Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Why is tax reform critical to strengthening Australia’s economy?

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

I thank the member for Moreton for his question. Tax reform as proposed by the government is very important for the Australian economy. Econtech modelling shows that the government’s tax package will lead to higher growth, will be good for jobs, will be good for the state of public finances and, indeed, good for Australia’s resources sector.

The proceeds from the Resource Super Profits Tax that the government is proposing in this tax package go to cutting company tax, cutting tax on small business, improving superannuation tax concessions for low- and middle-income earners, providing a tax break for small savings and providing a guaranteed $1,000 tax deduction on ordinary personal tax returns. Under the Rudd government, you will have a 28 per cent company tax rate. Under an Abbott government, you will have an almost 32 per cent—31.7 per cent—company tax rate, according to their own announced policy positions.

We have heard a lot of wild claims, many of them from the opposition but not only from the opposition, in this debate. We have seen a lot of very vigorous, very robust, prosecution of self-interest on the part of people in the mining sector. It is notable, as the Treasurer mentioned, that there is a big statement of confidence in the future of Australia’s mineral sector that has been made by coal companies just today by announcing an almost $5 billion bid for the rail infrastructure of the Queensland Rail Corporation. That is hardly the action of a sector that thinks that there is no future in mining in Australia.

The key points are these: first, the Australian people own these resources and the taxing mechanisms are the means by which they extract the price for selling those resources to mining companies that extract them, process them and onsell them. Secondly, mineral prices globally have soared. They are at new levels and are likely to remain at those levels. Therefore, the proportion of the total price that the Australian people get from their resources has diminished substantially. The Australian people are entitled to get a fair return for those resources. Thirdly, those mining companies get very generous tax concessions on their company tax payments and, as a result, at the moment, broadly, over an extended period they have typically been paying around 17 per cent in company tax compared with 29 per cent for financial services and 27 per cent for transport. Finally, taxing profits is a much more efficient mechanism in this sector than taxing production or taxing volume. It is a much more efficient mechanism for extracting the value for the Australian people for their resources.

It is unclear what the opposition’s position is on this question of whether or not the government’s tax package is good for the Australian economy and strengthening the Australian economy, because we have had several positions during this week. On Monday, the Deputy Leader of the Opposition said that the mining industry was paying its fair share of tax. On Tuesday, Senator Joyce said it could pay more than it is currently paying. On Wednesday, the Leader of the Opposition said that the mining industry is paying more than its fair share of tax. Also on Wednesday, the shadow finance minister, the member for Goldstein, indicated that the opposition did not appear to object to the design of the tax, that that was not the issue, and therefore he and the opposition are happy with a profit based tax. Just today, we had a media alert put out by the shadow Treasurer, the member for North Sydney, at 7 past 10 announcing a doorstop media interview at half past 10. About five or 10 minutes later the Leader of the Opposition also put out a media alert saying he was going to have a doorstop, which ended up being about asylum seekers. At 20 past 10 a media alert was put out by the shadow Treasurer saying that the 10.30 doorstop had been postponed. They moved right away from the debate about the tax reform issue.

Opposition Members:

Opposition members interjecting—

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

It is interesting that the Leader of the Opposition did not even tell the shadow Treasurer he was going to have a doorstop on asylum seekers.

But this raises a key question: what is the opposition’s policy going to be, heading into the election, on the government’s tax reform proposals? Is it to defend the status quo? Is it to support a profit based tax? Is it to reduce taxes on the resources sector? I know one thing about this; it will be very interesting in the campaign when the Leader of the Opposition turns up in Cairns and talks to the tourism industry about why they should be paying higher taxes under a Liberal government. It will be very interesting when he turns up in Geelong and talks to the manufacturing industry and tells them why they should be paying higher taxes under a Liberal government. It will be interesting when he turns up in Lismore and talks to small business there and tells them why they should be paying higher taxes under a Liberal government. Because, under his proposals, company tax will be nearly four per cent higher, there will be no $5,000 immediate write-off of costs for small business, there will be no increased superannuation and savings tax concessions and there will be no automatic tax deduction of $1,000.

It is one thing to throw verbal bombs, to throw all the one-liners and the TV grabs that we hear from the Leader of the Opposition; it is one thing to run around squawking ‘great big new tax’ every time somebody drops $10 in the street; but the moment of truth is going to arrive when the opposition will have to front up to the Australian people and indicate why they are putting the interests of one sector, which is now paying a much lower proportion of its profits as tax than it previously did on minerals that are the Australian people’s asset, ahead of all the other businesses all around Australia that are struggling to get by. That is the thing that they are going to have to explain to businesses all around the country.