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

I always enjoy listening to the contributions from the member for Wakefield. They are always very comic. I think they sometimes come from a parallel universe not known to the rest of us, but it is a great expression of how those on that side of the chamber simply do not get it. They simply do not get the fact that, if you spend more than you raise you create a black hole—that is the black hole of the previous government's creation and that is why I rise today to speak on the removal of the mineral resources rent tax and associated measures.

There is no better expression of class warfare and the creation of a black hole than the mineral resources rent tax that was brought in by the previous government. There is also no greater example of the dysfunction, chaos and lack of due process in the former government than that of the MRRT and its predecessor, the resources super profits tax. Because of those two bills, we got to witness a tax that raised virtually no money; associated recurrent spending that significantly exceeded the revenue; the introduction for the first time in decades the words 'Australia' and 'sovereign risk' in the one sentence; an industry dependent on long-term certainty having to constantly question what the next announcement out of government was going to be, thus hindering investment; and the ugly and bitter internal politics of the Labor Party. But, most importantly, we learnt a lesson on how not to conduct sensible economic policy.

This is an age-old tale of the emperor and his new suit. We are all aware of this fable and the lessons learnt. The MRRT was the tax that revealed the former Prime Minister and Treasurer to be the economic vandals that we knew them to be. Like the pub with no beer, the MRRT is the tax with virtually no revenue. Putting to one side that the RSPT was forecast to raise in the vicinity of $50 billion, the original prediction for the MRRT was that it would raise $26.5 billion over the forward estimates. This, however, was constantly downgraded at every opportunity by the government, not of course to the surprise of those on this side of the chamber, I might add.

Eventually it was revealed that the tax collected not $26.5 billion, not even $1 billion, but actually $340 million in its first year—significantly less than what had been predicted by the previous government. Meanwhile, it cost the Australian tax office $50 million to administer the tax. It raised $340 million despite the billion dollar predictions and cost the ATO $50 million to administer—talk about a policy that was not well thought through, talk about inefficiency in our tax system. And that is before you even get onto the compliance cost for companies that did not pay the tax. That is not to say that they do not pay tax; they do pay tax. They pay royalties, they pay company tax, they pay payroll tax, they pay a number of taxes. But the compliance cost for companies, for instance, like Fortescue was between $3 million and $5 million, even though they were not due to pay any money under the MRRT. You cannot say that that is sensible. You cannot say that is good for business. You cannot say that is good for the economy. You cannot say that is good for jobs.

Let me move on to the fact that the government projected that billions of dollars of revenue would be collected but spent the money before such predictions came to pass. In the infinite wisdom of the former government, they decided to spend big on money they had not collected. It is like buying a house in the hope of a Christmas bonus to pay for it but that Christmas bonus never comes. It is irresponsible and it is imprudent. The MRRT had $16 billion of recurrent spending associated with it over the forward estimates. That is $16 billion the former government did not have but spent anyway—a cruel hoax on the Australian people.

This will be one of the only cases in Australia's history where the removal of a tax will improve the budget bottom line to the tune of $13 billion. That is right: we are going to get rid of a tax and improve the budget bottom line, because the previous government was so incompetent that it did not bring in as much revenue as it was spending. These savings will be made through the removal of all of the associated spending measures outlined by the previous government and it is done because we need to be responsible in government.

I want to move on to this notion of sovereign risk and how the MRRT was designed. The process of the MRRT was formulated and introduced with one announcement following another, one disaster following another. The first incarnation was of course, and we all remember it, the resources super profits tax. It was announced overnight, without consultation and to the complete surprise of industry. This is completely consistent with the modus operandi of the previous government: make an announcement first, force it on industry and then, after legitimate protest, say that you will consult. This is no way to make public policy and it is no way to design good public policy.

