less attractive and less likely to receive a final nod of approval from shareholders even if it had been passed by the foreign investment watchdog and Treasurer Wayne Swan.

The Federal Government has also dodged a political bullet by not having to reach a decision on the controversial Chinese bid. There are still some review processes in relation to the proposed BHP – Rio joint venture, but it seems likely to be a done deal.

As a Rio contact told me this week,

“What’s not to like; it’s a win/ win situation for the company and shareholders”.

(He was rubbing his hands in anticipation of what is basically a one for two share offer at the heavily discounted price of $28.29 per share.)

Opposition Leader Malcolm Turnbull, Nationals Senate leader Barnaby Joyce, Greens leader Bob Brown and Independent Senator Nick Xenophon will also applaud the move to keep ownership of Australian resources out of Chinese hands.

But the Chinese Government is not happy. It claims the new iron ore joint venture by the two former rivals will create a monopoly, which will drive up prices and may force it to look elsewhere.

Meanwhile, the Queensland Government has copped some flak for awarding a $45 million contract to a Chinese company to supply glass for its new Supreme and District Courts building in Brisbane, rather than struggling local company G. James Glass.

“Sources said the windows job on the $600 million Supreme and District courts building would have been a lifeline for G. James, which sacked about 100 staff in March because of a downturn in orders.”

Interesting times, Grasshopper.

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Agmates member and freelance journalist John Mikkelsen writes:

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THE build-up to this week’s Federal Budget reminds me of the hype over swine flu – it was going to be a shocker but turned out to be a bit of a fizzer as far as horror stories go.

A deficit of almost $58 billion instead of the $20 billion surplus forecast in last year’s budget is no cause for celebration, but the leaks before Treasurer Wayne Swan’s delivery on Tuesday night made sure any shock value was lost.

So if you tuned into Auntie to watch the presentation live in the hope of seeing the fiscal facsimile of Wolf Creek or the Blair Witch Project, you would probably have been a bit disappointed. Instead of a Canberra Chainsaw Massacre, we saw something more in tune with Willy Wonka and the Chocolate Factory.

Not that it was all good, there was some bad news and belt-tightening mainly for higher income earners, and for those in their forties or younger who had hoped to retire at 65.

Sorry, you’ll have to be nice to your bosses for at least another couple of years before you can tell them what you really think.

There was good news for single pensioners with $32 a week more, couples gain an extra $10, carers an extra $600 a year, workers receive some small tax cuts, but those on unemployment or single parent benefits miss out.

The $22 billion approved for major infrastructure is good news, even though it had been earmarked the previous year. But the devil is in the detail and most local residents will want to hear if a sizeable allocation will be made for the Gladstone airport upgrade. Don’t hold your breath.

It’s interesting that this “third stimulus package” is about equal to the cash handed out in bonus payments. (Critics claimed these did more to stimulate the pokies or the economies of countries such as China, churning out their plasma TV’s).

Cutbacks to private health insurance rebates are bad news but again we knew about those weeks in advance.

Now fired-up Opposition leader Malcolm Turnbull has challenged the government to swap the health cuts for an extra three cents tax on cigarettes, which he said would raise the same amount and lower the strain on health services. Go Malcolm!

The biggest criticism of the budget is its sugar coating of forward income estimates and a return to a budget surplus position as soon as 2015, which many analysts, even punters, see as over optimistic. And there are suggestions the government would really like the Opposition to trigger a double dissolution election before they have to frame next year’s budget, when the really bad news would hit the fan.

Centrebet has described this week’s effort as “A Journey into Neverland” and its odds on a Rudd government being returned next election have taken a blow.

Independent Senator Nick Xenophon labeled it ” A Harvey Norman budget – Buy now, pay later.”

Reminds me of a story I heard which could hold an answer:

“Holiday season is in full swing at a small seaside town but it’s raining so there is not much business. Everyone is heavily in debt.

A rich tourist arrives at the small hotel. He asks for a room and puts a $100 note on the reception counter, takes a key and goes to inspect the room on the third floor.

The hotel owner takes the banknote and rushes to his meat supplier, whom he owes $100.

The butcher races to his supplier to pay his debt. The wholesaler rushes to the farmer to pay $100 he owes for pigs.

The farmer gives the $100 to a local prostitute who had supplied her services on credit. The prostitute goes quickly to the hotel and pays the $100 bill for her hourly room use.

At that moment, the rich tourist comes down to reception and informs the hotel owner the room is unsatisfactory, takes his $100 back off the counter and departs.

There was no profit or income. But everyone no longer has any debt and the small town people look optimistically towards their future.”

Hmmm, has to be a catch. Or you could say, the benefits of ” Buy now, pay later” depend on good luck and good timing. I wonder if Wayne Swan had heard that story?

