Rent tax is as absurd as its predecessor

This dooms the MRRT. Miners will quietly divert capital to places with more accommodating tax regimes, the bureaucracy will duly inform the government, which, also anxious about constitutional challenges from Western Australia, will discreetly drop the whole proposal. Unlike the RSPT, the death of the MRRT will therefore not follow a humiliating capitulation by the government.

The proposed tax changes have foundered on the shoals of demand, supply and competition. Demand and supply has led to a doubling of coal and iron ore prices in the past year or so. But analysts (whose guesses are better informed than most) expect prices to subside to their previous levels in the coming years, even if China continues to boom. This is because no firm has a monopoly on mining skills and technology continues to offset the increasing costs of accessing new deposits.

With the RSPT, a costly policy error was made. Rudd has paid with his political career. So far Swan, the chief propagator, and Henry, the chief strategist, have shown themselves to be indifferent to the costs - probably billions of dollars - of their incompetence in proposing the tax.

This is understandable with Swan, a politician with the hide of a rhinoceros. But Henry has done a massive disservice. He has presided over the debauchment of Treasury. His poorly thought-through mining tax was accompanied by deceptive estimates of its revenue effects. This follows other actions in promoting fiscal irresponsibility, including the response to the GFC and inventing data that put a rich gloss on the adverse repercussions of a carbon tax.

The suspicion is these mistakes are more than errors of judgment and stem from a contempt for the market system and a hubristic wish to reconstruct it. Either way, he and others of similar mind who are in positions of influence within the Treasury should be dismissed as a step towards repairing confidence in the department.