Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I rise this afternoon to comment on the Minerals Resource Rent Tax Amendment (Protecting Revenue) Bill 2012. This is a very important piece of legislation introduced by the Greens, and it goes to the heart of the question of what sort of nation we want in this century. It goes to the heart of that question because, if you want to make and put in place the kinds of plans and the consequent infrastructure that the country needs, you have to raise the money to be able to do that. The Greens have said for a long time that we need to massively move towards a low-carbon or zero-carbon economy. We would like to see in Australia high-speed rail linking our cities. If you go to Europe or see what is happening in China—Japan did it years ago—it makes eminent sense for this country to move to high-speed rail. If you want to put in place the kind of infrastructure that will anticipate the extreme weather events that global warming is bringing us then you have to have the dollars to be able to do it. Equally, the Greens have secured Denticare, a new capacity to assist people to meet the needs of their dental health, but again it requires funding. My colleague Senator Siewert has been running a strong campaign around the country to get people out of poverty and to make sure that we can allow Newstart to be increased by $50 a week, but the question becomes: where is the money going to come from? The Prime Minister today has announced infrastructure funding to anticipate extreme weather events—with the Warragamba Dam, for example—but $50 million goes nowhere near the kind of infrastructure that is needed. Even $100 million, as she has suggested for the whole nation, goes nowhere near the kinds of changes that need to be made.

Then—the fact is that, in an Asian century, we need to be competitive—we need to lift our education standards. That means a massive investment in education, the arts, innovation and entrepreneurial skills. For that to happen you need to implement the Gonski review, and that requires billions of dollars and should not be back-ended to 2020. Then you have the National Disability Insurance Scheme. I do not think anyone disputes the fact that we need a national disability insurance scheme in this country, and the Greens are the first to agree. But all of these promises are essentially hollow unless there is the money to roll them out. You cannot just put a tiny deposit down in the lead-up to an election and say that somehow you have delivered on these things. You need to raise the money.

That is why Australians should be getting a fair return for the mineral resources which are owned by the people. These mineral resources are not owned by the mining companies; they are owned by the people. And they are, in many cases, non-renewable resources—in fact, in all cases they are non-renewable resources when it comes to ores: you dig them up and ship them away once and that is it. So we need to make sure we are getting a decent return on those.

One of the most grave crimes against future development in the nation occurred in 2006 when the Prime Minister, Mr Howard, and the then Treasurer, Mr Costello, gave back the huge benefits of the boom at that time by giving tax cuts all around. There were headlines like 'Manna from heaven,' and rivers of gold pouring out all over the nation. That money should have been kept and invested in proofing the country against climate impacts, and, recognising that we are facing peak oil, in building massive public transport infrastructure around the country. There were huge opportunities then to invest the money, but instead it was just thrown out into the community in massive grants to everyone to make everybody feel good, and now we are left with a need for infrastructure—in terms of brains capital and human capital, as well as physical infrastructure—for the country. So the Greens are saying that we should get a fair return from our mineral resources and that the problems with the current minerals resource rent tax need to be fixed.

This bill would amend that tax to correct one of its most egregious flaws, and that is the rebating of any future increases in state royalties, which allows the MRRT revenue to be further eroded by state governments. This flaw gives a blank cheque to state governments. They can lift royalties, knowing that they will effectively be paid by the Commonwealth government rather than by the large mining companies. That is appalling. This bill amends section 60.25 of the Minerals Resource Rent Tax Act 2012 to provide that any increase in royalties after 1 July 2011 should be disregarded when calculating royalty credits for the MRRT. It is a first step towards ensuring that the mining sector makes a fair contribution to the society whose assets it consumes in generating its wealth. It is essentially the amendment that the Greens sought to make to the bill in March 2012.

This design flaw has not been criticised just by those on the left. It goes against what the original designer of the mining tax, Dr Ken Henry, advised. It has been criticised by the OECD, by conservative economists such as Henry Ergas, and by Nick Greiner and other members of the GST Distribution Review. It is only in the bill because of the weakness of the Treasurer, the Prime Minister and the Minister for Resources and Energy, when they sat down with the big mining companies and tried to appease them so that they would call off their advertising campaign. Effectively, the miners wrote their own tax, knowing full well they would never pay it.