As a result of this 'announce first, ask questions later' process, sovereign risk was introduced back into Australia for the first time in decades. It had not been seen since the seventies and eighties where there was strong militancy in the unions that also forced bad policy decisions. It is not just us on this side of the chamber who say so. We saw reports on the front page of the Wall Street Journal. We heard from our business leaders that this was undermining investment confidence. Let me quote from just two. AngloGold Ashanti CEO Mark Cutifani remarked that when he addresses his board of directors he advises:

We have Australia as one of the top sovereign risk countries in the world and places where government policy has demonstrated failure in terms of taxation policy and inconsistency in policy. And that is a real concern for me and our board.

Ivan Glassenberg, one of Australia's most successful businessmen, corroborated this by saying:

Australia does have its risk, yes. We saw the carbon tax, we saw the minerals resources tax. It is a First World country but is doing things that are making people cautious of investing, so Australia is becoming another country where you have to make sure that the rules are not going to change on you.

When we look to expand our operations we do our valuations, we put a certain tax on it and a certain royalty on the valuation and then you invest lots of capital in those countries and you are just never sure but you hope the rules don't change on you.

Australia did send a signal to the world we may just change the rules and it is like other countries.

We hear from these two captains of industry, warning that the previous government, through their actions, was creating Australia as a sovereign risk destination and therefore not a destination for investment.

In its irresponsible, reckless and unpredictable approach to government, the previous government set a very low standard. This coalition government will be very different. This coalition government will take a very different approach to policy. We will not announce first and ask questions later; we will ask questions first, develop policy through a methodical process and only then will we legislate. It is no wonder to me that the relationship between government and business had become so frayed under the previous government that we saw business confidence at such a low.

The change of government has brought with it an immediate boost to confidence because of our difference in approach. The message for industry is once again 'Australia is open for business', business that is based on proper and methodical processes, with no surprises and no sudden shocks.

Finally, it would be remiss of me not to mention the political strategy of the former Treasurer, the member for Lilley, and the class warfare he engaged in in order to push this flawed tax. In my view the attack on individuals in the mining industry was one of the many low points of the previous parliament. The former Treasurer went as far as to say that mining interests were 'a threat to democracy'. The Treasurer, the very person who is meant to be trusted with the management of our economy, who is the conduit between government and the business community, waged a war on the very people who provide jobs, who create economic opportunity and who pay billions of dollars every year in tax.

What the former treasurer failed to recognise in this class warfare attack is that every time he attacked a miner he attacked a fellow Australian. Listening to the former Treasurer with these attacks we could be forgiven for thinking that no miner pays tax, that they do not pay royalties and that they do not pay company tax. And yet this is not the case. The more profitable they are, the more company tax they pay—and we do want them to be profitable, because if they are profitable they are adding to our economy and they are employing Australians.

The former Treasurer would have been better advised to embrace the success of the mining industry, rather than seek to retard it. Even members of his own side—the former member for Hotham—begged the former government to cease its class warfare led by the former Treasurer. The member for Griffith, the former Prime Minister, on his return to the prime ministership was forced to declare the class war over before again engaging in this low and base tactic. Is it any wonder that, again, business confidence plummeted to new lows?

This bill, the repeal of the MRRT, is an example that Australia is again open for business; that the economic agenda is no longer being written by the unions and a government that is antibusiness. It is an opportunity to restore confidence in investment so that people are secure and the rules will not change overnight. We as a government want to develop and build our industries so that we can build further economic prosperity in this country.

The repeal of the MRRT and its associated measures is another way in which the coalition is restoring confidence to the business community and restoring confidence in our economy. When combined with the removal of the carbon tax, a genuine deregulation agenda, reduction of the corporate tax rate and a real motivation to balance the budget, the coalition will maximise the potential of the Australian economy.

The coalition will make tough decisions to get the economy back on track, but it is not a tough decision to get rid of the MRRT with its associated measures. It is an irresponsible tax, a tax that raised less than it spent. That is why I commend this bill to the House and ask that those opposite support us in restoring confidence again to Australia.

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