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

I have received letters from the honourable the Deputy Leader of the Opposition and the honourable member for Kennedy proposing that definite matters of public importance be submitted to the House for discussion today. As required by standing order 46(d), I have selected the matter which, in my opinion, is the most urgent and important; that is, that proposed by the honourable the Deputy Leader of the Opposition, namely:

The adverse impacts of Government policy on the mining sector.

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—

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

All Australians want to receive a fair share of their state's mining and resource wealth, and state governments have an obligation under their royalty regimes to ensure that occurs. Australia's wealth is shifting west, much of it now located on the west and north-west coasts of Australia. Ninety per cent of our recoverable reserves of natural gas are located in these waters. The Gorgon gas development alone is expected to deliver eight per cent of the world's LNG needs. Ninety-seven per cent of total production of iron ore comes from the west, and Western Australia accounts for well over one-third of Australia's exports. By the end of the decade, this figure is expected to be closer to 50 per cent.

But the federal government has been on a massive tax grab to soak as much revenue out of the west as it can get its grasping fingers on. Last year, we witnessed the fiasco of the resource super profits tax. It was an illogical, ill-conceived tax that assisted in the downfall of Prime Minister Rudd but—miraculously, one would think—left unscathed its principal architect, the hapless Treasurer of this country. After that unmitigated failure, the Gillard government came up with a less ambitious but no less destructive mining resource rent tax. The mining tax has not been finalised despite the fact that the Prime Minister and the Treasurer claimed they secured a deal for it from three large mining companies last year—almost 12 months ago.

Now, in another development in this very sorry saga, the member for Lilley has been caught again 'gilding the lily'. Rather than being economical with his outrageous budget spending, Australians can instead always rely on this Treasurer to be economical with the truth. He has expressed 'surprise' that the Western Australian government has addressed an anomaly in its royalty regime. He has threatened retribution through the Commonwealth Grants Commission. He and the Prime Minister have said they will slash infrastructure funding to Western Australia but, importantly, he said on ABC Radio National last Friday that the decision of the Western Australian government was 'a surprise'. Further, he told the ABC:

Mr Barnett did not communicate that he was going to do this to us.

Today, the Treasurer said this announcement about the royalty regime in Western Australia was 'suddenly out of the blue'. The facts are to the contrary.

But before I detail his deception to this House and to the Australian people, let me briefly explain what was announced in last week's budget in Western Australia. The budget states that the state government will move to increase the royalty rate for iron ore fines to 6.5 per cent from 1 July 2012 and to 7.5 per cent from 1 July 2013, in line with the rate applying to lump ore. In other words, it is not an increase in the royalty rate of 7.5 per cent, which still exists; it is removing a concession, a historical anomaly, to bring in line all iron ore products—fines and lumps—to 7.5 per cent. This will deliver a fairer return to the Western Australian community. The Western Australian community owns those resources.

As I said, this different royalty treatment of iron ore is a historic anomaly—a discount given to iron ore products in the early days of the Pilbara when the industry was getting on its feet. But the Treasurer has said that Premier Barnett 'did not communicate he was going to do this to us'—in other words, to the government. He did not communicate that he was going to lift the fines rate to 7.5 per cent. Oh, really? Is that right? I have a pile of press clippings here from at least 12 months ago detailing how the Barnett government most certainly intended to increase the rate applicable to fines.

Premier Barnett did not say he was going to increase the royalty rate of 7.5 per cent across all minerals, and he has not done so. What he told the Treasurer, what he told the Australian people and the Western Australian public, as recorded in this handful of press clippings, time and time again was that they were going to increase fines to 7.5 per cent. As far back as 18 March 2010, Premier Colin Barnett announced his hopes to scrap all discounts on mining in Western Australia within three years. On 10 April 2010, another article in the West Australian newspaper reported Mr Barnett as saying he would end concessions on mining within three years. This is precisely what he has done.

On 10 May 2010, Premier Barnett again spoke of bringing the iron ore fines rate and the lump rate of 7.5 per cent into line. In the Australian on 13 May 2010, in an article written by Dennis Shanahan, Premier Barnett told the Australian he planned to raise the royalty rate for iron ore fines to 7.5 per cent by July 2011. The plan was so secret that Swanny did not know about it, but even industry bulletins in May last year were talking about the increase in concession for iron ore fines to 7.5 per cent. On 20 May 2010, Colin Barnett said he was going to increase the royalties across the board to 7.5 per cent but it was not going to happen until July 2011, which has happened. If ever evidence were needed that nothing escapes the attention of this Treasurer, he was actually directly asked at a public forum on 19 May 2010 about Premier Barnett's secret plan—the plan that he did not know anything about—to raise the royalty regime on fines to 7.5 per cent. This is a plan that came suddenly out of the blue; a plan that he was not informed about. A journalist says:

Premier Colin Barnett has flagged he wants to increase iron ore royalties to the global rate of 7½ per cent. He has flagged that before the Henry Review.

The Treasurer says, 'Well, they will have to establish that in discussions with Premier Barnett.' This is the plan that the Treasurer said in the House today came suddenly out of the blue.

In question time the government tried to say that last October there was a report that Premier Barnett was not lifting the royalty rate. That is true—he has not lifted the royalty rate beyond 7.5 per cent. In March this year the Treasurer announced that all current and future state royalties would be credited back to mining companies. He knew about the proposed rate. Premier Barnett had already been talking for over 12 months about taking away the concession applicable to iron ore fines. So in March this year the Treasurer knew, and he wrote to the Commonwealth Grants Commission in February of this year asking them not to punish Western Australia when it increased the fines rate to 7.5 per cent.