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Independent Senator for South Australia Nick Xenophon writes:

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A decision by the Victorian Government to abandon a 10% limit on the amount of Murray-Darling water that can be traded is proof the restriction was wrong.

The move comes after the South Australian Government threatened to contest the legality of the Victorian restriction in the High Court – a move of which I have been a long time advocate.

The Victorian Government knew this scheme wouldn’t hold water if it was scrutinized by the High Court. This is further proof that state governments can’t be trusted to act in the national interest.

The abandoning of this cap will mean more water can be traded which in turn should mean more water for South Australia.

However, Victoria’s 4% cap on the amount of water that can be traded outside the State remains.

In February this year I negotiated with the Federal Government for a $500 million fast tracking of funds for water buybacks along the Murray-Darling River system.

The South Australian Government decided to take the Victorian Government to court when it became clear the Federal Government’s accelerated buyback was being hindered by the Victorian government’s caps on trade.

Victoria’s decision today is a tacit acceptance of the fact that state and territory governments don’t actually control the rivers. If this went to the High Court, I believe the Federal Government would be found to be the ultimate authority over the rivers.

That’s why I am again calling for an immediate national take-over of the Murray-Darling River system. We need one river system with one set of rules and we need that river system to be run in the national interest.

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Have Your Say.

Independent Senator from South Australia Nick Xenopkon despite his bluff and bluster about standing up for the people of the Murray Darling basin has rolled over this morning and voted with the Rudd government to pass the $42b stimulus package.

Shadow Minister for Agriculture, John Cobb [pictured]writes from Canberra this morning.

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I am genuinely appalled that every man, woman and child in Regional Australia will now be saddled with $9,500 debt.

The Rudd Labor Government has now spent everything the Nation had in reserve – there is nothing left in the kitty.

My major concern is the direction the Rudd Government is leading our Nation.

Last time Labor maxed out the credit card to the tune of $96 billion, taxpayers paid over $108 billion in interest alone. Just think of how many schools, roads, hospitals, ports, railway lines, water infrastructure, could have been built in regional Australia if the nation had not been saddled with $108 billion in interest repayments alone.

The Rudd Labor Government has absolutely no idea about how or who will pay back its $200 billion plus interest debt.

Far from creating jobs the Rudd Labor Government’s $500 million water buy back deal with Senator Xenophon will destroy jobs and productivity in the Murray Darling Basin.

The last time the Government was panicked by greenies they bought Toorale Station near Bourke in my electorate which resulted in the loss of 100 full and part-time jobs, slashing the economic out put of the Bourke Shire by 12 percent.

This deal is job and productivity destroying making a complete mockery of the government’s claims that its legislation which authorises the increase of public borrowing to $200 billion is all about saving jobs.

We need infrastructure which will create jobs and improve productivity, not these types of dodgy deals that will see more communities in the Murray Darling Basin destroyed.

We have been completely sold out in regional Australia, not only will we be lumped with a $200 billion debt, our ability to produce food and pay off that debt has been destroyed by the dodgy deal cut by the Labor Party and Senator Xenophon.

We need investment in water infrastructure which will increase productivity and return water to the environment to ensure we can pay back Rudd Labor’s $200 billion debt, not hundreds of millions of dollars in further water buybacks which will destroy jobs and our ability to payback Labor’s $200 billion debt.

Remember Friday the 13th of February, 2009 – this is the day that you and your children were sold out by the Rudd Labor Government and a motley collection of greens and other cross benches.

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The Senate today voted down the Government’s legislation, implementing the $2billion stimulus package. The bill was defeated in the senate after independent senator Nick Xenophon voted with the Coalition.

The Australian Greens and Family First’s Steve Fielding voted with the Government, tying the vote at 35-35. Senator Xenophon’s vote blocked the bill.

Nationals leader in the Senate Barnaby Joyce writes from parliament house:

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Mr Rudd must immediately engage with all parties in an open and sincere manner to put together a stimulus package that may actually have the capacity of delivering an outcome to the Australian people.

The fiasco that this whole process encapsulated sits firmly on the head of Mr Rudd and the Labor Government. It is nobody else’s fault but their own. How you could possibly plan for the payment of $200 billion worth of debt on the Nation’s credit card with two bullet points on page 5 of the Updated Economic And Fiscal Outlook booklet defies belief.

It is an insult when one considers the time that was given to the Senate inquiry for deliberation on this issue. The gun-to-the-head salesman approach both to the Australian people and others in the Senate chamber and other later intonations that were placed on its passage by such people as Mr Rudd, meant that not only did the package become totally fiscally irresponsible but was morally bankrupt.

