Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

I oppose the Minerals Resources Rent Tax Repeal and Other Measures Bill 2013 because, quite simply, it is one of the most illogical and short-sighted pieces of economic policy that I have ever seen in my time in the parliament. Australians and their families and, indeed, small businesses are working harder than ever before. They are working longer hours, they feel more under pressure, they are spending less time with their families, and the cost of housing particularly in my electorate is skyrocketing.

The Minerals Resources Rent Tax was a carefully crafted piece of policy aimed at not only relieving pressure for families but also delivering a brighter future for our nation. It came about as a result of the Henry tax review, a careful consideration of the balances required for a future taxation system. The Henry tax review determined that some of our large mining companies were earning economic rents. They were earning superprofits from resources that are owned by the Australian people. I must laugh at the former member's comment that these resources are owned by the states. That are not owned by the states at all, they are owned by the people of Australia. The people of Australia own the resources that are in the ground and once you dig them up and once you sell them—predominantly overseas—that economic benefit is lost and it is lost forever. It is not something that can be picked up by the next generation, it is lost forever. That contribution from the former member typically highlights the approach of those opposite to this particular issue and the policy approach that they are taking in repealing this important legislation. This bill is probably the most abysmal short-sighted piece of policy work that I have witnessed in my time in parliament.

This bill will benefit three large multinational mining companies. Three large multinational mining companies will benefit from the repeal of this legislation, but every single Australian will lose. Every single Australian, except for those three mining companies, will lose under this bill. The great irony is that even those small mining companies that do not have a liability under the minerals resources rent tax, that blindly followed their industry group and were hoodwinked into funding a campaign against the tax, are going to lose. They are going to be worse off. They put their money into a campaign that will make their companies and their shareholders worse off, and they campaigned against the minerals resources rent tax. Incredibly, they paid for a campaign that will make them worse off. It is a laughable irony. It would be comical if it were not so serious: that small mining companies paid for a campaign that makes them worse off, that reduces their profitability. It is incredible. It is laughable.

But what is not laughable is the additional pressure that this decision puts on households and small businesses. The tax breaks and the support for families and small businesses that were funded by the minerals resources rent tax revenue are abolished or put on hold by this government. The minerals resources rent tax and the revenue raised would have funded a number of important progressive policies in our economy, most notably, the increase in compulsory superannuation contributions from nine to 12 per cent.

We have an ageing population. The biggest pressure that is going to come for our economy in the future is not the condition of international relations or the international economy, it is the ageing of our domestic population. At the moment for every 10 people who are over the age of 65 in Australia, there are 52 Australians in the workforce, 52 Australians working and paying taxes to fund our social security, our health and our aged-care system. Within the next 40 years that number will almost halve. For every 10 people over the age of 65 in our nation, there will be only 27 Australians in the workforce. That is going to put massive pressure on our social security, on our health care and on our aged-care systems. We must be encouraging Australians to save more and to build up a nest egg to fund their own retirement. That is the philosophy behind the increase in superannuation contributions from 9 to 12 per cent. It is a simple one, a foresighted one, and it is one that was backed by the former Treasurer Peter Costello in the Intergenerational report.

But because of this bill, because of the repeal of the minerals resource rent tax and the lack of that revenue which funded that policy, we are going to see that increase in superannuation payments from nine to 12 per cent delayed. And you can bet your life, Deputy Speaker, that it will not only be delayed; it will never happen. It will never happen under a Liberal government that they will increase compulsory superannuation contributions. When the Howard government came to office in 1996, what did they do? They instituted a Commission of Audit. Does that sound familiar?

Mr Chester interjecting—

Does that sound familiar, Parliamentary Secretary? It does, and they are going to do it again—another Commission of Audit. And guess what that Commission of Audit will find? I would not mind putting a few dollars on the fact that the Commission of Audit will find that the increase in superannuation contributions from nine to 12 per cent is unaffordable, and it will not go ahead. It will be stopped by another Liberal government, and the opportunity for us as a nation to plan for the future, to put in place an economic policy that ensures that Australians can save for their own retirements, will be lost again. It will be lost again until a Labor government comes to office.

This policy not only funded the increase in superannuation contributions from nine to 12 per cent; it also funded a raise in the compulsory age at which compulsory superannuation contributions cut out. We were increasing that age from 70 to 75, again because of the changing nature of the workforce and the increasing pressure on families to work longer to be able to fund their own retirement. A sensible, foresighted policy again will be lost under this government because of this decision.

I noticed some younger Australians in the parliament earlier, watching from the galleries. They stand to lose quite a bit under this policy because the effect of not increasing compulsory superannuation from nine to 12 per cent is that the average male Australian who is 30 years old, working over the rest of their life, would have had an extra $105,000 in their superannuation account when they retired. So they will end up with $105,000 less in their superannuation account if the increase in superannuation from nine to 12 per cent does not go ahead.