The wording used in the heads of agreement between the new Gillard government and the big three mining companies said: 'All state and territory royalties will be creditable.' Then, after the 2010 election, the Policy Transition Group, chaired by former BHP chair Don Argus and resources minister Martin Ferguson, was established to sort out the technical details of the MRRT. It recommended that all current and future state and territory royalties on coal and iron ore should be credited, which the government accepted.

Restricting the crediting of royalties to the rates in place at 1 July 2011 would raise an additional $2.2 billion over the forward estimates. The government has made a mess of the treatment of royalties in the MRRT, and the Australian people are paying. No group is paying more significantly than single parents, who have had their support payments taken away while the mining industry collectively has only paid $126 million. In fact you have Marius Kloppers walking away with $75 million—as a handshake, as his retirement benefit, as his walking-out-the-door ticket—and single parents left without that support payment, and those on Newstart with none of the extra money that they need. Yet BHP is essentially only paying $77 million in the tax—$2 million more than Marius Kloppers walked away with.

The other significant flaw in the MRRT is the ridiculously generous depreciation provisions. The legislation allows companies a choice for determining their asset base for the purposes of depreciation. One of the choices is a market-value approach. This is an extraordinary departure from standard accounting practice and allows companies to claim deductions for costs they have never incurred. Why on earth would the Treasurer, the minister, Martin Ferguson, and the Prime Minister agree to allow the companies to claim deductions for costs that they have never incurred? Market value is not a measure of costs paid out but of the amount the market is prepared to pay for an asset. This benefits the big miners, who have well-established mines now worth a lot more than their initial investment.

I have circulated an amendment to stop this rort and remove this choice so that only the book-value approach can be used. The amendment commences on 1 July 2013, so it affects payment not for this year but for those years into the future. I note that the book-value approach is generous in its own right as it includes an uplift rate. We should not be giving the billion-dollar multinational mining corporations more than that. If passed, the amendment would raise an additional $2.2 billion over the forward estimates.

Dr Parkinson, the current Treasury Secretary, identified at estimates five factors that determine the revenue raised by the MRRT: commodity prices and volume, the exchange rate, state royalties, the starting cost base against which the mining companies can claim depreciation, and the difference between prices at the mine and at the docks.

In estimating the depreciation costs Dr Parkinson said Treasury had relied on initial estimates from the mining companies which they may well have changed since. In effect he admitted Treasury had developed their assumptions based on conversations with the mining companies before the tax came in, but the mining companies had had the opportunity, once the tax became law, to rethink what their starting base would be. Why on earth would you have given the mining companies the ability to determine how much they would pay and adjust the formulas according to what they wanted?

Former Treasury Secretary Ken Henry, in an appearance before the Senate Select Committee on Fuel and Energy in July 2010, admitted that no Treasury officials were directly involved in the negotiations between the government and BHP, Rio Tinto and Xstrata. I find it extraordinary that the Prime Minister, the Treasurer and Minister Ferguson thought that they could manage this negotiation without the expertise of Treasury. That is an extraordinary thing. What it will do is put out there into the heartland of people who perhaps thought that if there was one thing that Labor could do it was actually manage the economy—in terms of accounting practices at least—that, when push came to shove, the Prime Minister, the Treasurer and Minister Ferguson excused the experts and brought in the people who were looking after their own interests absolutely, 100 per cent—Rio, Xstrata and BHP—and allowed them to determine the terms. You can only assume from that that the deal was that the mining industry agreed to a tax that they knew they would never have to pay and that the government would appear to have a win, to have negotiated an outcome, knowing that in fact the outcome would not deliver anything. That is the only conclusion you can reach.

Again, it goes to the heart of the competence of the negotiators in that negotiation. That is why I have been asking: where is the Minister for Resources and Energy, Mr Martin Ferguson? He has not been seen for months. Whilst the Prime Minister and the Treasurer have been out there trying to defend their role in this, the minister whose job it is to look after resources and energy seems to have gone AWOL. If you go to his website, he has not got a single transcript on there from after September last year. I have to ask: where does that go to in terms of transparency, or is the minister hoping that no-one will notice, that the people of Batman will not notice, that he is nowhere to be found in terms of his accountability, and culpability, in relation to this particular disaster?

