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

I remind the House that, pursuant to the resolution agreed to by the House on 2 November 2011, this is a general debate covering the Minerals Resource Rent Tax Bill 2011 and 10 related bills.

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

I speak in support of all of these bills. I particularly want to mention the Minerals Resource Rent Tax Bill 2011. This is very important legislation, not just for this country but particularly for my home state of Queensland.

We are absolutely determined to make sure that the benefits of the mining boom so squandered by the coalition during the first mining boom, such a short time ago, will be extended across the length and breadth of this country so that all Australians can share in the benefit. We want to make sure that the most profitable mining companies will pay their fair share of tax. We want to make sure that we have, as has been described on numerous occasions, a stronger, fairer, simpler taxation system, and we want to make sure that there are significant benefits to Australian small business, Australian households, Australian families and Australian individuals, by virtue of the minerals boom that we are experiencing across this country.

This MRRT legislation will provide good return on the wealth of Australia, which belongs to all Australians, for all Australians. The benefits under this legislation will be many. They include a company tax cut for all companies to 29 per cent on 1 July 2013; a new tax break for up to 2.7 million small businesses from 1 July 2012; investments in our regions, particularly in my home state of Queensland, through the Regional Infrastructure Fund and Regional Development Australia Fund; and a simplified personal tax for 6.4 million Australians, with a $500 standard deduction from 1 July 2012, and a $1,000 deduction from 1 July 2013. Of course, we will also help five million Australians by rewarding them with personal savings: a 50 per cent tax discount and up to $500 of interest income from 1 July 2012, increasing to $1,000 of interest income from 1 July 2013; a boost to superannuation for 8.4 million Australians—the first increase to take place from 1 July 2013; and expanded superannuation concessions for 3.5 million low-income earners and about 275,000 people over 50 years of age from 1 July 2012.

I listed those out because I wanted those who might be listening to recognise the economic consequences and the consequences to the financial budgets of Australians, not just presently but into the future and in their retirement. This is a fair and just piece of legislation that I think will make a difference.

The MRRT will apply to all new and existing iron ore and coal projects at a rate of 30 per cent An extraction allowance of 25 per cent reduces the effective rate of the MRRT to 22.5 per cent. This will make a difference. The design features reduce compliance costs for small miners, including a low-profit offset reducing the MRRT liability to nil for companies with an annual MRRT profit of $50 million or less. The offset phases out between $50 million and $100 million of MRRT profit.

This legislation has had a long and convoluted history. There has been a lot of community consultation and consultation with miners, including, on 1 October 2010, the Policy Transition Group, led by Don Argus and Minister Martin Ferguson, who commenced the consultation process.

This is important legislation for a number of reasons. It will have a big consequence for my community. For instance, over 43,500 people living in Ipswich and Somerset in the electorate of Blair will benefit from the rise in compulsory superannuation from nine to 12 per cent. That is what the Treasury data shows.

Those opposite opposed superannuation when it was initially brought in as compulsory under the Hawke-Keating government. Some extraordinary things were said about superannuation. Until very recently the opposition took the same attitude to superannuation as their predecessors back in the days of Peacock and Howard. In the early nineties, the idea of compulsory superannuation was denounced by the opposition. The business lobby were their allies and comrades in the battle. They described compulsory superannuation as a 'company killer' and they said that unemployment would rise and the economy would be deleteriously affected. They used all kinds of jeremiad in relation to superannuation. But we know that this will make a big difference. We have at March 2011 about $1.36 trillion invested in the superannuation industry—and there are market fluctuations; it goes up and down—and this has secured our future and provides security for the benefit of Australians across the country. This rise in superannuation will make a big difference in my community, and I look forward to the day when it comes in. It will also apply to electorates held by those opposite. Their attitude to this aspect is interesting. As I said, they opposed it fiercely and ferociously, but it will have a big impact in their electorates.

Small business will also benefit from the small business changes that I outlined: 10,700 small businesses in the Ipswich and Somerset region in the electorate of Blair will benefit from those changes. The small business changes will make a big difference, but those opposite who parade, preen and pose as champions of small business are opposing what we are doing in the MRRT. I want all small business operators to understand that.

I think those opposite, particularly members in South-East Queensland from the LNP, should hang their heads in shame because they are beneficiaries. I decided to do a bit of research and find out how the changes we are making through the MRRT will benefit small business. As I said 10,700 small businesses will benefit in my electorate of Blair, but also other electorates in South-East Queensland such as Longman, 13,300 businesses; Dickson, 14,800 businesses; Groom, 17,400 businesses; Wright, 18,500 businesses; Fisher, 19,900 businesses; Ryan, 20,200 businesses; Fadden, 23,100; and Fairfax, 23,100 businesses. Those opposite are opposing the small business write-offs that I have outlined already which will help the small business operators in their electorate. They have got the gall to come into this place and say they support small business when they are opposing the very reforms which would make a difference in the lives of small business operators in the state of Queensland.

They claim that the minerals resource sector is paying their fair share of tax when they know very well that there is person after person, company after company which have been cited during this debate to indicate that they are prepared to pay this tax and that this arrangement has been undertaken through consultation. They know we can only dig up the resources of this country once, but those opposite will claim and have claimed that the mining companies pay their fair share. But the public think otherwise, and I am sure that in their heart of hearts those opposite also know that that is not the case.

I mentioned the minerals resources rent tax and what an impact it will have in my home state of Queensland. The view of those opposite on regional development and regional infrastructure was to engage in what the Australian National Audit Office described in a 1,200-page report as—and I will use my words and the words of Minister Albanese—regional rorts. We set up a process whereby Regional Development Australia would be carried out in a more meritorious, transparent and accountable process. Regional Development Australia is an investment—and we are doing this under the minerals resources rent tax—of about a billion dollars over five years, funding a diverse range of economic and community infrastructure projects across Australia. Five hundred and seventy-three million dollars is contingent on the passage of the minerals resources rent tax.

In my electorate we were fortunate enough to get $2 million in the first round of the Regional Development Australia Fund for the Somerset Civic Centre, which replaced the Lyceum Hall that had burnt down. It will be a 350-seat centre. It will have a stage, backstage areas, dressing rooms, multifunction rooms and amenities. It is important in the terribly flood affected area of Esk. Those opposite opposed the funding for this. They also opposed so many other areas of regional development which have been funded by this government, including things like the Better Regions funding and the Regional and Local Community Infrastructure funding, which have made a difference not just in Ipswich with the Robelle Domain Parklands but with the refurbishment of the Ipswich Civic Centre, the creation of the corporate centre at Ipswich and the rugby league stadium in North Ipswich. They also opposed the flood levy, which was necessary to rebuild communities like Ipswich and Somerset.

Those opposite have also opposed in this legislation the source funding for the Regional Infrastructure Fund which comprises about $6 billion in funding targeted at states like Queensland and Western Australia, which face large infrastructure demands, and $5.6 billion of that funding is contingent on the passage of the minerals resources rent tax. Those members opposite from Queensland in the LNP and those from Western Australia in the coalition should hang their heads in shame in opposing this legislation. We have provided in our commitments funding to so many terrific projects. I was pleased to hear Minister Albanese talking about that today in answer to a question I put in relation to the Blacksoil interchange and commit to it.

