This drains capital and other factors of production away from more efficient lines of production which in turn lowers economic welfare. In any case, it should be obvious that if these companies cannot survive without subsidies they have no business being in Australia. It is not the role of Australian taxpayers to fund corporate welfare schemes. However, Goldsworthy is absolutely right to point out the economic damage our punishing capital gains taxes are imposing on the economy. But this was duly predicted when the Labour government introduced them.
Capital gains are profits and anything that punishes profits punishes growth.
Trying telling that to Labour bigots like Crean, Ferguson or Beazley who prefer subsidies and other government distorting activities to genuine tax reform and market solutions. It is these people Professor Goldsworthy should be concerning himself with, not phantom trade deficits.