Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The Speaker has received a letter from the honourable member for Groom proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The effect of the Resources Super Tax on future investment, employment and the cost of living.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

The imposition of this super tax on the resources industry by the Rudd government is an attack on the mining industry of Australia; it is an attack on the miners and their jobs in Australia; it is an attack on the contractors and small businesses who support the mining industry in Australia; it is an attack on household budgets in Australia; it is an attack on the shareholders in these companies that operate in Australia; it is an attack on the superannuation recipients whose funds have invested in these resource companies; and it is an attack on self-funded retirees.

Never in my lifetime have I seen such a reckless approach by any government in its attempt to destroy the Australian resources industry. This is an industry that has supported this country through a series of recessions and has ensured a standard of living in Australia that we all enjoy and are proud of. This industry has done nothing to deserve the gutless attacks it has received in the past three weeks from those who sit opposite. I never, ever thought I would hear the language that has been used about mining industry leaders by everyone from the Prime Minister to the Treasurer to backbenchers who are scared of losing their jobs at the next election. The Prime Minister tried to invoke not only xenophobia but also the tall poppy syndrome, asking Australians to question the motives of people simply because they have been successful. I never, ever thought I would see a leader of this country stoop to that.

I never thought I would see a situation where we have the Treasurer of this country accusing mining industry leaders of being either liars or ignorant—liars or ignorant. These are the fathers and mothers of industry in Australia, these are the people who have put Australia’s resource development on the world map, these are the people who have provided jobs directly and indirectly for millions of Australians, and yet the Treasurer’s description of them is that either they are lying or deliberately putting out mistruths or they are ignorant—that is, they do not understand the way of the world.

Surely not—surely the Treasurer would not be referring to someone who once referred to him, the Treasurer, and his counterpart the Prime Minister as ‘Labor brothers’. This is a former Labor state Treasurer, a person of distinction within the Labor Party in Queensland who held office in the Goss government in which the Prime Minister had a prominent role. Yet the Treasurer has referred to him as either ignorant or a liar. I refer of course to Keith De Lacy, a person I have considerable time for, a person I had considerable time for before I came to this place. Mr De Lacy said the Treasurer’s claims are wrong, highly misleading and offensive. That was in relation to the Treasurer’s claims that mining companies were lying about the amount of tax they paid.

We are now in a situation where the head of the third largest resources company in the world, Rio Tinto, is describing Australia’s mining tax as being ‘the biggest sovereign risk facing the miner anywhere in the world’ and certainly Australia as having a sovereign risk profile which requires him and his companies to reassess billions of dollars worth of investment here. It is not just the dollars of investment that we need to worry about; it is the tens of thousands of jobs that go with it. It is the returns by Rio Tinto that go back to the shareholders of Australia—and that company has an Australian listing; it has a very long and proud history of investment and employment in Australia—to self-funded retirees, to superannuation holders and to people who have had the courage to invest in an industry that has underpinned Australia.

These men do not speak lightly of their concerns, nor of the impact that the mining tax will have on their companies. They are bound by an obligation under the director laws of Australia not to lie. The Treasurer may not understand that. He has probably never done the Australian Institute of Company Directors course. I have. I understand corporate responsibility. I understand director responsibility. I understand the requirements by law that if you abuse them you will go to jail. I understand that what these people are saying is true. And I understand that, when you combine that with a great Australian, someone whom we have all looked up to in our past, Mr Herb Elliott, who is the Chairman of Fortescue Metals, that we have someone with integrity in terms of both his own character and of course his director responsibilities.

Today, the Chairman of Fortescue Metals Group wrote to his 55,000 shareholders advising them of the company’s rejection of the federal government’s proposed resource rent tax. The letter to the shareholders, which is available on the Fortescue website, states that the government’s proposal is akin to ‘a socialist style funding and tax device’ and is ‘bad for every Australian’—every Australian. Who is going to benefit from this tax? It is not the people who work at the mine sites, not the small businesses who support them, not the shareholders in the company, not the self-funded retirees and certainly not the people who want to see Australia prosper.

We have heard a lot of figures recently in relation to Treasury documents. If I had more time I would revisit the comments about what a fraud has been tried to be perpetrated by quoting documents, in one case from the University of North Carolina in an undergraduate work associated with a professor. The professor clearly stated that those documents were never to be used for a tax model and I have that document here. The other document, of course, that we saw rushed out overnight was the document purporting to be the Treasury analysis of the taxes in relation to the issue of company tax. On the bottom of the document Disparities in average rates of company tax across industries the authors, Peter Greagg, Dean Parham and Pero Stojanovski say:

The authors are from Business Tax Division, the Australian Treasury. This article has benefited from comments and suggestions provided by Paul McMahon and Shane Johnson. The views in this article are those of the authors and not necessarily those of the Australian Treasury.