The Blacksoil interchange is the intersection of the Warrego Highway and the Brisbane Valley Highway. It is one of what the mayors of South-East Queensland describe as the 'Magnificent 7' projects that they urged both sides of politics to fund before the 2010 election. It is a $70 million project. The state Labor government in Queensland committed $16 million and it sought $54 million from us. My LNP opponent last election described it as a worthy project and actually ran demonstrations at the Blacksoil interchange but made a commitment of zero, zilch, nil—not a dollar was committed. Notwithstanding the fact that the member for Groom and I had discussions—in fact we debated with the mayors of South-East Queensland at a forum in Ipswich at Walloon and at Haigslea in relation to this issue before and during the last election—not a cent was committed by those opposite to this vital project.

Recently we have had the mayors and councils from South-East Queensland here in Canberra urging infrastructure in South-East Queensland, urging the opposition to support the Blacksoil interchange upgrade. Indeed they have, by opposing this legislation, opposed the funding for the Blacksoil interchange, which is the most important interchange and intersection in South-East Queensland, according to the Council of South East Queensland Mayors. At the last federal election, on the first day of the election campaign, we had mayors from South-East Queensland standing at the Blacksoil interchange, urging both sides of politics to fund it. The coalition, by opposing this legislation, opposes the Blacksoil interchange upgrade.But why should we be surprised about that? For three elections in a row, the coalition opposed a project which was supported by the Liberal Lord Mayor of Brisbane, Campbell Newman—the alternative Premier of Queensland—supported by the coalition at a state level, supported by all the councillors in South-East Queensland, supported by the state Labor government and supported by this side of politics. I refer to the Ipswich motorway upgrade. They took a policy to the last election saying they would stop construction on the Ipswich motorway, putting at risk 10,000 jobs. That is their idea of infrastructure.

I want everyone from Queensland to know that the coalition's opposition to the MRRT stops regional infrastructure and road funding in South-East Queensland that we are going to deliver under the MRRT legislation. Their opposition to the Ipswich motorway and the Blacksoil interchange and their failure for 12 years when sitting on this side of the House to support infrastructure in South-East Queensland is indicative of their attitude to roads, rail and ports. Indeed, we have increased by 70 per cent the funding to road infrastructure in Queensland.

Those opposite, the LNP members from Queensland, should hang their heads in shame for this opposition to the MRRT, because they know that the mayors from South-East Queensland support this. The only mayor I know in South-East Queensland who holds a Labor Party membership ticket is the Mayor of Ipswich, Paul Pisasale. All the others are on that side of politics. But they all support what we are doing, particularly in relation to the Blacksoil interchange, the Ipswich motorway and the other infrastructure across Queensland. But those opposite oppose it. They fail on infrastructure and they should hang their heads in shame. They should be supporting the MRRT legislation. It is important for Queensland. It is important for electorates across South-East Queensland in particular.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

It is said that Australia's wealth grew on the sheep's back. Well, I can tell you that the Hunter's wealth grew on the miner's back. Today I rise to address the Minerals Resource Rent Tax Bill 2011 and associated bills, to give the Hunter a voice. This tax, when coupled with the Labor-Green carbon tax, will cripple the Hunter Valley economy, cost the jobs of thousands of local people, lower investment confidence and cut the retirement savings of those who rely on their superannuation. Yet my Labor colleagues in the region are not voicing the real fears of their constituents.

As I stand here today, I feel a sense of deja vu. A year ago I stood here to warn the Rudd Labor government about the consequences a resources tax would bring. The Australian public shared those fears and, as the polls began to slide, Prime Minister Rudd was replaced with Prime Minister Gillard by the faceless men of the unions and the ALP. And here we are again. The policy is slightly different, but the consequences remain the same. But what more should we expect? Labor has always believed in tax and spend, tax and spend. And now we have the minerals resource rent tax—a 22½ per cent tax on miners who invest their money in Australia in good faith, gave local people jobs, supported local business and poured billions of dollars in to the Australian economy.

I was recently at a function here in parliament where a senior representative of a foreign owned airline said that introducing a passenger movement charge in their country would be thought of and seen as adding a tax on its biggest wealth generator, something that would be a complete anathema to them. The chorus that came back from those in the audience was that this was just what this Labor government is proposing with the MRRT. The Labor government knows this is a bad idea. It knows that, in the long term, jobs and investment will be lost. However, after wasting the former coalition government's surplus of $20 billion and racking up a multibillion-dollar debt for this country through infamous programs such as the school halls rip-off and the insulation fiasco, this government is desperate. It will do anything to claw back money in the short term, regardless of the consequences for Australian people.

The coalition is determined to warn the Gillard Labor government about the dire consequences it will face if this tax is approved. We recognise that the resource sector is just too important to jeopardise. When companies make investment decisions, a significant equation about where to invest is a nation's sovereign risk. Under the Gillard government, Australia now has a very real sovereign risk problem. Members on the other side do not understand this. However it is their government's increasing regulatory burden, its original dumped plan to nationalise 40 per cent of the mining industry, the carbon tax and now this proposed MRRT that put future investment at risk. They need to understand that Australia is not the only resources game in town. Global corporations can choose to move offshore and invest in places like Brazil, Mongolia and Africa, which have friendlier tax regimes. Once the investment goes elsewhere, so will the jobs and we will not get them back.

The resource sector employs half a million Australians. It is one of the most productive parts of the national economy and was our salvation during the global financial crisis. It was also pivotal in rebuilding after the recession of the 1990s. We absolutely cannot afford to have our mining industry be the victim of yet another tax-and-spend Labor government. Last year Xstrata gave a start-up commitment in excess of $130 million of infrastructure through Xstrata rail in New South Wales, and the potential is there for further investment of more than $4 billion over the next three years. Why would a government want to do anything that puts Australia at a global competitive disadvantage and puts both this or further such investment at risk?

Those opposite say that Labor is the party of the workers. Why would the government want to introduce policies that threaten the livelihoods of our miners in the Hunter? There are 17,000 people directly employed in the coalmining industry in the Hunter and there are thousands more jobs indirectly reliant on those positions. That includes jobs at Newcastle Port, where 97 million tonnes of coal was exported in 2010. It includes 400 employees and 16 apprentices at Port Waratah Coal Services. As these figures show, the mining export industry is one of the Hunter's key businesses and would cripple the local economy if it were to fold. The reliance of the Hunter on the resource sector is an easy relationship to see. So, at a time when the cost of living is at an all-time high, you would think that our region's elected representatives would be fighting to attract jobs to the Hunter. In fact, it is quite the opposite. Hunter Labor MPs have backed the party line rather than local jobs. Sharon Grierson in Newcastle, Jill Hall in Shortland, Greg Combet in Charlton and Joel Fitzgibbon in Hunter all live in the Hunter amongst the thousands whose jobs and livelihoods depend on the continued success of mining. They know all too well how reliant our economy is on this sector. For example, Xstrata, which operates 10 mines in the Hunter Valley, has alone contributed $14.6 billion in goods and services, port and rail, wages and royalties since 2002. At the same time as Hunter Labor MPs are preparing to wipe out local mining jobs, they are doing very little to create new jobs.

A major hit on the profits of our miners is a hit on the funds available for investment in research and development. It is our own mining companies which are investing in research and technology to help bring about that innovation. This helps enable Australia's best scientists to work on developing alternative, cleaner technologies that will lead to a healthier environment. Those companies which first obtain cleaner technologies will be those that continue to prosper as we move away from a reliance on coal towards an alternative energy source. We cannot afford disincentives to investing in research and development—and a major cut in profits is certainly that.