On 25 March this year, in an article in the Australian, it was spelt out clearly that Premier Barnett was raising fine rates to 7.5 per cent, that the Commonwealth knew about it and that they had already announced crediting back all future and current royalties. This article in the Australian makes it quite clear that Colin Barnett had flagged that his government was already raising the rates on fines from 5.6 to the lump rate of 7.5 per cent. So, again, on 25 March 2011 there was an article in the Australian pointing out that Colin Barnett as Premier of Western Australia was going to raise the fines rate to 7.5 per cent.

Let us assume that the Treasurer does not read the media and that nobody brought it to his attention, and let us assume that he did not understand what the journalists meant when they said that Colin Barnett had a plan to raise the royalty on fines to 7.5 per cent. Even more damaging than those press releases and those press statements are documents released by Treasury under a freedom of information request which make it abundantly clear that the Treasury and the Treasurer were aware of the exact details of these proposed changes in May last year. A letter from the Western Australian Under Treasurer received on 10 May by Dr Ken Henry, then Secretary to the Australian Treasury, explicitly states:

… I seek your urgent confirmation that "scheduled increases" in Western Australia would include the removal of existing iron ore royalty rate concessions, which would see both fine and lump iron ore royalty rates being levied at 7.5% … by 1 July 2012.

That is exactly what has been announced. It is an incremental increase—a per cent increase this year up to 7.5 per cent by July 2012. So the Treasurer knew in May of 2010 precisely what Colin Barnett was going to do. Let us give him the benefit of the doubt and say a letter to the Treasury Secretary is not the same thing as telling the Treasurer himself. However, the FOI documents reveal more. In a Treasury executive minute dated 17 May 2010 entitled 'Mining projects and royalties in Western Australia'—so you get the idea what this is about—the Treasurer himself was advised of this proposal. It is noted in the executive minute that the brief was provided because the Treasurer's office requested it urgently. So the Treasurer himself asked for the Treasury to provide advice on Premier Barnett's plan to raise the fine rates to 7.5 per cent. It states clearly on page 8:

Western Australia indicated at a recent Commonwealth Grants Commission meeting—

this is prior to the announcement of the resource super profits tax—

… it was considering increasing the royalty rate on iron ore fines from the current rate of 5.625 per cent, to the 7.5 per cent rate for lump ore.

So the Treasurer did know; there was communication; there was discussion; there were minutes from Treasury requested by the Treasurer. We now know, following questions from the shadow Treasurer in question time, that there were conversations between the Premier of Western Australia and the Treasurer. There was actually a phone call from the chief of staff of the Premier to the Treasurer's chief of staff before the Western Australian budget that set out explicitly what was going to occur. The Treasurer himself took action by writing to the Grants Commission in February 2011. So, the Treasurer has been well and truly caught out. His statement that this came suddenly out of the blue is a lie. His statement that he knew nothing about this and that they did not communicate to him is a lie.

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

Mr Speaker, I ask that that unparliamentary term be withdrawn.

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

It would assist the House if the member for Curtin withdrew the use of the word 'lie'.

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

I withdraw. It is evident that the Treasurer knew of the Western Australian plans to increase the royalties on iron ore well before he advised the Prime Minister to sign that mining deal with the three big miners. And this is the rub: the Treasurer knew that Western Australia was going to raise the royalty rate across the board to 7.5 per cent. They went into that meeting last year with the big miners—remember how they had to fix the mining tax debacle; they had to sack Kevin Rudd because the government had gone off the rails—knowing that Western Australia was going to raise the royalty rate, and yet they promised those miners that they would credit all current and future royalty rate increases. Now they are screaming blue murder, telling the Australian public they knew nothing about it when they knew all about it. The Treasurer knew before he made the commitment to credit all state and territory royalties against any national mining tax liability. It was interesting during Senate estimates last night how the Prime Minister's own department sought to distance itself from this debacle caused by the Treasurer. The Prime Minister's department pointed out very clearly that the advice to the Prime Minister on the mining tax deal came directly from the Treasurer on this occasion. In fact, the Prime Minister's own department was sidelined—this was all from the Treasurer. The question remains: why did the Treasurer not advise the Prime Minister that signing the mining tax deal would mean that the increases from Western Australia would be credited? Or did the Treasurer tell the Prime Minister and she thought she could get away with it before the election?

We are witnessing a huge deception of the Australian public, an enormous deception by the Treasurer to suggest he knew nothing about the Western Australian increase to 7.5 per cent when he knew all about it. He stood in this House today and said to the parliament and through the parliament to the Australian people that it came suddenly out of the blue. He has had over 12 months notice, in detailed discussions with the Western Australia government. Through a series of press announcements, he knew, yet he stood in this parliament and said it came suddenly out of the blue. This government is not only destroying the Australian mining industry but it also cannot be believed on anything. (Time expired)

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

I thank the House for the opportunity to address the very strong state of the Australian mining and petroleum industry at this point in time. I remind the House that that is what the MPI is about. It goes to the influence of government policy on the state of the mining industry in Australia. Let us deal with a few hard facts.

In the last 12 months, we have created an additional 27,700 new jobs in the mining industry. The reason we have created those jobs is that we are part and parcel of one of the most attractive nations for investment in the world when it comes to the petroleum and mining sectors. I was fortunate enough last Friday to be part of a further major announcement about where we are going as a nation. That was the Shell announcement concerning the construction of Prelude, the biggest ever floating LNG plant in the history of the world. That announcement effectively means that we now have the capacity to open up parts of the petroleum sector which were historically perceived as being stranded because of their distant nature in Australian waters—not Western Australian waters. Those petroleum products are to be developed for the benefit of all Australians, not just Western Australians.

In the development of the petroleum sector, 90 per cent of Australian projects are in Commonwealth waters. It is therefore our responsibility to continue to work with petroleum companies such as Shell to guarantee that we remain attractive and, in doing so, to create real jobs akin to the 27,700 new jobs created in the sector over the last 12 months.