So desperate is this government they will grab anything to back up their case, anything to try and add a shred, a tiny modicum of credibility to this dreadful, dreadful tax. It is a tax that is destroying Australia’s resources future. One Treasury has been able to make comment because it is not bound by those who sit opposite and that is the Treasury of Western Australia. The WA Treasury said in the budget papers:

… that the risks and uncertainties leading up to the planned introduction of the resource super-profits tax could deter investment in the state’s resources sector, which would affect economic forecasts badly.

It goes on:

There is a risk that the commonwealth’s proposal … will have a significant impact on the level of future investment in the mining sector in Western Australia.

Where do we start to look for evidence of that. There is so much evidence. Do we start with Southern Cross Portfolio Ideas, who today said:

Claim and counter claim between Canberra and the mining industry is doing Australia incalculable damage in the eyes of foreign investors.

               …            …            …

To me this is like having a fight with your wife at a restaurant. It is destructive, unnecessary and classless.

The Prime Minister can argue that the Australian dollar fall has nothing to do with the RSPT. The market facts beg to differ from that. This document continues through a series of charts comparing our dollar’s fall with the Canadian dollar and with every other major currency to highlight the fact that this government is destroying the resources industry in Australia. We have Moody’s, who are well-respected and impartial with nothing to gain either way who have said categorically that the RSPT:

… could reduce earnings for firms by nearly a third after it takes effect in mid-2012.

That is a 30 per cent reduction. The list goes on from JB Were, Citi, UBS, JP Morgan. These are people who understand the market unlike those who sit opposite. These are international companies that understand how the markets works. Perhaps the small miners might think this is a great tax but, again, the list goes on of companies that are opposed to this tax. It is too long to read in the moments I have left but the list has Milan Jerkovic of Straits Resources, David Robb of Iluka Resources, Paul Pike of Mulgundawa Salt, Will Robinson of Encounter Resources and Michael Weir of Gindalbie Metals. It is a long list of companies who say this tax is bad for Australia. So who says it is good? The Canadians, of course. They think it is fantastic. Brad Trost MP said:

So I’m sending out the message—Canada wants Australian business.

What is Rio’s response to that? Rio Tinto is a company that has resources in Canada. Obviously they have to consider that and Mr Tom Albanese said:

What may be Australia’s loss from the resource super profits tax will be Canada’s gain.

He warned that his company and fellow Australian miners were likely to give preference to developing resources in overseas companies. Even Papua New Guinea is licking its lips at the opportunity to see Australian companies turned away from Australia and investing in PNG. The list goes on and on.

I have not had time in this speech to talk about a key issue. That is the opportunity for Indigenous Australians that is presented by the resource sector in Australia, particularly in Western Australia, the Northern Territory, South Australia and Queensland. Let me quote from Indigenous businessman Barry Taylor who said:

When something like that affects the mining industry, if cuts are going to be made, generally there are two people at the bottom of the food chain—that’s the contractors and the blackfellas and in most cases we are both, particularly up in the Pilbara.

               …            …            …

If mining companies are going to say ‘we are going to get taxed on a lot of our profits,’ it is just going to make it difficult for those types of companies to invest in the region and the Pilbara, in particular, has massive Aboriginal communities surrounding the mines.

This is a disaster for regional Australia, it is a disaster for urban Australia and it is a disaster for all of Australia. (Time expired)

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

Madam Deputy Speaker, I thank you for the opportunity to address the House in this MPI debate on what is a complex issue. In doing so, can I simply say that the contribution from the opposition to date in the debate on the resource super profits tax clearly shows that they are out of touch with the broader Australian community. The community is actually up for this debate, and the reason they are up for this debate is that they believe the mining sector has had a good 10 years. There are good profits. The community appreciates and wants in place a decent tax system which rewards risk-takers while it also guarantees that the community gets a fair share from the opportunity to develop the resources.

The mining sector itself is also up for the debate. The Minerals Council of Australia has clearly said that it regards the current royalty system to be out of date and inappropriate for the future development of the Australian resources sector. It has actually argued for a profit based system. Mr Andrew Forrest might have some criticism of the current government proposal but I refer to his statement lodged with the ASX today. It is a clear statement that a range of companies in Australia appreciate that the time has come for this debate. In the statement by FMG to the ASX today, Mr Forrest says:

We acknowledge Australia needs tax reform and are pleased to be working with the Treasury consultation panel to consider and make input to a new and fairer tax system.

