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

I began my remarks on the mining tax legislation in the minute or two just prior to members' statements earlier this day. At that point I was recalling the long and winding road of this mining tax that began about 18 months ago. It began, as I said, when the Treasurer, Mr Swan, finally, after six months of consideration, released the Henry review into taxation just days before the budget. At that point he announced that the government would have a mining tax. All honourable members, many members of the public and those listening today will recall that the government, after announcing this measure, sought through the then Prime Minister, the member for Griffith, to attack the mining companies who had the temerity to criticise this very bad tax proposal. We all remember how the then Prime Minister, the member for Griffith, criticised our most successful mining companies on the basis of their levels of foreign ownership. As we all recall, the mining tax eventually was the subject of much negotiation. The government had to concede they had got some of the details wrong, but they would not concede the essential point that you would think they would know in their hearts and that is that this is a very bad tax proposal that will damage investment, damage jobs and harm our mining industry—one of the great strengths of the Australian economy.

We now come here to this House to debate this package of bills. As the member for Higgins outlined a couple of hours ago, these proposals and this mining tax went before the House of Representatives Standing Committee on Economics. The process in that committee alone says so much about how the government has fumbled and stumbled at every turn in trying to implement this bad tax. Submissions were open and closed within a three-day period. There were two half days of hearings but, unfortunately, it would not have mattered what evidence went before that committee as the Labor members of that committee—the majority—had made up their mind that no matter what the evidence was they would support the imposition of this bad tax.

As I was saying prior to question time, it will not only create a black hole for the mining industry but also create a black hole for the budget. The shadow Treasurer, in speaking on these bills on behalf of the coalition a few weeks ago, made points about the government's chaotic process and how that of itself has caused a lack of certainty. Those points have also been made by many people other than those on this side of the House. If those opposite do not want to listen to those of us on this side of the House, at least listen to some of the witnesses who, in that short period of time, had the opportunity to come before the various committees and make the point about the government's approach. In fact, they should listen to the comments of Yasser El-Ansary of the Institute of Chartered Accountants in Australia—an esteemed body that calls it as it sees it on issues of tax design, tax administration and tax policy generally. He recently said:

The government's approach to consultation and policy design in respect of the new resource tax arrangements during the course of 2010 can only be described as abysmal.

…         …    …

If there was an international prize for the best worst policy consultation process in a sophisticated open market economy, Australia's efforts during the course of 2010 would win hands down.

He went on to say:

But while the consultation process around the original resource super profits tax announced in early May 2010 was bad, the subsequent consultation process that involved striking a deal behind closed doors with three key mining groups in July 2010 was even worse. It would not be unreasonable to say that that represented a low point in Australia's economic and political history. It is a low water mark which most Australians would prefer not to see repeated in our lifetime. I think you would be hard pressed to find anyone to support the view that that is a good way to make public policy decisions.

The government have heard that and they have ignored that. They have decided to push on, for one simple reason: they want to collect some revenue. We have heard the Treasurer and the Assistant Treasurer talking about the revenue they wish to collect and the fact that they have linked that to expenditure on a number of levels. I will address the government's approach on that in some detail because it does tell the story of this government and its fiscal incompetence and irresponsibility in so many ways.

An important point that others have made in this debate is the issue of sovereign risk. The shadow Treasurer made this point in some detail in his contribution in the House. Clearly, the government is looking at a key performing industry, namely the mining sector, and setting out to hamper it. It is an important sector in Australia and it gives Australia an important comparative economic advantage. I will not take the time of the House to recite all of the important statistics that the shadow Treasurer and others on our side of the House have rightly used to illustrate that important fact but, needless to say, in this highly competitive sector Australia competes with a number of countries, including Brazil, Chile and Canada. We compete for investment right through those industries. The government's approach to this issue and the actions it has taken in seeking to introduce this tax has very much undermined confidence in the policy architecture of Australia. The signal has been sent that this government will chop and change.

The signal of uncertainty has been sent, and again I would refer honourable members to the comments of those within the industry. I will quote the CEO of AngloGold Ashanti, who said at a Commonwealth Business Forum in Perth in October that Australia is one of the top sovereign risk countries in the world on the basis of government policy and its demonstrated behaviour in terms of taxation policy and inconsistency in policy. Those are the words of a key player in the industry. That has not deterred the government one iota. For those members opposite who are debating these bills this day, I urge them to think about the comments of those who are experts within the industry. Indeed, the CEO of the Minerals Council of Australia, Mr Mitch Hook, explained in his testimony to the parliamentary inquiry just a few days ago that the mining tax has already eroded the investment climate in Australia by increasing the perception of sovereign risk. He cited the Fraser Institute in Canada, which is an independent think tank that surveys more than 400 CEOs around the world. It looks at 51 jurisdictions of resource-rich nations down to the state or provincial level. What has gone on up to this point with the debate over the MRRT has been enough—without the bills even being passed—to drop Australia from 18th out of 51 to 31st out of 51 in what the Fraser Institute calls the Policy Potential Index.

The Chamber of Minerals and Energy of Western Australia expressed similar concerns. I quote:

Uncertainty around implementation and administration of the new measures increases the risk premium international investors demand from Australian investment.

