Kelly O'Dwyer (Higgins, Liberal Party) Share this | Hansard source

by leave—I rise to speak on the minority dissenting report on the Minerals Resource Rent Tax Bill 2011 and 10 related bills. These bills contain some of the most complex tax changes ever introduced into the parliament. There are 11 bills in total and they account for more than 525 pages of legislation. You would think that, in these circumstances, the government would be keen for proper scrutiny of these tax changes. You would think that the government would want to evaluate the impact of these tax changes on employment, on investment, on Australia's international competitiveness, on the Commonwealth budget position, on state and territory revenues, on whether the tax changes have a disproportionate impact on smaller miners versus larger miners. But no, it is clear that the government does not wish to look at these elements in detail. Despite the government's high-minded rhetoric on undertaking tax reform to make laws 'simpler and fairer', it appears that the government does not want to hold to this test. It is simply interested in the revenue that will flow from any tax changes made. This is clear from the fact that the Treasurer allowed only 12 business days to conduct this inquiry and report. There were only three business days on which people could make submissions to the inquiry.

This tax has been flawed from the very beginning. It has been flawed in its design and in the consultation process that led to this design. I will quote from Mr Yasser El-Ansary, from the Institute of Chartered Accountants in Australia. He said:

If there was an international prize for the best worst policy consultation process in a sophisticated open market economy, Australia's efforts during the course of 2010 would win hands down.

Speaking about the consultation process after the RSPT that occurred in secret between the three big miners and the government, he went on to say:

It would not be unreasonable to say that that represented a low point in Australia's economic and political history. It is a low water mark which most Australians would prefer not to see repeated in our lifetime. I think you would be hard pressed to find anyone to support the view that that is a good way to make public policy decisions.

We are very concerned about how this tax has come about and, specifically, about a number of elements of the tax. We outline those in the minority report, but for the purpose of this speech today I will highlight one element: the revenue and fiscal position of the government and the revenue implications of the tax.

When the government came into office, it had been left with a very strong fiscal position. The coalition left a surplus of $20 billion and a $60 billion investment in the Future Fund, having paid back $96 billion of the government's debt when it was previously in office. In the May budget, the Treasurer announced his fourth deficit—a fourth deficit in four years. He has, in fact, announced an accumulative deficit of over $100 billion.

It is clear that the goal of the MRRT is to try to obtain revenue for the government because of the fiscal position that it finds itself in. Yet, despite the goal, it is clear that the revenue raised by the MRRT is highly volatile and sensitive to changes in such things as commodity prices and production volumes. The government has chosen to introduce the package of bills that include both revenue and expenditure measures. In so doing, the spending will continue to grow as a permanent feature of the architecture of the bills, yet there is no guarantee that the revenue will also continue to increase. In fact, the evidence provided to the committee gave cause for alarm because, according to Treasury's modelling, the MRRT and extended PRRT will raise $11.1 billion over the last three years of the forward estimates.

Since the government released its numbers, New South Wales and Western Australia have announced increased royalties over this period of $1 billion and $2 billion respectively. These royalties will be credited against the revenue of the mining taxes. This means that net revenue to the federal government will be reduced to $8.1 billion. Under the government's numbers, there is a shortfall in revenue relative to spending of $2.8 billion over the forward estimates. This black hole blows out to $5.7 billion after crediting the royalties of New South Wales and Western Australia.

Both the RBA and Access Economics have suggested that commodity prices in terms of trade have peaked and are declining more rapidly than expected. This created further downside risks for the mining tax revenue. It is clear that the spending side of the package is locked in but the revenue side is subject to the vagaries of the international market and state royalty changes. The MRRT package will significantly worsen Australia's structural budget deficit over time, with the government's proposal underfunded beyond the forward estimates.

The coalition members of the committee also have serious concerns about the transparency of the government's modelling. It was pointed out on a number of occasions in the testimony provided to the committee that the government had not provided the assumptions behind its modelling, making it very difficult for miners to determine the amount of MRRT that they would be subject to. It also goes to the accuracy of the revenue projections by the government when it was revealed that Treasury had not done a calculation on a project-by-project basis. This also concerns coalition members. We think there is no reason for the government not to be completely transparent about the assumptions behind its modelling. This is something that is commonplace in the WA treasuries and is something that we would commend to the government.

The coalition members were particularly concerned about some of the sovereign risk concerns that had been raised in the course of the testimony provided to the inquiry. Those concerns were outlined in a number of the submissions. I will not go through all of those in detail but they are referred to in our minority report. The coalition members were also concerned about issues raised by the smaller miners in relation to thresholds and the impact of the regulation impost that would be applied as a result of the MRRT. Again, we highlight that these issues are not issues that have been properly and duly considered by the government in its design of this tax. As such, due to these reasons and others as outlined in our report, the coalition members recommend that all 11 of the bills in this package be rejected and that the Minerals Resource Rent Tax Bill 2011 and the four related minerals bills, the Petroleum Resource Rent Tax Assessment Amendment Bill 2011 and the three related petroleum bills, the Superannuation Guarantee (Administration) Amendment Bill 2011 and the Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011 be rejected.

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