A major cut in profits will also erode the funds available for community engagement, and I have personally seen the great things that are being achieved in coal communities. I have met several times with William Cant and John Richardson, joint owners of a family-run mine in East Maitland, Bloomfield Colliery. Bloomfield employs about 500 people in the Hunter Valley, with many more reliant on its operations, based on the multiplier effects, such as businesses in Tomago, Thornton and Beresfield. However, it is not only families and small businesses that rely on Bloomfield. Local charity organisations also rely on its support to operate. The Bloomfield Group Foundation was set up in 2006 to fund community based programs which benefit the Hunter Valley. Those causes have included the Red Cross Breakfast Club, Hunter New England Health's Neonatal Intensive Care Unit, Maitland Cancer Council's Relay for Life, Singleton Legacy and Samaritans, to name just a few.

It is not just Bloomfield Colliery giving back. Over the past decade, mining companies have made moves towards social responsibility, and community engagement programs are often included under the terms of the exploration licences. At the Doyles Creek mine, just outside Singleton, five per cent of all pre-tax profits will be directed into the community foundation. The foundation will provide $40,000 per year for three years to help the Westpac Rescue Helicopter Service. Hunter Valley Operations, owned by Coal and Allied, contributed $1½ million in community development funds last year and the same in 2009.

This year Xstrata and their partners have committed over $6.65 million to their Corporate Social Involvement Program in New South Wales. This included total contributions to community organisations of over $2 million. Organisation recipients included Lifeline's Hunter Support Program and the Maitland neighbourhood centre, and a further $2.5 million went to education groups such as the Hunter Valley Training Company. They also provided over half a million dollars to a range of environmental programs and groups working to protect and preserve our nation's unique fauna and flora such as the Hunter Central Rivers Catchment Management Authority and the Koala Research Centre. And where would the Indigenous Youth Leadership Program, the Hunter Medical Research Institute or the John Hunter Children's Hospital Neonatal Unit be without the almost $1 million committed to them in this year alone?

There are similar programs being run right across the Hunter Valley. If the profits of our mines are eroded, the ability of those mines to contribute directly to local communities will also be eroded. This will be yet another devastating effect of Labor's minerals resource rent tax, especially when combined with the effects of the Labor-Greens carbon tax. We all want our miners to contribute to the Australian landscape, so let us do it through further partnerships and positive community projects. Let us not put a huge tax on profits which will strip competitiveness, cost jobs and ultimately end up in Labor's coffers. As Labor's reckless spending and waste continue, it is evident we simply cannot trust Prime Minister Gillard with the money generated through yet another great big new tax.

The Prime Minister has said that a small fraction of the money raised by the MRRT will go into local roads. Forgive me if I don't get too excited! At the last election the coalition pledged $71 million to upgrade local roads to make them safer and reduce travel times, including $20 million for Main Road 301 between Raymond Terrace and Dungog, $20 million for the Lakes Way, $20 million to build passing lanes on the Bucketts Way, $6 million for the much-needed Nelson Bay to Fingal Bay bypass and $5 million for Main Road 7778. Had the coalition been elected, works would already be underway. I can say this with certainty because the former coalition government honoured each and every roads commitment I made under its tenure. However, Labor was elected, so I wrote straightaway to the Prime Minister urging her to fund the desperately needed works in my electorate. I never received a response. So when I hear Labor promising road upgrades in coal communities, I am beyond sceptical. I do not believe it for a second.

The Gillard Labor government would have you believe that miners are big, dirty, evil people that take from Australia and give nothing back—and that is simply ludicrous. I remember a media release from the member for Newcastle, Sharon Grierson, which read:

More importantly, this agreement will allow the Gillard Government to pass on the benefits of the mining boom to the rest of Australia.

And the member for Hunter, Joel Fitzgibbon, stood in this House and asked how the government plans to 'spread the benefits' of the mining industry across Australia. It sounds like they have been reading from the same song sheet.

For the benefit of those Labor members who do not seem to understand how the economy works, allow me to provide some real answers. The benefits of the mining boom have been and are currently being felt by the Australian public. Just ask any one of the thousands of families whose breadwinner works in our mines or related industries such as rail, at our harbours, in vehicle rental, in diesel motor repairs—and the list goes on. They could also ask the state and territory governments, which have been deeply reliant on coal royalties.

Make no mistake, our mining companies are already paying billions of dollars to governments in Australia. In fact, the premiers of New South Wales and Western Australia have recently signalled their intention to raise coal royalties. But here is the kicker: under Labor's minerals resource rent tax, these royalties will not be paid by the mines It sounds odd but it is true, because at the same time as Prime Minister Gillard is telling the public that miners need to pay more tax she has also agreed to pick up the tab for the state royalty increases. I will repeat that in case anyone thinks I have made a mistake. Under the deal struck by Prime Minister Gillard, the federal government will cover the cost of state government increases in coal royalties. Labor has pledged to return some of the royalties by giving companies a tax offset against the minerals resource rent tax. Australia's prosperity is at stake. We all know Labor cannot be trusted with the economy. Not so long ago Wayne Swan, when questioned on local radio, could not even remember the last time Labor delivered a surplus in one of its budgets. For your knowledge, it was more than 21 years ago. My esteemed colleague, Wyatt Roy MP, has never seen a Labor surplus in his entire lifetime.

It is no wonder Labor wants to sell out Australian jobs, investment, income and superannuation funds for a bit of cash. It is desperate to save face. With such a ludicrous policy, you have to ask yourself why? Apart from needing the money, because Labor has wasted billions of dollars, the ALP jumped into bed with the Greens and is now desperate to hold on to government. This presents an even scarier scenario for Australia. Just months ago, it was the Greens asking for 50 per cent of mining profits. Who is to say what the Greens will try do next against the mining industry in the Senate? If you listen to the Prime Minister, there will be no changes. But this is the same woman who stood before the Australian public just five days before the election and promised there would be no carbon tax. We now have a carbon tax; forgive me if I do not take her at her word.

These bills will hit the Australian resource sector with a double blow that will cripple our economy. As Labor looks for short-term gain to appease the Greens and to claw back some of its wasted funds, the coalition is focussed on the economic future and prosperity of our nation, jobs for local people and security for retirees. I urge the Gillard government to think about the people it represents, not the party interest. Therefore, I and my colleagues will be rejecting this bill.

In the moments left to me I note that today the member for Hunter put out a press release saying that without the mineral resource tax projects like the $1.7 billion Hunter Expressway would be in jeopardy. He was the person, when they were elected into government in 2007, who opposed funding for that road. That road is already funded. It is funded through the forward estimates and work is well and truly underway. We see here direct misleading and misrepresentation by the member for Hunter, who simply does not even understand these bills, where the funds are coming from or where they are going.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

On 22 August this year a company well known to yourself, Madam Deputy Speaker Bird—BlueScope—announced to the stock exchange and to the Australian public that it intended to restructure its operations at Port Kembla and elsewhere at Western Port, the net result of which would be a loss of upwards of 1,000 jobs and the exiting of the company from the export steel market.

In advising the stock exchange and the Australian public of this decision that company cited the enormous increase that it was facing in input costs, particularly from coal and iron ore, and the great difficulty it was having in competing with imported steel due to the rapid increase in the value of the Australian dollar. It was an announcement that followed about three days after its former parent, BHP, now BHP Billiton, announced to the Australian public and to the stock exchange that it was about to post a record profit of around $24 billion.