That is what the debate is about. Clearly, there are different points of view on this debate, but the government is absolutely committed to the process of consultation established on the day that the Henry tax report was released. It was also the day that we announced our response to a number of key, tough issues raised by the Henry tax report which go to making sure that not only do we get a fair return for the Australian community but we also invest in the Australian community’s future. The record will show a lack of attention by the previous government to use the opportunities that came from a resources boom to cement our nation’s economic future. That is why, when you look at the range of announcements made by the Prime Minister back on 2 May, you do not just look at the complex debate about a new resources tax system in Australia; you also look at the investments we are going to make as part of the package.

We should never forget that this is a package. Yes, there are changes in taxation but there are also a range of benefits to the resources sector and, importantly, a range of benefits to the broader community. They include, for example, a significant investment in the future of small businesses in Australia. A cut in company taxation is something that small businesses want. They should be rewarded for the manner in which they cooperated with the Australian community and government and got us through the global financial crisis.

What about infrastructure? The record shows that, during the previous decade, we as a nation lived off the back of increases in commodity prices, whilst we lost market share. The reason for that is that government failed to invest in resource related infrastructure. For the first time ever we will establish in the budget each year a line item for dedicated investment in the resources sector. This will take some pressure off the resource regions.

Then we come to the issue of retirement. We all have to save more for retirement but government is obligated to create an environment that enables people to save for retirement. Hence, we propose to take the minimum superannuation guarantee from nine per cent to 12 per cent. It means that someone who is currently about 30 years of age will receive an additional benefit which, based on today’s dollar terms, will be over $100,000. That is very, very significant. It will provide people with a greater capacity to retire with some dignity.

This debate also goes to the management of the economy—not just to the incentives government will create to enable people to save for retirement but also to the strength of the economy which enables people themselves to contribute to their future. I take the House today to an article about the Melbourne Institute Quarterly Wages Report of May 2010. It states:

According to the latest Melbourne Institute Quarterly Wages report total paid growth over the last 12 months to 2010—

a very tough period for the Australian economy, I point out—

increased by an average of 4.3 per cent compared with an increase of 3.2 per cent in the 12 months to February 2010.

It goes on to say about wage expectations:

… measuring expected wage growth over the next 12 months increased from an expected 2.2 per cent growth in February to 2.5 per cent in May.

Clearly, all the hard work of the previous 12 to 15 months by this government is bearing fruit. We have a strong economy. We have good growth and, all being well, we will achieve unemployment of 4¾ per cent, as announced by the Treasurer on budget night only a matter of weeks ago.

In order to further secure the future of this economy, you have to take a few tough decisions but, in doing so, you have to put in place a tax system that not only encourages investment but also acknowledges the acceptance by a range of mining companies in Australia that they do have capacity to give a fair return to the Australian community for the opportunity to develop their finite non-renewable resources. That is what this debate is about. And it is also about using the proceeds of that tax for our future. The exploration that we do today determines the projects that we will have in 30 and 40 years time. That is why we propose, for example, a new exploration incentive—something that the previous government failed to deliver. That effectively means about 4,500 exploration companies in Australia will benefit from the rebate. That will encourage investment—it will create the Olympic Dam and the Gorgon projects in 20 and 30 years time—and it will create the wealth and jobs that are so vital to our future.

Now I turn to the issue of infrastructure. For the first time ever, there is the capacity for the Commonwealth, in a line item, to do more on the infrastructure front. That builds on what we have done since we were elected 2½ years ago. It is not new to us to invest in the resources sector, but we want to do more as a result of this debate. We are talking about a new fund of $5.6 billion over the next decade. That is on top of a range of investments we have already made to assist the resources sector. The state and territory governments are saying we should do more. If they expect us to do more, they also have to understand that there needs to be a complex debate about the tax system and the resources sector. We need to have the financial capacity to do more.

But we have not been neglecting our responsibilities. We have acted already. Take Oakajee Port in Western Australia. We have spent $339 million in a new iron ore province. Darwin Port is exceptionally important in the development of the resources sector in Australia. That is where uranium out of Western Australia will go, a new industry supported by the Commonwealth government. Then there is the Australian Rail Track Corporation. That railway corporation has never had the degree of government support that it has had over the last 2½ years. We have put $1.2 billion into that corporation. For example, in our coal corridor we have spent $580 million in the Hunter region alone. Then there is Geelong, another key port for us. And there is Esperance in Western Australia, with a three-way split between the Western Australian government, the Commonwealth government and the Port of Esperance, each spending $40 million. There are the port access roads in Townsville. Regional community by regional community, resource sector by resource sector, we are committed to doing the right thing.

The time has come for the opposition to understand that the Australian community is starting to see through its scare campaign. They understand that this has been about, yet again, political opportunism from the opposition driven by a desire to attract donations for the purposes of paying for the next election. That explains the opposition’s point of view. We have the Western Australian Premier, for instance, arguing that it is time for the resources sector to pay here. Then we have the federal opposition saying: ‘No, no, no. Give us the donations and we’ll oppose the Australian government’s proposition.’ That is short-termism and a lack of a proper understanding of the needs of Australia. They have failed to front up to the hard debates.

