Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Mr Speaker, my question is to the Prime Minister.

Honourable Members:

Honourable members interjecting—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The House will come to order. Hopefully, a lot of people have got it out of their system before we even start. The Leader of the Opposition has the call.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Following last week’s announcement by Fortescue Metals that it has placed two projects on hold worth $17½ billion in investment and up to 30,000 jobs, I refer the Prime Minister to today’s announcement by the head of Rio Tinto, Mr Tom Albanese, that all Rio Tinto’s Australian expansion plans have been put on hold, that capital would shift to other nations like Canada and that the Rudd government’s proposed great big new tax on mining was Rio Tinto’s top sovereign risk issue on a global basis. I ask the Prime Minister: how much damage will the Australian economy suffer before the Prime Minister backs down on his great big new tax on mining?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the Leader of the Opposition for his question and I draw his attention to the sort of debate which occurred in this place, and more broadly, when we brought in the petroleum rent resource tax in the mid-1980s. There were loud threats across the nation and from abroad about the impact on the Australian offshore mining industry at that time through the introduction of the tax. That tax was a tax on profits. The proposed RSPT is a tax on profits. Every economic analyst concludes that a tax on profits is a more efficient tax than a tax on volumes.

The second point that the Leader of the Opposition asked was about, I think, a reference to Fortescue Metals. Notice was given to the ASX by Fortescue last Wednesday noting that the projects in question had been placed on hold. I note the two paragraphs in the Australian newspaper on 20 May which said:

Mr Forrest’s move to delay the Solomon project was last night labelled a “political statement” more than a genuine setback to the company’s plans.

It went on to say:

Credit Suisse analyst Nathan Littlewood noted Fortescue had not abandoned its Solomon feasibility study due for completion later this year, by which time a federal election would have been held …

I also draw attention to recent statements which have been made by Mr Forrest concerning China and the response which has been forthcoming on that as well. As the Leader of the Opposition will know, there will be many, many statements by many, many companies, and all of them may have this in common: they do not want to pay more tax.

This government believes that the time has come for tax reform which delivers a fair return for all Australians, a fair return for those who depend on this tax for investing in our future infrastructure, a fair return from this tax to support super for working families and a fair return from this tax in order to bring down the taxation burden for Australian business. This reform, as the Leader of the Opposition knows full well, has been projected by independent modelling to bring about an overall increase in mining activity of 5.5 per cent as well as bringing about other deep reforms in the tax system, and incentives and global competitiveness to the Australian economy at large.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Prime minister, why is tax reform in Australia’s long-term interest? How has the government’s reform of the resources taxation system been received?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the member for Braddon for his question. In fact, we were in his electorate only last week at a community cabinet meeting where we heard loud and clear from a number of local businesses how they appreciate an Australian government that gets out there in support of local business to protect jobs in local communities, as we have been doing throughout the global financial crisis and, with reforms to the economy, how we will continue to do so into the future as well. I remember that we spent some time with a number of businesses in the honourable member’s electorate. Penguin Composites comes to mind, a company which has benefited from a co-investment with the Australian government in the expansion of its operations.

The member for Braddon asked a question about tax reform and where it fits within the overall priorities of the government, and responses to it. The first responsibility of government is to keep the Australian economy strong. That is what this government is committed to. We have done so by keeping Australia out of recession. We have done so also through a budget which halves our net peak debt and brings the budget back to surplus in three years time—three years ahead of time. Furthermore, the strength of the economy in the future depends on the continued reform of our economy—reforms in productivity, reforms in workforce participation, and reforms also in regulation and in tax.

On the question of tax, if the opposition blocks this tax reform, Australia will look back in 10 years time and see that another opportunity to strengthen our economy and invest in our competitiveness in the future was passed up. No. 1, with this tax reform, we are aiming at boosting the overall national competitiveness of Australia. We are doing that by bringing down the company tax rate by two percentage points—

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

How are you going to—

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

The Leader of the Opposition interjects, ‘How are you going to do that?’ Not by increasing the company tax rate, as he is planning to do. We are bringing it down two percentage points; you are taking it up two percentage points. There is a big difference.

