Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Hansard source

There is a growing and ever present appreciation and awareness within the broader community that the Rudd government’s great big tax on the mining sector is not only bad news for the mining sector but also bad news for all Australians. It is bad news for Australian small businesses. It is bad news for Australian consumers. The Rudd government would have you believe this is a kind of Robin Hood tax where they are taking money off pinstripe suited investors from far away that have shares in huge mining companies, but really it is a Scrooge tax, gouging revenue out of mums and dads across Australia for day-to-day activities of everyday life and small businesses that employ right across our vast continent and also representing a threat to those that have funds invested in superannuation or rely on that investment for their income. This is not a Robin Hood tax; this is a Scrooge tax.

You just need to look at the commentary that we are now seeing start to emerge. This commentary will increase as people come to realise just how disastrous this tax is not just for the big mining industry and for the big mining companies but for everybody that uses any product that is manufactured or that is recovered from that mining operation. Those mineral extractions appear in every part of our lives. Every corner of our existence has a product that has been extracted from these mining operations. It is not just BHP and Rio that make those extractions.

This is the great lie, the falsehood, that the Rudd government is trying to put out to the Australian public—that all this is a bit of a touch-up for those huge mining companies. It is not that at all. It is a cost impediment; it is a dagger in the heart of those big industries and the mining industry that has driven prosperity in Australia. But it is going to have ramifications right throughout the community, throughout the suburbs, throughout the regional centres. It will have implications for people wanting to buy a home; it will have implications for everybody who uses energy in their day-to-day life or as an input for their business operations. Those that use particular minerals that are extracted as part of their production processes will be copping it as well. We are learning more and more about those impacts as time goes by.

It is important to understand just what is going on here. As the Prime Minister refuses to listen to anybody who contradicts his point of view, I hope he might at least listen to Winston Churchill. He has some form; he has some credibility. Back in around 1903, Churchill said something that should be resonating right across this economy and right across the community. He said:

A nation that tries to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

That is exactly what is going on here. What you are seeing is a grubby tax grab from a lazy government that does not think through its policies, not to do anything about the holes across the continent but to fill a black hole in its budget. This is a grubby grab for tax revenue that is going to have harm and hardship right across the Australian economy.

Let us look at some examples. Let us look at the housing industry. People already are struggling with housing affordability issues, the government seemingly incapable of doing anything with it. What do they do? They go and push up the price of houses. The West Australian talks about profits tax, a $20,000 slug on a new home—a $20,000 increase on the cost of a new home. There is example after example from the Slattery property group in Western Australia saying, ‘If all resources are left on the table, it will really add to construction costs. An average home cost is $200,000 to build.’ It then goes through the details of the impact and points to a $20,000 potential price increase. That is an extra $20,000 that people already struggling with housing affordability will need to find. It goes further: Midland Brick general manager Greg Smith confirming that the extra tax on the clay and other resources used to make bricks would be passed on to consumers—another example. If there is any comfort that you can take out of this article, it is Multiplex saying, ‘There is a bit of international competition; we will buy it offshore.’ What a comfort that must be for people that are involved in those industries.

Anyone who is interested can have a look through this chart that shows how minerals extracted not by big mining companies—although some are involved in this activity—but by small operations that you see right across Australia in outer metropolitan areas such as the electorates of Dunkley and Casey and in the rural and regional centres of Australia. They are involved in this industry that is now facing a tax that no-one wants to own and that Kevin Rudd and the Rudd Labor government will not even bother explaining. They have shirt fronted people with it. They are expecting them to cop it sweet, suck it up and hope that it has no adverse impact on the Australian economy.

Small businesses are too smart; they are too streetwise. They know a stooge job when they see it. They know when they have extra costs coming at them that are either going to be passed onto customers, pushing up the cost of living and the cost of their services, or going to eat into their own profits at a time when profitability is a major challenge for the small business community. So there is the housing example. Anyone who is interested in it can just think about the tiling, the steel roof frames, the brickwork, the aluminium windows, the electrical systems, the plastering, even the earthworks and foundations, the very concrete that is used to have the home built, the plumbing and even the internal plaster boards—all using minerals extracted in many cases from smaller operations that are going to be made more expensive from this poorly conceived tax.

Cement, Concrete and Aggregates Australia has pointed out that this tax is really going to hit areas that currently do not even pay royalties. So poorly designed is it that the chief executive, Ken Slattery, said that 85 to 90 per cent of quarry products do not attract royalties, but they are in for Kevin Rudd’s great big mining tax, which will land not only on huge companies that seem to be the target of the political statements made by the government, but the small companies, small family businesses and small mining and quarry operations right across Australia.

So that is what is happening, and if you want to use some energy in your house you are also going to cop it. Country Energy is one of a number of companies talking about the uncertainty that this new tax is going to create. The cost of coal will be pushed up and, in turn, household energy bills will be pushed up. As well, that cost will be pushed onto the energy bills of small businesses, who are already having to cope with enormous energy prices. We have discussed some of them and we sought to advocate on behalf of them when we had the CPRS—the other great big new tax that the Rudd Labor government wanted to introduce. So there is another example. Anyone using energy and anyone who is looking at coal and gas prices affected by this new regime will see upward pressure on the costs of those inputs flowing through to more expensive power—for every small business and for every household.