In that one week in August the debate around this issue—the debate around the mineral resources rent tax—was crystallised in the minds of people in our electorates in the Illawarra, Madam Deputy Speaker, and also, I think, of the broader Australian public. What you saw in this one announcement was the fact that we have a booming resources sector—a resources sector that is making a lot of money for the companies that are operating in the resources sector. Some of that money is flowing through to others within the community, particularly those who are working in or around the mining industry, but that money and success are not flowing evenly to the rest of the economy. In fact in some sectors, and particularly the manufacturing sector, the success of the mining industry and the enormous prices that it is able to command for the raw materials of coal and iron ore is having an enormous impact on the ability of manufacturers to compete domestically and in their international markets.

The legislation that we have before the House will not address all of those issues, but does go to the very heart of the issue that we here in the 43rd parliament have an obligation to ensure that we can spread the benefits of this wondrous gift that we have—our natural resources—and that we can spread the benefits of the mining boom both here today and well into the future so that we ensure that when the great bounty is no longer attracting the prices that it currently attracts, and when those mineral resources are depleted, there is something left for the rest of Australia and for future generations to enjoy.

It is for these reasons that I am very pleased to be speaking in the House today on this important package of legislation. It will enable the government, on behalf of the Australian people, to obtain a fairer return on our non-renewable resources and to support growth across the entire economy.

This is a good measure. It is good for our economy and it is good for all Australians. It makes good economic sense because as a resource-rich country we have for many years now been talking about the mining boom, the wealth it is generating and how Australia can manage that to maximise the benefits of that extraordinary wealth. But I would have to say that all tiers of government have not done as well as they could have in ensuring that we manage that boom responsibly and into the future.

Our good fortune from our resource riches has been a feature of Australia's social and economic life since we began to develop as a nation. Indeed, many economic historians argue that we largely owe our development as a nation to the very first mining boom that we experienced in the 1850s—the gold rush that started in Victoria in 1851.

That first great mining boom saw the populations of Melbourne, Ballarat and Bendigo swell rapidly as working men from around the country, and then later from around the world, threw in their existing jobs to go and try their luck in the goldfields. Indeed, one of my forebears travelled around the world from Denmark—from Schleswig-Holstein—to try his luck in the goldfields during that period. Before the 1851 gold rush, wages were low and employment was hard to find in areas outside of agriculture. But within a matter of months after the discovery of gold in the Victorian town of Clunes wages had already risen by one-third. During the various periods of the development of the gold and mining industry in Australia, the discovery and exploitation of gold was largely in the hands of individual prospectors. It was not until the enormous scale of the resource discovery had been ascertained that it started to become industrialised.

The former New South Wales statistician who wrote a seminal work in Australian Labor history, Timothy A Coghlan, in his four volumes of Labour and Industry in Australia, talked about the effects of the gold rush on the industrial relations and the economic history of Australia. He talked about how once the swift and easy gains of the early period of gold discovery were over gold mining became an industry and much of the glamour went out of gold prospecting. He also talked about how the gold rush became more streamlined and how working people were concerned to ensure that their new higher standards of living were maintained.

I quote directly from his second volume of this seminal history, where he says:

From 1851 to 1862 Australian society had undergone violent changes. The diffusion of wealth, the rapid changes of fortune, had overthrown all the old ideas of class stability; the inrush of population had entirely obliterated bond labour as an economic factor in the country, and the change in the constitution and the wide extension of the franchise had prepared the stage for the entrance of democracy. It is the gradual and somewhat timid appearance of democracy which is chronicled in the period now under review.

The swift and easy gains of the gold period had gone. After 1861 the El Dorado dreams of that era gradually faded from men's minds, and, although large discoveries of gold were made in the 'sixties and afterwards, the impulse towards gold-seeking never again became the dominating passion among any large part of the community.

You can well imagine that those gold seekers of the early 1850s thought that this was a boom that would never end. They thought that the rivers of gold, the great luck that they were then enjoying, would continue to flow, if not for decades then perhaps for the century to come. Of course, that was not to happen.

I argue that there are great parallels between the gold rush enjoyed in Victoria in the 1850s and the resources boom that we are now encountering here in Australia in 2011. It is important that we in this generation ensure that we learn from the mistakes and do not repeat them, and that we learn from the good things that occurred during the development of the gold rush and the gold industry in Australia in the 1850s. We need to do this because we all know that we can only dig these resources up once. There needs to be a lasting benefit from what this generation is currently doing.

That is why this government is so focused on delivering on its commitment to spread the benefits of the mining boom to all Australians. That is why Labor believes in the mining tax—to ensure that all Australians can benefit from the mining boom and not just the very profitable mining companies. The mining tax will mean that the Gillard government can use the revenue gained from the tax on extranormal profits to boost superannuation savings for our lowest paid workers.

Our overall superannuation reforms will mean that a 30-year-old worker on average earnings will retire with an extra $100,000 of savings. They also mean that we will be able to give a big tax cut to 2.7 million small businesses, many of them struggling in our patchwork economy. They mean that we can give a business tax cut to all Australian businesses, including those that are not in the mining boom fast lane of our economy. Perhaps even more importantly than each of these initiatives, the revenue gained from the MRRT will enable us to invest in infrastructure in our great mining communities and elsewhere, in electorates such as yours and mine, Madam Deputy Speaker, to ensure some of those long-hoped-for and much-needed large-scale infrastructure projects can move from the dream to the plan and to the reality.

There have been many claims, including the claims now made by the member for Paterson in this debate, that somehow this tax is going to lead to the death of the mining industry. It is not a claim that is given any credibility inside the industry itself and coming from mining districts such as yours and mine, Madam Deputy Speaker Bird, where recently we attended the expansion of a mine in your electorate and witnessed and have heard stories about the expansion of a mine by the same company in my electorate. These are mines that were mothballed a few years ago and are now being brought into new, renewed and energised production, including the installation of new longwalls because the proprietors of those mines know that there is a strong and robust demand for the excellent, high-quality coking coal that resides in the foothills of the Illawarra. That is a demand that will exist and persist despite this tax and will persist for many years to come.

Indeed, since the government announced its mining tax reforms, mining investments have skyrocketed from $35 billion last year to $47 billion this year and are expected to grow again between 2011 and 2012 to $82 billion. These figures are not disputed by the industry. I took the opportunity during the recent inquiry into this legislation by the Economics Committee of this House to put these questions to representatives of the mining industry, and they confirmed the fact that, far from there being a flight of capital, there is a rich, strong and exciting pipeline of investment into the resources sector that will not be persuaded because the Australian government, on behalf of the Australian people, has decided to put in place legislation which will give the Australian people a greater share in the wonderful returns from these resources that are owned by all Australians.

This is good legislation. It is Labor legislation. It is the sort of legislation that you would expect Labor governments to introduce. Many on the other side of the House might deride a Labor member for standing in this House and making that statement, but it is actually one that I am proud of. I am a proud member of the Australian Labor Party, which is able to bring legislation into this House which helps redistribute the wealth that is generated from these resources that are owned by all Australians and put that money to better use. And what better use could there be for that money than to build a new Australia through fantastic infrastructure projects, to ensure that Australians have a decent retirement income by assisting them with their superannuation and to provide tax cuts to literally hundreds of thousands of businesses throughout Australia? It is great legislation. I commend it to the House.

Alex Hawke (Mitchell, Liberal Party) Share this | Link to this | Hansard source

It is a great privilege to follow the member for Throsby, who is a good, old-fashioned socialist in this chamber, and I think he gave a good, old-fashioned socialist speech. He is dead wrong about a lot of things but he is right about one thing; this is definitely Labor legislation—we can all tell that. At least he speaks honestly about the redistribution of wealth that is the primary goal and objective of this government.

