Tuesday, June 08, 2010

On rhetoric

There have been two interesting policy discussions in Australia recently in which "big business" and its fellow travellers like the IPA have ben pushing scare campaigns using elements of global trade or more particularly the sanctity of prpoerty rights as weapons.

The funniest has been the campaign by Tim Wilson from the IPA to campaign against the proposed move to "plain packaging" of cigarettes. The proposition is advanced on three fronts, an acquisition of property, a violation of a treaty on trade marks and a violation of world trade rules. A succinct rebuttal was provided in the same debate.

Wilson writing in Crikey today has tried to describe this as a reasonable dispute about legal opinion. But Wilson hasn't retracted claims of a potential $3B compensation payment for "acquisition of property" despite dropping it from today's rhetoric. That part of the claim has always been bogus and it is bogus on two counts. Firstly banning the use of property isn't acquisition. More importantly if the High Court finds a law does acquire property other than on just terms the law is ruled invalid. Only if there is a saving clause known as a "historic shipwrecks clause" that the Commonwealth will pay compensation if it is an acquisition of property is the law valid and compensation payable.

I don't want to get into the rest of it, but I'd argue there have been plenty other limitations on the use of trade marks, if not the exiting legislation.

The biggest bogey is the one the miners and their acolytes have found in the PSPT invoking the bogey of "sovereign risk". Two definitions of sovereign risk from financial media actually claim it is the risk of exchange rate movements. As the Australian dollar falls our exported minerals get cheaper on global markets (or the miners get more $A for their $US denominated contracts). Some would have you believe that currency move is related to the RSPT - if so it isn't a sovereign risk but a sovereign benefit.

More nuanced understanding of the concept is Risk to participant in a project that a government action will cause loss which could not have been
foreseen when project committed to, and with no adequate legal remedy available
. It is a component of country risk that includes all the risks relevant.

More importantly there are rating agencies that actually compute sovereign risk. If I'm trying to attract investors to a project I need a third party valuation of that sovereign risk. I'm waiting to see an actual rating agency come out with a relative movement of Australia on its sovereign risk league table rather than justy miners blathering on.

As a telco person though I'm reminded that the "sovereign risk" argument and the "acquisition of property" argument were both elements of the Sol Trujillo/Phil Burgess rhetoric at Telstra. The former was particularly advanced in relation to structural separation, and the latter in relation to access prices.

Both, like these more recent incarnations, are not really rhtoric - they are just "right wing piss and wind".

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