Let us go to their latest scare campaign on the issue of electricity prices. It again shows the ignorance of many on the other side of the House. I remind the House that many fuel sources for electricity, such as coal mines, are part of an integrated system with power stations. Perhaps they ought to do a bit of hard work. Those integrated operations are not expected to attract a superprofits tax. That is fact, as against the fiction we have had from the opposition, which is what we have come to expect day in and day out.

It is also important to recognise that a household’s electricity bill is made up of a number of factors. In actual fact, fuel costs are a small proportion of a household bill when it comes to the cost of electricity. The wholesale electricity price comprises around 40 per cent of this bill, for example. The cost of coal and gas to fuel generators is only a relatively small proportion of the wholesale cost. Think about, for example, transmission and network costs.

I also remind you that the Western Australian Premier is out there arguing that these increases in the price of electricity have to flow through the system—increase after increase. He appreciates that, if we do not front up to this hard issue, we will no longer have the benefit of one of the most reliable electricity systems in the world. We have to invest more and more money over the next decade to ensure that we have such a reliable system in the future. But we have yet another scare campaign from those opposite. It is without foundation. The suppliers of our electricity are unlikely to be earning superprofits on the contracts that are in place. They are more often than not long-term supply contracts. More often than not, they also use low-quality coal because we export our better quality coal. It is not our premium coal, not our superprofits coal that is used in the electricity system in Australia.

But they will continue to run that scare campaign day in and day out. That is because we have an opposition led by a leader who finds economics boring. He is not focused on policy and you have to think whether or not he is telling the truth, as he admitted on the 7.30 Report last week. That is also reflected in the parade of opposition frontbenchers we have had over the last 24 hours, each with a different view on whether or not we should have a debate in Australia on tax and the resources sector. Senior opposition spokespersons have been falling over one another to give different views. We question whether or not this is a well-thought out campaign or whether it is a ‘read my lips’ campaign from the Leader of the Opposition. Is this about saying one thing to a particular section of the community—‘Yes, there is a capacity to increase revenue from the minerals sector’—at the same time having someone else say something else to another section of the Australian community.

Perhaps the next speaker from the opposition can tell us what the gospel truth is and what the opposition’s real position is with respect to reform of the minerals taxation system in Australia. What is their position? Is the Premier of Western Australia right? Is he entitled to increase iron ore royalties by $3.2 billion over the next four years?

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Roads and Transport) Share this | Link to this | Hansard source

Yes. He negotiated it.

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

If that is the case—and we have the opposition representative, the member for Canning, saying that it is okay—then perhaps the Deputy Leader of the Opposition, the member for Curtin, should be told. She is out there arguing that there is no capacity to increase government revenue through increasing taxation on the Australian resources sector.

We can come to this conclusion: the coalition have no policies of their own. They would sooner put self interest ahead of the national interest so as to maximise donations for the purposes of paying for the next election. We will continue to argue this and, at the end of the day, there will be higher tax taken from the resources sector and we will invest it in the future of Australia’s communities because that is in the national interest. The opposition stands for one thing alone—that is self interest and short-term political gain. (Time expired)

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Roads and Transport) Share this | Link to this | Hansard source

I am pleased to speak on this matter of public importance. ‘A politician thinks of the next election. A statesman, of the next generation,’ is a quote by James Freeman Clarke which puts the Prime Minister of Australia into context, because Mr Rudd has his eyes squarely focused on what is going to get him through the upcoming election. He is making policy on the run and, according to what the pollsters or the focus groups tell him every morning about his Sunrise performances, that is what he delivers for the day because it is part of the spin cycle. The news for Mr Rudd, the Prime Minister, is that the Australian economy is too important to be run this way. It needs a statesman at its helm, not a spin doctor.

This resources tax was the government’s $12 billion answer to getting the country out of a $93 billion financial black hole that it has dug for itself in less than three short years, managing the soon to be $6 billion interest per annum, which will be crippling. I have said time and time again that it is back to the old school, big-taxing, big-spending Labor government. The Rudd government has given up on Western Australia, so it is going to gouge from it. A headline in today’s Australian screams ‘The resource tax threatens to choke off the second mining boom’. Add this to Premier Colin Barnett’s comments that the $4 billion redevelopment of Oakajee Port rail project could be under threat because of the tax. For the benefit of Minister for Resources and Energy, there is the infrastructure for Oakajee. If people do not invest in the area, what is the point of Oakajee port? Andrew Forrest has been out there talking about 40,000 Indigenous jobs in Fortescue Metals that he wants to plan and create through this industry. That is going to cripple that development. So what happened to the Indigenous job commitment?