And I could go on. In the final minutes that I have remaining, I would like to address the issue of the fiscal irresponsibility of what the government is doing. As I outlined a few minutes ago, the government says that it wants to take the additional revenue from its badly conceived tax and fund a number of things that it has linked within the budget. As the shadow Treasurer has pointed out, even on the figures the government has produced, this opens up a black hole within the budget. Also, should there be a reduction in the forecast revenue, there is no reduction planned by the government in the spending which it has handcuffed to the revenue it expects to get. What that clearly does is open the budget up to a black hole in the future that this government does not care one jot about.

This very issue was raised during the inquiry of the House of Representatives Standing Committee on Economics. Let me just say that it was obvious from the testimony of the Treasury officials that this was a government decision and one the government had to answer for. The government is putting in place programs in perpetuity, relying on a revenue base that will move around and wobble. But we all know that our record terms of trade, whilst welcome, will not continue forever and a day.

The government has, every step of the way in the last 18 months, shown why it cannot manage the budget and why it cannot manage the economy. This is a bad proposal from a bad government, and it deserves to be rejected.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

The legislation before the House today deals with the imposition of a profits based tax on Australian minerals. In predicting the impact of this tax on the mining industry it is useful to look back into history, to the history of the petroleum resource rent tax. Back in 1987, the then Hawke government proposed that the offshore oil and gas industry shift from a royalty regime to a profits based regime. There was outrage from the industry. Industry members took out front-page ads. They said a profits based tax was anticapitalist and, predictably, those on the coalition benches supported them.

Over the last couple of decades, we have seen a boom in precisely that sector. As the economists told us, going back to the theory of brown taxation, a profits based tax was good for that sector. Under the old crude oil levy and royalties, the Bass Strait partners were going to shut several of their oil fields and not develop further gas fields. Under the PRRT, there is more than 20 years of oil production and 30 years of gas production remaining in Bass Strait. As the Minister for Trade, who was then an adviser to the Hawke government, has pointed out, history is now set to repeat. The coalition are railing predictably against the minerals resource rent tax.

There is another sense in which the coalition are going through groundhog day all over again. The revenue from the minerals resource rent tax will go to fund an increase in superannuation. It was again a Labor government, back in 1992, who put in place the superannuation guarantee levy, guaranteeing nine per cent superannuation for all Australians, ensuring that Australians would be able to retire with dignity. What did those opposite say at the time? Well, the member for Mackellar said that there would be firings and that businesses would be regulated out of existence. But now of course we know that, under compulsory superannuation, Australians have more retirement savings that see them better able to face retirement.

But we on this side of the House believe that nine per cent is not enough. It is certainly not enough for new members elected in this place, who receive 15 per cent superannuation. We believe we need to increase the superannuation contribution to 12 per cent. Yet again—another groundhog day moment—those opposite are saying, 'No, you can't do it.' They are saying no to the profits based tax and no to the increase in superannuation.

The minerals resource rent tax we are putting in place today is a more modest tax than the successful petroleum resource rent tax. While the PRRT has a 40 per cent rate, this one, when you take into account the automatic deduction, has a 22.5 per cent rate. It does not kick in until you make an annual profit of $50 million. So when we are talking about small miners, it is worth bearing in mind that we are talking about people making some very large profits indeed.

In the House of Representatives Standing Committee on Economics inquiry into this package of bills, the representatives from the Council of Small Business Australia made it quite clear that $50 million in profit was well above what their members would expect to earn. It has been the product of a careful consultation process, including a Policy Transition Group—led by Don Argus and the resource minister—and the Resource Tax Implementation Group.

It is important to recognise the context in which we are putting this change in place. Before the last mining boom, Australians got $1 in every $3 of mining profits, through royalties and resource charges. By the end of that boom, it was down to $1 in $7. Profits were over $80 billion higher in 2008-09 than they had been in 1999-2000, yet the government only collected an additional $9 billion in revenue.

A profits based tax is a fair tax. Because it is a rent tax, it ensures that the burden does not fall on workers or communities. It falls instead on the owners of the mining companies. The incidence of a minerals tax is different from the incidence of a company tax.

Many international policymakers understand this. In fact, it is not just those of us on the progressive side of politics who get it. I draw the House's attention to Sarah Palin's time as Governor of Alaska. During that period, Sarah Palin introduced a petroleum profits tax. It is unusual that those on the opposite side of the House are further to the right of Sarah Palin. Sarah Palin wants a profits based tax; those on the other side of the House want to stick with the old, outdated, unfair royalties regime.

The Minerals Council of Australia get this. In their November 2008 submission to the Henry tax review, they argued for a shift from a royalty based system to a profits based system. They did so because they knew that would be a more efficient way of taxing the minerals that are the birthright of all Australians. It has been widely recognised across the political spectrum up until this nay-saying Leader of the Opposition came in.

A profits based tax is the right thing to do. It is an equitable tax, but it is also a more efficient tax. The revenue from this tax will go to fund important investments for all Australians. It will fund a company tax cut for all companies, down to 29 per cent; a new tax break for small businesses; and investment into the regions, through the Regional Infrastructure Fund and the Regional Development Australia Fund. It will simplify the personal tax system with a standard deduction of $500, increasing to $1,000 from 2013. It will support a boost to superannuation for 8.4 million Australians. It will support expanded superannuation concessions for 3½ million low-income earners. So all of this revenue is going to put in place the building blocks for Australia's future prosperity, but we know that, being 'Mr No', the Leader of the Opposition will set in place repealing it. He has already said to the Australian people he will repeal the carbon price. He said he will repeal the minerals resource rent tax. He said he will stop the NBN. He said he is going to stop these because it is absolutely critical to stop them.