The Parliamentary Budget Office has costed a revised mining tax with the following reforms: a 40 per cent rate of tax, royalties credited at rates in place at 1 July 2011 and the depreciation starting base restricted to the book value. If you take those three things together, those three improvements, that would raise an additional $26 billion over the forward estimates. I began my speech by saying it is a hollow promise to say you will deliver the Gonski education reforms or the national disability insurance. There is no hope at all for people out there on Newstart if you are not prepared to take on the mining industry to raise the money to be able to fund these critical pieces of social infrastructure which benefit the entire community. We need to be putting money into physical infrastructure—for example, high-speed rail and public transport systems. There is no use standing up in Western Sydney talking about more freeways; what Western Sydney needs is light rail. As the Parramatta City Council and the Greens have been saying, we need to be able to invest in the infrastructure of the future. We need to get people off freeways and into much more efficient public transport systems. Everywhere you look in the world, the competitive cities are the ones that have got rid of congestion, got people onto public transport and made cities more liveable with more green spaces, more pedestrian access, more public transport, more cycleways and fewer freeways. And that is what is necessary in Western Sydney.

But where are we going to get the money to drive this kind of infrastructure if we do not make the mining industry pay their way? The Greens have argued for a long time that we need a sovereign wealth fund and that it should be set up so that you genuinely use the benefits of the boom to accumulate not only the balance of the fund but the interest on the fund in order to invest in the kinds of social and physical infrastructure I am talking about. We need a first-class education system; we need to invest in research and development; we need public transport; we need high-speed rail; we need to get ourselves rapidly moving off the old coal fired generators and into the new energy providers, 100 per cent renewable energy, as quickly as possible. We need these things and that is why you have to raise the money to pay for them.

The Parliamentary Budget Office costed that royalty change in this bill on their own. They determined that it would mean raising an additional $2.2 billion over the forward estimates from 2012-13 to 2015-16. The PBO costings showed that making the depreciation amendment on its own would have resulted in the MRRT raising an additional $2.2 billion over the forward estimates over that same four-year period. So I would encourage the Senate to support this bill. We have the bill in the Senate and we have now successfully moved for a Senate inquiry into the flaws in this bill. We also need to provide for the opportunity to fix it, to improve it, so that we secure the funding. The Greens have no interest in allowing the mining industry to walk away when 80 per cent of the profit from these big miners go to overseas shareholders. These profits leave the country. We want to make sure that those big mining companies actually pay a fair return on the resources that belong to the people in this country.

Surely it is not too much to ask a parliament to secure those resources.

The only reason we have not secured them is political. When you think about how this happened, you will see it happened as a consequence of Prime Minister Rudd losing the prime ministership over the fact that the mining industry bullied the government of the day by running a massive advertising campaign—a $20 million advertising campaign—that has saved them billions of dollars. They are laughing all the way to the bank. After succeeding in bringing down one Prime Minister, they succeeded in diddling the nation through inept negotiations between the next Prime Minister, the Treasurer and the minister. That is what happened. It was the politics of the day that did the Australian people out of a fair return which would have enabled us to spend on the things the nation needs.

That is where the coalition are disingenuous in this, because the coalition do not want a mining tax at all. They do not want the big miners to pay a fair return to the Australian people for our resources; they are more than happy to have the profits leave the country. The question to the coalition is: where are they going to get the money from to be able to invest in improving Newstart, to be able to invest in high-speed rail, to be able to invest in education, to be able to invest in Gonski reforms and to be able to invest in national disability? That is not to mention the five per cent emission reduction that they say they are committed to, which they do not have the dollars to actually do; nor do they have the dollars to upscale to the level of emission reduction necessary as a to face up to the science of climate change. So we have a coalition who do not want the miners to pay at all and a government who have been inept in negotiating with the miners to the point where they have embraced the interests of the miners at the cost of the people.

The Greens are standing here saying: 'We care about the people of Australia. We care about the environment.' We clearly have a vision for the future: to transition to a low-carbon economy and then a zero-carbon economy, and to have a society in which people are well educated and well cared for, where we have a decent health system and Denticare rolled out and we do not have people absolutely constrained in situations of poverty and homelessness because we say we do not have the money to deal with it. We have the money to deal with it if we have the political courage to take on the big miners. The Greens are prepared to stand up to the big miners. I would urge the rest of the Senate to support the bill. (Time expired)