Sovereign Risk

I am often amused by the claims of the increase in sovereign risk that the mining industry faces.  While I have no doubt that the concerns the mining industry face are genuine, they and everyone else should have a look at the sovereign risk my business faces. 

I am a pastoralist in the Kimberley region of Western Australia turning off high quality cattle for live export markets in Asia and the Middle East with a small number of cattle going to the domestic market.  The business is a family business which plays its part in feeding a growing world population in Asia and around the world. 

In the past few years we have copped it from all three levels of Government – Local, State and Federal.  Our local shire formally withdrew the last remaining service it provided to us and we are now in the situation of paying about $30,000 per in local Government rates and receiving absolutely no services in return. 

No to be outdone, the State Government increased our pastoral lease rents by 400 per cent with very little justification.  This increase came at a time of falling cattle prices and sharply higher input costs. 

The suspension in the live cattle trade to Indonesia and the subsequent ramifications which are still being felt by the industry has been well documented by the mainstream media.  This decision meant that all three levels of Government are now moving against us almost simultaneously. 

Both sides of politics have been involved in the moves against us – the Labor party at the Federal level and a National party minister at the State level.  These incidents are far from being one-off events.  The Federal Government can shut the industry down with the stroke of a pen. 

State Government charges are reviewed every five years so there is every chance the increase will be as big or bigger next time.  Who knows what will happen to our local government charges – the only certainty is they will continue to go up and no services will be provided. 

The result of all this is that our business now faces a level of Sovereign risk that makes the mining tax look like the imposition of a parking ticket.  While all layers of Government mouth the rhetoric that they are committed to Australia’s agricultural industries their actions are entirely different.