It is difficult to see how some of these things can be stopped in their tracks, but what is curious over recent weeks is there is one reform that the Leader of the Opposition will not repeal, and that reform is the increase in the superannuation co-contributions, rising from nine to 12 per cent. It is a particularly surprising reform to be saying that you are not going to repeal, given that the rate is increasing gradually from now until 2020. But the Leader of the Opposition has said, 'I'll vote against it in this place but, if I'm elected in 2013, I'll support all of the incremental increases up to 2020.'

It is good that the Leader of the Opposition has come to his senses on at least one Labor policy reform. But the problem for him is that he now has to pay for that reform. We know the opposition have some serious financial problems. They went to the last election $11 billion short in their costings—they are now $70 billion short in their costings. That means, when Australians are looking at what the Leader of the Opposition has on the table, they should be aware that there is $70 billion worth of slash and burn still sitting secret. They should be aware that there is $70 billion worth of additional savings the coalition has to find. That is on top of the 12,000 public sector jobs which are going to be slashed out of towns like Canberra, Darwin and Townsville.

If the Leader of the Opposition is going to repeal any law, the one that he really needs to repeal is the law of mathematics—the law that says that he has to make his books balance, the law that says that if he is going to support a spending measure, he needs a tax measure to back that up. But, of course, he is unwilling to do that. The only bit of this package that he says he will support in government is the spending measure, the superannuation side of it; not the taxing measure, the minerals resource tax. We know why the opposition are in such a deep hole. They are no to reform, no to economists. They do not like what economists have to say. They go out and attack them, but they are yes to special interests. There is no special interest that does not get a hearing from the opposition. If you are willing to make a case for cutting a hole out of a piece of legislation, the opposition would be happy to bring your case to the parliament. Theirs is a policy of no special interest left behind.

We see the opposition coming into this place and making the sovereign risk argument. I am reminded of the old rule in high school debating which is that, when you have got two teams, the first team to mention the Nazis automatically loses. There are some arguments in high school debating that, when they come out of your mouth, we know you have run out of any sensible argument to make. That is true of the sovereign risk argument as well. Those opposite cannot work out a good reason for opposing a profits based tax. They know the PRRT model has worked well. They know there is no rational reason for opposing this tax, so they reach deep down and pull out the sovereign risk argument. They say that doom and disaster will rain down upon Australia if we are to tax mining on a profits basis rather than on a royalty basis.

You can tell the lie from that simply by looking at minerals investment in Australia. It has never been higher. Investment in this sector is at record highs, but, for those opposite, no scare campaign should be left unturned. They are willing to go anywhere and run any scare campaign, no matter how unbelievable.

Those opposite are the Colonel de Groot of Australian politics: they are willing to slash, wreck and break. They are willing to come in here and do anything they can in order to break down good constructive reform. We saw this last week during the visit of the President of the United States. There was brief moment where the Leader of the Opposition had a chance to look prime ministerial, but he was not able to take it. He was not able to step out of his day-to-day attack, attack, attack mode and just for a moment focus on what is in the interests of Australia.

The Leader of the Opposition is always more interested in tearing down the Labor Party than he is in building up Australia. His political interests are what get him out of bed each morning. There used to be a proud tradition in the Liberal and National Parties of Australia of noblesse oblige, but today the coalition are all noblesse and no oblige. They are willing to back away from reforms that will help low-income earners in Australia—reforms that will help small businesses in Australia and reforms that will put fair taxation in place for the minerals that are the birthright of all Australians. That revenue will ensure that older Australians can retire in dignity, that they can retire with 12 per cent superannuation, which will ensure that they are able to do the things they have wanted to spend their lives doing. They will be able to enjoy taking that grey nomad trip around Australia. They will be able to enjoy appropriate living standards.

We are going to be funding this out of an extremely efficient tax—a tax which, contrary to what some came before our House economics committee and argued, will be paid overwhelmingly by large miners. That is what Treasury said to us. That is what the Minerals Council of Australia said to us. Those opposite are willing to believe the claims of Fortescue, a company that has never paid a cent of company tax, has consistently changed its position on the minerals resource rent tax and has been willing to run arguments in its self-interest rather than in the national interest. Those opposite should be very careful of this sort of special interest pleading. They should be aware that Australians have a long memory, that Australians are watching to see which political parties make decisions based on the long-term interest of Australians and which political parties focus on the right thing to do—that is, moving to a profits based mining tax, boosting the retirement incomes of Australians and cutting the company tax rate. I commend the package of bills to the House.

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

In rising to speak to this package of bills, I will make some preliminary remarks regarding the imposition of the new MRRT itself but make specific reference to the Superannuation Guarantee (Administration) Amendment Bill 2011, which is also a part of this package, and the misleading of the parliament by the minister responsible for the bills with his second reading speech and subsequent actions.

It is purported that this whole package of legislation sets out to raise $11 billion in tax but proposes to spend $14 billion of tax. In reality, it will raise only $8 billion because the agreement between the now Prime Minister and the heads of BHP Billiton, Rio Tinto and Xstrata—after her assassination of the former Prime Minister—has in fact meant that $3 billion which is being raised by state governments, quite properly, in royalty payments will be refunded by the government to the companies paying those royalty payments. In other words, a tax which has been purported to be brought in to enable certain benefits to be given to people in fact results in a further debt being incurred by this government in that its expenditure is once more greater than the income it brings in.