When you think about the attractiveness of Australia, think about some of the key investments over the last three years. Think about the Gorgon plant, a $43 billion investment, the biggest ever single investment in the history of the petroleum sector in Australia. At the same time and side by side with the Barrow Island development, we are almost at the completion of Pluto 1, a Woodside project, an investment of the order of $15 billion to $20 billion, with gas to be produced in the second half of this calendar year, opening up further LNG contracts for Australia.

We also have the capacity in the foreseeable future to see the final investment decisions going to the Wheatstone project, a Chevron project at Onslow, and potentially the Browse project at James Price Point north of Broome. It is just not in Western Australia any longer; it is also in Northern Australia where Conoco-Philips at the moment has one gas train. There are opportunities to hopefully develop the Impex project—a development investment decision by Impex in association with Total, prior to the end of this calendar year, another investment of the order of $20 to $30 billion. Then we go to the east coast of Australia—investments in the first LNG exports in the world from the coal seam methane sector, a $31 billion new investment which will make Gladstone a major industrial centre in Australia, but that is just the petroleum sector.

Let us go to a couple of other key commodities because in my opinion not only does the coal seam methane export industry have great potential for Australia over the next 10 to 20 years but so do the coal sector and the iron ore sector. And this is despite the best endeavours of the Greens to undermine and destroy the coal seam methane, LNG and coal industries in Australia. The coal industry and the coal seam methane industry in Australia have a bright future of investment and the creation of real jobs and training opportunities and, side by side with that, a capacity to create real export earnings for Australia, strengthening the overall foundations of the Australian economy.

Let us have a look at a couple of those investments over the last six to 12 months. On 25 March this year alone BHP Billiton, at one board meeting held in London, invested $400 million in the thermal coal industry in New South Wales, $5 billion in the coking coal industry in Queensland and then, when we go to Western Australia in the important iron ore industry, something of the order of $7 billion—that is, over $12 billion invested in the resources sector in Australia by one company at one board meeting in March this year. That is only a small example of a range of investment decisions going to the strength of the mining sector in Australia over the last six to 12 months.

We could go to the decision by Fortescue Metals on 10 November last year to invest another $8.4 billion in the iron ore sector in the north-west of Western Australia. That investment decision is very important. That company is now out raising capital for further investment opportunities in Australia. The decision of the Western Australia government last Thursday to increase mining royalties in Western Australia does not augur well in terms of that company's capacity to promote Australia as a safe haven for investment at this very important time in this investment cycle. We go also to other major investors. We go to Xstrata and the Ulan West underground project in New South Wales on 3 August, last year—$1.1 billion. We go to Xstrata and a range of other coking coal and thermal coal decisions around Australia. We should also not forget Rio Tinto, which on 20 October last year made an investment of $3.1 billion in a further expansion of its iron ore operations in north-west Western Australia.

The truth of the matter is that the mining and petroleum industry in Australia, be it in New South Wales, South Australia, Queensland, Western Australia, Tasmania or Victoria, is in a very sound position at this moment. We are strong on investment. Our real challenge is to actually manage the investment pipeline in relation to a shortage of skilled labour in Australia.

What we have really got in Western Australia—and this is what the Deputy Leader of the Opposition wanted to talk about today—is a dogs breakfast when it comes to royalties and the understanding of the industry as to where the Western Australia government is going with the royalties regime not only over the last 12 months but also in the future. Let us look at what the Western Australian government has said about royalties since April last year. It is relatively recent history. Firstly, it was out there talking about increases in gold royalties that would occur in the May 2010 budget. As a result of a campaign by the coalition in the upper house, the Western Australian Premier backed off from that and abandoned the plan in the May 2010 budget. Norman Moore, the Minister for Mines and Petroleum, took the Western Australian Treasurer and Premier on and forced them to back off from a potential increase in gold royalties.

Then we had a proposal, over the last 12 months, to review the magnetite royalties paid in Western Australia. There was an expectation in the industry that they would be reduced. I say 'reduced', because the Argus-Ferguson report into the federal profits based tax showed that, where the magnetite industry exists in Australia in competitive terms compared with other states, the royalties rates in Western Australia were relatively high and made Western Australia uncompetitive.

We go to the question of iron ore royalties. Following the budget last year, and a proposed joint venture operation between BHP and Rio Tinto, the Western Australian government reopened the state development agreements with the purpose of trying to increase the royalty take to assist the Western Australian community. That was agreed to by BHP and Rio Tinto, because they expected major synergies and improvements in efficiency arising from the proposed joint-venture operation. The joint-venture operation fell over, yet BHP and Rio Tinto continue to pay those increased royalties without gaining necessary efficiencies. As a result of the renegotiation of that agreement, they contributed about $350 million per year to the Western Australian state coffers. In addition, they made a one-off contribution of the order of $350 million to the Western Australian budget processes for the purposes of developing a new hospital in Perth.

Following that announcement, if I remember correctly, in June of last year, we had very bold and clear statements by the Western Australian Premier as to what he intended to do on royalties in the future. I refer to his statement that was reported in the West Australian newspaper of 20 October 2010. He said:

The State has no intention of increasing royalties, but we will certainly preserve the right to do so …

The mining industry took the Western Australian Premier at his word. Since October 2010 until more recently, not only was Mr Barnett the Premier of Western Australia but also he was its Treasurer. That is why the mining industry took him at his word. They regarded his statements as being set in stone. It is therefore not a surprise to see a range of media statements issued by the mining industry on Thursday of last week clearly nailing the Western Australian government for a lack of consultation with the industry on the recently announced increases in royalties. That is reflected, for example, in statements by the Chamber of Minerals and Energy of Western Australia and by the Association of Mining and Exploration Companies. The statement by AMEC, which was posted on 19 May 2011, said:

AMEC is extremely disappointed that industry bodies and individual companies have not been consulted in respect of the WA Government’s decision to increase the royalty rate on iron ore fines.

