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

I move:

That so much of the standing and sessional orders be suspended as would prevent the Member for Warringah moving immediately:That this House censures the Prime Minister and the Treasurer for grossly and falsely misrepresenting the economic basis for their so called resource super profits tax which is nothing more than a great big new tax on mining and puts at risk a vital part of our nation’s prosperity. In particular:

(1)

for claiming over the weekend, based on a draft academic paper by an American graduate student, that Australia’s mining sector only pays 13 to 17 per cent company tax when in fact, overall tax payments exceed 27 per cent and the total tax paid, when royalties are included, is over 41 per cent;

(2)

when found out that the US paper was based on as few as four Australian mining companies (and later completely revised), for then trying to rely on a hastily released paper by three Treasury officials that was later exposed as using six year old data and came with the disclaimer that it wasn’t “necessarily the views of the Australian Treasury”; and

(3)

and most damning of all, for relying on the Treasurer’s own Economic Note dated 9 May 2010 which bases this new tax on completely false graphs that have been relied upon by this government, analysts, investors and the media as being true and correct.

When is this government going to admit that it has got it wrong, and scrap this big new tax on mining? This is a government which cannot be trusted with Australia’s future, because it does not know what it is doing and it does not know what it is doing because it cannot get its story straight. First, this Prime Minister said that mining companies pay tax of just 14 per cent. Wrong—dead wrong—because it completely ignores the fact that these companies pay corporate tax as well as royalties. Then he said that the mining companies pay tax of between 13 per cent and 17 per cent. Wrong—dead wrong—because that relied on a draft paper by a University of North Carolina graduate student, you fraud! That is what he relied on. He relied on that and we now know that that paper was based on data from as few as four companies, and that particular part of the paper has now been withdrawn. Finally, these people opposite say that the rate is just 27 per cent, and again they have got it wrong, because now they are relying simply on the corporate tax rate and do not include royalties. This is a government that does not know what it is doing. This is a Treasurer who has built his case upon a misprint. He has built the case for a $9 billion tax a year on a misprint in a Treasury document.

Then to top it all off we had the extraordinary spectacle in question time today of a Prime Minister who did not know whether the projects on the North West Shelf were going to be included under the resources rent tax or the super profits tax and then had to be corrected by Minister for Resources and Energy. This is a government that does not know what it is doing. This is a government that cannot be trusted with Australia’s future. Most of all, this is a government that cannot be trusted with the truth, because their case for this great big new tax is based on lie after lie.

They say it will fund the super. Wrong. That is a lie, Mr Speaker. The three per cent payroll tax on business or the three per cent of salary forgone by workers will fund the super increases, not this great big new tax. They say it will fund a tax cut for companies. This is a $9 billion tax increase to fund a $2 billion tax cut. What a fraud! He is robbing Peter to pay Paul, and I tell you what: Peter is robbed a lot more than Paul is ever getting under this government.

The Prime Minister says that it will fund small business concessions. There are $300 million worth of small business tax cuts funded by a $9 billion rip-off of those businesses on which small business depends for their economic livelihood. He says that it is the same as the Petroleum Resources Rent Tax. Well, what a whopper that is! The Petroleum Resources Rent Tax was, firstly, prospective and, secondly, it was effectively at 11 per cent. It was a retrospective tax at anything over six per cent.

This Prime Minister simply cannot be trusted. He says there are consultations—again, wrong, wrong, wrong. There is simply dictation to the mining companies of this country. They are being faced with a fait accompli. The one thing that he will not discuss in consultation is the 40 per cent rate for the six per cent threshold and retrospectivity—and they are the only things that matter, Mr Speaker. The only things that matter are the things that they will not discuss.

Finally, the Prime Minister says that it will not damage the mining sector. The idea that ripping $9 billion a year will not damage the mining sector is completely and absolutely incomprehensible. If he were right, and ripping $9 billion a year out of a sector was going to somehow help that sector, why aren’t all the other companies in Australia saying, ‘Give us a super tax! If it is so good for the mining sector, give it to us!’? Come on, why aren’t they falling over themselves to get hit with this great big new tax if it really is so good for the economy, as he suggests? The truth is that this is a Prime Minister who has one big love—he just loves tax. That is what he does. He just loves tax because he needs tax, ever more tax, to feed his obsession with spending and buying his way back into office.