It was most interesting that when those discussions took place between BHP, Rio Tinto, Xstrata and the Prime Minister, Ms Gillard said that she would settle this question of the minerals tax—which had become such a burdensome question for the former Prime Minister, Mr Rudd—and came out of those decisions and said, 'It has now all been fixed.' But, of course, it has left the smaller miners in the very difficult position of them in fact carrying the burden of the money that has to be raised or that will be raised by the tax. There has been a paper put out which shows that the amount of tax paid over the next five years by those large companies—that is, BHP, Rio Tinto and Xstrata—will in fact be nil. But, for the smaller companies, the MRRT that will be raised is from nought to 46 per cent over those same five years.

I think people get a bit confused when they hear it said by the government that the mining companies need to pay tax, implying that somehow they do not. Indeed, in respect of one particular company where there was evidence given in the Senate and it was disclosed that no corporate tax had been paid in the start-up period for that company, they had in fact paid royalty taxes of something between $450 million and $500 million a year in that period—so, clearly, not being in the position of having paid no tax; it simply was bearing another name.

Then we come to the question of the Superannuation Guarantee (Administration) Amendment Bill. The minister responsible, the Assistant Treasurer, Mr Shorten, in his second reading speech—and this is the tabling speech and therefore part of the official record—said:

And this bill abolishes the superannuation guarantee age limit.

It simply does not do that. In fact, all it does is implement the government's policy that it took to the last election. It said that it would raise the age from 70 to 75, being the age where the employer can elect whether or not to pay superannuation entitlements. We, on the other hand, said that was not good enough and, in the promise that we made to the electorate in the lead-up to that election, said that we would abolish that age limit for employees in the paid workforce altogether. So, in accordance with that promise, I brought in in February of this year a private member's bill which would abolish that age discrimination.

The minister, having said in his tabling speech that the bill would abolish the superannuation guarantee age limit, misled people in his press conference and then in the parliament by saying that they were doing it. I then raised with the Speaker the question of whether or not the minister could come back into the chamber and correct the record or whether or not he would consider it as a prima facie case of contempt and refer it to the Privileges Committee. After question time on that day, the minister in fact came back into the chamber and said he wished to make a personal explanation and he said:

The member for Mackellar seems to be confused.

I was not confused at all; he was. He continued:

The government is firmly committed to abolishing the Superannuation Guarantee age limit for all Australian workers. My second reading speech for the Superannuation Guarantee (Administration) Amendment Bill yesterday states that the bill will lift the SG limit to 75.

That is exactly what I had said—it does not abolish it. He then went on to say that various people had convinced him of the need to abolish it and that he would introduce some amendments to his own bill. I find that particularly curious, because the only way that he can amend his own bill is to introduce a bill in exactly the same terms as the one that I brought in as a private member's bill in February. By the time we got to May to have the second reading debate and a vote on my bill, the government moved heaven and earth to stop that bill having a second reading debate, saying that it should be voted down. I appealed to the then minister and to the crossbenchers for them to give the bill a second reading and to give a commitment during the consideration in detail that they would bring in an appropriations bill to allow the legislation to function.

The Speaker was asked to rule on whether or not the private member's bill was a tax or an appropriation bill. The Speaker accepted the ruling of the clerks, which was that, because my bill would enlarge the class of persons to whom the superannuation guarantee charge would apply, it was in effect an appropriations bill—it increased a charge. I find it intriguing that the minister said that he will introduce an amendment to his own bill when he might be caught by section 55 of the Constitution, which says that a bill dealing with a tax can only deal with a single item—that tax. The bill increases the superannuation guarantee that must be paid from nine per cent to up to 12 per cent in 2019. There are plenty of arguments about whether or not the minister will be caught by section 55 and therefore will have to perhaps withdraw the bill and bring it in in another form.

The reason that I have gone into this amount of detail is because it shows that the minister is simply not across his brief in this area. He simply does not understand the way in which the law operates or the way in which it can be amended. The government has shown all along, including in speeches during the debate on my private member's bill, that it has no concern about mature age workers who remain in the workforce having the right to be paid in exactly the same way as anybody else of any other age. In attempting to pretend that the bill he had brought in removed that age discrimination simply shows that he is not competent in this area and that he does not care, either. He was just busy making a political point, trying to say, 'We do care after all.' I am afraid that the people who are concerned about these issues see through that.

I would point out once again that there are at least 100 employees in the Public Service, of whom the government is the employer—and the government is supposed to be the model employer—who are not paid the superannuation guarantee. Therefore, for the minister to say that the government is championing this cause when it is within their power to, right at this moment, pay those employees in the Public Service who are between the ages of 70 and 75 their superannuation entitlements shows once again his falsity and cynicism. He wants to pretend that he is concerned and yet the way in which he presents legislation and argues for it shows that he does not care at all. I challenge the minister, Mr Shorten, to seek to have those public servants between the age of 70 to 75 who are in the employ of the Commonwealth right now to be paid their superannuation entitlements. There needs to be no amendment to legislation for that to be done.

