Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Hansard source

I rise today to speak about Labor’s great big new tax on mining. Labor’s latest massive tax grab is a tax grab which, it saddens me to say, has been initiated by a Prime Minister who has completely lost the plot, a Prime Minister who has gone mad, a Prime Minister who, quite frankly, is getting dangerous and for whom it is time to go. I say this because Kevin Rudd’s latest tax grab is a reckless and irresponsible attempt to nationalise our mining industry. It is already putting our economy at risk and it is already putting jobs at risk. Of course, the way that Labor is trying to spin their way out of the absolute disaster they have created over the last week is just breathtaking.

Yesterday, here in this chamber we had Minister Kim Carr trying to suggest that this massive new tax will actually result in increased investment, increased mining production and more jobs. I guess it takes a real socialist minister to come up with the view that massive new taxes will actually lead to new jobs and new investments. Only a socialist minister could come up with that sort of response. But I did go out of my way and had a close look at exactly what the minister said yesterday in his remarks during question time, because sometimes in the hurly-burly of question time you cannot hear every last word. In fact, there was a very important qualifier in his response. He said that, in the long run, mining investment will rise by 4.5 per cent, jobs by seven per cent and mining production by 5.5 per cent. I do not know what Minister Carr meant when he said ‘in the long run’. All is can say is that in the long run we are all going to be dead. What I am concerned about is the short and medium term and that the short- and medium-term actions of this government are going to put the long-term future of Australia at risk—and I believe they will. The latest massive and reckless tax grab that Kevin Rudd has put forward here is going to put our short-, medium- and long-term economic security at risk.

Of course, Kevin Rudd has form on this. In his first budget we had the $2½ billion tax grab on the North West Shelf gas project. Those of us from Western Australia are used to this eastern states centric, antiwest Australian Prime Minister running policies and running tax grabs that are bad for Western Australia. I guess the point to be made with this latest tax grab is that it will hurt not only people across Western Australia but people right across Australia because it will cost jobs, it will drive investment offshore, it will have a serious impact on the superannuation incomes of Australians right across Australia and it will have an impact on the standard of living of people right across Australia.

Kim Carr might think that this tax grab is going to generate new jobs but his Prime Minister, who is running different spins depending on which part of the country he is in, does not actually agree with him. I draw the attention of the Senate to an article in the West Australian on 30 April which quoted Kevin Rudd quite extensively. Essentially the argument that Kevin Rudd was running in the West Australian on 30 April—I am paraphrasing but I will get to the quotes in a moment—was that the super tax on the mining sector would help us address the skills shortage. In Western Australia we are facing skill shortages. He said: ‘You’ve got a problem; I’ve got a solution. Your problem is skill shortages. You know what? I have a massive new tax which can help fix it for you. In the eastern states you need more money for this, that and whatever. I have a response for you. A massive new tax will fix it for you.’ Kevin Rudd said in the West Australian that:

A growing resources sector will draw capital and workers to the mining States, increasing pressure on other industries and regions as they compete for employees and investment …

So he is saying, ‘There are too many workers coming from the eastern states into the mining sector, so we have to slow that down. The only way you are going to slow that down is if there are fewer jobs in the mining sector.’ So, according to Kevin Rudd himself, he is pursuing his tax as a strategy to make sure that mining companies and resource companies in Western Australia—and perhaps Queensland, Senator Mason—will not draw on the workers from western Sydney, Melbourne and perhaps around Cairns. He is saying, ‘We cannot have the resources sector draw on all these workers. We have to make sure that, rather than having a two-speed economy, we have a one-speed economy—one where we all slow down and do not have this massive growth in jobs et cetera.’

We have Kevin Rudd on the one hand saying, ‘This massive new tax is part of our strategy to slow down the resources sector and to slow down the economy in Western Australia and parts of Queensland so that the lowest common denominator of the slower economies of New South Wales and others can catch up.’ Then we have Kim Carr on the other hand saying in here that over the long run this is actually going to lead to significant growth in the mining sector. The government has got to get its messages right.

This Prime Minister has hung all the WA Labor members and senators out to dry—and they know it. Sharryn Jackson in the marginal seat of Hasluck is fighting for her life. I hope the good people of Hasluck will be supporting Ken Wyatt, the Liberal candidate for Hasluck, who will stand up for Western Australia and will stand up against an eastern state centric government like this one. We have an off-the-record revolt happening in Western Australia by Labor members and senators. There are not that many of them. We do not have that many Labor members and senators in Western Australia. We have eight. There are four lower house members and four senators. Two of them are ministers and one of them is a parliamentary secretary. There are five Labor backbenchers from Western Australia.

In a recent article in the West Australian on 5 May 2010 titled ‘Labor knives out for Rudd’, four of them came out and attacked Kevin Rudd—off the record, of course—in the context of this latest tax grab, which they know is not in the best interests of Western Australia or the people they represent. I call on Glenn Sterle, Mark Bishop, Chris Evans, Louise Pratt, Stephen Smith, Gary Gray, Melissa Parke and Sharryn Jackson to come out of the shadows. Come out of the shadows and represent your constituencies. Stand up for Western Australia. Stand up for good public policy. Stand up for what is right for our economy, instead of, in this cowardly sort of way, briefing against your Prime Minister in an off-the-record fashion.

