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

Madam Deputy Speaker, I thank you for the opportunity to address the House in this MPI debate on what is a complex issue. In doing so, can I simply say that the contribution from the opposition to date in the debate on the resource super profits tax clearly shows that they are out of touch with the broader Australian community. The community is actually up for this debate, and the reason they are up for this debate is that they believe the mining sector has had a good 10 years. There are good profits. The community appreciates and wants in place a decent tax system which rewards risk-takers while it also guarantees that the community gets a fair share from the opportunity to develop the resources.

The mining sector itself is also up for the debate. The Minerals Council of Australia has clearly said that it regards the current royalty system to be out of date and inappropriate for the future development of the Australian resources sector. It has actually argued for a profit based system. Mr Andrew Forrest might have some criticism of the current government proposal but I refer to his statement lodged with the ASX today. It is a clear statement that a range of companies in Australia appreciate that the time has come for this debate. In the statement by FMG to the ASX today, Mr Forrest says:

We acknowledge Australia needs tax reform and are pleased to be working with the Treasury consultation panel to consider and make input to a new and fairer tax system.

That is what the debate is about. Clearly, there are different points of view on this debate, but the government is absolutely committed to the process of consultation established on the day that the Henry tax report was released. It was also the day that we announced our response to a number of key, tough issues raised by the Henry tax report which go to making sure that not only do we get a fair return for the Australian community but we also invest in the Australian community’s future. The record will show a lack of attention by the previous government to use the opportunities that came from a resources boom to cement our nation’s economic future. That is why, when you look at the range of announcements made by the Prime Minister back on 2 May, you do not just look at the complex debate about a new resources tax system in Australia; you also look at the investments we are going to make as part of the package.

We should never forget that this is a package. Yes, there are changes in taxation but there are also a range of benefits to the resources sector and, importantly, a range of benefits to the broader community. They include, for example, a significant investment in the future of small businesses in Australia. A cut in company taxation is something that small businesses want. They should be rewarded for the manner in which they cooperated with the Australian community and government and got us through the global financial crisis.

What about infrastructure? The record shows that, during the previous decade, we as a nation lived off the back of increases in commodity prices, whilst we lost market share. The reason for that is that government failed to invest in resource related infrastructure. For the first time ever we will establish in the budget each year a line item for dedicated investment in the resources sector. This will take some pressure off the resource regions.

Then we come to the issue of retirement. We all have to save more for retirement but government is obligated to create an environment that enables people to save for retirement. Hence, we propose to take the minimum superannuation guarantee from nine per cent to 12 per cent. It means that someone who is currently about 30 years of age will receive an additional benefit which, based on today’s dollar terms, will be over $100,000. That is very, very significant. It will provide people with a greater capacity to retire with some dignity.

This debate also goes to the management of the economy—not just to the incentives government will create to enable people to save for retirement but also to the strength of the economy which enables people themselves to contribute to their future. I take the House today to an article about the Melbourne Institute Quarterly Wages Report of May 2010. It states:

According to the latest Melbourne Institute Quarterly Wages report total paid growth over the last 12 months to 2010—

a very tough period for the Australian economy, I point out—

increased by an average of 4.3 per cent compared with an increase of 3.2 per cent in the 12 months to February 2010.

It goes on to say about wage expectations:

… measuring expected wage growth over the next 12 months increased from an expected 2.2 per cent growth in February to 2.5 per cent in May.

Clearly, all the hard work of the previous 12 to 15 months by this government is bearing fruit. We have a strong economy. We have good growth and, all being well, we will achieve unemployment of 4¾ per cent, as announced by the Treasurer on budget night only a matter of weeks ago.

In order to further secure the future of this economy, you have to take a few tough decisions but, in doing so, you have to put in place a tax system that not only encourages investment but also acknowledges the acceptance by a range of mining companies in Australia that they do have capacity to give a fair return to the Australian community for the opportunity to develop their finite non-renewable resources. That is what this debate is about. And it is also about using the proceeds of that tax for our future. The exploration that we do today determines the projects that we will have in 30 and 40 years time. That is why we propose, for example, a new exploration incentive—something that the previous government failed to deliver. That effectively means about 4,500 exploration companies in Australia will benefit from the rebate. That will encourage investment—it will create the Olympic Dam and the Gorgon projects in 20 and 30 years time—and it will create the wealth and jobs that are so vital to our future.