There is something I want to dispute in his claim about the mining boom being similar to the gold rush. The gold rush was a very different era. When a currency was backed by gold, people used to get pick axes and choose the relatively scarce metal, gold, which is why it became the base for currencies all around the world. Today mining is a very highly technical and complex industry which requires great risk of enormous amounts of capital to extract minerals from deep within the earth's surface, refine them and turn them into useful products. It is not guaranteed of making a return.

Every time we hear a Labor member enter this place and talk about spreading the benefits, sharing the wealth and redistributing the income from this risky activity, I often think that they are not really interested in sharing the risk or sharing the danger associated with these ventures. A lot of mining ventures fail. I do not see Labor members jumping up to say that they will put their hands into their pockets to share the risk of failed ventures in this country or in any other country. That is why redistribution of other people's wealth earned by people who are willing to put up their own capital—shareholders, investors, people who are willing to put together ventures—is their business and there has to be a profit at the end of it. That is the best system that human beings have devised to order their economies and to order their societies.

The notion that the member for Throsby talked about of redistributing the wealth of successful people, essentially, to everybody else on a basis of 'you've been successful' will do exactly what has happened to every country in Europe that has followed that path, whether it be Italy, Greece or others. Socialism heads us to a point where people stop creating, stop innovating and stop investing. They stop digging things out of the earth and refining them at great risk to their own capital and investment because it would not be profitable.

That is what this legislation proposes. It is Labor legislation, of course, as the member for Throsby pointed out, because it is completely unclear what it is about. We have seen so many versions of the proposed minerals resource rent tax that it is very difficult to understand what the government is actually going to do. That is a bad way to handle government. Constantly this government provides legislation which their own backbenchers and frontbenchers cannot explain to ordinary people about how it will function and what it will do, how it will work and when it will kick in, what are the rates and who is going to pay it. We still do not know today.

In fact, going back to that concept of risk and return, the original proposal that was floated by this government for the minerals resource rent tax tried to make the Australian taxpayer a shareholder in every mining venture. That was the way the first minerals resource rent tax draft legislation worked. The Australian taxpayer would have had a stake in every venture and, if it failed, the government would have been liable. They quickly realised that would not be a good idea. The government backed out of that part of the draft legislation very, very quickly as they had made a big error. Why? They do not want to share the risk and they do not want to share the difficulty of mining. They just want to share in the benefits of wealth created and earned by other people and the risk taken by those people.

Mining companies in Australia today pay enormous amounts of taxes. They pay royalties, they pay employment taxes and they pay all the different rates of corporation and other taxes that have to be paid by legal entities in Australia. They pay quite a lot of tax and they probably pay more tax than every single member of this parliament put together. They pay a lot and contribute a lot to our society.

Of course, when you impose a new tax, you are looking for a revenue stream for the government to ensure that it can do worthy things. It is not a great idea to put in place taxes such as the minerals resource rent tax and all of its related measures which collects, in our view, $11 billion and has $14 billion in expenditure. That is a great concern for us, and I do not see that we have a big problem in opposing this legislation. The government constantly tells us that we are 'no' sayers. When your own modelling and figures show that you are going to pull in $11 billion and send out $14 billion, that you are not going to have any loss of investment and everything is going to be dandy, it makes taxation sound like a noble concept that everybody loves and supports, that we all want to see more of and that we want to be taxed more. It is coming on the back of an economy-wide carbon tax applied to every sector and every industry, including mining and large unknown effects on mining, so you start to wonder about this government's addiction to taxing because its expenditure is out of control. This tax will send more money out the door than it will raise. It is a very unusual measure at an unusual time.

Looking at this particular version of this legislation, I do not think tax experts or other people understand. Ken Henry's original proposal was very complex and was not well understood by tax experts. So I do not think any member in this place has a great chance of fully appreciating how this tax works, although we have done our best. When you look at some of the detail of this legislation there is an intrinsic problem with having tax revenue from this legislation linked to volatile commodity prices. The member for Throsby was wrong about a lot of things but he was right in saying that the gold rush came to an end. This minerals boom, although it is not automatic to make a profit out of mining, will come to an end. Commodity prices have been volatile over the past few decades. They do rise and fall and they are capable of rising and falling almost at any moment.

The member for Melbourne just walked in and I know that the Greens often talk about our carbon emissions and reducing them. The biggest thing that reduced our carbon emissions worldwide was the GFC and resultant collapse in demand that came from that. It is the same with commodity prices. Our commodity prices can simply collapse from economic downturn or lack of demand for economic activity. If you think about what is coming up in Europe and other places, there could be a big drop in demand for our commodities. Having this revenue linked to that volatile and unstable notion of commodity prices is a recipe for further government problems and endeavours to try and fix down the track. Never mind a patchwork economy; we tend to get a patchwork approach to legislation. We put out a draft where every taxpayer is a shareholder in every mining venture and then we come back and say: 'Oh gosh, that's not a good idea. Now we are going to lower the rate, send all the money out the door, including more than we are raising, and link it to the volatile commodity prices.' These are things you would not necessarily do if you had to design them.

We are worried about budget deficits. The government has never delivered a surplus. It promises that it will deliver a surplus, but this tax will lose us more revenue. It has also provided a platform for state premiers, who have essentially seen the Treasurer coming and have raised their royalties right before this legislation is passed by this parliament, knowing full well that we as a Commonwealth will be required to compensate the states for those royalty increases, which are now in the order of $3 billion. It is not some technicality, but this is the very real consequence of failing to understand what you were doing and failing to do it properly. Three billion is a lot of money in anyone's language.

I want to address some other concerns here. The government is making much out of its great notion of redistribution of wealth earned by productive people in society to people who have not taken part in the risk of those ventures—people who would not want any part of that risk and who if there were losses would run a million miles, saying, 'No, that was the failure of the corporation.' The government has also talked about how it is raising the superannuation of every Australian. The minerals resource rent tax came out of the Henry review, which of course recommended—and I think Ken Henry was right to say—that nine per cent is about right at the moment. That is what he found in his review. So the government is keen to adopt a recommendation to increase revenue, although we know that it will not, yet it is keen to run away from another recommendation of Ken Henry, which is that nine per cent is about right in the current climate and there is no need to put it up to 12 per cent.

Our estimates show that the government cannot fund the increase to 12 per cent from this revenue completely. The cost of initiatives we worked out for increasing compulsory super to 12 per cent was $16.8 billion. The company tax cut would be $13.2 billion—this is for the 2012-13 to the 2020-21 period. The Regional Infrastructure Fund will cost $6 billion; the small business instant write-off and simplified depreciation, $8.2 billion; refund of super contributions for low-income earners, $6.6 billion; and 50,000 concessional contribution cap balances under $500 would be $6.8 billion. The total is about $57.6 billion in expenditure, all things that the government would laud as noble, worthy and outstanding things. The problem is that the revenue comes to $38.5 billion over the same period, assuming high commodity prices. As a famous lady once said, 'It's very easy to do that when you are spending other people's money.' It is easy to throw around $57.6 billion and say: 'Isn't that worthy? What a great initiative. We will tax the mining sector. They deserve to be taxed.' I know that the member for Melbourne is about to say that gold should be taxed, even though gold has underpinned currencies and still does today. Considering its price, it is still relied upon as a safe haven for investors and for people of capital in times when currencies are so inflated and devalued by socialist governments, which continue to devalue paper money through largesse and foolish policies.

