Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Hansard source

I thank the member for Isaacs for his question. As I have said on a number of occasions over the past couple of weeks, tax reform has never come easy to Australia but it is the responsibility of the Australian government to actually take on this debate, a responsibility that the previous government shirked. I say that because the only sections of the Australian community arguing at the moment that the resources and petroleum sector in Australia should not pay higher taxation are the Leader of the Opposition and the coalition. In that context, can I say that we are well positioned to have this debate. Australia has come out of the global financial crisis in a very sound position. In many ways we are the envy of the OECD world.

The real debate is about how much tax is paid, who collects it and under what system. We should also remind one another that that is not just my view, it is also the view of many in the resources and petroleum sector in Australia. Let us go to the Minerals Council of Australia. This is what they have actually said about a profits based tax debate in Australia:

There is a strong argument to reform the basis of determining royalty payments to a profits based criteria from a revenue one.

I could not agree more with the Minerals Council of Australia. But I also appreciate that the devil is in the detail. That is why the government is engaged in a very serious process of consultation at the moment. With respect to the requirement of the resources and petroleum sector to pay more taxation in Australia, I remind you of what the CEO of Woodside, Mr Voelte, said on Radio National this morning:

In talking to the big miners and the mid cap miners I have not heard that they are not willing to negotiate a different tax and a higher tax back. They want to give a fair share back to the Australian citizens. The key is how you balance the right amount of money back to the citizens versus the economic return on billions and billions of dollars of investment.

I agree with Mr Voelte of Woodside. That is where we are at in this debate at the moment—the coalition is opposed to any tax reform in Australia whilst the government seriously engages industry with a view to actually getting the balance right. I say that because shareholders are entitled to a fair return for the purposes of their investments in Australia, but perhaps more importantly we should remind the coalition that so is the Australian community. They only get one chance to develop their finite resources. Those resources are 100 per cent owned by the Australian community.

I also remind the House that a number of major resource companies in Australia are also open to this debate. Let me go to what the CEO of BHP Billiton said on 9 May when he was asked, ‘But are you opposed to the resources rent tax in principle?’ He answered no and went on to say:

… we are not opposed to reform. We’re not opposed to any particular form of how that taxation takes place.

The reason for that is that the resources and petroleum sector and the Australian community now want some certainty for the purposes of the pipeline of investments that are in place potentially for Australia. They have had a gutful of state and territory governments lifting royalty rates from time to time to suit their short-term circumstances. The Minerals Council submission to the Henry tax review argued for a profits based tax system in Australia to create that certainty. I simply say that I agree with the mining industry. We require certainty. The tax announcements of the government will change that. Yes, they will tax profits at an appropriate rate, but they will also provide certainty and flexibility because you will only pay taxes on the basis of the profits you make.

In that context, I refer to an earlier question by the member for Groom who, I might say, should know better. He should go away and re-examine the question given to him by the Leader of the Opposition that he asked today. Clearly that question was carefully choreographed, yet we do not know, from time to time, whether he is telling the truth or not. Let us go to the oil and gas sector tax. That has created certainty in Australia. I remind the member for Groom and the Leader of the Opposition about the introduction of that tax. It goes to the issue of certainty. Esso and BHP actually chose to transition into the petroleum resource rent tax system of Australia, under which the life of the Bass Strait oil and gas reserves was extended for decades.

Then he goes to the question of the long-term nature of these investments. Let us go to the issue of Pluto, an investment decision made in 2007. Pluto will export LNG from Australia in the financial year 2010-11. Let us go to the biggest ever LNG investment in Australia. Let us go to the biggest ever single investment in the history of Australia—Gorgon. Gorgon will export LNG from Australia in the financial year 2015-16. We had a debate 25 years ago about the need for tax certainty in Australia—an investment horizon that created attractiveness for investment in Australia whilst creating long-term opportunities for shareholders. Let us go to the nature of that tax in the Gorgon LNG investment decision. I refer to some comments made in Western Australia on the occasion of that investment. I remind the House of what the Chevron vice-chairman, George Kirkland—not known to the Leader of the Opposition because he finds economics and investment in Australia boring but at least known to the member for Groom—said:

There’s no doubt … this positions Australia very, very strongly in the gas world. It really and truly does.

He then went on to say:

The good news is Saudi Arabia is all about oil, and what we’re seeing in Australia is all about gas.

               …            …            …

Asia has been growing, growing significantly. And where’s Australia? Great position to really deliver on a cost advantage basis, that market.

He went on to say:

… for Chevron we have four focus exploration areas of the world that we push the predominance of our exploration money. Western Australia is one of those and we feed our exploration budget here very well, and we’re going to continue to feed it very well, because we have the view that we can grow the resources here …

That is because we took on a debate 25 years ago. It was a debate which ensured we had certainty in the tax regime in Australia for the resources and petroleum industry and a debate which ensured the Australian community got a fair return for the development of their resources—100 per cent owned by the Australian community.

That is why this government, unlike the opposition, who should have done this over the previous decade, is committed to putting in place a resources rent tax that provides for the broad development of the Australian resource community and creates efficient and effective mining but also ensures a better return for the Australian community. I simply say to the resources and energy sector and the petroleum sector: there is a genuine process of consultation underway; we are interested in the issues that you are raising; and we are absolutely committed to getting it right. Unlike the opposition, we believe in investment certainty and the right of the Australian community to get a fair return on their investments. The only people arguing against higher taxation for the resources sector in Australia are Tony Abbott and the opposition, because all they are interested in are grubby donations from certain sectors of the Australian community.

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