Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. How will the government’s tax reform package impact Australia’s international standing?

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

There have been many colourful claims made in the debate about tax reform recently, both by sections of the mining industry and of course the opposition. For example, sections of the mining industry chose very conveniently to exclude the effect of generous tax concessions when making claims about what percentage of their profits are taken in tax. But perhaps the most absurd claims with respect to the impact of the government’s tax package relate to its impact on Australia’s international reputation—to what extent Australia is an attractive location for international investment—and in particular to the issues of sovereign risk and alleged retrospectivity.

I would urge all members to have a look at a column about these issues today in BusinessDay in the Age and, I presume, in the Sydney Morning Herald by Ross Gittins, somebody who has in recent times been critical of the government on a number of matters but on this issue is absolutely bang-on. We are seeing the mining sector seeking to redefine the concept of sovereign risk to something very different from what it is generally understood to be. Typically it is understood to relate to issues of conflict, corruption or expropriation, but now sections of the mining industry want us to believe that sovereign risk basically arises whenever there are tax changes we do not like. That is basically their concept of sovereign risk. Even though prices for our resources have soared relative to where they were five, six or seven years ago and are likely to continue to be at elevated levels, and the Australian people are seeking through their government a better return for the asset they can only sell once, according to sections of the mining industry this raises sovereign risk issues. That is simply nonsense.

Second is the alleged issue of retrospectivity. This also involves a clever redefinition of the concept of retrospectivity. It effectively seeks to relate the tax incidence not to the activity—which of course is the usual concept of retrospectivity, and clearly we are not dealing here with retrospective taxation—but to the original investment. Some mining investments can last for decades, so the concept of retrospectivity that is being sought to be applied here is one that is totally unrelated to the normal use of that concept in taxation. You would never be able to change taxes without them being retrospective if this were taken to its ultimate extreme. Any change in tax that applied to any business, if taken back to an original investment decision that could have been taken 20 years earlier, would therefore be deemed retrospective.

Interestingly, it is notable that nobody is complaining that the proposed cut in company tax is retrospective. Nobody seems to be complaining about that, even though it has exactly the same kind of effect. Most importantly, these absurd claims about the alleged impact on Australia’s international reputation completely ignore the positive elements of the government’s tax package—the cut in company tax down to 28 per cent. Whereas the coalition are promising that their company tax rate will be increased to nearly 32 per cent, the government’s package involves a cut in company tax down to 28 per cent. What are the implications of a cut in company tax for Australia’s reputation internationally? According to the former Treasurer Peter Costello, it would increase attractiveness as an investment location, strengthening Australia’s prospects for investment and economic and jobs growth. That is the former Treasurer Peter Costello’s assessment of the benefits for Australia’s reputation of a cut in company tax.

I also want to draw the House’s attention to the benefits to our reputation of increased investment in mining infrastructure, better tax treatment of mining exploration and, of course, a stronger superannuation system which is already the envy of the world. In conclusion, if you ever wanted to see a better example of the ludicrous rhetoric and the ludicrous scare campaigns that the government’s proposals are being subjected to, I draw your attention to statements by Clive Palmer yesterday morning on the Meet the Press program. I preceded him on the Meet the Press program, but unfortunately it was not a debate, otherwise I would have had a bit of fun. I would have had some serious fun. His statements were these:

The perception overseas is that it is a 70% tax on mining in Australia, so avoid Australia and that perception will mean that there won’t be any further investment and there won’t be any jobs created. Mum and dads all over Australia will become unemployed. They won’t have the money to buy their Christmas presents for their kids. They will be out on the street.

We have not quite got to the plague of locusts and the seven years of famine and the four horsemen of the apocalypse, but by God we are getting there. This is just empty rhetoric, hysterical rhetoric, from a man who is the proprietor of the Queensland Liberal National Party. This is just ludicrous rhetoric, and it illustrates precisely why it is important for the government to explain its position as to why these changes are good for the Australian economy and good for Australia’s international reputation.

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

My question is to the Prime Minister. I refer to the $38 million of taxpayer ads that deliberately mislead Australians into believing that ‘The Australian people only receive royalties and resource charges from mining companies’. Why does the government deliberately exclude from the ads company tax paid by mining companies to the federal government? Is it because a decade ago only five per cent of all company tax paid to the government came from the mining industry, whereas last year an estimated 24 per cent of all company tax came from the mining industry?

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

Again, I welcome any question from those opposite about tax reform in Australia and I welcome any question about the public advertising associated with that tax reform. The reason I welcome it is that long-term tax reform is necessary for the long-term reform of the Australian economy. That is why we are doing it: to build better super for working families, to cut taxes for small business and to fund the future of infrastructure. The member for North Sydney—as a member, I presume, of the Liberal Party and therefore a representative, more broadly, of the Liberal-National Party—must therefore also now be taking his instructions from Clive Palmer, the new pin-up boy of the LNP.

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

Mr Speaker, I rise on a point of order. It goes to relevance. I asked the Prime Minister why company tax was excluded from his ads.