Instead of amending his bill, to put the question beyond any doubt he should withdraw the bill and bring it back in an appropriate form—such as in the same form of the private member's bill that I presented to this House. He would also need to bring in legislation to increase the superannuation payments from now until 2019 as a separate bill so that there could be no question of the legislation being subject to a challenge in the High Court at some stage. As I said earlier, there is plenty of precedent for this to occur. Other bills have been withdrawn and re-presented to avoid a challenge some time in the future. It would be prudent for the minister to recognise that he has made a mess of it and to bring it back in a form such that the age limit of 75 is abolished altogether, which was the coalition's promise before the election and which remains the coalition promise. The legislation brought in and the tabling speech shows that the intention was never to match the coalition's policy but simply to try and portray the government as doing so without actually removing the discrimination.

Going back to my initial point about the whole package of bills—the package that the coalition has said that it will repeal—the idea that you can tax a nation into prosperity is an idea that will never come to fruition. When you put a greater tax burden on people, you lower prosperity, not heighten it. This legislation was originally designed to raise $11 billion. It will in fact raise only $8 billion and spend $14 billion. That shows that this government has a serious problem in the way that it formulates policy and then tries to put it into place with legislation. This whole package of bills highlights once again that this is neither a competent nor a straightforward government. It says that it has the ability to share prosperity across the land by introducing a new tax. In fact, what that is going to do is disadvantage a very productive sector in the mining industry, which does not deserve to be penalised in this way.

Laura Smyth (La Trobe, Australian Labor Party) Share this | Link to this | Hansard source

The things that have already been achieved by this government in this parliament will see the transformation of our country. We have seen historic initiatives such as paid parental leave, the establishment of a national broadband network and health reforms which modernise our health system and make it more accessible and more responsive to the needs of Australians. We have put a price on carbon, we have introduced the Carbon Farming Initiative and we have committed ourselves to a clean energy future with clean energy jobs.

Today I take great pleasure in speaking in favour of new measures in this package of bills before us, the Minerals Resource Rent Tax Bill 2011 and related bills, which will ensure that all Australians share in the benefits of the mineral wealth of our country. It is a historic measure and it follows a range of other very significant reforms that this government has already put in place in a relatively short time. And it is a Labor initiative. It is fundamentally about sharing the benefits of the mining boom for the long-term benefit of the many, not simply the short-term gain of the very, very few.

The minerals resource rent tax demonstrates very clearly this government's determination to provide for future generations—some of whom I suspect are sitting up in the gallery now. It is a determination to ensure that those people share in the prosperity that our country is presently experiencing through the mining boom. The MRRT will support the superannuation savings of some of our lowest paid workers. Funds raised through the MRRT will be used to boost superannuation for around 8.4 million Australians. It will also mean expanded superannuation concessions for around 3.5 million low-income earners and about 275,000 people aged over 50. The benefits of those concessions will be available to around 26,900 people in my electorate who, according to ABS statistics, earn less than $37,000 per year. All of this means, for example, that a 30-year-old worker on average weekly earnings will retire with an extra $100,000 in savings.

That is very significant to people living in my electorate of La Trobe. The average age of people living in my electorate is currently 36.2 years, according to the Australian Bureau of Statistics. A substantial part of my electorate takes in Melbourne's south-east growth corridor, with new families moving each week to the local government areas of Casey and Cardinia. So the figure that I have just quoted will be extremely relevant to parents of young families in my electorate when they retire. That is why the minerals resource rent tax is so important to my electorate and to me as their representative. It will make a real difference to so many people living in La Trobe, particularly to their financial situation on retirement, their independence on retirement and the circumstances of their families.

The average annual salary for workers in La Trobe is around $43,900, according to ABS statistics for 2008-09. To put that figure in perspective, the average annual salary for 2008-09 of people in the Leader of the Opposition's electorate of Warringah was around $73,000 a year and the average annual salary of people in the shadow Treasurer's electorate of North Sydney was $62,000. So an increase in superannuation from nine per cent to 12 per cent is clearly going to be a very important source of savings for a huge number of people in my electorate who are on low wages.

That is exactly what the Hawke-Keating government had in mind when it started the superannuation system in this country. It was a Labor initiative from the beginning and we are progressing it now. And it was opposed then by the coalition, just as the initiatives that we are talking about today are being opposed by the coalition. Indeed, as we have heard today from the Assistant Treasurer, the present Leader of the Opposition made some remarks about compulsory superannuation at the time. On 25 September 1995 he said:

Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.

That has been the view firmly held for some time by the Leader of the Opposition about the prospect of retirement savings for average Australians, like the substantial number of working people in my electorate who will enormously benefit from the increase this government is proposing should flow from the MRRT. Why is it that those opposite would prefer to stand up for big mining companies than for people on low or average incomes? Why would they prefer to go in to bat for the few who are currently making an extraordinary amount of money from Australia's mineral wealth than for the many families and workers who stand to benefit from the legislation before us today?

I think the people in my electorate should know that the coalition, through their opposition to the minerals resource rent tax, are going in to bat for Rio Tinto, which had a first-half profit of US$7.6 billion. That is an increase of 30 per cent on the previous year. The coalition, in opposing the minerals resource rent tax, are going in to bat for BHP Billiton, which recorded a profit of $22.48 billion for the year ending 30 June 2011. That is an 86 per cent jump in profits. The coalition, in speaking out against the minerals resource rent tax, are standing up for Fortescue Metals Group, which has seen its net profit increase by 76 per cent to $985 million. They are also standing up for Xstrata, which had an operating profit of $4.25 billion, some 31 per cent higher than that previously recorded by it.