Now I turn to the issue of infrastructure. For the first time ever, there is the capacity for the Commonwealth, in a line item, to do more on the infrastructure front. That builds on what we have done since we were elected 2½ years ago. It is not new to us to invest in the resources sector, but we want to do more as a result of this debate. We are talking about a new fund of $5.6 billion over the next decade. That is on top of a range of investments we have already made to assist the resources sector. The state and territory governments are saying we should do more. If they expect us to do more, they also have to understand that there needs to be a complex debate about the tax system and the resources sector. We need to have the financial capacity to do more.

But we have not been neglecting our responsibilities. We have acted already. Take Oakajee Port in Western Australia. We have spent $339 million in a new iron ore province. Darwin Port is exceptionally important in the development of the resources sector in Australia. That is where uranium out of Western Australia will go, a new industry supported by the Commonwealth government. Then there is the Australian Rail Track Corporation. That railway corporation has never had the degree of government support that it has had over the last 2½ years. We have put $1.2 billion into that corporation. For example, in our coal corridor we have spent $580 million in the Hunter region alone. Then there is Geelong, another key port for us. And there is Esperance in Western Australia, with a three-way split between the Western Australian government, the Commonwealth government and the Port of Esperance, each spending $40 million. There are the port access roads in Townsville. Regional community by regional community, resource sector by resource sector, we are committed to doing the right thing.

The time has come for the opposition to understand that the Australian community is starting to see through its scare campaign. They understand that this has been about, yet again, political opportunism from the opposition driven by a desire to attract donations for the purposes of paying for the next election. That explains the opposition’s point of view. We have the Western Australian Premier, for instance, arguing that it is time for the resources sector to pay here. Then we have the federal opposition saying: ‘No, no, no. Give us the donations and we’ll oppose the Australian government’s proposition.’ That is short-termism and a lack of a proper understanding of the needs of Australia. They have failed to front up to the hard debates.

Let us go to their latest scare campaign on the issue of electricity prices. It again shows the ignorance of many on the other side of the House. I remind the House that many fuel sources for electricity, such as coal mines, are part of an integrated system with power stations. Perhaps they ought to do a bit of hard work. Those integrated operations are not expected to attract a superprofits tax. That is fact, as against the fiction we have had from the opposition, which is what we have come to expect day in and day out.

It is also important to recognise that a household’s electricity bill is made up of a number of factors. In actual fact, fuel costs are a small proportion of a household bill when it comes to the cost of electricity. The wholesale electricity price comprises around 40 per cent of this bill, for example. The cost of coal and gas to fuel generators is only a relatively small proportion of the wholesale cost. Think about, for example, transmission and network costs.

I also remind you that the Western Australian Premier is out there arguing that these increases in the price of electricity have to flow through the system—increase after increase. He appreciates that, if we do not front up to this hard issue, we will no longer have the benefit of one of the most reliable electricity systems in the world. We have to invest more and more money over the next decade to ensure that we have such a reliable system in the future. But we have yet another scare campaign from those opposite. It is without foundation. The suppliers of our electricity are unlikely to be earning superprofits on the contracts that are in place. They are more often than not long-term supply contracts. More often than not, they also use low-quality coal because we export our better quality coal. It is not our premium coal, not our superprofits coal that is used in the electricity system in Australia.

But they will continue to run that scare campaign day in and day out. That is because we have an opposition led by a leader who finds economics boring. He is not focused on policy and you have to think whether or not he is telling the truth, as he admitted on the 7.30 Report last week. That is also reflected in the parade of opposition frontbenchers we have had over the last 24 hours, each with a different view on whether or not we should have a debate in Australia on tax and the resources sector. Senior opposition spokespersons have been falling over one another to give different views. We question whether or not this is a well-thought out campaign or whether it is a ‘read my lips’ campaign from the Leader of the Opposition. Is this about saying one thing to a particular section of the community—‘Yes, there is a capacity to increase revenue from the minerals sector’—at the same time having someone else say something else to another section of the Australian community.

Perhaps the next speaker from the opposition can tell us what the gospel truth is and what the opposition’s real position is with respect to reform of the minerals taxation system in Australia. What is their position? Is the Premier of Western Australia right? Is he entitled to increase iron ore royalties by $3.2 billion over the next four years?

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