What is the real impact of this tax? We have heard about the real impact of this tax from the people upon whom this tax will fall. What are Fortescue Metals doing? They have suspended $17 billion of investment and they are not going ahead with an investment that would create 30,000 new jobs. Thirty thousand new jobs have evaporated because of this Prime Minister and his great big new tax. Rio Tinto says that had this tax been in operation over the past decade $38 billion of investment and the tens of thousands of jobs which depend on that investment would not have happened.

And finally, we have BHP, the big Australian, now blaggarded by this Prime Minister as a foreign company, and the boss of BHP now blaggarded by this Treasurer as an ignorant liar. That is what this government says about the heads of great companies like BHP and Rio Tinto—because they dare to criticise, they are ignorant liars. What an absolute disgrace! How dare the Prime Minister and the Treasurer of this country blaggard in this way the businesspeople on whom our economic future so much depends. The head of BHP has said that iron ore mines and uranium mines in Western Australia, coalmines in Queensland and, above all else, the $22 billion new investment in Olympic Dam—the lifeblood of the state of South Australia—are all in doubt because of this Prime Minister. This is the Prime Minister who is close to slitting the throat of the South Australian economy because of his great big new tax on mining.

Let us be very clear about this. This tax here is a triple-whammy tax. It is not about reform. It is just a revenue grab. In fact the greatest travesty of all is the idea that somehow he is enshrining the wisdom of Ken Henry—poor Ken, the most misused man in this country and misused by this Prime Minister. Let us make it absolutely clear. This triple-whammy tax is a tax on jobs. It is a tax on retirees who depend upon the dividends and income from mining shares. Above all else, it is a tax on consumers whose prices will inevitably rise as the price of their power goes up.

Mr Speaker, we heard it, didn’t we? We heard it the other day from former Prime Minister Malcolm Fraser, who saved this country from the second-worst government in Australia’s history. I am very pleased and proud to be able to save this country from the worst government in Australia’s history.

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

Is the motion seconded?

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I second the motion. The spins and turns from this government are quite exceptional. You can imagine the conversation in the Treasurer’s office earlier in the week when they said: ‘We need some quick justification for the new tax. Quick, go to Google.’ And in Google they found an obscure academic working paper out of North America. ‘That’ll do,’ says Wayne, ‘That’ll do the job.’ But then we find out when we dig a little deeper that it is based on a survey of four people, and even the authors of that working paper say, ‘Please do not overstate this for a particular industry in Australia.’ So they go into panic mode: ‘Quick, Google. Find us some more justification for the tax.’ Lo and behold, there is an academic paper from three junior officials in Treasury—not even Treasury says that it is a ‘Treasury paper’. And when we dug a little bit deeper on that paper we discovered that if you applied the same rationale to the electricity industry and the gas industry and the water industry, they deserve a super profits tax. Of course, the Prime Minister runs away from that.

At the end of all that, where are we left? We are left with a government that is seeking to use whatever it can to justify its $9 billion a year tax. What we do is start to go behind the numbers of the Treasurer’s own paper, the one that Rory Robertson used as a justification for the great big new tax. The Treasurer’s paper from 9 May says that in 2008-09 royalties, resources taxes and company tax amounted to 27 per cent, and profits, 73 per cent. The only conceivable way they could get those numbers is to redefine ‘profit’, to call it something other than what it truly is. But I will tell you what matters. What matters is when you go to the tax office website and you have a look at the numbers in the bank. The numbers in the bank do not lie. Table 8 says quite clearly that in 2007-08 the total net tax of the mining industry was $8 billion on $29 billion—around 27 per cent. In addition there was nearly $4 billion on royalty expenses, which takes it to around 41 per cent. So this Treasurer is asking us to believe his spin rather than the money that has been received by the Australian Taxation Office from the mining sector.