So, while the Labor government lines up with families to ensure as many Australians as possible can take advantage of the mining boom, the Leader of the Opposition and the member for North Sydney are going in to bat for mining companies with record profits measured in the billions. And that is not all: many of these same mining companies that the Leader of the Opposition and the member for North Sydney have gone in to bat for have already agreed that they should pay more! And it is to their credit that they do so. The Liberal and National parties' position is illogical, unnecessary and comes at the expense of ordinary working families and small businesses like those in my electorate. As a member of this government I am standing up for people in my electorate whose average salary is around $44,000 a year. I am standing up for their superannuation, their retirement savings and their futures. I am standing up for the some 53,600 working people in La Trobe who stand to benefit from the superannuation increase that will flow from the minerals resource rent tax.

Under the government's proposals, local small business owners in my electorate will be able to write off every asset they buy valued below $6,500 and the first $5,000 of any motor vehicle, yet this is being opposed by the coalition, who seem absolutely determined to sell out the people that they perpetually claim to represent. As a result of the benefits flowing from the MRRT, Australian businesses stand to benefit from a company tax cut. All of these measures in relation to small business and company tax stand to support people and businesses in our patchwork economy who may not be travelling as well as those in the mining sector. We want to ensure that those in small business and companies throughout Australia remain strong and continue to support jobs and growth in our economy. Yet again, this is being opposed by the coalition.

This government is standing up for better infrastructure in mining communities, which should see some reward, some direct benefit, from mining activity on their doorstep. It seems that individual members of the coalition might quietly think that this is a good idea. The Leader of the Nationals recently made some very interesting remarks about mining operations. In a speech to the Transport Australia Summit and Expo on 28 September, he spoke about the concerns of many Australians to ensure:

… the mining boom would leave behind a legacy of stronger country communities with permanently improved services and enduring populations.

The Leader of the Nationals went on to tell us what he really thought about mining companies, their contributions and their impact on local communities, thus far. He said:

I share the disappointment about how few mining companies contribute to the areas they invade …

It is a somewhat curious choice of words. Could these be the same mining companies that the coalition is arguing should not be subject to the MRRT? The Leader of the Nationals said it was a tax which would ensure 'the mining boom would leave behind a legacy of stronger communities'. Are these the same mining companies that the Liberals and Nationals would prefer to see profit at the expense of local families and small businesses in my electorate of La Trobe? Indeed, they are. They are the same mining companies that are making extraordinary profits. If the Leader of the Nationals is genuine about supporting local communities, he ought to have a word to the Leader of the Opposition and the shadow Treasurer to tell them to stop putting the interests of the very wealthy—the very few—ahead of the interests of ordinary Australian wage-earners and small businesses.

I am proud to be speaking in favour of these bills today. In doing so I am standing up for residents and small businesses in my own electorate, residents and small business owners who do not earn billions of dollars and who understand that all Australians should share in our nation's wealth. They are local residents whom the Liberals and Nationals simply do not care about. It is time that all Australians—not just a few big mining companies—benefited from the resources boom and shared in our country's enormous mineral wealth.

The initiatives of this government, reflected in the bills before us, offer an opportunity for all to benefit. They will strengthen our economy, they will assist in building up national savings, they will support small business and they will support infrastructure investment in mining communities and investment in our regions. These opportunities could have been seized during the Howard government's years in office, to ensure that the benefits of the mining boom at that time were experienced by all Australians.

Reflecting on the remarks of the Leader of the Nationals, it is a wonder they did not take the opportunity at that time. Now it is clear that it was not simply a case of the Howard government failing to act. It was not simply that they did not think these kinds of measures might be a good idea. It is clear that the coalition has always intended that big miners should have the exclusive benefit of Australia's mineral wealth. Australians know how important the mining industry is but they also know that we can only dig up Australia's natural resources once. That is why Labor believes in the mining tax—to ensure that all Australians, not just the very profitable mining companies, can benefit from the mining boom.

We understand that many Australians do not currently feel the benefits of the boom. We understand that many businesses and households are doing it tough. Mining is important but we have to make sure that we have a future beyond the mining boom and that we share the benefits for future generations. The coalition opposes the mining tax because it will always put the limited interests of big business before the interests of Australians who are doing it tough. It is once again acting for vested interests and for the very few.

It really is time that the coalition sets out its plan for ensuring that all Australians benefit from the rich mineral resources that our country has found itself the beneficiary of. The coalition must explain why the Liberals are supporting tax breaks worth billions of dollars for mining companies but do not support tax breaks for small businesses in Berwick, Belgrave, Boronia or Ferntree Gully in my electorate. The coalition needs to explain why it is standing up for billionaire mining magnates but ignoring the retirement savings and the day-to-day challenges of families and residents in Pakenham, Berwick Clyde North, Emerald, Belgrave, Cockatoo and Boronia. All that the coalition has been able to articulate in its rebuttal to this package of bills before us today is that somehow it suspects there is likely to be a risk to investment in Australia as a result of the proposals the bills contain.

It is useful to consider part of the proposed investment that is currently being contemplated by a range of the mining companies that I have already mentioned today. It is ludicrous that the coalition suggests there will be damage to mining investment in this country as a result of the MRRT. We know that a number of major projects have already been entered into since the announcement of the package of bills that is before us today. We also know that Australia is clearly experiencing a very significant increase in mining investment.