That sentiment is also reflected in a statement issued by the Chamber of Minerals and Energy on Thursday of last week. Its statement first referred to the endeavour by the Western Australian government to create a sense that this is just an anomaly. So when the coalition increases royalties in Australia it is an anomaly, but when you actually want to put in place at a federal level what the industry wanted—a profits based tax—then it is a major tax grab. After stating that the chamber is not opposed to reform, the chamber's statement continued:

We support genuine economic reform that protects against sovereign risk, improves the international competitiveness of the resources sector as an investment destination and promotes economic growth.

It has really become clear what it is that the Western Australian government was really about on Thursday of last week. It was focused on a mere short-term endeavour in order to have a political stoush with the Commonwealth government. If members have any doubts about that, I refer them to the comments of the Western Australian Premier today—and this goes to the issue of an own goal. He said:

Yes, we knew that we would get less funding by raising our royalties under the current arrangements.

That is what it is all about: a short-term political stoush. That position is also reflected in comments by the resources minister Norman Moore that were reported in the business pages of the Sunday Age and detailed today by the Treasurer in the House. Those comments referred to the fact that Mr Norman Moore advised journalist Michael Pascoe early last year that the last thing the Western Australian government should do is increase royalties because it would have a major impact on their GST grants under the Commonwealth-state grants system.

I therefore suggest to the House that the Western Australian government has potentially created an environment that will strangle the future of the resources sector in Western Australia. The Commonwealth government will stand by its agreement with the resources sector—both the petroleum and the mining components. We will credit the increase in royalties in accordance with our undertakings to industry. But the truth of the matter is that, in terms of royalties as against a profits based tax, royalties are paid in both good and bad times. The Commonwealth will only increase its revenue take under the mining tax on super profits during very good commodity price times.

In essence, in the future, from here on in as of last Thursday and as of June last year, the resources sector in Western Australia will confront a substantial increase in royalties. There have been two increases in royalties in the last 12 months that will have to be paid in both good and bad times—irrespective of the state of commodity prices. So not only have they kicked an own goal in terms of the potential loss of GST revenue, which they admitted today they had knowledge of, but they have also potentially set up an environment that will strangle the small and start-up companies which are so central to the future of the mining sector in Australia.

In conclusion, I simply say that the mining and petroleum sectors have never been better positioned. We are working with them on labour supply issues, opening up further opportunities for migration to assist them to make sure that their investment delivers further wealth and prosperity to Australia. The real problem in the resources sector in Australia is the lack of policy and understanding on the other side of the House. As we all appreciate, the leader of the coalition finds economics boring and has no interest in decent policy development in Australia, as reflected in the stoush reported in the newspapers of last weekend between the shadow Treasurer and the coalition leader. (Time expired)

Barry Haase (Durack, Liberal Party) Share this | Link to this | Hansard source

I appreciate the opportunity to rise and address this issue today. The mining industry in Australia is highly valued, and right now the centre of mining in Australia is Western Australia. Western Australia has a responsibility to this nation to pull its weight. We have heard a great deal from the Minister for Resources and Energy about why the actions of Premier Barnett are somehow illegitimate. All I can suggest is: check the records, look at the communications that took place and make up your own mind. Premier Colin Barnett has done the right thing by Western Australians and continues to do the right thing by all Australians in supporting this nation, being the state Premier of the coalface, if we may say, of the Australian Treasury. Mining in Western Australia, according to the best stats from 2007-08, made a contribution of $58.6 billion to the Western Australian economy. The Western Australian minerals and petroleum sector contributed 83 per cent of the state's merchandise exports. It contributes approximately 53 per cent of Australia's total value of mineral and petroleum sales. Royalties received by the state government from Western Australian mineral and petroleum producers totalled approximately $2.3 billion in the year.

This whole argument about fines and the rate of royalty levied on fines goes back to the development of the iron ore provinces of Western Australia in the early sixties. Fines were considered at the time to be an inferior product and not particularly required by the smelters of the world. Therefore, there was a reduction in the royalty charged of something like 1.375 per cent. That reduction or concession, in the light of the popularity today of iron ore of any description, has been removed. It is as simple as that. It is not an increase; it is a removal of a concession that the industry in Western Australia has known about for about the last two years. The statement by the Premier in the latest state budget simply gives the industry two full years to come up to speed in paying the full royalty rate of 7.5 per cent. This is much less of an impact than many would suggest is the case.

The mining industry in Western Australia, I might add, in the most recent annual report, contributes $70.9 billion. That is the resources sector in Western Australia. It is now 89 per cent of the state's total merchandise exports and it is 42 per cent of the nation's exports. And $176 billion is the value of projects underway, committed or close to commitment. It is those projects that are close to commitment that I wish to bring to the attention of the House. The imposition of this MRRT, the minerals resource rent tax, speaks to potential investors around the world, who used to believe that Australia was a good place to put their capital investment because, apart from many differences that occur around the world, sovereign risk in Australia is exceptionally low. Investors would say, 'We can deposit our capital funds there. We know that they will make profits for us into the future because Australia is secure.' Australia has had good governance and a reputation for low sovereign risk. With the introduction of the MRRT, all of that reputation goes out the window—forever. The real issue today is the decisions being made in boardrooms around the world as to where to put floating capital. If our reputation as a secure destination for those funds is trashed then we take the risk of reducing employment in the resources industry.

Keep in mind that when this government last year raised the spectre of the people of Australia not being compensated for the mineral wealth that this nation possesses they talked about Australians not getting their fair share of the wealth. What about the taxi drivers in suburban Melbourne and Sydney, the hairdressers and others who provide services to those households employed on a fly-in fly-out basis in the Western Australian iron ore province? That has all been discounted. The government seem to have a hypocritical view of the world. They talk about wanting to close the gap. They refer blithely to closing the gap. They are talking about the health and education differentials between Indigenous Australians and other Australians. Do they realise that, in imposing the MRRT, they run the risk of taking away all of the investment that the mining companies place in regional Australia for the assistance of education, employment and the consequential long-term health of Indigenous Australians?