The Western Australian Premier is strenuously opposing the super tax because he is looking out for the state’s best interests. As a Western Australian in this place, I certainly support him when we are fighting for the interests of Western Australia and all Australians. Rather than raid the state’s growth, the Premier will always make sure that WA gets its fair share. Unlike the Prime Minister, the Premier is willing to negotiate with BHP and Rio Tinto on royalty rights, and he has been doing so for some time, well before this tax announcement, unlike the retrospective nature of the announcement of and then the negotiations on this super tax that the Prime Minister has delivered. The Premier’s planned royalty rates take them onto the industry standard of 5.625 per cent and offer a concessional rate that they have enjoyed for many years for pioneering iron ore extraction, particularly in the Pilbara. A rise in the rate to 7½ per cent by this time next year would bring about $1 billion in royalties. It is a fair plan and will not inhibit the state’s growth, unlike Mr Rudd’s agenda to essentially make a hostile takeover of Western Australia’s mining and petroleum industry. Do Australians really trust Mr Rudd to give any of these super profits back to the states? You only have to look at his track record which, if I have time, I will get to.

Rio Tinto boss Tom Albanese yesterday said this super tax was his No. 1 sovereign risk on a global basis. Rio Tinto operates in some of the most unstable countries in the world like Mongolia, New Guinea and so on, and he has labelled Australia a sovereign risk. It just shows how much uncertainty it has created for the industry. Rio, which draws 60 per cent of its world revenue from Australia, would not have gone ahead with some of the massive projects like Pilbara iron ore operations had the super tax been in place at that time of change. How many thousands of jobs would have been lost if Rio had known about this tax some time ago?

A super tax does nothing but encourage mining companies to go offshore. In this case it allows our biggest buyer and investor, China, to dominate the industry and to put pressure on ordinary taxpayers, using their funds to bail out failed mining companies. Why would you allow taxpayers’ money to help buy out the penny dreadfuls of this country? It is a disgrace. There are people running out of offices in Perth who fund their whole life and existence out of setting up a company out of blue sky and then living off it. Now this government is going to say, ‘If you crash, we will bail you out.’ It is a real problem and I am sure there are people in this place that know that this is a reality—more borrowing, more government debt, falling share prices and upward pressure on interest rates as a result.

The resources tax was given little thought and no consultation. Any consultation on this super tax now would be retrospective rather than prospective. It is a tax grab that is sending half a million Australian jobs and foreign and local investment offshore like the ETS would have. If you recall, the ETS was going to penalise Australian industries to the extent that they would go to a developing country like Indonesia where there was not any financial impost. We would have exported not only jobs and the income from those jobs such as taxation but also the pollution that would have gone with it. We have dodged the ETS at least for three years; now we have a tax which we are going to have to deal with in the same vein. It is going to penalise companies operating in Australia both prospectively and retrospectively. The impact will not be instant. We are not going to feel this tomorrow. We are not going to walk out tomorrow into St George’s Terrace and find out that the mining companies have shut down. Of course they will not. They will be operating on their current leases and their current operations, but it is going to be felt for years—in fact generations.

This is a tax that could stop any new mining boom—it will strangle any new mining boom—and it will hurt the Australian economy for years to come. These people sitting in here today are going to have to explain to future generations why we made a decision in this place to allow this to happen to their future and the future of many generations of Australians to come. When we had the ascendancy in world resources and the production of world resources at a competitive rate, we in this place are going to be saying, ‘No, we are going to put a stranglehold on that competitive advantage that Australia had.’

The impact of a 40 per cent tax goes far wider than the mining industry. This is a tax on the very working families that Mr Rudd said he would look after. When it comes to jobs, the fundamentals are simple. Industry employs workers and pays them a decent wage, which they spend in the local shops, on homes, in restaurants and on holidays, which keeps thousands of other Australians employed. One job in the mining sector creates at least four elsewhere in the economy—air hostesses, real estate agents, accountants et cetera, all jobs that back up someone in the mining industry. Some people say it is seven jobs for each mining job, but let us be conservative and say it is four.

The tax would push up power bills. On the back of already soaring electricity costs, higher gas and coal prices would be paid by generators and this is obviously going to be passed on to consumers. They will not absorb it. Where does this stop? This tax will grow exponentially and it will continue to explode from now on. Applying to all mining activities, this tax will include such operations as clay mining, the brick industry, sand mining and hard rock mining. This tax applies to more than just corporate conglomerates. I can think of some sand miners in my electorate, for example, that will be hit by this because they might make a so-called superprofit.