Since the government announced its mining tax reforms, for instance, mining investment has increased from some $35 billion last year to $47 billion this year, with an expected $82 billion in the 2011-12 period. Mining investment is not going to slow down. The employment that is generated through mining investment is not going to slow down. This is about ensuring that companies which are profitable pay their fair share and that all Australians derive the benefits from resources which can only be dug up once and which we need to make the best use of for our future generations.

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

I am pleased to speak on the Minerals Resource Rent Tax Bill 2011 and related bills. I am amused by the title 'minerals resource rent tax'; it is a benign name for an evil tax. As the Leader of the Opposition has said, this government has not seen a tax that it did not like and that it did not want to hike. This government has brought in a tax that is a taxation of envy, where the states are the envious parties. This is a jingoistic tax. The opposition has seen the Labor Party, the Greens and the Independents talking about these evil foreigners that invest in our country! They take their dues after having invested billions of dollars in this country. This is a tax that will destroy jobs.

We have heard so much from the government—the Labor Party—about why this is a good tax. I will talk very quickly in the small amount of time we have to talk on these 11 bills. Remember, there were 19 bills related to the carbon tax and we had 15 minutes to debate them. And now we have 15 minutes for 11 bills. I just want, generally, to flesh out some of the details, particularly as they affect my electorate of Canning. As a proud member from Western Australia I can say that the state of Western Australia will be affected very much by this minerals tax.

This is a tax that was thought up by Ken Henry, the head of the taxation inquiry. He wrote 130 or more recommendations in his review. Just 2½ of those were taken up by the Treasurer, Wayne Swan, who decided to sell it to the then Prime Minister, Kevin Rudd. He fell in a huge hole over this. This, along with the carbon tax, was the reason his demise was so swift and the execution so brutal. Along came the night of the long knives, and we had the new Prime Minister ,Julia Gillard, who decided to do a deal with three miners: BHP Billiton, Xstrata and Rio Tinto. It is such a secret that nobody is allowed to know the details of this fantastic deal that has been done with the three multinationals! So much for multinationals being evil! But the deal left out the Australian investors—the small- and mid-cap investors. They are going to be the ones who will pay so much more than anyone else.

AMEC, the Association of Mining and Exploration Companies, which represents the explorers—the mid-caps and the juniors—see this as a gravely unfair tax. As we have heard so often lately, this is a tax that will see the larger companies being able to write off much of their infrastructure and investment, yet the mid-caps and the juniors, who are endeavouring to raise money, will not have the same opportunity so they will be paying the higher rate of tax.

Let us focus on the fact that Australia is not the only place with a wealth of minerals. Africa, South America and many other parts of the world have a plethora of minerals. I have mentioned in this place before that Chile has BHP Billiton's largest copper mine in the world, Escondida. Chile has a mining tax that is something like 26 per cent negotiable. How much are we going to tax the same sorts of companies? Up to 44 per cent. So where will those companies go with their money? If you have some money and you want to invest in a mining, exploration and production unit, will you go to Australia and pay 44 per cent or go to Chile and negotiate around 26 per cent? It is a no-brainer. Canada is rubbing its hands with glee. They are saying, 'Come our way. We'll accommodate you at a sensible tax regime.' Companies will go overseas.

The fact is that this is happening now. There is already a slow burn. We heard the Treasurer in question time today talking about the reinvestment in Olympic Dam. That is a massive investment and a huge mine; of course they are not going to wind it down. They will eventually get their resource, but will they do another Olympic Dam under this sort of taxation regime? Of course not. They will find an Olympic Dam in Namibia, Zambia or somewhere else in the world which will not do the same damage to them as they begin to mine.

For some bizarre reason, the Labor Party thinks that if you put a hole in the ground and dig away you will make a massive amount of money. This is risk capital. I have had contact from a whole range of people in my state of Western Australia who feel very concerned. For example, there is a group representing the magnetite miners. As compared to hematite, magnetite is very difficult to process. It is a very common mineral. You can dig it out of the ground but it needs to undergo a fair bit of processing. The miners are asking for recognition of this. They went to the Treasurer, the resources minister and everyone else and put a good case to them but they were snubbed. They even went to the Independents, over the last few days, who feigned some interest in helping to bring some justice to this argument. But the Independents were always going to be bought off. They were always going to do a deal with the government so that they could square up with their opponents in the National Party in this place. Goodness knows what deal has been done to get their vote! I think this is a bit tawdry and unseemly, because we found out from the Australian newspaper on 3 November about the member for New England:

Mr Windsor sold his adjacent family farm, Cintra, to Whitehaven in February last year for $4.625 million and now leases it back from the miner.

While seemingly content to allow his land to be torn up for coal, Mr Windsor has seized on coal-seam gas as an environmental evil which could also save his political skin.

So much for sincerity and genuine behaviour on this!

This mining tax, at the moment, is meant only to operate on coal and iron ore, but the Greens representative in this place—the member for Melbourne—has been talking about this being extended to gold. I have one of the largest goldmines in Australia in my electorate, at Boddington. They extract 800,000 ounces a year. How do you think they are feeling about reinvesting a massive amount of money in expansions at Boddington?