The Martu people enjoy something like $6 million per annum from Telfer in the way of training and improved health and facilities on the ground like roads and airstrips that will allow flying doctors to come in and provide health services. When imposing a tax on the mining industry, albeit just on the iron ore and coal industries today—and remember that iron ore is the major mined substance in Western Australia—I remind you: what about tomorrow? It is the thin end of the wedge when you talk about the mining industry involving coal and iron ore. But with a greedy government in power that lives by the mantra of, 'Impose a new tax whenever the budget looks crook,' what about all of the other very wealthy, great contributors to this national economy such as goldminers, manganese miners and solar salt producers? Those industries are shivering right now because they fear that this greedy government will impose additional taxes on their industries as well, to say nothing of that hanging sword of Damocles called a carbon tax.

The mining industry is not always going to be the golden goose. This government want to impose a tax that will put the wealth of this nation at risk because they are short-sighted and, frankly, hypocritical in their view. If we are going to increase employment, another mantra of this government, why would we impose a tax on the very industry that has the potential to employ another 27,000 Australians this year? It makes no sense to be so two-faced in one's approach to solving problems for this nation.

There is a great deal to be said about improvements and the way forward in the mining industry. I have a long list of recommendations here. I will pick a couple from the Chamber of Minerals and Energy of Western Australia. They talk about improving skilled migration. They talk about improving education and training in the industry. They talk about having a strategic policy of planning initiatives to fulfil their vision for the state of Western Australia and exploring innovative ways to manage water, one of our scarcest resources, for enabling growth. They say nothing about the necessity to impose a great big new tax to pave the way forward for this industry.

If we are serious about maintaining the wealth of this nation, if we could be serious for a moment about envisaging this government ever having a budget in surplus, why on earth would we impose a great big new tax on the very industry that sustains this Treasury? It does not make sense. Why would you impose a tax on the industry that provides such a resource for Indigenous people in health, education, training and employment? It is the height of hypocrisy to suggest that you could impose a tax and therefore improve the outcome for all of those other things that this government proposes. They put their hands on their hearts and talk about the necessity to improve life expectancy, education and employment opportunities. None of those things will be achieved if they impose this minerals resource rent tax on the very successful industries of this nation.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Last Friday I was in Moranbah, the largest of the mining towns in my electorate. I was there to open the BER projects—a new hall and a new library—at Moranbah East State School. As I was inspecting the buildings with the principal before the ceremony, he told me that the new buildings had arrived just in time to deal with the expansion the school is experiencing. The number of students at the school has gone from under 500 to over 700 in just a few years. That is because of more kids and more families of more miners coming to work and live in Moranbah. And the story is repeated wherever you look in Moranbah and throughout Central Queensland. Investment in mines and infrastructure is flooding in and workers are following. This is not the story of an industry suffering under any adverse impacts, as alleged by the coalition.

This MPI is about politics, pure and simple. It is about shifting attention away from the shafting the Premier of Western Australia is giving to mining companies in that state and the raw deal he cooked up in last week's budget for the people of Western Australia. Just look at who has put this topic up for today's MPI—not the shadow resources minister, the member for Groom, but the Deputy Leader of the Opposition, the Western Australian chief on the other side. She is doing it as a favour for her Western Australian mate Colin Barnett, even though he has just betrayed every promise she would have made in the boardrooms of Perth in the lead-up to the last election. Back then she would have been going from boardroom to boardroom collecting donations for the Liberal Party and promising her mining company donors that she would protect them from additional taxes.

This is the same deputy opposition leader who not so long ago was in Geraldton telling locals:

To impose an uncompetitive tax on this sector of the economy really does damage it.

Who is imposing uncompetitive taxes now? Who is going after an extra $2 billion in tax from mining companies, big and small, the profitable and the not so profitable, with the hike in royalties? Who is putting his state's budget position at risk with a $300 million gap in revenue, as reported on the front page of the Australian today? Who is giving away more GST revenue from the Grants Commission than the hike in royalties will raise for his state? Who is putting at risk infrastructure funding that would actually support the mining industry in Western Australia? It is the Premier of Western Australia, Colin Barnett, and now we can see that he has the full backing of the federal opposition for his tax grab on mining in that state.

If the deputy opposition leader was serious about standing up for the mining industry, she would be gathering her Western Australian colleagues together and telling the Premier to stop milking WA's mining companies and to stop selling out Western Australia in terms of GST revenue and infrastructure spending. But, as we have seen, the opposition is happy to let the Western Australian Premier go right ahead with his mining tax grab and even to provide him with cover here in the parliament with stunts such as this one today. I noted before that it was not the shadow resources minister who put this matter of public importance up for debate today. He clearly does not feel the same obligation to defend the Premier of Western Australia.

Coming from Queensland and from an electorate which sits alongside the explosion in resource investment and activity associated with the coal seam gas industry, the member for Groom—as I know you do too, Mr Deputy Speaker Scott—must know that the claims made by the deputy opposition leader and the opposition generally just do not stack up against what anyone in Queensland can see with their own eyes. Every day I open the paper there is a new project being announced: a new mine, a new pipeline, a new port facility, more railway capacity—all driven by an industry that cannot keep up with demand for its commodities. It is an industry whose real life, on-the-ground concerns, away from negotiations and rhetoric about matters like the carbon price or the minerals resource rent tax, are all about dealing with the pressures of growth in the sector—how to get enough workers, how to house them and how to develop supporting infrastructure and industry quickly enough. There is not much evidence in that of these adverse impacts the opposition is talking about. Mr Deputy Speaker, these claims crumble in the face of what is happening all around us in Central Queensland and I know in your own electorate in the south-west of the state. The shadow minister knows it is the same where he is around Toowoomba.

