Monday, November 18, 2002

VGC, Partly Renovated, Ideal Tax Haven

Monday, 18 November 2002

The big news from Papua New Guinea over the weekend was the furore over Alexander Downer's announcement that Australia was not prepared to restructure payment of a $200 million dollar loan to the PNG government, with $70 million in repayments due next year. Papuan Energy Minister Sir Moi Avei was a little miffed and made pointed references to asylum seekers. I can see his position: it's a little like your bank manager arriving one Saturday to park his widowed mother-in-law in the granny flat at the back of the house, then following up with a friendly phone call on Monday to tell you that you are 3 months in default on your mortgage repayments.

While I sympathise with the PNG position, I think the current directors of Commonwealth of Australia (Inc) are being entirely responsible in this matter. The country's bottom line is under threat from litigation by the HIH liquidators and we have nearly run out of public assets to sell to foreign investors so that we can pay back the money we borrowed from the foreign investors who are buying the public assets that we're selling to the foreign investors who live in the house that Jack built. I know that the last part of that sentence is nonsense but let's face it, if I hadn't thrown it in, we'd be going round in bloody circles forever.

Cynical as it sounds, if PNG defaults on the loan repayments next year, it would provide the ideal opportunity to boost our country's bottom line by foreclosing on the loan and selling up the country. I'm sure there are a few elements of the Indonesian military who might still have the readies to put down a deposit and we could probably expect some keen interest from corporates who understand what a valuable asset a nation state can be. Of course, if we want to get the best price, we'll have to get the sitting tenants out of the place. I guess they'll just have to move in with the Nauruans.

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