Secondly, we are also boosting the competitiveness of the Australian economy by investing in infrastructure. That is necessary in order to underpin long-term productivity growth. We are investing also in the tax competitiveness of our small business sector. We will lose an opportunity to deliver a fair share for all Australians if the opposition blocks this legislation. If the Leader of the Opposition blocks this RSPT, he will be denying workers an increase in super from nine per cent to 12 per cent. He will be denying a worker on about average earnings an additional $108,000 a year. He will be denying working Australians better super on their retirement. He will be denying all those Australian companies a two percentage point tax cut. He will be denying Australian small business a $5,000 tax break. He will also be denying some 6.4 million Australian taxpayers a radical opportunity to simplify their tax arrangements and to throw the shoebox away, if they so choose, when it comes to tax time. That is what is at stake with these reforms.

I was asked by the member for Braddon about other people’s comments on these reforms and the need to tax the mining sector more. It seems that the Leader of the Opposition alone in this country believes that our mining sector is currently paying enough tax. His state political colleague recently said the following:

The mining companies are aware of it and some of them have expressed their views. I have to say that a few people who work around the mining industry have come to me over the summer and said, ‘By the way, Colin, the mining companies are getting away with murder; they’re not paying enough.’

So says Colin Barnett, the Liberal Premier of Western Australia.

We go to Don Voelte, a leading representative of the mining industry in Western Australia, who said this:

Your original question was, ‘Can the miners give a little bit more?’ In talking to the big miners and the mid-cap miners, I have not heard that they are not willing to negotiate a different tax and a higher tax back. They want to give a fair share back to the Australian citizens.

Look at what Roger Corbett has had to say on the matter of tax reform. He said the following:

These are resources owned by Australians and Australians should extract from those resources the best possible advantage that they can. In principle I support a resources tax. I support a taxing regime that allows redistribution and I support a taxing regime that retains some of the value of this asset that is going to be consumed to the point where there is nothing left so that they can have an asset base for the future.

So said Mr Corbett, whom the previous government appointed to the Reserve Bank board.

So there you have it: the WA Liberal Premier says that the mining industry—in his words, not mine—is getting away with murder. Don Voelte from Woodside says that it is entirely appropriate for mining companies to be paying more. Roger Corbett of the Reserve Bank, a leading Australian businessman, says that in-principle support for a resources rent tax is appropriate. There is only one person in this parliament who believes that our mining industry is paying enough, and that is the Leader of the Opposition.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Me too!

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

Oh, and Wilson Tuckey—the dynamic duo when it comes to economic reform. The Leader of the Opposition stands in the way of tax reform for workers who want better super, stands in the way of small businesses who want decent tax cuts and stands in the way of decent infrastructure to underpin the future of the Australian economy.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Infrastructure and Water) Share this | Link to this | Hansard source

My question is to the Prime Minister, in relation to his comments that the Australian LNG industry has prospered under a petroleum resource rent tax. Can the Prime Minister name one gas field in Australia covered by the petroleum resource rent tax that has exported one tonne of LNG in the last 20 years?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

We now have an attack on the PRRT. From memory, it came in in 1985, which is 25 years ago. The honourable member cannot recall the Gorgon announcement made recently. Where has he been for the last 25 years? He was amazingly silent as they took receipts in from the PRRT, and now they seek, opportunistically, to change their line.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. What are respected economists saying about the role of the resource super profits tax in strengthening our economy and ensuring Australians get a fairer share?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for Wakefield for his very important question. There is growing support for the resource super profits tax. Everybody on this side of the House recognises that there is a rolled-gold case for more tax to be paid. But you never hear those on that side of the House even whisper about the need for the Australian people to get a fairer share of the bounty of this country. The Leader of the Opposition was sitting in his office and all the mining companies came in. At that stage he did not have a word to say about it. They told him what to say, and you have seen the outcome here today. The opposition are simply doing what they have been told to by the mining companies. There is going to be a lot of loud noise made by those who are opposed to this tax, by those who are opposed to Australians sharing in the wealth.