This policy also assisted those on low incomes in Australia. Anyone who was earning less than $37,000 was paid the low-income superannuation contribution, and there was good philosophy behind that policy. It was to ensure that there is an incentive for those low-income earners to remain in the workforce, that they are not crowded out by the effect of welfare payments, in that welfare payments become more attractive than staying in work, because a lot of those people were losing most of their superannuation contributions in taxation. Labor relieved that by introducing the low-income super contribution—gone because of the repeal of this legislation.

Under the original proposal for the minerals resource rent tax, companies would have been better off through a 1½ per cent cut in the company tax rate. Those mining companies that funded that campaign would have had a 1½ per cent cut in their company tax rate had they not taken a negative approach and funded that campaign. They would have also benefited from a resource exploration rebate, which would have refunded some of their costs, those initial lumpy outlays in investment that many burgeoning mining companies have to undertake when they are beginning projects, when they are exploring. They would have got a rebate for that under the original philosophy of the minerals resource rent tax. That was later abandoned; there is no doubt about that. But, again, if it were not for the campaign that they funded, it might not have been the case. So again they did themselves out of some advantages when it came to economic policy.

Small businesses have lost the instant asset write-off, the ability to claim up to $6½ thousand worth of assets and immediately write them off. That was a big boon for many small businesses. I visited a local pub in my electorate last Friday, and I met with the publican. He told me. He said, 'Mate, that instant asset write-off is a great piece of public policy,' because it allowed him as a publican to refit all of the refrigerators in his pub with the assistance of the government. That meant that they were emissions friendly, so he was reducing his carbon liability because he was installing cleaner technology in his business. It was supporting the environment, making our environment cleaner, supporting small businesses and making them more profitable into the future—again lost under the review of this legislation.

It is only three big mining companies that are going to win from the repeal of this legislation, and every other Australian loses. There is no better example of the priorities of those opposite when it comes to economic policies: tax breaks for the big end of town, for the mining companies, for those with superannuation balances over $1 million that are earning a revenue above $100,000. It is beyond me how on earth you can justify that and how you can cut the superannuation tax breaks for those on less than $37,000 and then give a massive tax break to those who have more than $1 million in their super accounts and are earning over $100,000 in revenue from those.

These are resources that are owned by the people of Australia. They are not owned by the states. They are not owned by the mining companies. They are owned by the people of Australia. And these mining companies were earning economic rents from them. It is not unfair for us as a nation, given that these resources do not continue forever and a day, to make a fair return from them and to redistribute some of that revenue to ensure that our economy is sustainable into the future. That is what this policy was all about. It is going to be lost because of the intransigence of those opposite. Imposing a tax increase on 3½ million low-paid workers, 60 per cent of whom are women, through their superannuation accounts in the low-income superannuation contribution is nothing short of scandalous.

Some other speakers from the other side have mentioned royalties and the states imposing royalties. This is the other great irony of this debate. We are going to get rid of a tax which is only paid by companies once they make a profit—above $70 million, I might add. We are not talking insignificant profits here; we are talking about companies that make a profit above $70 million. We are going to get rid of that tax, but we are going to allow states to increase their royalties on those mining companies, not only those that made above $70 million worth of profit but every single one of them, every single mining company, regardless of whether or not they make a profit at all. So here we have a system that we are encouraging by repealing this legislation, in which, if you make a loss as a mining company—you have been working hard all year but you make a loss—you will pay the tax through royalties. You will pay the royalties. What does that do for investment in that particular business? What does that do for job creation in that particular business? That is not exactly government encouraging growth, encouraging exploration and encouraging jobs in that particular industry. It is imposing an inefficient tax.

We propose to replace those inefficient taxes, those royalties that are paid regardless of whether you operate at a profit or not, with a much more efficient tax, one which is paid only once the company earns more than $70 million profit. Yes, for the last year only three mining companies had a liability, but that shows you how fair the tax is. It shows you that only those that are making superprofits, that are making those economic rents identified by Ken Henry, will pay the tax. If you do not make a profit, you do not pay the tax. Those opposite are encouraging a system where if you make a loss you will continue to pay the tax. That is not exactly promoting the interests of business, investment and jobs growth in a very important sector of our economy.

So what do we have? We have a system in which three big mining companies are going to be let off the hook. They are going to pay no taxes under this once it is abolished and every other Australian is going to be worse off. Low-income workers are going to be worse off because the low-income superannuation contribution is removed. Small businesses are going to be worse off because they lose the instant asset write-off. They have lost the opportunity at a reduction in the company tax rate, so those small mining companies that were not even paying the liability for the tax are going to be worse off. Millions of Australians are going to be worse off and three big mining companies are going to be better off. That says everything about the priorities of this government and why this piece of policy, this bill, is so twisted and why I am opposing it.

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