The Labor Government now feigning some contrived injury have only one job to do and that is to become positively engaged in the process in such a way that delivers an outcome but they must engage in a civil, balanced and diligent process. No chance of that because they have apparently given us 15 hours to reconsider the issue.

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THE Federal Government will reintroduce the legislation this afternoon after it was rejected by the Senate.

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Independent Senator Nick Xenophon [pictured] writes:

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The government must immediately release the results of a full audit of all water in the Murray-Darling Basin.

In August last year I called on Prime Minister Kevin Rudd to conduct a full audit of the basin so we all could see where the water is, who owns it and how it can be best allocated along the river.

On the 14th of August 2008, in Adelaide, Prime Minister Rudd said

“We will commission one of the independent accounting houses of the world to separately and independently audit the accuracy of the Murray-Darling Basin Commission’s figures.”

Earlier this month a spokesperson from Water Minister Penny Wong’s office wrongly claimed the audit figures were publicly available.

I understand the audit has been completed and private briefings have been conducted with government officials about the findings,” Nick said. “It is time for the federal government to come clean with the people of South Australia. What is the government hiding?

The people of South Australia should not be kept in the dark.

I will join a candlelit vigil at the Milang pier tonight to protest government plans to flood sections of the lower lakes with salt water.

How can anyone trust government claims there is not enough water to save the lower lakes when they won’t show us the figures?  Taxpayers paid for this audit and we have a right to see the findings.

WHAT:  Candlelit Vigil for Lower Lakes.
WHEN: PM Friday January 30th 2008.
WHERE: The sand spit at Lake Alexandra, Milang (near the pier)

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There’s no way Independent senator Nick Xenophon will support the Rudd governments emission trading scheme in its current form.

Senator Xenophon [pictured] said the Government’s proposed Carbon Pollution Reduction Scheme would lead to a massive churn of funds from industry and households to government and back as compensation, as well as higher-than-anticipated costs.

He pointed to modelling by Melbourne consultants Frontier Economics to warn that the CPRS could collect up to $80billion a year that would need to be reallocated.

“The scheme is all stick and no carrot,” he said.

“If the design is wrong, we shouldn’t do it.”

What hope has Australian Agriculture got of surviving the adverse impacts of the emissions trading scheme with our current Agriculture minister Tony Burke saying this in defending the ETS proposal:

“We’ve got the balance there in the Carbon Pollution Reduction Scheme to make sure that industries can deal with the challenges of the transition whilst making sure that Australia is part of the economy of the future and can credibly argue for significant emissions reductions for the major emitters around the world,

” Mr Burke [pictured] said.

That ‘balance’ the minister speaks of is turning 84 million acres of prime agricultural land into carbon sink forests and wiping out our livestock industry. Under the proposed emissions trading scheme, in 10 years time we won’t need a minister for agriculture, they can replace that with a minister for trees.

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The National Farmers Federation is pursuing their bizarre policy of jumping up and down after legislation has been passed and the horse has bolted.

Both the National Farmers Federation and the Victorian Farmers Federation have called on the government to level the taxation playing field after last week’s decision by the Full Bench of the Federal Court that MIS investors are conducting a legitimate business within the meaning of the Tax Act, and are thus eligible for an up-front tax deduction.

But NFF vice-president Charles Burke said the court’s decision was a question of the existing law – the NFF’s concern was not whether MIS were lawful, but whether they were an appropriate form of investment in agribusiness.

Mr Burke said the issue was whether the law should be changed. That was a political decision for the government to make.

Were were the NFF and the Victorian farmers Federation when the ‘Carboon Sink’ legislation was going through the parliament just prior to Christmas. You remember, that was the same legislation that the Nationals broke ranks with coalition Liberals to cross the floor and vote against it.

Independent Senator Nick Xenophon [pictured] wrote this article for Agmates the day after the legislation was passed. – Carbon Sinks will Sink Aussie farmers.

This is the same legislation that will see 84 million acres of prime Agricultural land go under trees between 2013 and 2050, to save us from global warming.

For those mathematicians amongst you, over the 37 year period that’s 6,000 acres every day, 365 days a year for 37 years.

A month after this destructive legislation was passed with only the 4 National party Senators,  the 5 Greens, Family First Senator Steve Fielding and Independent Senator Nick Xenophon fiercely opposing it,  NFF and The Victorian farmers federation are are now calling for the legislation to be changed..

Honestly, the NFF and The Victorian Farmers Federation are a joke. They are a month late onto the scene and have arrived at the gate well after the horse has bolted and now they are screaming at it to  ‘come back’.

It’s truly pathetic.

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Independent Senator for South Australia Nick Xenophon writes:

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Nick Xenophon

The best way to give consumers real choice at the supermarket would be for the government to reduce the market control of Coles and Woolworths through tougher competition laws.