At the beginning of this decade, one dollar in three of mining company profits came through royalties and charges. At the end of the decade, it was one dollar in seven. But they do not care that the Australian people have missed out on a fair share of that. That much is obvious. There is one body that said very early that we needed a resource rent tax in this community. In fact, that was said by the Minerals Council. The Minerals Council, in their submission to the independent tax inquiry, had this to say:

There is a strong argument to reform the basis of determining royalty payments to a profits based criteria from a revenue one.

That was the mining sector; that was the Minerals Council of Australia. Of course, this is now widely recognised not only here but around the world. This is what the OECD has had to say:

Whenever there is a period in which there is a price spike or a price hike then it is legitimate for a sharing of that bonanza and that benefit.

That is what everybody on this side of the House believes. Nobody on the other side of the House believes that. And today we have had Roger Corbett, appointed by those opposite to the Reserve Bank board, saying:

These are resources owned by Australians and Australia should extract from those resources the best possible advantage it can.

Who can disagree with that? Everybody over there disagrees with that perfectly reasonable statement. And you have got Michael Hawker, a director of Macquarie Group, who had this to say:

A royalties tax on the assets of Australia is a good policy position because the capital of the country should be there not just for this generation but for multiple generations.

Who believes that? Everybody on this side of the House believes that. But it is not just people in business; it is many economists. This is what Mr John Freebairn had to say on 12 May:

It is actually going to increase the level of investment and employment down the track, contrary to what the big mining companies are claiming.

You have got the IMF, who had this to say:

There is a case for this tax to promote investment and secure for government higher shares of resource rent in profitable projects.

And we have Professor Garnaut. What has he had to say?

Opposition Members:

Opposition members interjecting—

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thought you supported Professor Garnaut. He said:

It is the right sort of tax. The Henry review made a strong case and a good case for taxing mineral rent. It is an elegant approach to the taxing of mineral rent.

We go on. Even the banks are saying this. This is what Westpac had to say on 3 May:

The RSPT is a more efficient way of extracting value for both the state and resource companies than a royalty system.

So, in the face of all this evidence, what we now have is an unprecedented, hysterical scare campaign which has been sponsored by those opposite and paid for by the Minerals Council, paid for and authorised by the Minerals Council. There are many commentators who have belled the cat on that. This is what Professor John Quiggin has had to say:

The tax is a good idea and the criticisms we have seen are what you would expect from rent seekers seeking to protect their rents.

I think that describes those opposite. And you had the Secretary-General of the OECD, again, saying:

If you look at these things strategically, of course it is a wise thing to invest in Australia.

Mr John Brogden, the CEO of the Investment and Financial Services Association—not someone from our side of politics—said:

This is a visionary policy. It is visionary for Australia’s retirement outcomes and it is visionary for the Australian economy.

So there is a strong tide of support for this tax in the business community, in the economics profession and among the Australian people. Those opposite are siding with the mining industry against the families of Australia, the workers of Australia and a national retirement savings plan. You hear those opposite claim to stand for families. Phony Tony over there claims to stand for families, but he will not support an initiative like this which will support Australian families. They are happy to see the profits walk out the door and not support Australian families. They should be condemned.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is again to the Prime Minister. Yesterday the Treasurer and the Deputy Prime Minister publicly claimed that the Australian resources sector pays only 13 to 17 per cent in tax, based on the University of North Carolina student research paper that was completed over a year ago which does not specifically focus on the Australian resource sector, does not include royalty payments and lumps data from New Zealand in with that from Australia. I ask the Prime Minister: to prevent further misinformation, will the government now publicly release all Treasury and tax office modelling in relation to the great big new tax on mining?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I draw the honourable member’s attention to the report which has already been released by the Treasury which contains copious information within it. Secondly, the underpinning of the Leader of the Opposition’s question again is that the mining industry in this country does not need to pay more. This government has a different view, the Premier of Western Australia has a different view and in fact many representatives of the Australian business community have a different view. The Secretary-General of the OECD has a different view. Those opposite seem to be of the view that the only way in which to advance this country’s economic interest for the long term is simply to leave things as they are, not to engineer fundamental reforms for the future. We stand for better taxation treatment for small business, better tax treatment for Australian companies and better super for Australian workers, and we also stand for better investment in Australian infrastructure. That is the basis of the reform we have put forward. The government stands by its reform plan.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Why is it important that spending commitments are properly documented, detailed and costed?

