Rowan Ramsey (Grey, Liberal Party) Share this | Hansard source

Thank you, Deputy Speaker Craig Kelly. It is a welcome sight to see you in that chair. Congratulations.

I rise to speak on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. It was interesting to listen to the member for Blair—who is just leaving the chamber—stating quite vociferously that the projects in his electorate that they had budgeted for, that their government had funded, were going to be taken away. That is the whole crux of the problem here. They may well have budgeted for them but they were not funded. They were not funded because the tax that the previous Prime Minister, Julia Gillard, drew up in 2010 did not raise any money. That is the crux of the whole problem. We are presented with a whole range of the previous government's spending commitments but no income to pay for those commitments.

It takes a genius—perhaps a whole pack of geniuses—to design a mining tax, to design any tax, that does not raise any money! It also inflicts a compliance burden on the costs of all players. Even though currently they may not be subject to the tax, they actually have to account under a new accounting formula to show at what time in the future they may have to pay the tax. Of course, any company that is trying to develop a project has to write in the cost of that compliance burden into the development of the project. I will come to some of those costs in a little while.

The mining tax, of course, originally the resource super profits tax, was estimated to raise almost $50 billion over five years. By the time the minerals resource rent tax was implemented in 2010, that was down to $26½ billion. It is estimated now that it might raise a little over $4 billion over that five years. In fact, in the last 12 months it has raised just $400 million. The problem is that the previous government committed $18.4 billion worth of expenditure against that income. For the $400 million so far raised, that is around 40 times as much expenditure committed as the tax itself will raise.

I was speaking about companies which may be looking forward to mining. I have had a look at the figures in my electorate. We have one significant iron ore miner and one significant coalminer to power the power station at Port Augusta—Alinta. As far as I know, neither company has contributed to the small amount that has been raised by the mining tax over the last 12 months, but they would have met the accounting procedure. There are 20 companies Australia wide that have paid the tax but there are over 145 that have had to submit MRRT instalment notices.

I think South Australia and particularly my electorate is on the verge of a great growth in mining. In fact, we need it very badly. We have the poorest performing state economically on the mainland. Only Tasmania is performing worst than South Australia. As I look around South Australia and the possibilities and opportunities for us to raise our economic activity, most of them are in the resource industry. Not all of them—we have a very strong agricultural sector, which I am very confident will grow in the future and improve its performance—but the opportunities in South Australia will come from the resource industry. As my electorate covers over 90 per cent of the state it stands to reason that over 90 per cent of the action in the resource industry will be in my electorate.

The minerals resource rent tax does not target mines—for instance, such as the Roxby Downs mine, even though there was certainly some unease under the previous government that they may in the future extend the tax—other than iron ore and coal mines.

We have very significant coal deposits in South Australia but they are not of a high standard and there is a lot of work being done at the moment around hydrocarbon extraction—both underground gasification and above-ground liquefaction—and we are now finding that we have very large resources of iron ore. We could easily run an iron ore industry of 60 to 80 million tonnes a year for export. That is not the Western Australia standard but it is pretty big That is 60 to 80 million tonnes a year that South Australia may be capable of for 50 to 100 years. There are very significant deposits on Eyre Peninsula. The company Iron Road in particular has over three billion tonnes of iron ore proved up. There are a number of other operators in that area. There are significant deposits; some are currently being mined in the Woomera region. There is also a very large line of deposits in what is called the Braemar region, which runs roughly from Peterborough in the north-east to Broken Hill.

At this stage the South Australian government has granted major project status to no less than four different developments in Spencer Gulf to load iron ore. Currently iron ore is being shipped directly out of Whyalla on a barging process. There is another proposal up for a place called Lucky Bay, which would be a different type of barging process, and then there are four others that have major project status. One is the development of a slurry pipeline from the Braemar deposits to the eastern side of Spencer Gulf. There are another two down on the western side of Spencer Gulf between Tumby Bay and Port Neill and then there is one at Whyalla. It seems to me that not all four of these will ever be built, and I am concerned about the planning process. From my point of view, I would like to see one significant port built and then the enabling rail and transport networks put in place to make sure that we have a port of world significance and all the efficiencies that come with that.

