Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Hansard source

Senator Wong clearly does not like it. After being moved from the climate change portfolio, she is struggling in the finance portfolio. I understand that you do not like the fact that states have rights. They created the Commonwealth, Senator Wong; the Commonwealth did not create them. Perhaps you should remember that, as you are supposed to be representing the interests of your state in this parliament. My point is this: the states own the minerals. They can charge the royalties that they need for the extraction—the one-time use—of those minerals. Indeed, that is what they are doing.

The problem that we have is that this government is not content to let the states earn money through one of their major revenue sources. They think that centralising power and sucking up the money to Canberra is somehow going to provide a better result for the Australian people. Clearly, it is not. You only have to look at the track record of this government and the mismanagement of taxpayer resources by this government to understand that they are not fit to hold the Treasury benches.

There is going to be a big impact on the mining sector. The great big new super tax on Australia's mining tax is going to cost Australians significantly through lost investment and lost jobs. In the theoretical world that some textbook economic gurus inhabit—and I recall Mr Henry saying this—the tax could range up to 99 per cent of profits and people would still invest. The theory may sound good but it is not practical, because there is a finite amount of money in the world and there are opportunity costs. If investors are going to be taxed more to develop mines in this country then they will look at alternative projects in Brazil, Africa or Papua New Guinea. One stockbroking firm recently wrote that the sovereign risk was less in Papua New Guinea than it was in Australia. That is a sad indictment by a professional analysis on this government's economic track record.

Labor will also tell Australians that this mining tax is going to fund an increase in compulsory superannuation. I happen to support Australians saving for their own retirement. This government continues to tinker with superannuation and to make it almost unattractive for many people, because there is no certainty and people cannot rely on it. But let us put paid to this abject lie. This mining tax will not fund an increase in superannuation. Businesses will be paying for any increase in compulsory superannu­ation contributions for their employees. That cost will be borne by businesses—including the mining companies, might I add, many of whom employ tens of thousands of Australians. That would be a fourth level of additional taxation of these mining companies.

The other point that needs to be highlighted to the Australian people is that Labor's mining tax has an accompanying $4 billion black hole. And it continues to grow. While this will come as no surprise to those of us who have observed the lack of financial management skills in the Labor Party—particularly over the last four years—the Gillard mining tax will actually leave the budget worse off. Can you believe that? They are imposing another tax, a new tax, that will leave the budget worse off. Over the medium to long term it will worsen the current structural deficit.

To provide a bit of history to this, over the year since the mining tax was announced revenue estimates have jumped from $12 billion for the 'resource super profits tax', as it was then, to $24 billion, for the 'resource super profits tax with revised commodity price assumptions', dropped to $10.5 billion post a special deal that was done after taking into account further revised commodity price assumptions and then dropped to $7.4 billion after they took into account some exchange rate changes. Now it is at $7.7 billion after further exchange rate changes. Just two days ago in this place in question time we were told by the minister for finance that she did not have a crystal ball. They forecasted these sorts of changes and these sorts of revenues and yet they could not even keep those forecasts coherent and straightforward for a period of 12 months. What a bunch of clowns; what a circus this government is. PT Barnum had nothing on this lot. They are operating on the premise that you can fool some of the people all of the time and all of the people some of the time. Clearly, the 31 per cent of people who vote for the Labor Party can be fooled all of the time.

Treasury projections for the minerals resource rent tax revenue to 2020 released under FOI indicate that Treasury expects revenue to reduce over time as commodity prices come back to more normal levels after an international supply response to the current record highs. And we are starting to see this moderation in commodity prices already. The cost of the measures that the government has attached to the MRRT will continue to grow strongly over time. So they have one little bit of capital to fund an ongoing recurring expenditure. My colleague and friend Senator Cormann has said that this proposed increase in compulsory superannuation is expected to cost the budget $3.6 billion in the year that it is fully phased in. In the same year, Treasury projections of MRRT revenue is $3 billion—another $600 million black hole. While the MRRT will help the government create the illusion—along the lines of PT Barnum—of an early surplus in 2012-13, it will leave the budget worse off from the subsequent year and in every year after that.

A Senate inquiry into the mining tax has conservatively estimated that over the next decade the net cost to the budget will be $20 billion. This is a new tax that is going to discourage investment and employment and leave the national budget $20 billion worse off. You would not design something like this for an episode of Yes, Minister or The Hollow Men. Unfortunately, we are experiencing real life versions of those two parodies at work in our national parliament. I want to return to the issue of the states. This tax effectively makes the federal budget hostage to the decisions of the state and territory governments if they decide to increase royalties on iron ore and coal—as indeed they can because they own the iron ore and coal. Western Australia, New South Wales, South Australia and Tasmania have already increased these royalties. It will lead to a hit on the federal budget to the tune of about $3 billion. That is the figure so far and it could increase in the future, and Queensland has clearly reserved its right to do this in the future. I want to point out that none of the states whose interests it is this house's responsibility to protect were part of Julia Gillard's mining tax deal. Serious resource taxation reform, if there is to be some, requires engagement with the federal, state and territory governments and Labor simply did not care enough to do this.

