Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Hansard source

It is a great privilege to be able to speak on this legislation which really does complete the package of economic reforms that the government is pursuing this year. It was very interesting to follow the comments of the member for Bowman, who highlighted the fact that our mineral resources in this nation are, in fact, finite. He also delineated some of the time limits for some of those resources, and that is the entire point. You only get one go at those resources: you dig them up, you sell them and they are gone. They do not come back as they are non-renewable resources. One of the things that he forgot to highlight in his speech is that the price of resources fluctuates during their lifetime. If we have 100 years worth of coal, we may well have that length of time for that resource, but the price will go up and down during that time. What does any prudent person in business and any prudent government do in managing resources? They make sure that they get the best possible price they can while they have the resources in a good price bracket. This is the situation we are in at the present time. We are enjoying good prices for our commodities; some would even say we are enjoying super prices. In fact, if we take one example, BHP-Billiton, and look at the profits that they made last year, we see that they made $22.48 billion in profits. This is an extraordinary sum of money. It is an 86 per cent increase on their profits from the previous year, which were up by about 116 per cent on their profits the year before that. Obviously, when you are looking at a sum like that, you are looking at a figure that is greater than the GDP of some countries, so by any definition you are talking about superprofits.

The thing we are discussing here is simply, at the end of the day, taxation efficiency. This is really a very simple point to grasp, which is why I do not understand why some members of the coalition do not grasp it. I know that many do, and I would ask that the Leader of the Opposition listen to his backbench and to those members of the coalition who would dearly love to be able to get behind a vote for this legislation because they do understand the principles behind it. As I said, effectively we are dealing here with efficiency in taxation. The issue is that the tax expands and contracts with the profitability of a company. Instead of being a fixed royalty system, it is a system based on the actual profits that the company has earned. It is a very simple proposition, and the mining companies themselves support and understand it. In fact, they were advocating it before we endeavoured to go down this road.

I do have to laugh at the member for Bowman's suggestion that we are picking on defenceless mining companies. They do so seem to be so hard up and in such difficult circumstances in being able to mount a case! However, a simple $20 million advertising campaign occasionally thrown out before the public indicates that perhaps they do not deserve the sympathy that the member for Bowman has bestowed upon them. He has talked about the sovereign risk that this tax presents to the country. Of course, this is a complete fallacy and a complete fantasy; it is another element of the theme of misinformation that the opposition leader has pursued. We know that, despite the fact that this measure is being introduced, there is some $430 billion marching this way in investment in the minerals resource sector. In the country area I represent we have a saying: 'money talks, bulldust walks'. Money is talking, and money is moving. The investors do not regard this tax as a sovereign risk, and there are several reasons that it is not a sovereign risk.

I have mentioned the flexibility that it introduces into the system based on the profitability of companies, and there are other reasons that Australia is an attractive location for investment. One reason is the geological convenience of the minerals that we possess and the easy winning of those resources, as opposed to the difficult winning of resources in many other countries. Another very important reason is geographic proximity. Australia is well positioned in relation to the markets that are absorbing these resources and the people who are buying our stuff: China and India, which are dynamic economies in our region. There are others, including some in the Asian-Pacific area, who are also buying our resources. They are creating the Asian-Pacific century that we are talking about with rising affluent communities and the rising demand of the booming economies of those regions. Our market is close to them, and there are cost savings in transporting and delivering resources to these proximate markets. So geographic proximity is another advantage.

Political stability is another reason. In Africa and other locations there may be mineral resources, but the political stability there is a distinct factor, and it is a distinct question to be asked in assessing whether or not to make sovereign investments in those places. Obviously, Australia compares extremely well. Infrastructure efficiency is another reason. In some of these countries infrastructure problems much worse than those than exist in Australia are presented to companies. Of course, we have a long way to go in improving the efficiency of our infrastructure. We could be better, we could do better—and this goes to the real issue: in the 12 years of the Howard 'Rip Van Winkle' period of government, they were reaping in what they could get from the mining boom at the same time as they were not investing in the critical infrastructure that this country needed. Also, they were not dealing with the difficulties posed to our economy by the 'Dutch disease' which we often talk about—that is, the imbalance that is caused in the rest of the economy by a mining boom, the pressures it puts on the dollar to rise and the flow-on impact that has on other businesses in a country. The coalition missed the opportunity to do something about that during Mining Boom Mark 1. This government has been determined not to miss such an opportunity, and we are acting to use this mining boom to deal with the inequitable effects on the rest of the economy and the damage caused to the rest of the economy. We will do that by creating a reduction in company tax.

The Leader of the Opposition gets out there and tells people he is supporting small business. When he goes out to Queanbeyan—he doesn't spend any money when he goes out there, unfortunately—he invades our small businesses and tells them all sorts of porkies. At the end of the day, he is the major threat to those small businesses. He has always been their major threat. He is attempting to deny them access to this reduction in their company tax. He is attempting to deny them access to a $6,500 instant write-off for their assets, which can be multiple assets adding up to $6,500—a huge opportunity for small businesses. Of course, there are the benefits that will flow to our workforce as well, which is also at the heart of this legislation. Our workforce is going to benefit so much from the superannuation reforms we are talking about here. The minerals resource rent tax is helping to fund those reforms, not only through the reduction of the company tax but also through the generous provisions that will apply with the 15 per cent tax concessional arrangements for those in the $37,000 bracket. This has to be paid for, and it will be paid for by the tax.

We know the opposition have flip-flopped over superannuation; there has been great division there. The member for Goldstein has famously been out there saying that he was not consulted on superannuation. But superannuation has to be paid for, and we know that the coalition has no plan. The funding of super is part of the expanding $70 billion black hole of the coalition's approach to economic issues—a black hole whose scope and size would shock even Stephen Hawking.

This package is one of the ways we are going to pay for that superannuation reform, which will provide for the retirement incomes that our workforce needs and that the people of my region need. It will also take the long-term burden off the government in funding the pensions we might face with an ageing population. So my workers in Eden-Monaro will welcome this package; they do welcome it. My 18,200 small businesses welcome and are looking forward to the extra support that will be provided through this package.

It is part of the broader economic agenda that this government has set, which is a story of unbroken success. This is the only government in the history of Australia that has avoided recession in the context of an international recession. Look at the other indicia: we have got interest rates now at 4.5 per cent, which is another factor providing relief not only to the workforce but also to small businesses; inflation is at 3.5 per cent; unemployment is at 5.2 per cent; we have record terms of trade; and, as I mentioned, a record flow of investment dollars. These are numbers that the coalition was never able to match. They are outstanding numbers and do represent the fact that this government has been the most successful in this country's history at addressing the economic challenges that we face. It is a key distinguishing point: we address these issues of productivity through dealing with infrastructure, skills and innovation, whereas the coalition would seek to make workers pay to achieve productivity gains. That is the key philosophical difference between us.

It is the Leader of the Opposition who wants to hurt the working people of this country. He slept while we put in place measures that saved 200,000 jobs. He opposed the Clean Energy Future initiative, which will deliver 1.6 million jobs. He opposed the steel package, which is out there and accepted by the steel industry and saving workers jobs. So his position is to hurt workers and to hurt the economy. We will not allow that to happen. We are going to pursue this reform. We are going to make sure the workers of this country get the support they deserve for a prosperous future with satisfying jobs and that we deal with the challenges that this country faces.

See this speech in context