Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

Mr Speaker, my question is to the Prime Minister. Why is the resource super profits tax an important reform for Australia and what other views have been expressed about resources taxation in Australia?

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

Notwithstanding the fact that the once great Liberal Party has abandoned the tax policy debate and has hauled up the white flag on the need for a profits based tax for the future of the resources sector, for which we thank various members opposite for their contributions yesterday, this government believes in the importance of tax reform for Australia. For this government, the importance of keeping the Australian economy strong depends on (1) keeping our economy out of recession, (2) making sure that we are returning the budget to surplus three years ahead of time and (3) implementing fundamental economic reform, including tax reform. Furthermore, tax reform is essential because it enables us to increase super for working families, it enables us to bring about tax cuts for small business and it enables us to build infrastructure for Australia’s future.

In the last 24 hours the opposition has gone very cold on the tax debate indeed. After three days of chaos and confusion in their ranks they have now scurried away from the debate altogether. The government is happy to continue to prosecute this debate because we believe it is a fundamental reform for Australia’s future. There are two issues at stake in this debate. One is the design of the tax and the government’s plan for a tax on profits as opposed to a tax on production, and the other is the level of the tax—the government’s plan for an RSPT 40 per cent tax credit on a company’s investment and a 40 per cent tax on super normal profits.

Yesterday, on the design of the tax, the opposition tapped the mat. They fundamentally tapped the mat. In fact, we had the Leader of the Opposition out there yesterday saying that this new tax system would plunge a dagger into the heart of the Australian economy. That is what he had to say. That was before the shadow finance minister stood up and said, ‘This debate has never been about the design of the tax but simply about the level of the tax.’ Then we had the good old member for Tangney—the two of them seem to be missing today, the member for Tangney and the shadow minister for finance—who said that there is potential that taxing profits is better than simply taxing volume. He has moved—I am sorry about that.

On the design of the tax and the need for a profits based tax as opposed to a production based tax, those opposite have hauled up the white flag and conceded defeat because they know that Peter Costello supported a profits based regime. They know that the former Leader of the National Party supported a profits based regime and they know that most people serious in the economic debate support that for the simple reason that it is the most flexible way of encouraging the expansion of the industry over time, making the tax returns commensurate with the level of commodity prices over term, enabling small and medium capped firms to enter into the mining industry and to broaden the base of that industry and to replace the patchwork quilt of state royalty regimes with a comprehensive profits based tax. That is issue No. 1: the actual design of the tax where the Leader of the Opposition and his colleagues have hauled up the white flag.

No. 2 on the level of tax is where it gets really interesting. This is where we have had this complete evolution in the opposition’s position over the course of this week. Our position is very clear: 10 years ago $1 out of $3 profit went in royalties; 10 years later $1 in $7 came back in royalties. That is why we need fundamental reform. But on this we have had nothing less than absolute chaos and confusion. Earlier this week—I think it might have been on Tuesday—we had the Leader of the Opposition coming out and saying that he believed that mining companies were paying too much tax. That is his position. The Deputy Leader of the Opposition came out and said that they were paying just the right amount of tax. Nice one, Julie! You got that one I suppose a bit better than you got other things in recent days.

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

Order! The Prime Minister will refer to members by their parliamentary title.

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

Thirdly, we had the shadow infrastructure minister come out and say that miners are not paying enough tax. So we have had too much, not enough and just right—as I said yesterday, the Goldilocks policy on tax from the opposition: that is, they cannot quite settle on it. Today we had a further contribution from the good old member for Kalgoorlie. Where is he? Is he missing in action from the debate today? He was asked today a question on the level of tax: ‘Do you agree with Tony Abbott when he says they pay more than a fair share of tax?’ Mr Haase said, ‘No, I do not.’ There you go. ‘And, you know, you’re going to question me as to why I disagree with my leader, but I’m pretty close to the mining industry.’ So there we have the member for Kalgoorlie repudiating his leader.

It gets better because the member for Kalgoorlie was then asked, ‘But, Barry, isn’t it damaging, though, for the opposition to have different options on whether or not mining companies are paying too much tax or not enough tax? The government is keen to exploit that.’ Mr Haase, the member for Kalgoorlie, then said, ‘I think individual points of view are a fine thing.’ In other words, it is not just a question of having a tax policy which says you are paying too much tax, not enough tax and just enough tax. In fact, he says that everyone in the opposition should have their own individual tax policy. That is where we have got to—Monday, too much tax; Tuesday, not enough tax; Wednesday, just the right amount of tax; and Thursday, everyone should have a tax policy. What we have seen on tax policy is abject chaos and confusion on the part of those opposite. It is very simple. If you cannot manage a tax system, you cannot manage the public finance of Australia. What you have had is a chaotic opposition who would in government be a chaotic government. If you cannot manage the tax policy of the country, you cannot manage the economy of the country, and you cannot manage the country itself.