The government is trying to obscure the debate with any clutchable number and any clutchable paper as a justification for a $9 billion a year new tax. The government has a problem: not only is it banking the $9 billion a year, it is spending the $9 billion a year. So we will know exactly to the dollar how big the backflip is going to be—and we know there is going to be a backflip. We know the backflip is going to be this big—maybe even bigger. We heard it today. The Prime Minister, with absolute conviction, said, ‘We’re engaging in consultation on the North West Shelf.’ And the Prime Minister said, with absolute conviction, ‘We’re engaging in consultation with small miners.’ The Prime Minister has said over the last few weeks, with absolute conviction, ‘We are engaging in consultation with the industry.’ But you know what absolute conviction is? The budget numbers: $9 billion a year in, $9 billion a year out.

We asked the Treasurer, the master of the numbers: ‘Exactly how much, Treasurer, is the gross amount of money you are going to collect from this tax?’ He said, ‘Well, it’s all there in the budget papers.’ All there in the budget papers? That remains a mystery, because on 4 May the Treasurer said, ‘We’ll be writing out a cheque of at least $8 billion a year to the miners.’ Add that together with the $9 billion he is banking net from the resources tax, and that tax looks like a hell of a tax, even bigger than the ETS. It is a huge amount of money. And you know what? The bottom line is: this mob cannot be trusted. They have not thought through the implications of their tax. They have not thought through the implications for Australians. It is pretty simple: if you are collecting $9 billion more from the Australian people, either someone is going to have smaller returns from their shares or someone is going to pay a higher price. It is simple: you take $9 billion out and every Australian is going to pay, because this government just do not know what they are doing.

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

Mr Speaker—

Opposition Members:

Opposition members interjecting—

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

Order! The Leader of the Opposition and the member for North Sydney were heard in silence. The Treasurer has the call.

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

I absolutely welcome the opportunity to reply to the rants from the Leader of the Opposition and the shadow Treasurer. We read in the Financial Review today that ‘Abbott drops attack-dog demeanour’. Well, the ‘mad monk’ is out of the box today, and of course the shadow Treasurer is just completely out of control. What is that all about? The embarrassment of the Deputy Leader of the Opposition who has breached national security. That is why we have got this motion right at the end of question time. If it had so much substance, why didn’t we hear from them yesterday? Why didn’t we hear from them earlier in question time? They are so embarrassed by their pathetic performance in this House that they have to resort to these sorts of desperate tactics.

But I certainly welcome the opportunity to reply to any number of those distortions that were contained in the contributions by both the Leader of the Opposition and the shadow Treasurer. The first one that I warmly welcome the chance to talk about is this notion of the headline company tax rate and the effective tax rate being paid by companies, because they have taken up the cudgels of the mining council and run with them, asserting that the effective tax rate that is being paid by mining companies is 27c in the dollar. That is just dead wrong—

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

It’s your tax office that said that!

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

just dead wrong. We have cited a study which was contained in the Henry report that says it is 17c, and of course they have gone out of their way to try and discredit that figure with all manner of irrelevant detail. The truth is the effective tax rate is 17c in the dollar. It does not matter what they do, they simply cannot get over that hurdle. They cannot get over the hurdle of the paper in the Henry report and they cannot get over the hurdle that that figure of 17c in the dollar, which in the first instance was a study over a decade, was based on data that went through to 2004-05.

Of course, the Treasury is updating that. The tax office and the ABS have supplied information for 2005-06 and 2006-07, and the conclusion is the same: 17c in the dollar is the effective rate. Why is this distortion between 30c, 27c and 17c so important? Because the opposition have locked themselves in the cart with the mining industry council, who are claiming the effective tax rate is 27c. But it is not, and they cannot prove that it is, because they know that mining companies get very generous depreciation. Everybody in the country understands that there is very generous tax treatment for mining because it is capital intensive. So it is 17c in the dollar. They are terribly embarrassed by the fact that they have locked themselves into this 58c figure which has been peddled by the mining industry council right around Australia.