If members do not believe their own eyes, the figures confirm the staggering truth about the scale of the boom we are living through and trying to manage as a government. A snapshot from Central Queensland which was reported in February this year talks about 50 mining projects identified in the Bowen Basin alone, with a potential value of about $20 billion. Twenty-four of these projects are at an advanced stage and include 12 new mines and 12 expansions of existing operations.

A large proportion of my time as the member in a mining region is spent keeping up with what these developments mean for the region and the people living in the mining towns and larger coastal centres, like Mackay and Rockhampton, because the impact a new or expanding mine can have on services and infrastructure—both physical and social—is enormous. As an example, in April the CEO of Anglo American came to Moranbah to announce a $2.7 billion growth plan for the town, including two new underground mines and the creation of 2,000 new jobs over the next five years. As part of the development, the company is going to provide $20 million towards community infrastructure for the town in recognition of the impact this is going to have and the pressure it is going to place on services. That is $2.7 billion just in one town of fewer than 10,000 people. I ask again: how is that indicative of the adverse impacts the opposition is talking about? The fact is that the opposition has to keep attention away from the tax grab by the Western Australian Premier and the betrayal of mining companies and residents of that state.

Sadly, when we should be talking about the substance of the mining industry and the challenges that the mining boom mark 2 presents to our country, this MPI is not about the realities of the mining industry. It is just a political stunt to give cover to the opposition's hypocrisy. On the other hand, the government is focused on the realities of mining boom mark 2. The current mining boom is a once-in-100-years opportunity that must be managed for the benefit of all Australians not just for now but for the future needs of our country—for that time when we do not have the mining boom to hold us up. That is why we have worked with mining companies to design a minerals resource rent tax—a tax that provides a greater return to Australians for their resources and allows the government to invest in other important initiatives that support mining, as well as broadening and strengthening our economy overall.

The MRRT is funding important tax returns. The revenue collected will be returned to Australians in a number of ways. It will help us to broaden our economy by allowing for a tax cut to 29 per cent for all companies, starting from July 2013. Small businesses will get that new tax break from 1 July this year. All Australian workers will benefit from a boost to superannuation savings from 1 July 2013. I know that my electorate is particularly pleased about the $6 billion regional infrastructure fund that will come from the minerals resource rent tax. That is a fund that will pay for important projects like the $120 million for safety improvements to the Peak Downs Highway between the Bowen Basin and Mackay and $40 million to duplicate the Yeppin Bridge and relieve congestion at the southern entrance to Rockhampton.

The MRRT is a tax that the government designed in close consultation with the mining companies that will be most affected by it. It is designed to be more efficient for the companies and fairer for the Australian people, who should benefit from the mineral wealth of the country. The mining sector sees that. Following the announcement of the MRRT on 2 July 2010, the Minerals Council of Australia said:

Today's proposal on a new Minerals Resource Rent Tax stands to deliver a positive outcome for Australia and its minerals industry.

Where is the bit about adverse impacts there? The reality is that the government is responding to the needs of mining companies and mining communities through extra spending on infrastructure in mining states like Queensland and through the funding provided in the budget for training and apprenticeships This is all geared towards creating the skilled workforce the resources sector so desperately needs and ensuring that more people in places like Central Queensland get a foothold in employment in industry. It is geared towards constructing the infrastructure mining regions need to drive the growth in the sector and to enable communities to live alongside that growth. This government will continue to work constructively with the mining industry and continue to show up the opposition for how hollow its claims are to be any kind of friend to the mining industry.

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Local Government) Share this | Link to this | Hansard source

I am pleased to speak today on this matter of public importance about the adverse effects of the government's policies on the mining industry in Australia. Dare I say that we are here today because of what this government did under the leadership of the former Prime Minister, Kevin Rudd, and the Treasurer, Wayne Swan. The history of this is that the Treasurer, over the Christmas break, read the Henry tax review and out of the dozens of recommendations he picked 2½ of them and one of them was this so-called mining tax. The Rudd government's first incarnation of this tax, which was called the resource super profits tax, was condemned across the world. This tax on the Australian mining sector was the brainchild of those geniuses the Treasurer and former Prime Minister Rudd. I thank them for that, because that certainly played out well in seats like mine in Western Australia. Keep it up, because it really goes down well in resource areas where they know what is happening. This resource super profits tax really damaged the Labor brand. It really damaged the former Prime Minister, to the extent that the factional bosses whipped out their knives and executed him in June last year. It was a political execution, dare I say.

Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

Fundamental injustice day!

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Local Government) Share this | Link to this | Hansard source

Fundamental injustice day. Then along came the current Prime Minister, delivered by the factional bosses. In the middle of an absolute row with the mining industry, where she asked the mining industry to stop their ads, to pull their ads and to sit down and negotiate, what did she do? She negotiated with the three major miners: BHP, Xstrata and Rio. She did a secret deal with these three majors on what they were going to pay. Canada was actually licking its lips at that stage. It thought: 'Isn't this fantastic? Australia, one of the pre-eminent resource areas of the world in terms of its mining industry, is now going to make itself uncompetitive.' Canada would be so much more competitive.

I will put this in context. I was speaking to the mine manager of potentially the largest goldmine in Australia, the Boddington goldmine in my electorate. He has just returned from South America and he confirmed what I have said. In Chile, the government tax, which is not set but negotiable, is 26 per cent. If we were to end up with a tax of 56 or 58 per cent, as proposed by the then Rudd government, where do you think they would take their money? As this person said to me: 'We would be taking it off to South America, we would be taking it off to Africa and we would be taking it off to Mongolia, where there are no impositions on us getting ahead and mining.' Money is fluid in this business. Those strange people out there who think that Australia is the only place that these large companies want to invest in should just think about BHP. The largest copper mine in the world is Escondida, in Chile, which they are going to expand. We have huge copper resources in Australia. Sandfire Resources outside Meekatharra is going to be a massive copper mine. But what is going to be put in its way? These sorts of impositions—not only a mining tax but a carbon tax.