Opposition Members:

Opposition members interjecting—

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

Order! The member for North Sydney finally got the call after those behind him allowed it. The member for North Sydney has raised with me a point of order. There is no point of order. He can extract the element of the question where he wants the direct answer, but he has to remember that the question included other matters. The member for North Sydney will know that under a strict reading of the standing orders, much of his question was out of order as it contained argument. I think that he understands that during my period in the chair I have allowed those types of questions because of what I believe to be an imbalance in the standing orders, but he also has to recognise that once I allow that matter to be in the question it can be responded to.

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

As the member for North Sydney will know when it comes to royalties, 10 years ago, for every $3 that companies received in profits, $1 came back to the governments of Australia through royalties. Ten years later, for every $7 which companies received in profits, $1 was coming back in royalties. Furthermore, the member for North Sydney would be aware that, if you then added royalties to the company tax cake, you would find that on average receipts relative to profits have halved compared to the proportion which existed 10 years ago.

I say to the member for North Sydney, though: whichever way you cut the cake—whether it is on royalties, whether it is on company tax and against all ranges of measures—the bottom line is that because of the current structure of the taxation regime the return to the Australian people via the taxation system is infinitely less than it was a decade ago. In the intervening decade, Australian families have faced a range of additional imposts to fund the infrastructure of the future.

Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. I refer you to page 553 of Practice and direct you to the second paragraph, which says that ‘the answer must maintain a link to the substance of the question’. The substance of the question was corporate tax being paid by the companies to the Australian government. I would ask you to ask the Prime Minister to either answer that core part of the question or to sit down because he cannot.

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

The chair is in the difficulty that if the chair identifies other aspects that could be considered core to the question, they are open to being involved in the debate. Core to the question might have been the preamble about the $38 million being spent on advertising. The core could also have been the part of the question that talked about deliberately misleading about other taxes and levies. I think that this shows the problems about question time. Whilst I do not want to delay people much longer, I would refer them to pages 515 and 527 of Practice which, inter alia, say:

The purpose of questions is ostensibly to seek information or press for action.

Before the guffawing, this statement I am going to make refers to everybody:

However … it is often a time for political opportunism—

where the questions will seek to embarrass the government—

… while government Members will be tempted to provide Ministers with an opportunity to put government policies and actions in a favourable light or to embarrass the Opposition.

This is the tradition of question time that has developed. If the House would like to have changes, it should deal with that itself. The Prime Minister is responding to the question.

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

So I say to the member for North Sydney: if you look at the overall return to the Australian taxpayer, the return now is much less than it was 10 years ago. The commodity price increases which have occurred over the period of time have not been properly reflected in returns to the Australian people. Frankly, the Australian people are deserving of greater returns in order to fund the future needs which they face—one, by assisting and bringing down the company tax; two, by assisting those companies to pay additional superannuation payments through the SGL; and, three, by funding the infrastructure needs of the future as well.

The other thing I would say to the member for North Sydney is this: we have seen one scare campaign after another from those opposite when there have been any changes over the last 10, 20 or 25 years that affect the mining sector and its profitability. When the PRRT regime was brought in 25 years ago, those opposite claimed that it would lead to a collapse in investment in the industry. It did not. In fact, I would draw the attention of those opposite—

Kevin Andrews (Menzies, Liberal Party, Shadow Minister for Families, Housing and Human Services) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. Mr Speaker, having heard what you said by way of explanation to the previous points of order, can I indicate to you, sir, that it is the view of this side of the House that the Prime Minister is in no way answering the question. Having said that, he is straying right away from any semblance of relevance to the question.

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

Order! The member for Menzies will resume his seat. The Prime Minister has the call.

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

It goes to the question of the impact of policy decisions on the mining industry. The history of those opposite over the last 25 years was in saying that any changes that affect the mining industry will automatically result in something akin to the collapse of the industry. They did the same in relation to the PRRT regime—a resource rent tax—25 years ago. Secondly, do we all remember the debate over Mabo? The debate over Mabo was that the mining industry would collapse as a result of the introduction of native title laws.

Kevin Andrews (Menzies, Liberal Party, Shadow Minister for Families, Housing and Human Services) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. How can this be possibly relevant at all?

Honourable Members:

Honourable members interjecting—

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

The House will come to order! I expect better from both frontbenches—much better. They are not immune. The Prime Minister is responding to the question. The Prime Minister has the call.

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

The point of my response is to say—

Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

Ms Julie Bishop interjecting

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

Deputy Leader of the Opposition!

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

The Deputy Leader of the Opposition, when it comes to defence of the national interest, I believe has form herself.

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

The Prime Minister will respond to the question.

Kevin Andrews (Menzies, Liberal Party, Shadow Minister for Families, Housing and Human Services) Share this | Link to this | Hansard source

Mr Speaker—

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

Order! The member for Menzies will resume his seat. The Prime Minister has the call.

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

So, when those opposite enter scare campaigns in relation to the mining industry, they have form: the PRRT regime, first and foremost; secondly—

Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Link to this | Hansard source

Mr Speaker—

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

The Prime Minister has the call. The member for Mackellar will resume her seat. The Prime Minister has the call and he will conclude his answer.