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thank the member for Lyons for his question. Honourable members may recall that at the end of the last sitting week I issued a tally, a table, of existing coalition spending commitments that totalled $15.7 billion that had not been funded in any way by the opposition. They may also recall the Leader of the Opposition’s budget speech in reply on Thursday of the last sitting week in which he only managed to refer to one significant saving, with a grossly inflated estimate of how much it would deliver, and that was the Public Service hiring freeze.

Since that time, we have had a very, very interesting week. First, on the Monday of last week, we had the Leader of the Opposition on the 7.30 Report indicate that we should not treat anything that he says seriously; we should only treat his statements as gospel truth if they are in writing. Then, on the Wednesday, after the Leader of the Opposition had promised that the detail would be delivered by the shadow Treasurer, the member for North Sydney, at his traditional budget reply speech at the National Press Club, the member for North Sydney came along and there was a lot of verbiage and bluster but there was no detail in his speech. A few hours later in the day, this elaborate game of pass-the-parcel concluded and finally the shadow finance minister—the fifth shadow finance minister in this term of parliament—the member for Goldstein, launched a list of supposed budget savings, the vast bulk of which do not hit the budget bottom line. Finally, to make the week even more interesting, the member for Goldstein, late on Thursday, put out a press release entitled ‘Tanner’s numbers in tatters’—almost illiterate if not quite. It stated in a press release:

These costings leave in tatters the desperate claims of the Finance Minister, Mr Tanner, that Coalition promises add up to $15.7 billion.

It claimed that only $4.7 billion is the tally of coalition promises. Mr Speaker, as you can imagine, I found this rather interesting and rather puzzling—in fact, I was a bit mystified. How could there be such a big gap, $11 billion or so, between my tally and the opposition’s? The answer was in the fine print in the member for Goldstein’s press release because it contained this ripper phrase:

… other past commitments have been discontinued.

The older members of the chamber will no doubt remember Ronald Ziegler, the famous press spokesman for Richard Nixon who came up with the immortal phrase, ‘That previous statement was inoperative.’ We now have a new equivalent, a new euphemism. It is, ‘That commitment has been discontinued.’ The promise last year to allow small businesses to carry back-tax losses has been discontinued. The commitment of the shadow families minister, the member for Menzies, to get rid of the means-testing initiatives of the government on the baby bonus and the family tax benefits has been discontinued. The superannuation spokesman, the member for Cowper, in a speech only on 19 April this year made a commitment to reverse the government’s tightening of concessional superannuation tax treatment. That one has also been discontinued, not to mention the radical reduction in funding for the Leader of the Opposition’s so-called green army commitment that he made in a speech to the Sydney Institute and the dramatic scale down in funding for the Toowoomba bypass.

What we have is a simple explanation for the discrepancy between the costings that I announced a week and a half ago and what the opposition now says are the costs of their promises. They have junked most of their promises and given us a living example of phoney Tony’s principle: if it was a statement, ignore it; you have got to have it pinned down in writing, in triplicate, and it has got to be there in a document before you should treat it seriously.

There is a common thread across all of these events last week. It is this: panic under pressure. First, we have the Leader of the Opposition refusing to be accountable for anything he says, then we have got the pass-the-parcel game from the Leader of the Opposition to the member for North Sydney to the member for Goldstein, then we have got the phoney savings announcement and then the final nail in the coffin that previous promises have been discontinued. There is a lesson for everyone here and that is that the Leader of the Opposition is too risky, too erratic and too flaky to be trusted with managing the nation’s finances.