When we go back to the revenue shortfall, we really do have a serious problem with this legislation and what it will cost us in the future. What will happen by committing to expenditure on the forward estimates—and our revenue is already a shortfall—if there is a commodity price drop? From where will this shortfall be raised? How will we produce budget surpluses if there is already a shortfall in the revenue projections over that period? The government is silent on this. Why? Because that has been its approach to government through every piece of legislation. How will the carbon tax affect families and households? You cannot get an answer about the modelling and the assumptions. You cannot get an answer on the modelling and assumptions of the minerals resource rent tax. In question time today, we heard from the government that it is not willing to tell us about the assumptions, that it is on the website, but of course we know that it is not on the website. The remodelled versions and the assumptions it makes are not available to the opposition. These are billion dollar questions that are not being answered.

This policy process is poor. I think the government has in a rush realised that its original minerals resource rent tax was a kind of boutique and bizarre form of taxation. It was an experiment that was proposed by Ken Henry but which has not been tried or tested in any jurisdiction around the world and which has a whole range of risks, including making the Australian taxpayer a shareholder in every single mining venture. We have seen the government run away from that quickly to what we regard as a process of picking winners and losers in the mining sector. It deals just with the big players by saying, 'If you're comfortable with this, if you're happy to pay this rate of tax, then we'll set the benchmark higher for every future mining venture to compete with you, but we will take your advice as big miners yourself.' It is a poor way of doing public policy and of doing legislation and one that will not produce the outcome that it is seeking.

We know that the mining sector is already paying a lot of tax. It is paying all of the legal taxes in Australia today. This contention from the Labor Party or the Greens that somehow this sector has evaded taxes is a complete nonsense. This contention that it has been a drain on the economy or that it is against the ordinary person is a total nonsense. The employment and the infrastructure that has been generated by these major projects is immense. The Special Minister of State, the minister at the table, will tell you that in WA most of these ventures have to build their own infrastructure, whether it be rail or road or port upgrades. They have to build it into the investment risk, to the capital required to be generated to complete their tasks, especially in WA. They are doing it themselves. If they waited for government it would never happen. If they waited for this government it would never happen. These are all the reasons why I oppose this tax. Mainly, as the member for Throsby said, this is just a pure redistribution of people's income on a completely unfair basis from a government that is desperate for revenue, and it has become desperate for revenue because it is addicted to spending. There is a better way than raising taxes and levying charges on all of our most profitable sectors, and that is by reducing expenditure and restricting excessive government spending and waste.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

We are living through one of the biggest commodity booms in Australia's economic history. The mining industry has grown from four per cent of GDP in 2004 to approximately nine per cent today. Commodity prices have surged and there is an enormous investment pipeline that will continue to drive the giant profits currently being made by the mining corporations.

Until recently much has been said about the positive impacts of the mining boom, but there has been less focus on the impacts on the rest of the economy. It is worthwhile to start by remembering some facts. Fact No. 1: the Australian mining industry is largely overseas owned. In 2009-10, mining profits were $51 billion, of which 83 per cent, or $42 billion, went to overseas investors. Over the next 10 years, mining pre-tax profits are likely to be around $600 billion. At present levels of ownership, around $500 billion will end up in the hands of overseas owners. Fact No. 2: while mineral prices have boomed, mining employment has not. Mining is one of the smallest sectoral employers in the country. According to the ABS, out of a workforce of over 11 million, only 217,100 are employed in mining. Fact No. 3, mining companies do not pay much tax. The average rate of corporate tax paid by the mining industry in 2008-09 was 13.9 per cent, substantially below the company tax rate of 30 per cent.

Despite these facts, the miners have liked to portray themselves as big taxpayers, big employers and big money spinners for Australian shareholders. By and large, until recently, those myths have held sway, but this is changing. With a greater understanding among the public about the negative effects on manufacturing, for example, particularly in the wake of the recent announcement by BlueScope Steel to cut over 1,000 jobs, people understand that the high exchange rate associated with the mining boom, while making imports cheaper, is hurting trade exposed industries such as tourism, manufacturing and education that are competing in international markets. They know that our high mortgage rates are in large part caused by the mining boom, as the Reserve Bank seeks to keep down inflationary pressures with higher interest rates.

People also know that, while mining investment does create some jobs, there are problems associated with the fly-in fly-out culture of the workforce. People know that a largely overseas owned sector is moving to import many workers and procure many of its materials from overseas and, at the same time, is sending large profits there. That is why, despite an unprecedented campaign of opposition from the mining industry and the ongoing chorus of negativity from the opposition, the Australian people are strongly supportive of a superprofits tax on the mining industry.

The Australian Greens are at one with the Australian people on this issue. We want to see a mining boom tax that will ensure that the big mining companies are made to pay their fair share of the profits made through the digging up and sale of Australians' mineral wealth. These are minerals that we all own but we only get to dig up and sell once. Unfortunately this mining tax is not that tax. Instead what we have before the parliament is a watered down, mining giant approved compromise. It is limited in scope, there are problems with its design and it will sell the Australian people short when compared to the original Treasury endorsed proposal.

The Australian Greens supported the original mining tax proposed by Treasury. That tax was designed to set us up for generations to come. It would have covered a broad range of minerals, including gold, and raised substantial revenue for the Australian people. Like the IMF and the OECD, we question whether this tax can do the job that is needed. We would have liked to have seen some of the revenue going towards a sovereign wealth fund to relieve some of the pressure on the rest of the economy from the mining boom and to invest in the future. We would also be spending the revenues from the current proposal differently.

We support the principle of an increase in superannuation. In fact, we think it is just the first step in superannuation reform and we need to be looking at what other changes we can make to improve retirement incomes for our workforce. We also need to look at the equity implications of providing, in effect, a tax break to people on higher incomes and providing it to them disproportionately. Whilst the Greens support a cut to the company tax rate for small business, we think it could be larger. In fact, we want small business to get a five per cent tax break and larger companies to continue to pay the current rate of company tax.

We note that the government has not introduced its tax cut for big business as part of this package of bills which includes the Minerals Resource Rent Tax Bill. But we remain concerned that the government has adopted an open-chequebook approach to refunding state royalties, a decision that should never have been made. So we have some big questions, but we also recognise that this mining tax is better than the opposition's proposal, which is to have nothing. Our focus in on improving, not blocking, this tax. We want to get something in place that can be built on into the future.

Contrast this with the approach of the opposition. They have joined with the big tax evaders and foreign miners in saying no to any tax. They joined the millionaires' revolt; the Rolex revolutionaries like Twiggy Forrest and Gina Rinehart crying poor on the streets of Perth while being some of the richest people in this country. It takes one's breath away to think about what these jokers believe they can get away with. And how will the Opposition fund their commitments, including their superannuation pledge, without the mining tax? What jobs and services will they cut to offset a budget black hole that looks to be expanding towards $100 billion? The Leader of the Opposition's claim to any sort of credibility on the economy is rapidly eroding. He will not even get behind a sovereign wealth fund, unlike others on his front bench.

The Australian Greens went to the election saying that we would support this proposal before us now even though we believed that it represents a cave-in of $20-odd million by the mining industry which saved them having to pay $100 billion in taxation over the next decade—and that is $100 billion that every one of us and every member of the Australian public is going to have to find and make up. We said we would support it because something is better than nothing. We have also been saying very clearly to anyone who would listen that any further changes to be made to the tax in order to gain the support of other members of this place would have to be revenue neutral, that the Greens would not automatically support a further watering down of this tax. We find it astonishing to learn today that now the government has formed the view that, for companies that earn up to $75 million profit, the money that would have gone to revenue and could have gone to schools and hospitals is now better staying in the companies' pockets—that is, the government has made the decision today that it is far better that a mining company that earns between $50 million and $75 million profit in a year should get to keep that rather than pay their fair share of contribution. We do not agree with that, and as a result of that decision our support for this bill, and my vote in particular, has moved from the yes camp into the undecided camp, because this is a further watering down—something that we have said that we would not accept.