The previous Prime Minister, Kevin Rudd, went to the 2007 election promising $100 million for WA in infrastructure. The only thing that happened was that he said:

… in the West, so much money is generated for the public revenue in Canberra out of these great resource projects. But you know something? Not enough of that money is given back.

This government has not delivered one cent. None of that $100 million has materialised. The reincarnated tax, the minerals resource rent tax, of the Gillard government—done secretly with the large miners, leaving out the midcaps and juniors—will have a debilitating effect on the mining industry across Australia. Western Australia, where I come from, is not the only place where mining occurs. You only have to look at the massive resources of Olympic Dam in South Australia; at coal resources in New South Wales; right across the board—zinc, copper, gold, obviously massive amounts of coal—in Queensland; and uranium in the Northern Territory. I suspect no-one has mentioned uranium in the debate since Japan. There are all these potential opportunities. Western Australia is described by Colin Barnett as potentially the richest mining province in the world.

We are told that the resource rent tax will deliver $2 billion back to Western Australia over 10 years if it goes ahead. It has to get through this place yet, even though it was announced in the budget. During the election campaign my opponent wanted to tell us it would happen over four years. He argued that on radio. I want to confirm again that it is over 10 years. It is $200 million a year. It is not much when you think of the billions of dollars that will come out of Western Australia. In fact, between 2012 and 2014, WA will generate $7 billion for this tax if it goes ahead and will only receive $400 million in those two years. In other words, for every dollar WA gives to the federal government it receives less than 6c in return. The member for Capricornia talked about this tax grab on mining. You cannot get a bigger tax grab on mining than the minerals resource rent tax.

I want to make this point very clear before we move to the end of this debate. The Minister for Resources and Energy came in here and said how sneaky it was that Western Australia they did not tell them about this. We now know, through questions at question time and since through the Deputy Leader of the Opposition, the member for Curtin, that this government certainly did know and they knew well in advance. They knew that this would be added to the iron ore fines and it would not increase the overall royalty on iron ore. Obviously this government does not understand fines.

Let me put this into context. As a thief in the night, a couple of budgets ago, the Rudd government put a $2 billion tax on condensate in the gas industry. There was no prior knowledge and no prior warning. It was a by-product—a bit like the fines—that had not had any tax previously imposed on it, again to help the industry get on its feet. The gas companies did not know about it, they were not warned about it and they did not factor it in. Along came the government, tearing $2 billion a year out of that industry. The government complains about no knowledge, no prior warning, no consultation on this effort—which we now know from Western Australia is not true. What is true is this government put a tax on condensate, on a burgeoning resources industry which is going to supply clean energy to this country and to the rest of the world. They slapped a massive $2 billion tax on it without any warning. So much for this government saying that this is unjustified, terrible and something they would never do—they did. These threats that have been made by this government to Western Australia are just unparalleled. The Prime Minister and the Treasurer of this country are out there threatening Western Australia about its allocation of GST—and we know that we are only getting 63c in the dollar compared to Queensland's 91c, and I will not even mention Tasmania. But the fact is that this income will flow to Western Australia, because we are entitled to it. I had people stop me over the weekend and say to me, 'I thought the resources minister, Martin Ferguson, was a good bloke until I heard him coming out with these unbelievable threats.' If you are going to be a minister, you cannot carry on like a trade union thug, threaten sovereign states in this country and accuse them of doing a whole lot of things, as has been done over this last while. This is a bad tax. It is bad for Australia, it sends a very bad signal about the sovereign risk of this country and, at the end of the day, moneys will flow to areas where they do not have the same impositions.

MagNet, a group of magnetite companies, came to see us the last time we were in parliament here and outlined the massive projects they are building in this country, particularly in the north-west—CITIC Pacific, for example, has a project with a mine life of 25 years which will put $125 million in royalties per annum into this country. They are very concerned about the direction of this government in terms of both its mining tax and its carbon tax. The lobbyist for this company, dare I say, is the former state member for Kalgoorlie Megan Anwyl, who is out there saying, 'This is terrible for mining, this is terrible for our magnetite industry and we should stop it.' (Time expired)

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

This motion is typical of the coalition and their inconsistency and hypocrisy when it comes to economic issues. Those opposite are always claiming in this House that they are the party of low tax. They always claim that, yet when you look at the record they are the party of high tax. They are the party that squandered the mining boom mark 1. They did not invest in health, education and infrastructure and they never matched our contribution of $4.3 billion to the regions, in places like Queensland and Western Australia.

This motion is a disgrace. It simply shows just how many Western Australians in this place wag the dog when it comes to the coalition. It also shows the hypocrisy of the Western Australian Liberal Party and of the Leader of the Opposition. Have we had one question today about issues of economics? What about the budget reply speech? What about the National Press Club performance of the shadow Treasurer when it came to economics? On that side of the House, there are no economic credentials, there is no economic capability and there is no economic record that they can boast of.

What about the high-taxing government they were when they were in power last? Let us have a look at that. They claim that our policies impact on the mining sector and other sectors. In 2005-06, when they were in government, there was a 25.6 per cent tax to GDP ratio. In 2007-08, it was as high as 24.9 per cent. In the 2011-12 budget, it is 23.2 per cent. That is the reality. Those opposite always like a tax. Then they will squander it on middle-class welfare rorts. That is what they like to do.

They should have a talk to the mining industry. They went to those boardrooms and those business lunches in the lead-up to the last election and said: 'We won't do anything. We'll look after you, mates. We'll make sure we do.' When their state colleagues got in, they decided to whack on another $2 billion tax. I do not care if the member for Durack calls it a levy, a royalty or a tax; it is $2 billion. He knows that is what it is about. He knows this is a political strategy. He knows this is a tactic by those opposite. That is the reality. He knows also that, when it comes to the mining boom mark 2, in Queensland and Western Australia we are seeing massive investment.

