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

I remind the House that we have again seen the Leader of the Opposition clearly indicate that he has no interest at all in policy development in Australia. That was yet another political speech of no policy substance. The MPI that he requested the opportunity to debate went to the supposed adverse impact of the government's management of the mining tax on investment in Australia.

The Leader of the Opposition simply does not have a case in support of his proposition as reflected in the MPI. The House should appreciate that the government has not walked away, in any way, from its agreement entered into with the mining industry on 2 July 2010 and announced publicly. The MRRT of 1 July 2012 reflects in full the agreement entered into with the mining industry on 2 July 2010. More importantly, as the Prime Minister and the Treasurer have clearly stated on a number of occasions, we have no intention of walking away from that agreement, contrary to suggestions of the opposition.

The MRRT had two objectives. Firstly, and importantly, the objective was to maintain Australia as an attractive place to invest. In clear terms, as is reflected in the statement of the Reserve Bank governor of February of this year, we have achieved that outcome. He said in the media release of 5 February following the independent board meeting of that day:

In Australia, most indicators available for this meeting suggest that growth was close to trend in 2012, led by very large increases in capital spending in the resources sector …

The resources sector has known about the intentions of the government with respect to the introduction of the MRRT—and, I might say, bringing application of the PRRT onshore as requested by the petroleum industry—since early 2010.

Despite the so-called fear campaign of the opposition, the resources industry have continued to invest in Australia. The reason for that is that we have achieved our objective. Our objective was to introduce a resources tax which effectively meant that, during periods of record commodity prices and record profits, the Australian community had an opportunity to get a fair return for the one-off opportunity to develop its natural resources.

We also knew, in developing that national approach to taxation, that we had to make sure that we did not put in place a tax system similar to that put in place by state and territory governments with regard to the issue of the inefficient operation of royalties. The resources sector clearly made it known to us, during the development of the MRRT, that they wanted a guarantee that it was a profits based tax, because they had had a gutful of the royalty system developed historically by state and territory governments.

The resources sector accepted their requirement to give the Australian community a fair return for the opportunity to develop our natural resources—the Australian community's natural resources. And their difficulty with respect to the willy-nilly increases in state royalties has again been on display since the election of coalition governments in New South Wales and Queensland over the last couple of years.

Who would have thought that anyone who has any regard for the importance of the resources sector would willingly increase royalties at a time of declining commodity prices? That increase in royalties has, in turn, had a significant impact on the capacity of the mining industry to continue to invest in Australian places such as Queensland and New South Wales over the last 12 months—and, I might say, to keep open marginal coalmines. A number of coalmines have been mothballed because of the lack of understanding of coalition governments in those states that there could never have been a worse time to increase state royalties on such a fundamental commodity as coal.

As an alternative, we understood that during periods of record commodity prices we had an opportunity to ensure that the Australian community did share in the benefits. But in designing that tax we wanted to make sure that Australia remained attractive for investment. The proof is in the pudding. As reflected on in question time today, Australia has continued to remain attractive. We have remained attractive because, following the announcement of the heads of agreement on 2 July 2010, we also gave a clear commitment to enter into a process of full and proper consultation with the resources sector. That became known as the Argus-Ferguson led process: the transition committee. In addition to me and Don Argus—a highly respected person respect in the Australian business community—we also drew into that process key representatives of the resources sector and leading representatives of the Australian Public Service who have a thorough knowledge of the Australian taxation system and associated systems with respect to maintaining Australia's attractiveness to investors. Following detailed consultations, we presented the Treasurer with a report in December 2010 as to how we believed the government should go about implementing our announcement to develop the minerals resource rent tax in Australia.

Contrary to a number of interjections in the House today, the tax does not apply to Olympic Dam in South Australia.

I simply say that is a deliberate endeavour by the opposition to mislead the Australian public as to why Olympic Dam has not gone ahead; not because of the MRRT, but because of the nature of the resources cycle. Perhaps the Leader of the Opposition should actually take an opportunity to read the BHP announcement of 22 August 2012, because he had to admit in the House the day after that he had not read the media statement in which BHP stated that the decision not to go forward with the investment in South Australia was not related to the MRRT. Instead, they cited market conditions—including subdued commodity prices and higher capital costs—as the reason for the decision not to proceed with the proposed expansion in the near term. Despite that decision they have continued to work with the South Australian government to ensure that when the opportunity arises—there is an increase in commodity prices and they work out a more appropriate opportunity or process to deliver that resource—they will go on with the investment in South Australia. That is the nature of the resources cycle. Companies have to have proper regard for the interests of shareholders in ensuring that investments occur at the time of potential maximum return to their shareholders and the Australian community.

Let us go to the facts in terms of the application of the MRRT as it was announced and developed on 2 July 2010. I am pleased to say—unfortunately the Leader of the Opposition is unwilling to acknowledge this—that Australia has continued to have consecutive years of economic growth. I think we should all be proud of that. Everyone in this House, irrespective of their political positions, should be proud that Australia has had 21 years of consecutive economic growth. I might also say that we are exceptionally good on the question of unemployment at 5.4 per cent, inflation at less than three per cent and, I might say, continued investment in terms of $280 billion committed to capital investment in Australia in the resources sector. The Leader of the Opposition wanted to debate the so-called impact of the mining tax on investment in Australia. What he did not actually focus on was the real facts in terms of the performance of our economy and in terms of the resources sector. I acknowledge that the resources sector has been central to the economic performance of Australia over the last 13 years and will continue to be so in future because we have a major investment pipeline.

Let us deal with a few facts. Since the MRRT was announced, the economy has created over 380,000 jobs in total; it has created 67,000 jobs in mining; there has been over $152 billion of capital expenditure in mining; importantly, capital expenditure in mining has increased by nearly 160 per cent since the MRRT was introduced; I also note, the total business investment has increased by nearly 45 per cent. The facts speak for themselves. I also inform the House that the expected mining capital expenditure in 2012-13 is $109 billion which is more than three times what it was before the MRRT was introduced: $35 billion in 2009-10. So much for the facts. It also reflects on why the Leader of the Opposition did not want to debate the issue that he advanced in terms of the request for the MPI. The House should also be aware that resource investment pipeline in terms of what is in an advanced stage of a planned capital investment has more than doubled since the MRRT was announced. It has increased from $110 billion in April 2010 to nearly $270 billion today—that is, $160 billion.

Let us now go to the suggestion from the Leader of the Opposition that the government is seeking to walk away from its commitment of 2 July 2010 to the mining industry. Let us go to the Argus-Ferguson report, something that the Leader of the Opposition wanted to quote in question time yesterday. Let us go to the all-important question of royalties and the endeavour by the opposition to muddy the waters in respect of the government's intentions with respect to discussions with state and territory governments on these issues. Let us also go to the failure of the Leader of the Opposition to speak out in opposition to increases in state royalties such as in New South Wales and Queensland over the last 12 months in the face of declining commodity prices. This was the most inopportune time to actually increase state royalties, because, unlike the MRRT, you pay royalties in both good and bad times, and once you increase royalties beyond the capacity of industry to pay, that is when you get mines mothballed or closed completely and the loss of jobs. It is interesting to note that on the east coast of Australia, in New South Wales and Queensland, in the last 12 months, where state royalties have been increased by coalition governments, we have lost 6,000 to 7,000 jobs in the coal and mining industries. Roughly 6,000 of those jobs were in Queensland where the member for Dickson comes from.

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