Think about the regional impact. Warwick Chamber of Commerce President, John Randall, has given an account of what it will do in the Warwick district—a district that has some of the economic characteristics of a number of communities across Australia. He was quoted as saying:

“Warwick has several well-run quarrying businesses producing sand, gravel, deco, road base, sandstone and limestone for our region,”

“If business owners get hit by this new tax, they will have to pass it on and that means increases in a huge range of costs, including the cost of building a home in Warwick.

“This would be because of higher concrete costs and increases in the cost of landscaping supplies.

“It will hit everyone, even down to filling up the kids’ sandpit.

In question time today we talked about the talcum powder issue and the impact that will have, but even the kids’ sandpits will not be excluded from the impact of this great big new tax.

John Randall went on to talk about the impact on the farming community from the increase in costs for fertilisers like lime, gypsum and superphosphate—all of which come out of quarries and all of which are key inputs into our food production system. That goes to the very heart of the point that the coalition has been making over and over again. This great big new tax on the mining sector is not only on the huge mining companies but on everybody involved in these kinds of activities, because it is so poorly designed. It has not been thought through. It does not even follow the template that Henry outlined in his report—and I will come to that in a minute.

In my own community, Hillview Quarries is a charitable organisation and this tax will impact in double-digit figures on the cost of their supplies for construction in the Mornington Peninsula and beyond. Any profit they make is put back into the community, so even those philanthropic efforts of Hillview Quarries and other organisations will be hit by this very poorly conceived, poorly designed tax.

If you look at other examples, you can talk about the impact on investment. On Radio National we heard commentary provided by Graham Carman from Paradigm Metals Limited and also from Graham Jeffress from the Institute of Geoscientists, saying that the very design of this tax has implications for smaller companies in that ‘the risk-reward equation has been imbalanced’. He said, ‘It is going to make it that much harder for those smaller companies to raise capital.’ The whole sentiment of whether people want to invest in exploration is to be damaged.

Mr Carman and Mr Jeffress are making the point that these companies, to keep doing their business, need to be able to attract capital. If they try to attract investors, they will look at it and think, ‘Gee, over six per cent is a super tax for them to be hit with,’ how are they going to get equity? If they go to the banks and say, ‘Banks, can you lend us some money?’ the banks are going to say, ‘Even if you’re going well you’re going to get cleaned up on this resource super tax.’ This is at a time when the small business community is screaming out for relief from the difficulties it faces in accessing finance. So you are seeing adverse consequences of this tax not only in the cost of living in people’s homes and in the cost of doing business for small businesses, but even in the prospects for continuing to grow this area of the economy. Those prospects are being undermined by the very tax the government says is just what the industry needed.

But you do not have to believe me and you do not have to believe the industry experts; you do not even have to believe practical people on the ground who are living with this prospect day in and day out and who are worried about their future. You could talk to a Labor mate. You could even go and ask the South Australian Minister for Mineral Resource Development, Paul Holloway. He talked about the need to get the design features in the tax right. He said that we need to highlight possible design features in the tax that could create problems. He talked about Olympic Dam and said that the pricing point becomes particularly important. What he is asking is: where does this tax land? What if you are involved in a vertically integrated business? Does the tax land at the hole, at the gate, or at the port where the trains arrive? Do you blend your ores? Is that a value-add or is that an extractive activity? Do you have a company that passes on these resources for virtually no profit so there is no tax to be applied, just so that someone down the train can make all the money? We do not know.

The South Australian government Labor minister does not know either, and he is pointing to the impact that it will have on the lifeline for the South Australian economy: the Olympic Dam project. He says there is a high level of downstream processing as part of that project. He said:

You certainly would not want to see a super profits tax that discouraged downstream processes.

That was his point. It is not just the level of the tax; it is the way in which it is being applied and where it will be applied that will distort so much economic activity and investment opportunities. But the statement that cracked me up—I must say I found this incredible—was one that I could not agree more with. The statement went:

It is a self-evident fact and it is very difficult for any sector to develop successfully over time when the rules of the operation change in the short term. Investment decisions by manufacturers, developers and financiers all require long-term certainty that will enable them to invest scarce capital with the expectation of receiving an adequate return.

I think we could agree with that. Would you agree that that was a remarkable statement to come earlier today from the member for Braddon? A member of Labor Party made that statement, not about the mineral sector but about the renewable energy target. His advocacy was so crisp and clear and vivid as it related to the renewable energy target that he even stopped himself after he said it and thought: ‘Gee, this isn’t my best moment, is it? That is a cracking great quote, a quote that is going to come back to visit me.’ And it should visit him, because he is making the very point that the opposition and many that are concerned about this tax have been making over and over again: this messes with the very foundations about why people would invest, the rules under which they invest, and the implications for their own viability in the longer term.

So there you have the issues. You have cost increases in energy. The cost of housing is going up. Agriculture, food production, any activity—

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