The other thing the opposition then like to do is to add royalties in to either the headline rate or an effective rate of 27c to get this extraordinary figure that they claim miners are paid. The problem is that they are not paying that, and that is the whole point. So the detailed work that has been done by the credible people in this community, the Treasury—the people who have access to the ABS, the people who have access to the tax office data—shows that the effective rate is 17c in the dollar, not the 27c that they have locked themselves into in conjunction with the mining industry council, which has bought every one of them hook, line and sinker. They are here paid for, written and authorised by the mining industry council. That is why there has been such a savage attack made on the credibility of the Secretary of the Treasury and the figures that have been put forward by the Treasury.

So the effective rate is 17c and the headline rate is 30c. Of course, this does matter. It matters a lot, and I will tell you why: because the opposition are opposing tax relief for small business. They are opposing tax relief for the rest of the economy. They are acutely embarrassed by the fact that they are going to deny tax relief to small business and the people in other sectors, such as transport and so on. They are going to deny that—that is why they are so embarrassed by these figures.

But of course it gets worse. Let’s just go through it. The whole point about a resource superprofits tax is this: those who are very profitable will pay more. Those who are not so profitable will pay a bit less. But they like to carry on as if everybody will pay a lot more. What is all this about? They have been bought hook, line and sinker by the large mining companies who will be paying more, and they are prepared not only to desert the smaller mining companies but to desert all the other sectors of the economy in their craven cave-in to the opposition to this tax of sections of the industry.

The first point is this: royalties are removed under the Resource Super Profits Tax. We never hear that from them. The second thing we never hear from them is that we are dropping—

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Hockey interjecting

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

Order! The member for North Sydney was heard in silence.

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

the company tax rate. The company tax rate is coming down to 28c in the dollar. But they do not want to acknowledge that. And the last thing they will never acknowledge is that the effective tax rate paid by the mining industry is around 17c in the dollar. What those three things mean is that their figures do not add up, and their whole critique is just wrong, wrong, wrong. It is completely wrong. They are severely embarrassed by the fact that they have locked themselves into opposition to this modernisation of our tax system which is going to produce revenue to fund the reform of the Australian economy and ensure that we deal with the challenges of mining boom mark 2.

What we on this side of House are doing is facing up to the future. Those on that side of the House are locked into the past. They do not have a comprehension of what we need to do in the Asian century to maximise the opportunities that will flow to this country through a strong resource sector. How do we promote a method of taxation which recognises growth in the sector and which does not punish investment? I will tell you the first thing we can do: we can get rid of royalties. But they have locked themselves into this tax which absolutely punishes many miners and punishes investment, and they are so out of touch, so economically illiterate, that they cannot come to grips with this basic fact—they cannot come to grips with this at all. We on this side of the House face the future confidently. We face the future with a modern taxation system, one which recognises that the more profitable a firm is the more it should pay and the less profitable it is the less it should pay. They cannot acknowledge that one simple fact because they have locked themselves into a campaign of the mining council.

The situation is simply this: those opposite are now going to oppose a tax cut for all small businesses in Australia. Those opposite are opposing a move in the corporate rate down to 28c in the dollar. Those opposite are supporting an outdated, inefficient, punishing royalty regime and, more importantly, what they are opposing is direct investment back into mining communities, to which so much of the wealth is related. So they are opposing economic reform across the board.

The Leader of the Opposition likes to say he is straight shooter. He says he wants to stand up for families. He says he stands up for small business. But he comes into this House and sells out all of the families of Australia and all of the small businesses of Australia because he has been sponsored by a couple of large mining companies—companies that are paying an effective tax rate of 17c in the dollar, not 30c in the dollar as they assert. And of course the opposition go on with a lot of other rubbish. They go on and claim this has had some impact on share prices and some impact on the currency, when there are events occurring overseas which are impacting on our markets. They are so irresponsible they can come in here and make those sorts of reckless statements. They also come in here and claim that this is somehow a retrospective tax. It is nothing of the sort. Those who argue that would argue that we should leave royalties at the same rate forever and deny the Australian people their fair share of the resources that they own 100 per cent. The Australian people own these resources, and we are determined that they will get a fair share.

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

Order! The time allotted for the debate has expired.

Question put:

That the motion (Mr Abbott’s) be agreed to.

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

Could members conferencing in the gangways move to their places or move outside.