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Rudd's policy bomb lands on ailing SA economy

Wednesday, 17 July 2013
Author: Kevin Naughton, Indaily

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Mining explorer UXA Resources ceases trading, mining producer OzMinerals lays off 61 workers at Prominent Hill, gas distributor Envestra is set to be swallowed up in a merger and lose its Adelaide head office, and Adelaide Brighton Cement talks about going offshore.

Two hours north of Adelaide, the town of Port Pirie ponders what might happen if smelter owner Nyrstar can't get its ambitious $350 million redevelopment financed and approved.

"If Nyrstar goes, Port Pirie goes with it," an adviser to Nyrstar told me yesterday.

Sitting on the edge of this economic crumble is Holden, the Elizabeth-based car manufacturer trying to build a business case to convince its Detroit bosses that it can turn a dollar out of making and selling cars in Australia.

And then along comes newly recycled Prime Minister Kevin Rudd to announce a change in fringe benefit taxes that will add $1400 to the cost of a company car.

Industry analysts predict it will hit the car makers for six and take down a stack of jobs at suppliers, new car dealerships and associated service industries.

This fringe benefits tax (FBT) change, by the way, is to offset the cost of a change to the carbon tax that cannot be legislated for in the current parliament, due to opposition from the Coalition and the Greens.

It's been two decades since South Australia's economy looked so perilous; and there appears to be little coming from either the State Government or the State Opposition on how we should deal with this looming economic storm.

Jay Weatherill and Steven Marshall spent most of this week swapping barbs about whether a cop can run an education department.

But back to the main game. Reaction to Rudd's proposed removal of the FBT concession on vehicles to help pay for the ditching of the carbon tax has been ferocious.

The Federal Chamber of Automotive Industries (FCAI) said the changes will have dire consequences.

"The effects will flow right through the industry, including to dealerships and service centres," FCAI chief executive Tony Weber said in a statement.

"I want to know if the government truly understand the consequences of this decision, and why the industry was not consulted on such a significant change."

The retail sector said the changes will impact 320,000 employees across the nation.

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