Christopher Back (WA, Liberal Party) Share this | Hansard source

It was then Prime Minister Rudd who, in one of his more erudite moments, made the statement, 'No government should ever make a backward step in pursuit of the national interest.' It is in that light that I speak strongly in support of the repeal of the Minerals Resource Rent Tax Bill

It has hurt Western Australia. It has hurt Australia. We have now seen the repeal of the carbon tax repeal bill, and now is the time to do the same with the minerals resource rent tax

It was Mr Rudd who attempted to bring in the original resource super profits tax that did so much damage to Australia' reputation and constituted a sovereign risk around the world. He failed. In government, Prime Minister Gillard and her Treasurer, Mr Swan, negotiated with the three majors—BHP Billiton, Varley and Rio Tinto—to come up with what is now the minerals resource rent tax. It is interesting that they deliberately excluded Mr Martin Ferguson, a person who had far more knowledge in this field, I think it would be fair to say, than almost anybody else in the Labor government at that time with the possible exception of Mr Gary Gray. It is also interesting that in that discussion they deliberately excluded the small and the mid-cap miners, the exploration companies and, particularly, those involved in magnetite production.

What we ended up with was a tax which we in the coalition at all times said, and as industry said, would not make any money. Labor in government predicted that it would raise $3 billion in revenue in the first year alone and the remarkable figure of some $22.5 billion in the first four years. I will relate very briefly, given the amount of time, what actually happened.

As you and I both know, Acting Deputy President Sterle, it hurt Western Australia badly. It was directed at iron ore and coal, and some 67 per cent of the impact of this tax would have been on our state of Western Australia as indeed, because of the geographic size of our state, the carbon tax was so disastrous for us.

The unfortunate circumstance was that, far from yielding that figure of $3 billion in the first year, we in the coalition were right, industry was right—that is, that it was never, ever going to make any money. In its first year, it took a long, long time—it was like extracting teeth out of a crocodile—to get a statement as to how much it did yield, because we were told originally there would be quarterly reports. Of that $2 billion, it only yielded $126 million. When you take the fact that $40 million was spent in advertising and another $50 million was spent in set-up costs with an annual cost of some $20 million, there is the figure that says it made no money. Treasurer Hockey makes the comment now that once it is scrapped—imagine a tax being scrapped saving money; incredible—it will save some $13.4 billion.

It is a fact that only some 20 companies paid the tax. This was the point that the small and the mid-caps, the explorers and others continually made that it wasn't going to make money. Regrettably—and I think this is the important point—although 20 companies paid some tax, 145 companies invested some $20 million in administrative costs to be able to show the Australian tax office that they would not indeed be paying it. Imagine if that $20 million had gone into further exploration, further development, further employment of people and further opportunities for our mining industry. But, no, it went in administrative costs in the full knowledge that they would never, ever be paying the tax. One company alone paid somewhere between $3 million and $5 million of administrative, legal and other costs to establish that they would not be paying the tax.

The other night I heard Senator Wong, the Leader of the Opposition in the Senate, the former finance minister, go on at length about the various costs that the coalition was ripping out et cetera as a result of this. As we know, the worst feature of all of the predicted $2 billion of profit was that the Labor government then went and committed it and spent it.

All of us in households, residences and businesses would know that you can predict a year coming along: you might do well; you might make money. For farmers in my home state of Western Australia: things are looking pretty good for our cropping season but it is only July. Would any prudent home, business or residence ever go out in the hope that they might make $2 billion and spend the money? That is exactly what Labor did.

The regrettable thing was that the other night Senator Wong invited everybody who was listening to be upset and concerned about what the coalition was apparently doing by way of cutting back on that expenditure—the welfare expenditure that the Labor Party had committed itself to as a result of making money on a tax that they were never going to make the money on. In other words, the circumstances that Labor had put the funds towards themselves were probably laudable—I have no doubt they are—and one day when we reverse the negatives of budget, pay down the shocking deficit and get rid of that billion dollars a month of interest, it will be possible, as the minister finance said, in answer to a question this afternoon, to revisit these areas. When you are borrowing internationally and offshore, what right do you have to borrow money so that people—the children of today, the grandchildren of tomorrow—will have to pay that money back? That is exactly the circumstance.

The Leader of the Opposition in the Senate, Senator Wong, was talking about the superannuation guarantee scheme. She was talking about the effect of the small business instant asset write-off being removed. Let me tell you, Mr Acting Deputy President: the one thing small business is rejoicing about this afternoon is that the carbon tax has been removed—and all of those other concessions at one time in the future might be fantastic as indeed, when he was Treasurer, Peter Costello paid back that $96 billion of debt and relieved Australia of the annual interest debt of $5 billion a year and was able to give tax concessions.