But, as I said, the Australian Greens are seeking to improve this bill. In particular, we believe there is no reason why gold should be excluded from the tax, and later in the debate I will be moving amendments to return gold to the bill in accordance with the original Ken Henry proposal. Australia is the world's second biggest goldminer after China and we have 13 per cent of the world's gold resources. In 2010 the industry produced 266 tonnes, or 8.5 million ounces, of gold. This was a 17 per cent jump on 2009 output, as mining companies have capitalised on record gold prices. Like those sectors subject to this bill, the gold industry is making enormous superprofits. In fact, gold currently has many of the same characteristics which iron ore and coal have exhibited in recent years, so there is no legitimate economic reason for its exclusion. Most notably, the gold price is on a sustained upward trajectory, reacting to ongoing global anxiety, and goldminers' profits are surging with the higher price. Market experts do not believe current high gold prices are a bubble, and these superprofits are very likely to be sustained. The Australian gold market is dominated by five large players, all of which, with the notable exception of Newcrest Mining, are largely overseas owned. So currently profits from gold are mainly returned to overseas shareholders.

The Australian Greens recently commissioned a study of the estimated revenue impact of excluding gold from the mining tax, and the results were startling. Using ABARES's forecast of gold export earnings and a notional gold price of approximately $1,500 an ounce, the study found that the value of gold exports would be as high as 17 per cent of the combined value of iron ore and coal exports. This represents an incredible loss to the revenue base of the mining tax. The study estimated that, if gold is included in this bill, the revenues from gold could be as much as $840 million over the forward estimates period and $1.8 billion over the next ten years. This would be a big boost to revenues, especially when compared to the Treasury estimates of total mining tax revenue of $11.1 billion over the forward estimates.

Of course, these revenues could have been much higher if the government had not abandoned the original resource super profits tax in the face of a $20-odd million campaign from the mining sector. The original mining tax, proposed by Treasury and backed by the Greens, would have included gold. In that original mining tax, revenues from gold would have been approximately $3.5 billion over the forward estimates and $8.2 billion over the next 10 years—$8 billion over the next decade. That is $8 billion that could have been spent on schools, on hospitals or on trams and trains or that could have could have been put into a sovereign wealth fund for the future. That is the opportunity lost because of the cave-in in the face of a campaign from some of the richest people in Australia and overseas. But, of course, we know the opposition would not even have collected one cent. Given these facts, it seems incredible to the Australian Greens that gold will be excluded from this tax, and that is why we will move to put gold back in later in the debate. Members in this place will have opportunity to show where they stand on Australia's economy. Do they support miners contributing a fair share or not? Do they think gold miners should be able to send all their superprofits overseas or not? Let the Australian people see where they stand.

Gold is not the only mineral that is excluded from the mining tax. Recently the Prime Minister said she thinks we should sell uranium to India. This is despite India's failure to sign the nuclear nonproliferation treaty and its nuclear weapons stand-off with Pakistan, and it is despite the recent nuclear disaster at the Fukushima nuclear power plant in Japan. The Australian Greens oppose this move by the Prime Minister. We continue to believe that we should end all uranium mining. Uranium is not safe. It is dangerous and should be kept in the ground. However, if the government, as it is obviously intending to do, allows continuation of uranium mining and potentially its expansion—if that is going to be the reality—then we ask the question: why shouldn't uranium miners pay this tax? Why, at the very least, should the profits from this toxic trade not be taxed at a reasonable rate? Should not BHP and others contribute a fair share of the profits they are making from Olympic Dam and other uranium mines? At the end of the day, a failure to include uranium in this is just another leg-up to uranium-mining companies. They will get away with what companies mining iron ore or coal cannot. The answer is again a lack of courage. All too often we see a willingness in this place to let mining giants get their way and get to determine Australian legislation and public policy.

Members in this place share an enormous responsibility that we must exercise with great care. It is incumbent upon us to balance competing sectional interests to make decisions that are in the interests of all Australians and of generations of Australians to come. That is why we must take this opportunity now to put in place measures that can fairly and sustainably share the bounty of the mining boom. To not do so will mean we squander an enormous opportunity—an opportunity that potentially comes once in a lifetime. We will be allowing these big mining companies to continue to send profits offshore at the expense of the rest of the economy, and we will be robbing future generations of the opportunity to share in this country's mineral wealth.

We need to know that these opportunities may come only once in a lifetime, and we must be prepared for the future. We must take the fruits of this boom and invest in health, education, science and infrastructure. We must ensure that the boom does not destroy the rest of the economy. And we must build an economy that is sustainable and fair. That is why, subject to what happens over the next couple of days, we intend to improve this bill rather than block it, and it is why we will move to include gold and uranium within the tax on miners' superprofits. It is the fair thing to do and it is the right thing to do.

Natasha Griggs (Solomon, Country Liberal Party) Share this | Link to this | Hansard source

I rise to speak against the Minerals Resource Rent Tax Bill 2011 and associated bills. As already stated by a number of my colleagues, the coalition is opposing the mining tax. The process from which this new minerals resource rent tax and the expanded petroleum resources rent tax evolved is deeply flawed and by no means broadly representative of key stakeholders. Industry and state and territory governments were all excluded from consultation. In fact, this bill arises from secretive and largely non-transparent meetings devoid of depth, balance and practices cognisant of responsible government. The Prime Minister and Treasurer, to be fair, did hold meetings with senior representatives from three big mining companies in Australia: Xstrata, BHP Billiton and Rio Tinto. This engagement amounts to representation of less than one per cent of the total players within the space.

The coalition believes rather than adding additional burdens to the mining sector there should be support for international competition. The coalition recognises that in a global economy the movement of capital to countries with the greatest rate of return is relatively easy. Buyers buying commodities have alternatives. From an Australian perspective, should we fail to recognise the wealth of mineral resources globally then we lack vision. Other countries have and are developing mining sectors that could well rival our own. Development within Asia's great economies makes clear the level of investment we are currently seeing within the sector. From a Northern Territory perspective, the impact of this tax is not significant in the short term, as commodities which the tax is based on—for example, iron ore and coal—are not significant activities in mining within the Northern Territory. However, with a potential for competitive disadvantage resulting from the introduction of this tax, future exploration and associated benefits to the Northern Territory will most certainly be impacted. I reiterate comments made by my colleagues earlier in this debate.

The Gillard-Greens government is no friend of the broad Australian mining sector. It is no friend of the broader populace of Australia and it is no friend of the Australian economy. As a nation we should be developing and playing to our strengths. It is no secret Australia is a world leader in mining, yet this Labor government wants to drag our vibrant mining sector down and damage the foundations of our economic vibrancy by introducing taxes that our competitors will not be paying. Such is the impact of the mining and resource sector the average Australian would more than likely confirm that it is certainly one of Australia's greatest assets. Indeed, they would probably say that this sector is one of our biggest strengths. This being the case, why is it that this Labor government fails to see and acknowledge the significance of the Australian mining and resources sector as one of Australia's greatest strengths? Instead, the Labor-Greens government has sought to impose two new taxes on this booming sector.