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

And when we brought in legislation to get rid of Work Choices, they said it would kill the mining industry as well. Wrong, wrong, wrong, and wrong on this one as well.

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

My question is to the Minister for Resources and Energy and Minister for Tourism. How will the resource super profits tax grow investments in infrastructure and ensure that Australia continues to prosper from our natural resource wealth?

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

I thank the member for Moreton for his question. I echo what the Treasurer said today: long and enduring tax reform has never come easy to Australia. I simply say that our government is not going to walk away from this very tough debate, because it is a debate the nation has to have. This debate is about our long-term national interest. We also appreciate in that context that we are seriously engaged in a proper process of consultation. We are absolutely committed to getting the balance right, based on ensuring an ongoing stream of investment in Australia akin to what we have achieved over the last 2½ years, as evidenced by the Gorgon investment, and ensuring that the Australian community gets a fair share of the opportunity to develop its resources. I compare that to the position of the opposition at the moment. Also, I remind the House that one of the key outcomes of this debate is a capacity to further invest in the infrastructure requirements of the resources sector in Australia—something that the opposition neglected for 12½ years. A prime example is that, for the first time ever, we will have, in forthcoming budgets, a line item going to investment in resource communities in Australia—initially, $700 million in 2012-13; an amount of $5.6 billion over the decade.

We are in catch-up mode because of the failure of the opposition to invest during their period in government in key resource infrastructure projects. The bottlenecks that they left unattended effectively meant that we lost market share over the previous decade and lived off the back of commodity prices. They were content to spend the proceeds of the mining industry boom but not willing to invest in our future opportunities. I was therefore not surprised to see the ongoing campaign of misinformation yesterday by the stand-in opposition spokesperson, Mr Clive Palmer, claiming that the resources industry is paying 70 per cent tax. That is an outrageous claim, even from Mr Palmer—and we all appreciate what a colourful character he is, better known for his real estate activities than for his mining capacity.

The opposition might be content to stand side by side with Mr Palmer, but we are going to continue the debate that goes to the primary focus of our capacity to ensure the long-term sustainability of the resources sector to invest in key projects related to port, rail and road infrastructure. I compare our performance over 2½ years with the opposition’s performance over 12½ years. Let us go to the state of Western Australia: $339 million invested in the Oakajee project, something that the Western Australian Premier asked us to commit to, and another $40 million in the port of Esperance, which was a major problem in the previous parliament. Northern Australia is so important to the resources sector: investment in the further development of the Darwin port, $50 million; the Australian Rail Track Corporation, $1.2 billion, including key investments in the Kalgoorlie corridor in Western Australia; the Perth urban transport corridor, $350 million; and the upgrade of the Port Hedland roadworks, $160 million—an area historically absolutely neglected by the opposition under the AusLink program—under AusLink 1.

We also appreciate that the impact of resources activity does not extend only to resources communities. That is why I was delighted to notice a commitment today by the Commonwealth government of $180 million to a $225 million project in the heart of the city of Perth. The Great Eastern Highway is to be expanded to six lanes between Perth Airport and Graham Farmer Freeway, something that is so important to Perth. The impact of the resources boom is not just on regional communities; it is also on our major capital cities. Compare that key resource investment in the city of Perth with the previous government’s preoccupation with approving a brickworks at Perth Airport for a key donor rather than doing something about huge delays at Perth Airport that increase the cost of conducting mining industry activities in Australia.

It is not just government that is investing in key infrastructure. I also welcome the announcement last week by the Queensland Coal Industry Rail Group to commit $4.85 billion to seek the purchase of the coal corridors in Queensland, which is also exceptionally important. It is not just the initial commitment of $4.85 billion; it is going to mean another couple of billion dollars over the next couple of years to make sure we front up for the necessary maintenance and capital expansion of the Queensland rail corridor. The industry, despite the rhetoric that is currently out there in the community, understands that the coal industry in Australia is going to expand.

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

The minister will start to conclude his answer.

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

Its capacity is going to grow over the next three to five years, and that investment is most welcome and supported by the government. In conclusion, I simply say that this is a debate that we had to have. We as a government are going to go on and get the balance right. The resources sector is part of our future, but so is tax reform. It is about making sure that we stand up for the long-term national interest of Australia. The government’s policies are not for sale. The opposition might be owned lock, stock and barrel by the likes of Clive Palmer and his ilk, but we are going to continue this program of activity, because it is in Australia’s long-term national interest.

Sussan Ley (Farrer, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister advise the House of when the government first decided to seek an exemption from its own guidelines to run a $38 million advertising blitz to defend its great big new tax on mining? When were the advertising agencies first approached to prepare these advertisements?

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

In response to the honourable member’s question, in the context of reviewing the Henry report on taxation the government over a large number of months considered the desirability of a public advertising campaign to underpin its response to the Henry report. That is the first part of the answer. The second part of the answer goes to the use of the particular exemption provisions to which the member refers. My advice is that that was done in response to the conclusion reached by the Special Minister of State and the Treasurer concerning the misinformation campaign which began to unfold. That is the answer to the honourable member’s question.