As I mentioned last night, Satterley in Perth has predicted the cost of building a new home would rise by more than $20,000. Yesterday, we saw Australia Post appearing in a Senate estimates committee and confirming a return on capital of 12 per cent. They admitted to Senator Cormann that this was not a superprofit but a reasonable return on equity. But from the government’s viewpoint, six per cent is a superprofit. So should we tax Australia Post on profits of over six per cent? How about the banks that are making massive profits? Are they going to get a so-called supertax on anything above six per cent? Westpac’s first-half profits were 21 per cent, or more than $2 billion. No wonder the banks are getting nervous. What about Telstra’s $1.85 billion profit? Let us have a look at their profits too. Woolworths’ profit last year was nearly 13 per cent. Let’s apply a supertax on them as well, if you take the same mentality. It would be illogical to think that the costs would not be passed on to consumers. The message is that, if you are a business and you earn more than the government bond rate, a mere 5.7 per cent, you are making a superprofit.

This tax is not good for business, not good for workers and not good for superannuants. It is a kick in the teeth to working families. As a result, this is not a tax that can be supported. It is tax that we are going to feel harder in Western Australia. Mums and dads, superannuants and generations of Australians to come will suffer. (Time expired)

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

This debate is about mining taxation, but fundamentally it is about truthfulness. It is about the launching of scare campaigns, chaotic and confused as they are from the opposition, including claims made by the Leader of the Opposition that the resource super profits tax would increase the price of food. It is noteworthy that the member for Groom has sponsored this matter of public importance because he was asked about truthfulness yesterday. The journalist said, ‘You say what you believe, but Tony doesn’t.’ The member for Groom responded, ‘Well, Tony says what he believes at the time.’

Already there is a division between the member for Groom and the Leader of the Opposition because the Leader of the Opposition has confessed that he does not say what he believes when under pressure. He cannot handle the pressure and he will say things that he does not believe. That is what he said on the 7.30 Report. He indicated that he does not necessarily tell the truth when he is asked a question in the heat of the moment. That is not a good thing in general, but it does show that this opposition leader cannot deal with pressure and that he will say anything, including statements that are false, under pressure. Is that the sort of leader we want for this country—someone who cannot handle pressure?

The scare campaign that has been launched and prosecuted by the coalition has slipped into yet further chaos and confusion. We had the Deputy Leader of the Opposition saying on Sky television, ‘I believe that mining companies are paying a fair amount of tax.’ In that she was contradicted on the same day by the Woodside CEO, Don Voelte, who said:

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.

There is Woodside accepting that the mining industry believes it can pay more tax and it would be fair if it did pay more tax. So the deputy opposition leader is being contradicted by the mining industry itself, or certainly very large sections of the mining industry.

Today we have learnt that she is also being contradicted by none other than Senator Barnaby Joyce. When asked directly about the deputy opposition leader’s comments that mining companies already pay their fair share of tax, he said: ‘No, not at all. We can have a sensible negotiation. To say there is not the capacity to change the tax is not right.’ In that statement Senator Barnaby Joyce from Queensland has blown this confused and chaotic scare campaign out of the water. Senator Joyce has blown the Deputy Leader of the Opposition out of the water. Senator Joyce has blown the Leader of the Opposition out of the water. As I said during question time, Senator Barnaby Joyce obviously believes that revenge is a dish best served cold. There was a blue yesterday between the member for Goldstein and Senator Barnaby Joyce and when Senator Joyce was asked about the member for Goldstein’s comments he said: ‘He rang me up and he was very, you know, apologetic. And so he should be. How dare he run me down like that. Bugger him.’

Today we saw the revenge for that served cold. We saw the revenge served cold with his flat contradiction of the coalition’s position on this resource super profits tax, with his flat repudiation of the Deputy Leader of the Opposition, with his flat repudiation of the Leader of the Opposition and with his flat repudiation of the member for Goldstein. Today Senator Joyce had his revenge on the Liberal-National Party. Today Senator Joyce had his revenge on the member for Goldstein, the Deputy Leader of the Opposition and the Leader of the Opposition, completely blowing out of the water this chaotic, confused scare campaign being launched and sponsored by the Leader of the Opposition.

This matter of public importance deals with, among other things, the cost of living. Just a couple of weeks ago, the Leader of the Opposition said that the resource super profits tax would increase the price of food. The fact is that the resource super profits tax would apply to minerals which are traded on international markets, such as iron ore from the Pilbara, and for which international markets set the prices. How could it possibly be that a resource super profits tax on iron ore would increase the price of food unless there are iron filings in Mars bars? Even then, it would not increase the price of iron ore, let alone food.