The Treasurer, in a speech to the Brisbane North Chamber of Commerce on 13 May 2011, made the point very clearly when it comes to my home state of Queensland. I grew up in Ipswich and grew up with the coal mining industry. We still have New Hope colliery there and coalminers in rural parts of my electorate, around Rosewood et cetera. The coalmining industry is very, very important to Queensland. But it is not just that; the LNG industry is now growing. The Treasurer said in his speech:

The total pipeline of investment in Queensland is about $180 billion.

So much for the adverse impact of government policy on the mining industry in Queensland. He went on:

And over the past year, the state's LNG industry has committed to more than $30 billion in investment, driven by the Queensland Curtis LNG and Gladstone LNG projects. Big projects like this are going to support rising incomes and export capacity, and strong economic growth in the years ahead.

Those opposite know that is true. They know that is the case. They know that, according to the Treasury, the mining industry is planning to invest $76 billion in 2011-12—about eight times the annual level before the mining boom mark 1. That will boost Australia's export capacity. Investment will increase, the LNG sector will have many large projects and we will see projects by Rio Tinto, BHP Billiton and Xstrata. We will see all kinds of minerals and energy projects across the board. The Australian Bureau of Agricultural Resource Economics and Sciences estimates a total pipeline of resources investment of over $380 billion. That is going to increase export volumes and high commodity prices, and that will lead to increased incomes.

Nationally, Treasury estimates income from non-rural commodity exports over the next two years will increase by 15 per cent to $203 billion. I can tell you something, Mr Deputy Speaker: that really shows that somehow the federal Labor government is adversely impacting the mining sector! Our policies quite clearly are assisting in terms of economic capacity, investment in infrastructure and what we are doing in the regions. Locally I speak to blokes like John Berry, who is the CEO of JBS Swift, the big meat-processing plant in my electorate. John said to me a couple of months ago, when I had a conversation over lunch with him, 'We're finding it difficult to get workers because they're all going to the mining sector in Queensland and Western Australia.'

It was the same thing when we had the opening of the $2 million investment by the federal Labor government in Bremer TAFE, where the new machine shop has been entirely done. I was talking to apprentices and instructors there. What is happening is that the mining sector is grabbing hold of the apprentices and taking them up into Central Queensland and Western Australia. So much for the mining sector being adversely impacted by the federal Labor government's policies. It is just a nonsense. Those opposite know in their heart of hearts that this is a nonsense. It is a stupid MPI topic from those opposite. They know, of course, that we need to invest in skills and infrastructure.

That is why I was so pleased to see that we are building Australia's future workforce with $558 million for tailored quality training places through what we have called the National Workforce Development Fund. And we are giving $1.75 billion to the states and territories for vocational education and training. We are partnering with the states—for example, the department in Queensland known as DEEDI. I saw that on Friday when I was speaking to some women who were graduating from work ventures with a certificate II. I saw what they were doing. We have great organisations.

I was at the trade expo in Ipswich run by Apprenticeships Queensland. You can see what is happening. I spoke there to Brett Kitching, who is in charge of the Ipswich Turf Club. At the turf club in Ipswich they put on the trade expo. There you have a whole host of people from various sectors in vocational education and training, people from TAFE et cetera, including the federally funded Business Enterprise Centre Ipswich Region. Over lunch, Brett was saying to me that there is more interest in this trade expo than ever before. I was speaking to Anita Dwyer, from Apprenticeships Queensland, over lunch as well. I was talking to them about what is going on in the work that they are doing. Workers with qualifications in carpentry and building and construction trades, electricians et cetera are not just staying in South-East Queensland; they are going up to Central Queensland and Western Queensland and to the Western Australian regions because they are getting jobs there.

This is what the government is doing, spending $3.1 billion in trade training, skilling, increasing the capacity of our workforce and investing in the regions. Those opposite did not invest in regions. In my region alone, in South-East Queensland, it is quite clear that they did not invest. They did not take the benefit of the mining boom mark 1. We are taking the benefit of the mining boom mark 2, and in Regional Development Australia we are seeing an extra billion dollars put in for projects.

The Regional Infrastructure Fund that we have announced is part of the minerals resource rent tax. We are putting $6 billion in that fund, and locally we are seeing the benefit of it. We are seeing the benefit in my electorate with the $54 million to upgrade the Blacksoil Interchange. That is important not just for farmers but for the miners from the Surat Basin. You can see the mining trucks going through. You can see the farm produce going through. You can see the kids going to school. You can see the workers going to Ipswich and Brisbane and up to Toowoomba and the Lockyer Valley as well. That is what we are doing: investing locally.

And we are investing in major projects in South-East Queensland that the coalition refused to do. We have used the money we have beneficially, and I think it is important to note that we are going to use the money from the minerals resource rent tax to invest in important infrastructure in Queensland and Western Australia. Those opposite would not provide that infrastructure. They would not invest in organisations. The shadow minister for energy and resources, the member for Groom, has gone missing in this debate. There is a great project that he should have funded in his electorate during the time he sat in the cabinet—that is, the Toowoomba Bypass. He did not fund that project, and he squandered the money from the resources. He talks about the Toowoomba Bypass all the time, but did they use the money from mining boom mark 1? No way. Those opposite did not fund that project. They would not fund that project. They would not fund the Ipswich Motorway. They would not fund so many projects in Queensland and Western Australia which we are doing through the minerals resource rent tax. Those opposite should hang their heads in shame over this MPI topic. It is a disgrace. They should go back to their Western Australian colleagues and tell them they should fix this—

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Thank you for your contribution. There being no other speakers, the discussion has concluded.