Firstly, we had the carbon tax, about which prior to the election the Prime Minister said, 'There will be no carbon tax under a government I lead.' Fourteen or so months on, we all witnessed Australia's betrayal. Despite the promise and despite deep community resistance, Australia now has a carbon tax. Secondly, we have the mining tax, which is not disparate to the carbon tax legislation. It is evident that this legislation has been rushed. It is reckless in its lack of transparency and is easily the worst piece of policy ever put forward by this government since the original mooting of the resource superprofits tax. There is no doubt in my mind this mining tax is a tax grab, pure and simple.

The Australian credit card has been maxed out by this government. We are on borrowed time. In an attempt to make the minimum payments, the government is looking at ways to get some quick and easy money. What happened to the huge surplus, Australia's Future Fund, left in place by the Howard government? It was squandered. We all know that this Labor-Greens government spent that surplus and much more. This mining tax will do nothing for investment. In fact, this tax will—to use a mining aphorism—undermine the resources cash cow and discourage investment. As many of my colleagues have pointed out, this is a tax that targets mid-tier miners. It is a highly discriminatory tax. The general view is that this tax is another bungled policy proposal by this incompetent government. It further demonstrates the core philosophy of this government: spend, spend, spend; borrow, borrow, borrow; and tax, tax, tax. That is what this government stands for: spend, tax, spend, borrow, then tax again, spend some more, borrow, spend and tax. There is no doubt that the biggest flaw in the mining tax results from its hasty inception—all without consideration as to the economic and potential sovereign risk to Australia.

As I stated earlier, the involvement of the bigger mining companies BHP Billiton, RIO Tinto and Xstrata as the only consultation within the mining sector in developing this tax is not representative of the broader sector. It can be perceived that this limited consultation facilitates a push by the big three for their advantage—an advantage not representative of the small-to-medium miners. It is these miners who have been completely ignored.

The shadow minister for energy and resources has already advised this House that, despite more than a year passing since the first resources tax was proposed, the wider industry is still facing uncertainty and the threat of being disadvantaged relative to our international competitors. Uncertainty and disadvantage are unacceptable impacts for Australia's sovereign risk profile and our international competitiveness. It is concerning that the big three miners have manoeuvred to gain benefits for themselves that smaller miners do not have access to. For example, the introduction of a market valuation system to calculate applicable deductions provides a significant tax shield for the big three, a benefit that the smaller and mid-tier miners cannot access. Smaller companies will suffer under increased compliance burdens consistent with the new governance.

The Henry tax review recommended lower tax burdens for smaller mining ventures. Clearly, the review identified a measure needed to help start-up ventures grow and prosper and to keep mining ventures, in their decline phase, alive longer. In its place, smaller and mid-tier mining ventures will pay a higher effective tax rate under this proposal. According to research released on 3 November 2011 by BDO, a highly respected research company, the mining tax liability on, for example, Rio Tinto, was calculated for the first five years as follows: year 1, zero; year 2, zero; year 3, zero; year 4, zero; and—wait for it—year 5, zero! BDO also calculated the mining tax liability for BHP Billiton. No surprises here: year 1, zero; year 2, zero; year 3, zero; year 4, zero; and year 5—you guessed it—a big fat zero. To provide a balance and in contrast to the big three mining companies, a small emerging miner who is making revenue of between $600 million and $700 million can expect the mining tax revenue for the same five-year period to be: year 1, zero; year 2, $49 million; year 3, $107 million; year 4, $96 million; and year 5, $68 million. From a point of clarity, this demonstrates that this tax is targeted at small, emerging miners.

In reviewing the mining tax we, the coalition, believe the constitutional validity of this tax requires some serious questioning. It is well known from his review that Ken Henry said that the federal government chose not to seek advice on the constitutional validity of this tax before announcing it. Without legal clarification, there is a real prospect that this clumsy piece of legislation may not be lawful under section 114 of the Constitution. As a tax on a resource at the point of extraction, it could potentially constitute a tax on state property, as prohibited under section 114.

As evidenced already within this 43rd parliament, the government has form when it comes to High Court challenges—case in point: the Malaysia people-swap decision. The very real potential exists that the government could be heading back to the High Court over this piece of legislation, alongside the cigarette plain packaging legislation it pushed through. Strong economic conditions require investment, and investors require a return on investment. This bill will not maintain strong economic conditions; it will do exactly the opposite.

The Henry tax review recommended that a national profit based resource rent tax should replace state and territory royalties and that the federal government should negotiate the federal-state implications of such a move. This was completely ignored. The government's decision that there be no consultation on the implications of the mining tax is quite worrying. The implications across the country in terms of state revenues are real. Resource royalties in WA are 20 per cent of that state government's revenue streams. Further, resource revenues in Queensland amount to nine per cent of state government revenues, and in the Northern Territory resource royalties amount to six per cent of the Territory government's revenues.

This bill will damage Australia's capacity to draw foreign investment. Increased sovereign risk brought on as a result of the retrospective nature of the tax, and the large rise in taxation comparative to the overseas sources of investment, will no doubt cause foreign investors to reconsider their positions and think twice before entering the Australian market, particularly where there are other rich resource avenues available. The mining tax is divisive, as I have already said. The government has wedged the three big miners against the remaining 99 or so per cent of mining and resource sector.

We on this side of the House know the real reason why the federal Labor government is introducing this mining tax legislation. Australia is asset rich but the government is cash poor. In fact, it is in debt to the tune of around $100 billion and that debt is growing each day. The government is unable to fund the nation's vital infrastructure projects through the usual channels due to this massive national debt. Every single day, this government borrows over $100 million. This country has never in its history been in more debt than it is now. The government cannot meet its obligations to the Australian people. Massive overspending—for example, on pink batts and school halls—is a result of poor policy. Poor governance and incompetence are the reason the coffers are dry, and that is why this government is determined to introduce this mining tax.

It is time the government stopped. It needs to step back and reassess. A start-from-scratch approach is absolutely appropriate. Development of genuine tax reform to give Australians lower, fairer and simpler taxes through an open and transparent process is warranted. The parliament should stop the mining tax from going ahead and force the government to start again. It needs to reverse its credit card mentality and get its spending under control.

One of the most concerning outcomes of this legislation is the implications for our structural deficit. The mining tax will help the government create the illusion—smoke and mirrors, if you like—of an early surplus in 2012-13. The reality, however, is less impressive. It will leave the budget worse off from 2013-14 onwards. If Treasury projections for mining tax revenue to 2020 are an indication, as released under freedom of information laws, the figures indicate that Treasury expects revenue to reduce over time. The revenue will be not only downward trending but also volatile. For the first year since the mining tax was announced, predicted revenue outcomes have fluctuated from $7.7 billion to $24 billion. If Treasury forecasts are right, as the revenue from the tax diminishes, costs associated with measures the government has attached to the tax will continue to grow strongly. To quantify this point, if we look at the cost for the proposed increase in compulsory superannuation, for example, an increase in compulsory superannuation contributions to 12 per cent is expected to see a cost rise in the order of $3.6 billion in 2019-20. For the same year, Treasury projections reveal revenue from the mining tax at $3 billion.

The Senate inquiry into the mining tax has conservatively estimated that over the next decade the net cost to the budget will be $20 billion. As already stated, the coalition does not support this legislation. The mining tax remains a tax based on an exclusive deal negotiated with the three largest miners, who were given privileged access, and there was no consideration of our local, emerging miners. This tax is divisive to the country, it distorts the national economy, it diminishes our international competitiveness, and I will not support a tax that will drive investment offshore to countries that are now offering our miners incentives, not taxes.

Debate interrupted.