You do not need to rely on me for that analysis. Look no further than the KPMG Econtech report on the price impacts of the resource super profits tax and, in particular, the associated reductions in the company tax rate. That report, that modelling, shows that the resource super profits tax and the tax rate reductions it would finance would not only not increase the price of food and the general cost of living but would reduce them by more than one per cent. According to the modelling, some of the bigger price reductions would be in transport costs, down 1.7 per cent; clothing and footwear costs, down by 1.3 per cent; household contents and services costs, down by 1.1 per cent; and food costs to consumers, down by 0.9 per cent—not up, as the Leader of the Opposition claims, but down because of the reductions in the company tax rate and other factors. That is what is missing in this debate. The resource super profits tax would be used to fund reductions in the company tax rate for companies small and large and that would have a positive influence on prices—that is, it would put downward price pressure on prices.

There will be no company tax rate reductions if the resource super profits tax does not go through. There will be no small-business tax rate reductions if the resource super profits tax does not go through. There will be no small-business tax breaks in the form of $5,000 instant write-off of assets valued up to that amount—not just for the 720,000 small business companies but for every one of the 2.4 million businesses in this country. Do not believe the opposition when they say that the tax breaks for business would only be for small business companies. All businesses would get this instant write-off of the value of assets, up to the value of $5,000 for each, and all businesses would also get a reduction in the company tax rate.

If the Deputy Leader of the Opposition truly believes that mining companies are paying their fair share of tax and if she believes there should be no increase in taxes on companies, why on earth are the opposition proposing to increase taxes on mining companies and other companies by 1.7 percentage points? It will be a great big new tax on everything you buy, a tax to fund their paid parental leave scheme. BHP and Rio have already estimated that that tax would add hundreds of millions of dollars to their tax bills. So, you have the Deputy Leader of the Opposition saying the opposition are totally opposed to any increase in tax on mining companies, but they want to impose a 1.7 percentage point increase in tax on mining companies. We want to use the resource super profits tax process to fund a reduction in the company tax rate, not only for mining companies but for every company in Australia, large and small.

I want to deal with this issue of a retrospective tax. We have a new definition, I think, from the member for Canning. He said the Western Australian royalty increase is not retrospective. Go figure. He said, ‘It’s because Colin Barnett told them about it’—that means it is not retrospective! This scare campaign is confused and chaotic. There are obviously objections, raised by the mining industry, to the application of this tax to the Pilbara, to the Bowen Basin coalfields and so on. They say that it should not happen. By that reasoning, when tariffs rates in this country were being reduced over time by the Hawke and Keating governments and by the Howard government, those reductions should not have applied to existing automotive manufacturers, should not have applied to existing car plants and should not have applied to existing textile, clothing and footwear producers. The truth is that investment in this country would be fine under a resource super profits tax, as reflected in analysts’ consensus recommendations. The E*TRADE Australia website today says, in most cases, ‘Buy, buy, buy.’

The Petroleum Resource Rent Tax has proved to be a very stable tax and has been consistent with high levels of exploration and development in this country. (Time expired)

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

We have a government in this country that is meddling with Australia’s future prosperity and the living standards of all Australians. Terry McCrann was correct when he said:

The so-called Resource Super Profits Tax is a case study of the Rudd Government in action. Of spin and outright deception, shameless and recklessly dangerous politicisation, and fiscal fiddling that would win grudging admiration from the master Paul Keating.

This great big new tax will erode the value of superannuation savings for millions of average Australians. This massive loss in value seems to be lost on the Minister for Financial Services, Superannuation and Corporate Law, who amazingly said that this is something the government is not worried about. He also said that this will have a very small impact on the retirement incomes of self-funded retirees. The arrogance of this government is breathtaking.

Let us look at the figures. Since the government leaked the news of its great big tax on mining on 13 April, $90 billion has been wiped off the value of resources stocks in Australia—that is, more than 20 per cent of the value. Resources stocks account for about 9.3 per cent of superannuation balances. This means that over $23 billion has been ripped from superannuation accounts since the government leaked the news of its great big new tax. Superannuation is down around two per cent as a result of the performance of the resource stocks, yet Minister Bowen is not worried about this amount. He is on the record as saying that he is not worried at all that superannuants will be hit by the resources tax.

And then, of course, there is the cost of living. The Australian people are still reeling from the realisation that the Prime Minister’s other great big new tax on everything—the ETS—was going to drive the cost of living through the roof. They are now finding that this cost burden has merely been postponed until after the next election. Yet they are in for another great big slug: the impact of the RSPT on prices. This resource supertax will impact on the cost of energy and the cost of building materials. The increased cost of energy means Australians will pay more for electricity. The Prime Minister, who promised to take pressure off struggling families, was not content with the 64 per cent increase in power prices in New South Wales as a result of the ETS and state Labor’s incompetence; he now wants to slug consumers again, and this time it is the RSPT—the great big new supertax.