I will give you just a few of those quotes. There are some interesting ones. Quote No. 1 says:

“They—

that is, Labor Party central command—

have clearly made a political decision that there is more to be gained in margins and seats on the east coast than there is to be lost in Western Australia,” one Labor source said of the looming resource super profits tax.

The second quote is from Treasurer Wayne Swan commenting on the Newspoll drop down to 49 to 51 and various other drops related to the Prime Minister’s ratings. It reads:

Treasurer Wayne Swan said yesterday the decision to increase tax on cigarettes last week could be among the unpopular decisions that triggered the poll drop.

A senior MP quipped in response: “Mate, that’s a s...load of smokers. But seriously, let’s wait and see if this is a trend. Government’s very hard and only the impotent are truly pure.”

The next quote is a beauty. A Labor MP from Western Australia said:

We have a spineless PM whose timidity is only matched by people around him …

Quote No. 4 reads:

Another said: “He will get the next crack (at the election) but that’s it and then there will be a new leader.”

Here we have four out of eight Labor members and senators in Western Australia briefing off the record against their Prime Minister in the wake of this massive great big new tax on mining. We are saying to them: ‘Come out of the shadows. Join Liberal members and senators. Join federal Liberal candidates like Ken Wyatt in Hasluck. Join Michael Keenan in Stirling. Join Steve Irons in Swan. Join Luke Simpkins in Cowan. These are candidates and members of parliament who are standing up for Western Australia, who are standing up for their constituents and who are actually not frightened to criticise a government when it deserves to be criticised.

There are some Labor representatives who, unlike Labor members and senators from Western Australia, are actually prepared to stand up and be counted. We have Martin Ferguson, of course—a minister in the Rudd government. He has conceded what everybody knows, and that is that nobody can give an undertaking or guarantee that the new resources tax will not jeopardise future projects. He knows that future projects are at risk.

Western Australian Liberal members and senators met this morning with both BHP, as a representative of a large Australian resources company, and a group of junior explorers and mining companies as representatives of small and middle-tier companies. As one they said that this will have a serious impact on future projects across Australia. Investment has already dried up as a direct result of the Rudd government’s reckless, irresponsible and ill-thought out actions in relation to this tax.

Who would actually invest money after the Prime Minister makes a half-baked announcement saying, ‘We want to whack a 40 per cent tax on you but we are going to tell you about the detail later.’ Well, let us sit down and see how it all works. ‘And, by the way, don’t worry because we have had this Petroleum Resource Rent Tax for the last 20 years,’—disingenuously, they said—‘and that didn’t have a bad impact.’ Let me just say a few things in relation to that. The Petroleum Resource Rent Tax, which of course applies to resources in Commonwealth waters on offshore oil and gas production—not on a resource that is mined in the states and territories where there is already a royalty regime in place—actually applies on profits of six per cent plus five to 15 per cent depending on the circumstances, because there is a whole series of calculations and methodology in place that takes into account a much more reasonable profit assumption. This so-called superprofits tax is to apply on profits above six per cent. Since when was a profit above six per cent a superprofit? If six per cent is the only profit that you are reasonably expected to make, why would you not just put your money in the bank? Why would you not just invest in Commonwealth bonds? Why take a risk?

This socialist government, of course, does not know about the risk/reward equation. They do not know that somebody who takes a risk would want to have the prospect of a reasonable reward. This is a government who thinks, ‘Just give them what everybody else can get and let’s collect everything else.’ And one thing that has not been widely understood, I believe, is that the government is actually now prepared to take a share of the risk too. If a mining project falls over, the government is going to cover 40 per cent of it. Since when is it up to government to take risk? The way it should work is that private businesses, individuals or companies who are prepared to take risk should be able to enjoy a reasonable reward. There has to be a reasonable risk/reward equation. But of course this government does not believe in that whatsoever. This is the most socialist government we have ever had in this country. Gough Whitlam was an outstanding Prime Minister compared to this madman that we have in the Lodge right now. This really is a matter of very, very serious concern.

There is one other aspect to this tax, which is that it is extremely unfair. The PRRT was used as a justification by Kevin Rudd and Wayne Swan as to why this should work, but the PRRT was applied as a prospective tax. It was a tax that was to apply on new projects. What Kevin Rudd and Wayne Swan have come up with here is a retrospective tax. Retrospective taxes are unfair and unreasonable. They increase uncertainty and they have a significant impact on our sovereign risk profile as an investment destination. If you make a massive investment in a resources project across Australia, you should have a reasonable expectation that the tax arrangements that are in place are not going to be substantially altered.

This leads me to my next point: Australia as a destination for investment is going to be seriously impacted by this. The competitiveness of our taxation regime compared to other countries around the world is an important matter, and of course we have had Canadian MPs and ministers running around saying: ‘Come here. Come and bring your investment to Canada. Don’t worry about Australia,’ because in Australia a resources company will pay around 57 or 58 per cent of their profits in tax if this so-called superprofits tax were to come into effect.

I am about to run out of time and there will be other opportunities to talk about this. But just to conclude on this point: everything that this Prime Minister has touched, he has stuffed up. Whenever he runs out of money he goes for the tax grab. This is a prime minister who should not be trusted with more money. This is a prime minister who should have access to less money. (Time expired)