These two players control a staggering 80 per cent of the market.

That gives them too much power over suppliers and consumers and we are all paying the price.

The government has announcement that the failed Grocery Choice website is to be revamped and run by consumer group Choice.

I have concerns that the take-over has the potential to confuse consumers about Choice’s independence.

Choice is known in the community as a fearlessly independent advocate for consumers.  It is essential this deal doesn’t affect that reputation.

Many of the changes announced by Choice mirror changes previously outlined in a Motion I introduced into the Senate.

That motion had advocated for weekly, not monthly surveys and a marked expansion of supermarkets and products included.

Choice has announced it will survey 4000 supermarkets and more than 2000 products weekly.

The revamped website will also allow consumers to leave feedback about specials and concerns about certain supermarkets.

Use of the current website has dropped dramatically from three million hits a month to just over 100,000 hits in three months – a drop of 97 per cent.

Time will tell whether this website is a hit with consumers and gets plenty of hits.

But the best deal for consumers would be to reduce the market dominance of Coles and Woolworths.

There isn’t another democracy on earth that would allow two players to dominate something like 80% of the market, and it simply shouldn’t be allowed to happen here.

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Have Your Say!

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I spoke with Nationals Senate leader Barnaby Joyce [pictured] by phone Saturday morning. Barnaby asked me to pass onto the Agmates community his thanks for our support over the past week.

At the end of a tumultuous week that could be the beginning of the end of the Federal Coalition Senator Joyce had just met with Liberal Party Leader Malcolm Turnbull over coffee at an Eastern suburbs upmarket coffee shop.

The two were meeting to discuss Senator Joyce and his fellow National party members crossing the Senate floor twice this week in defiance of Turnbulls instructions.

RATHER than being reprimanded for leading his party across the Senate floor in defiance of the Coalition last week, Nationals upper house leader Barnaby Joyce has been offered a promotion.

The Coalition is in trouble after four Nationals senators and two Liberal senators crossed the floor in the Senate early on Friday morning.

Barnaby Joyce knocked back a similar offer when he became Nationals leader in the Senate back in September. At the time he said he could not accept the position as he could not guarantee that he would ‘tow the party line.’ Nothing has changed.

This week saw some heroic stands made by these Politicians:

From the Agmates community’s perspective the National Party in the Senate lead by Senator Joyce were just outstanding this week. Personally I don’t recall ever having said this before about a Politician, but I am enormously proud of the four National Party Senators for their performance on our behalf in the Senate this week.

National Party Senators Barnaby Joyce, Ron Boswell, Fiona Nash & John Williams actions in crossing the floor twice this week in support of rural & regional Australiain’s showed  tremendous integrity, courage and loyalty to the people who elected them. Four Hero politicians.

A situation where Politicians put their constituents well being before Party Politics is about as rare as Prime Minister Kevin Rudd knocking back an overseas trip to a United Nations Conference.

I must also make mention of two more Hero politicians:

Family First Senator Steve Fielding & Independent Senator Nick Xenophon who both spent the week ‘in the trenches‘ alongside the Nationals fighting to save rural & regional Australia from the ‘carbon sink’ legislation and the removal of the $2 billion rural telecommunications fund by the Rudd government with the treacherous support of Liberal Party Leader Malcom Turnbull.

Almost Hero’s:

We should also offer our congratulations to Liberal party Senators Alan Eggleston & Alan Ferguson who made a stand and crossed with the Nationals. They are only half hero’s as they voted with the Liberals and Labor on the ‘Carbon Sink’ Bill earlier in the week.

The Five Senators from the Australian Greens, Bob Brown Christine Milne, Rachel Siewart, Sarah Hanson-Young & Scott Ludlam also score a Half a Hero award as they fought for rural & regional communities on the ‘carbon sink’ legislation but voted with Labor to steal the bush’s $2 billion telecommunications fund.

Political Villain of the Week: Malcolm Turnbull.

If a coalition is to survive and if Malcolm Turnbull [pictured] is to remain the Leader of the coalition he and his fellow Liberal front benchers will have to learn to listen to and heed the concerns and policies of the National Party before making policy decisions.

If Malcolm Turnbull & his Liberal Front Bench are not capable of doing that as this weeks events have shown, then either the coalition is finished our they need to find another leader who understands that there is more to life in Australia than the Latte drinking, metrosexual Eastern Suburbs of Sydney.

After having the numbers to block the ‘carbon sink’ legislation and the appropiation of the $2 billion dollar bush telecommunicatiosn fund and chosing not to, the conservative voters of rural and regional Australia can never again trust Malcolm Turnbull as a coalition leader.

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