In the media today the Energy Supply Association boss, Brad Page, is reported as saying that consumers will not be quarantined if the 40 per cent tax drives up the price of coal, increasing the cost of electricity. He said:

Any additional cost that’s imposed on fuels will one way or another be sought to be passed through to consumers.

He went on to say:

To the extent that companies can shift taxes onto consumers, I expect they will try.

Those comments do not come from the coalition; they come from the Energy Supply Association of Australia, an organisation that represents electricity generators, distributors and retailers. Then there is the impact on the cost of housing. Once again, this supertax will potentially drive up the cost of gravel, concrete and other building materials—all this from a Prime Minister who promised he was going to drive down the cost of living.

This is a very dangerous tax. It is a time bomb in the hands of an incompetent government. This is a government that could not give away pink batts without stuffing it up. It got ripped off to the tune of almost $1 million to build a dunny, as reported in the newspapers today, and it is proposing to drive a dagger through the heart of our future prosperity. This tax is creating a sovereign risk crisis for this country. It will drive away investment, it will increase the cost of capital, it will destroy the retirement nest eggs of average Australians and it will drive up the cost of living.

This tax is being fraudulently represented by this government under the watch of a Prime Minister who stands for nothing. We see them ducking and weaving, quoting and misquoting one report after another, trying to justify their stance. The Australian people are not silly. They know about Australia’s dependency on mining. They can see for themselves the importance of mining. They are very concerned about the impact of this tax on Australia’s future prosperity, on employment and on the cost of living. It is an outrageous tax, and the coalition will oppose it to the end.

Gary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Western and Northern Australia) Share this | Link to this | Hansard source

The leader of the miners’ campaign, Clive Palmer, has talked about this tax producing a 70 per cent burden on business. Clive Palmer has talked erroneously of the impact of this tax on business and he has been prepared, on many occasions, to fund the opposition’s campaign to argue that case. This blatantly false and unsubstantiated claim has been published and re-published. The truth is that the RSPT is not a tax imposed on top of royalties. It is not a tax imposed on top of company tax. It will effectively replace royalties by providing firms with a refundable tax credit for royalties. Where royalty payments are higher than the RSPT liability, firms will get a cash refund of the difference.

These important points are forgotten by so many of those on the opposite side of this debate. I think it is important to acknowledge the importance of this debate, and it is important that those participating in it become better informed. It was with sadness that I listened to James Pearson, the head of the CCI in Western Australia, on the radio last week making the same logical error as Clive Palmer has. The RSPT is deductible against company tax. Even some sophisticated commentators have talked about the theoretical maximum tax rate of 56.8 per cent, as if every project will pay that rate. It is also incorrect for a number of reasons. One reason the estimates are wrong is that they ignore that the RSPT taxes only superprofits, not all profits. That means effectively taxing internationally traded commodities that might generate superprofits, like iron ore—not taxing projects that mine gravel, clay or sand. If a project does not generate superprofits, it will not pay any RSPT and it will benefit from a company tax cut to 28 per cent and the government refund on the royalties that it pays.

I think it is important that we also acknowledge the important role that mining plays in our community and in our economy. In Western Australia, mining has built many regional centres. Unfortunately, frequently it does not pay the freight and the cost of supporting those regional centres. Early concessional royalty rates granted in the 1960s and the 1970s were granted on the assumption that mining companies would fund substantial infrastructure in remote and regional communities. As the 1970s progressed into the 1980s and as the economic rationalists took hold of these firms in the1990s, they stopped funding community infrastructure, but they hung on to the concessional royalty rates. So we see the situation in Western Australia that the concessional royalty rate of 3.75 per cent, which had been in place on projects since the 1960s, has now increased to 5.625 per cent, ensuring that companies do pay a better rate of return on the mines that they do have.

It is important to recognise this, because mining companies in my home state of Western Australia, in the Pilbara, do not pay local government rates. For 40 or 50 years they have paid concessional royalties but they have not paid local government rates. What this means is that the provision of local government type functions has had to be funded from elsewhere or not provided at all. So mining companies have quite happily established communities and they have quite happily sought tax deductions for the infrastructure that they have created, but they have not funded local communities through the payment of rates—taking the concessional royalty and not giving the infrastructure to their own communities.

The Pilbara Regional Council five years ago reflected on this practice by referring to it as a form of cost shifting to local governments and families in remote and regional communities, cost shifting from the large companies. The Pilbara Regional Council at that time made the observation that they genuinely felt that companies should either be subject to increased royalties or pay the freight and pay local government rates. This debate comes down to an important matter. It comes down to whether it is possible to structure a tax in a way that effectively taxes pure profit and does not impact on economic activity, and I believe this proposal does that. (Time expired)

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

The time allotted for this discussion has now concluded.