Other gold projects around Australia are also very concerned about their future. In fact, they are now looking again at Africa as a place to go and do deals. So I say to the crossbenchers, including Mr Oakeshott: let us hope that the 30 pieces of silver which, dare I say it, materialise once you are not in this place—whether they come from the ambassador for somewhere in the world or someone else—does you some good and salves your conscience about trying to ram this shocking tax through the House.

In the last few days, although the government have said that the MRRT will be quarantined to coal and iron ore, we have heard that the Greens, who we know are the green tail wagging the dog, want the tax extended to uranium mining. The Prime Minister said only three months ago that the Labor Party would not countenance selling uranium to India. What does she stand for? She changes her mind on everything; we are not sure what she stands for. She was part of the Socialist Left as a student and hated the United States of America, yet when Barack Obama was here she fawned all over him. Despite the fact that the Prime Minister said she would not sell uranium to India, she hobnobs with the Indians at every opportunity and stared down the Left of her party to say that she is going to sell uranium to India. Now out come the Greens to say, 'No, we need a minerals resource rent tax on uranium.' Where is this going to end up? It is like when the Prime Minister said before the last election that there would be no carbon tax under a government she led. Will this Prime Minister say that, after the next election, there will be no extension of the minerals resource rent tax to the mining of any other mineral? Who would believe her?

This tax causes massive sovereign risk. Premier Barnett from my state of Western Australia is very concerned. He has renewed his attack on the federal government, saying that in China concerns are being raised to him about sovereign risk. Mr Barnett said that this tax is 'the worst piece of public policy'. An article on AAP on 26 October this year said:

Mr Barnett said the concern was about a new tax when projects were already in construction or planned and upfront investment had already been made.

This is a retrospective tax, in other words. The article went on to report that Mr Barnett had said:

“For the first time in my 20 years in politics, I have heard the term ‘sovereign risk’ raised in an Australian context.”

The premier said that at the very least, the higher cost and lower grade magnetite iron ore projects should be exempt from the MRRT.

But they are not listening to Premier Barnett, who is a successful Premier. Already some of the magnetite projects have lost their backers, and we know that the miners are having extreme difficulty raising funds for new projects. So an unseemly deal has been done with the crossbenchers, and this is going to have a rebounding effect for generations to come.

The Treasury modelling which we keep hearing about is rubbery at best. Recently, Mr Forrest—who is now an evil man because he has a successful mine!—said that he no longer trusts the advice of Treasury to be fair and impartial and that, with their modelling, Treasury are essentially backing whatever the government asks them to come up with. Today the basis used by this Treasury modelling and the money that it will collect is under extreme scrutiny. It is said that it will collect $11 billion, but we now know that all that is under question. The government have already committed to putting $14 billion into superannuation. Business is very concerned about this because, while the government say that the increase in superannuation to 12 per cent will come from the minerals resource rent tax, small businesses—and people in the Labor Party have never had anything to do with trying to run a small business—will be the ones who have to come up with the balance of money to help increase superannuation to12 per cent. Business said, 'If you're going to force us to pay this extra superannuation, the one per cent you are going to give us as a concession in company tax will do nothing, because we will be paying more in superannuation to our workers.' This measure should be consulted on and agreed to rather than rammed down people's throats.

Between 2012 and 2014, Treasury, with its rubbery figures, says that my state of WA will generate $7 billion for the MRRT. But guess what: Western Australia will only receive $400 million back in those years. This is less than 6c in every dollar that Western Australia will hand over to the federal government. Then they will come looking for us again, because what people on the government benches fail to realise is that mineral resources are not owned by all Australians but by the state in which they found. That is just a fact of life. There is this great myth that mineral resources are owned by all Australians; but, if a mineral resource is found in—for example—New South Wales, it belongs to the people of New South Wales. I say to my colleague the member for Franklin, who is sitting across the table there: if you dig up a goldmine or a tin mine down in Tasmania, the people of Tasmania will get the royalties. The trouble is that they do not have many there and they are not allowed to dig them up because the Greens will not allow them to put a spade in the ground. A state such as Tasmania cannot get much in the way of minerals—they are hamstrung by the Green-Labor alliance—but in Western Australia we actually do things: we dig minerals out of the ground, we sell them for a good price, we get royalties for them and we build ports and roads so that they can be shipped out.

However, the Labor Party are saying that they want to get more out of mining. I will tell you, Labor Party, how you get more out of mining: if you sit down and reach an agreement, and some of those in the industry say that they do have the ability to pay more, you do it in a fairer way—that is, through a company tax. A company tax will make sure that the proceeds of mining are more fairly distributed than they would be by the Labor Party's minerals resource rent tax.

This tax will hurt my electorate of Canning in a big way because, based on Australian Bureau of Statistics figures, I have the second highest number of fly-in fly-out and drive-in drive-out workers of any metropolitan federal electorate in WA. All those workers know—and we see them regularly flying over the top of my house, every five minutes, going off to the mines—that this tax is going to hurt them because it is going to stop investment in their industries and spread worry to other mining industries. But, even in the mining sector in Western Australia, where money is being invested either for expansion or start-up, they are very nervous about the sovereign risk this brings to their jobs, their future jobs and the job opportunities for their families. Let us finish on the fact that Mark Cutifani from AngloGold said that Australia is now a sovereign risk country, worse than South Africa. It is a shame. (Time expired)

Debate adjourned.