The problem we have—and I come back to the mining resource rental tax—is that many of these companies are not cashed up. They are trying to get their projects over the hump, as it were. The Association of Mining and Exploration Companies states:

AMEC conservatively estimates that the minimum accumulated total setup costs in the first year for all iron ore and coal smaller miners and junior exploration companies(excluding large miners) is estimated to be over $20 million in the first year, and an ongoing annual administration and compliance cost in excess of $2 million.

I was speaking earlier about the company Iron Road. They have recently raised over $50 million in the stockmarket. That is a significant cash-raising. But with respect to their project development costs, they would have to build in another $20 million and yet they may not be liable for the current tax for many, many years to come. So it is just an added burden. Maybe to some people $20 million does not sound all that much. Maybe to BHP it does not sound all that much; but it sounds like a hell of a lot of money to me, and these are the burdens that go on these junior explorers and miners—and let me tell you that Iron Road is far more cashed up than many of the others—that they do not need. The very way the tax was designed was punitive on those who were likely, perhaps, in some cases, never to pay it. It is fundamentally flawed and there is no bigger flaw than the fact that, at the end of the day, it raises no money.

My understanding is that no-one has paid the tax in Grey, and it would seem that Australia-wide no-one has paid too much at all, full stop. The member for Blair was talking about the government spending that will be axed and pulled back in as a result of cancelling the mining resource rental tax. He ran through a whole list and I could do exactly the same, but there is one in particular that cuts quite close to home. I admit it is not easy telling some of the news in some of the local projects, and that brings me to the Regional Development Australia Fund. This fund was meant to have $952 million in it, and the member for Blair was only recently telling us that it was committed, it was budgeted for and it was funded, but we know it was not funded, because the tax did not raise any money.

By the election time in 2013—and this project was only one-third of the way through—$916 million of that, 95 per cent, had already been committed. It is worth noting that, in the last 3½ months leading up to the election, almost two-thirds of that fund—$608 million—was committed in what was really the rundown time of the government. It was a time when contracts could not be written, when the money could not begin the stream of being spent in the local electorate—so none of this stuff had happened and it was just the most outrageous example of pork-barrelling coming into an election. There were four rounds announced in the last three months; there have been six rounds altogether in the Regional Development Australia Fund. Round 3 had $50 million for towns of 30,000 or less. I might say that these projects are not necessarily unworthy projects. Many of them are very worthy, but the problem is: there is no money. So for towns of less than 30,000 there was $50 million—all announced on 9 May. Round 4 was open to community groups and councils and $195 million was announced progressively from 31 May. Round 5—and we really are getting into the days just before the election—was $150 million allocated for councils based on the Financial Assistants Grants, on a formula of $30,000 per council. There was no justification of this expense, and certainly every council would be pleased to get a $30,000 cheque in the mail, but that was just in the lead-up to the election and councils were required to identify projects for assessment with their funding envelope, and of course the 558 councils put through 910 projects. They were all very excited when they got news that their projects had been funded. But of course they were not funded; they were only 'approved'; they could not be funded, because there was no money.

Round 5B was the corker of the lot: over $200 million, by invitation only. That was projects that had been previously knocked back by RDA Australia—so were seen to be wanting—but it was: 'Get your money in now; get your quotes in now; get your bids in now; there is plenty of money to go around'. That was the news coming from the government. 'There'll be plenty of money for everything.' There were plenty of promises for everything; but there was not plenty of money. Unfortunately, when a responsible government got back in power, there were some difficult decisions to be made.

There is nothing more important in Australia. One of the central issues that we have been put in power to achieve is to pull the Australian federal budget back into line, to get expenditure and income aligned in the budget, to pull Australia back from the brink, to pull Australia back from the already $300 billion worth of debt that was accumulated in just six short years. It is a responsibility we take very seriously.

Certainly there is no fun in coming into government and being the bearer of harsher news for the electorate. I said, in the lead-up to the election in our party room, that I think Australians generally—even if they do not have an interest in politics, even if they do not have an understanding of economics—know in the fibre of their being that Australia could not continue on the path we were on before September 7. They would know that where we were was an unsustainable place, that expenditure was widely out of step with income, and hence the rising debt. So, if there is one thing this government must deliver on—and we will be judged on our performance in this area in three years—is fiscal responsibility; bringing the budget back to order, binging the projects back under proper order, not just approving projects willy-nilly in the lead-up, in a few days, without proper examination.

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