Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

As a Western Australian member in this place, and I see my WA colleague the member for Tangney here too, we know that in the early hours of this morning the government did a secret deal with the Greens which allowed the passage of the mining tax which will affect all Western Australians. We know it was a secret because the member for Melbourne this morning told journalists that Bob Brown had been forced to sign a confidentiality agreement before passing the tax. I think it says a lot about this government that it would try to hide the deal with the Greens by making them sign a confidentiality agreement.

This is not the first time that this government has been secretive about its mining tax legislation. That began weeks before the last election, when the government did a deal with the three big miners, who dumped on the rest of their industry by agreeing to a tax-free 10-year deal. We are fortunate in this parliament to have a Senate Select Committee on Scrutiny of New Taxes, and it is with interest that I note its report of 29 June 2011 into the mining tax. I commend the work of the committee and in particular their investigation into the effect of the tax on Western Australia. The report states:

Since the announcement of the Gillard Government's mining tax deal, various Senate Committees and the Senate itself sought access, again and again, to information about where the mining tax revenue was expected to come from ... For more than nine months the government refused to release any information in response to those requests. The government completely ignored them and continued to keep the information secret. This is even though David Parker, the then Executive Director of the Department of Treasury's Revenue Group, had given evidence to the Senate Fuel and Energy Committee back in July 2010 that it would not be a difficult piece of analysis to perform. Eventually some information was released by the Treasury under Freedom of Information.

It took a freedom of information request to find out this information. Once the information was revealed, it became very clear that this was a tax on Western Australia. It revealed that, at the time the Gillard government entered the deal, it expected more than 80 per cent of the revenue from the mining tax to come from Western Australia. Eighty per cent! Instead of calling it the mining tax, they should have called it the Western Australian tax.

No wonder the Prime Minister did not reveal this information to the Western Australian people prior to the last election. No wonder we had to wait months and months for freedom of information requests to reveal these details. No wonder the Premier of Western Australia, Colin Barnett, is strongly opposed to this tax. It threatens many jobs and investments in Western Australia.

When Kevin Rudd, as the then Prime Minister, announced the Henry tax review he argued that it was a once in a generation opportunity for root and branch reform of our tax system to make it simpler and fairer. Instead, what we have ended up with is a multibillion dollar ad hoc and lazy tax grab which makes our tax system manifestly more complex and less fair. When Kevin Rudd gave a thinly veiled threat to the mining industry two years ago in the Great Hall, it was obviously not just a threat from him but from the Labor government. It has now been carried out.

Perhaps one of the most significant concerns raised about the mining tax is that it will widen the deficit. Alarmingly, the mining tax package will significantly worsen Australia's structural budget deficit over time, with Labor's related proposals underfunded beyond the forward estimates. The decision to link a highly volatile and downward-trending revenue stream to the increasing costs of a number of related proposals is a recipe for another Labor Party fiscal policy disaster. Over the forward estimates the tax package will cost Australia's mining sector over $11 billion and will worsen the budget position by over $6 billion. This comes on top of the carbon tax, which will add another $4 billion to the budget deficit. Only Labor could introduce two new taxes that both substantially worsen the budget position, but this is systematic of a government that needed to do over $13.5 billion of deals with taxpayers' money to get the mining tax through.

Adding a new tax on profits from iron ore and coal production on top of the existing royalty and company tax arrangements is more distorting of the status quo and should not be supported. That was also the clear view supported by a broad cross-section of eminent economists who gave evidence before the Senate committee, including two who had previously signed a letter in favour of a resource rent tax.

The Gillard mining tax not only creates distortions; it divides Australia. The government has divided the mining industry by giving the three biggest miners the exclusive opportunity to help design the tax while all their competitors were locked out of that process. Smaller and mid-tier mining companies feel understandably aggrieved that the proposed mining tax will make it harder for them to compete with those big multinational, multicommodity companies. They also divided Australia by exclusively targeting resource-rich states with the new Canberra tax grab. Resource-rich states rely to a large degree on revenue from mining royalties to help fund important services like health, law and order, education and transport where other states rely to a larger degree on revenue from gambling taxes.

The Gillard government never did its homework. It never engaged with state and territory governments before signing the mining tax deal, and this new tax should be condemned.