This mining tax came about by a flawed process because initially the RSPT, as it was called, was announced without consultation with anybody. There was no consultation with industry and the state and territory governments were not consulted despite serious implications, including the constitutionality of it, for their own source revenue. The Henry recommendation about taxation reform had been for a national profit based resource rent tax to replace state and territory royalties and said the Australian government should negotiate the federal-state financial relations implications of such a move. That did not happen. Labor did not pursue genuine tax reform in this area or any other area. It just came up with an ad hoc workaround supplying some ideas that seemed to make everything more complex and actually had a negative impact on the budget bottom line.

Of course, the negotiations were secret. The MRRT and the expanded profit resource rent tax were negotiated exclusively in secret between the Prime Minister, the Treasurer and the resources minister—without any officials apparently—representing the government and the managing directors of the three biggest mining companies: BHP, Rio Tinto and Xstrata. They would be the same three extremely wealthy individuals that the Treasurer seems to so dislike, the people who actually make money, run companies, employ people in this country and invest in this country. Where is the arbitrary limit on who is too wealthy and who is not? Is it okay for a billionaire running a public company to engage with the Treasurer but not okay for a billionaire or another wealthy person who runs a private company and puts their own money on the line to engage in public debate in this country? It is a joke, as this government indeed is.

The government excluded all the competitors of the big three from the negotiation process in designing a tax which further entrenched the dominant position of the big three, making it harder for the small- and mid-tier mining ventures to compete with them. That is an appalling indictment of the priorities of this government. There has been no consultation with any of the state or territory governments about the implications of the mining tax for them. That is despite the fact that resource royalties represent 20 per cent of the Western Australian state government revenue, nine per cent of the Queensland state government revenue and six per cent of the New South Wales state government revenue. In my own state of South Australia, the expanded Roxby Downs mine is somehow expected to contribute upwards of 20 per cent of gross state product in the future. These things can all be jeopardised by this approach by this government.

I get sick of saying it—I really do, and I am sure the Australian people are tired of having to listen to it—but this is yet another example of the government's policy mismanagement. The Australian people have unfortunately seen this bungling time and time again. It does not mean we should just stand by and let it all happen and say, 'Oh, well, we'll fix it at the next election.' We have to stand up and speak against it and campaign against it now because I believe the Labor Party do not understand fully—or perhaps they do, and that is even scarier—the implications of what they are doing to this country.

The coalition will do all it can to highlight the problems with this tax because it is not in the best interests of this nation. It is unfair. It gives unfair competitive advantage to the big three companies, who were allowed to actually design this mining tax. The big three miners, as I mentioned earlier, will receive a significant tax shield through the introduct­ion of a market valuation system to calculate application deductions. This is not available to small- and mid-tier companies. Smaller miners will also be subject to increased compliance burdens, another pet love of the Labor Party. They will also pay MRRT sooner or continue to pay the royalties on production. This is despite what the Henry taxation review recommended in support for smaller mining ventures to help the start-ups grow and prosper and to keep mining ventures in the decline phase alive longer.

Due to Labor's mining tax, small- and mid-tier mining ventures will pay a higher effective tax rate under the Gillard MRRT than the big three, who were given exclusive access to negotiations with the government. Of course, this is divisive. It has put the big three miners against the rest. What adverse effect will this have on the future of this industry, which has given so much to Australia and driven so much of our prosperity? Dr Henry confirmed that 65 per cent of mining tax revenue will come from iron ore production in Western Australia. It is mind-boggling that this one tax will raise 65 per cent of its revenue from one state economy, about $25 billion out of the $38.5 billion in revenue over the next decade. Remember that there is going to be a $20 billion cost to the federal government as a price for pursuing this ideological obsession with higher taxes.

Labor will try to tell Australians any manner of things, such as they are establish­ing a regional infrastructure fund, but can we really believe they have any interest in regional Australia after what they have done? Labor's mining tax is a knife in the heart of the driver of much of the prosperity in regional and remote Australia given that there are so many mines there. Labor's words of support for regional Australia ring hollow, and those people living in rural and remote areas are too smart to fall for the words of such hollow men and women.

In conclusion, for over four years this government has spent taxpayers' money like a kid in a candy store, splashing around the cash with little thought of the consequences, either short term or long term, and now they are desperately scrambling to get back on track. But they are so far off the track that there is no hope for them to restore this country to the path it was hitherto on. The policies they have put forward to achieve their goals are poorly thought out, irresponsible and damaging to our own domestic industry. Add to this Labor's mismanagement, their lack of consultation and transparency, their inability to speak coherently and consistently about the national interest, and we have a veritable policy disaster for this country.

This government, its Prime Minister and ministers, needs to spend less time in secret backroom deals plotting who is going to be the next Prime Minister or how it can drag people out of retirement to replenish its ministerial stocks. It needs to stop plotting ways to destroy our economy and each other. It needs to spend more time working for the interests of Australians doing what needs to be done to secure our financial prosperity and our future. The Australian nation needs a government that is prepared to do that. The Australian nation, the Australian people, deserve a government that is prepared to do that. The entire country needs an election so they can elect a government who is prepared to do that.