We are paying not $5 billion; we are paying $12 billion—a billion dollars a month; a new primary school every 12 hours we are forgoing in this country at the moment, because we are borrowing offshore to pay interest on that debt. All of these concessions that Senator Wong was speaking about—many of them, I have no doubt at all, are laudable—are welfare issues. They are issues that you are able to devote funds to when you are in surplus, not when you have got to borrow overseas for that purpose.

I am absolutely amazed to see my colleague Senator Macdonald—I do not know whether you now think the need for the high visibility dress is the result of the fact that this has become a dangerous place occupationally—through you, Mr Acting Deputy President, to Senator Macdonald—but I assure you it is not.

Let me tell you very quickly about the impact on the mining industry as a result of the carbon and mining taxes. This amazing statistic has been given to me by the minerals exploration council. In 2011, 65 per cent of Australian Stock Exchange listed exploration companies'—these are our companies, our Australian exploration companies—expenditure for exploration activity was here in Australia. One year later, by 2012-13, 65 per cent of the exploration dollars of ASX listed companies was being invested away from Australia. You do not need any other statistic for the impact of the mining tax on Western Australia: one year there is 65 per cent investment here; a year later 65 per cent in west Africa, in Canada, in other countries. I could not give you a more explicit example. It has been a very unfair tax. It has cost some $20 million in administrative fees and $2 million a year for companies to tell the ATO that they will not have to pay the tax because of the way in which it was established.

Mr Acting Deputy President Sterle, I know you, like me, move about the state a lot. I was in the city of Kalgoorlie only two weeks ago. Kalgoorlie is on its knees. I know that is part of the cycle, the boom and bust cycle. Iron ore is important at the moment. The MRRT was only applying to iron ore and coal, but the threat was—and I think it was Senator Ludlam who spelt it out the other day—it was going to be on gold, it was going to be on uranium, it was going to be on other metals. But what it has done is this: each of the 12 or 13 big drilling companies based around Kalgoorlie—they operate around the world; these are massive companies that are very big employers when they are working—probably has eight or 10 drilling rigs and when I was there one of them had one rig working. And we all know that explorations today are the mines of 20 years' time. That is the sort of lag time we are talking about, and that is where the important element comes in.

Karratha, on our north Pilbara Coast, and Port Hedland: I have learnt in the past few days that each of those places has got more than 400 vacant homes at the moment. It is only 12 or 18 months ago, through you, Mr Acting Deputy President, to Senator Macdonald, that rental was $2,500 a week in those places—Karratha and Port Hedland. Both are reliant on the resources sector; both are obviously very severely hurt. That is the circumstance. We were advised yesterday that of all of the competing resource exporting countries, Australia ranked 133rd out of 134 when it came to our cost of production and cost of exploration.

I have been asked to be relatively brief. I am going to conclude with some information. We hear so often—Senator Milne, through you, Mr Acting Deputy President, I know you so often say that the mining industry contributes nothing, that the resources sector does nothing for our economy. Let me tell you this: the single biggest taxpayer in this country today is Rio Tinto. Mining has paid $117 billion in company tax and royalties since 2006-07. Last year alone they paid $21 billion, which was double the 2006-07 figure. It is in excess of 40 per cent, and the other ATO figure I was given is that the effective tax rate, according to the ATO, is now well in excess of 40 per cent. So by the time you take tax, by the time you take the royalties and then, on top of that—as Senator Lines would also know as a Western Australian senator—by the time you include local rates, by the time you include payroll taxes, by the time you include employment—the thing I was very pleased to report about Kalgoorlie was how robust and resilient a community it is. Although it is on its knees, when I asked how many vacancies there are in the schools in Kalgoorlie, I was told there is one vacancy in one school. So they understand the peaks and troughs of mining, and that is where we are. It was claimed the MRRT would somehow or other generate a revenue shortfall of $100 billion. That did not happen. Dr Ken Henry said it would not happen.

We have the circumstance of R&D. We heard the allegation again that mining is just digging holes in the ground and sending it offshore, and of course the industry would very strongly make the point—and I am quoting here from MCA—that 'Australian mining spends more than $4 billion per annum on R&D and that represents about one-quarter of all research and development in Australia.' That is far from the allegation about multinational companies sending it all offshore. We know they invested heavily here and that mining has spawned an Australian mining equipment, technology and services sector worth some $90 billion—I repeat that: $90 billion—and it exports $15 billion worth of goods and services. Forget this nonsense about mining only being a relatively small employer; in this country it directly employs some 245,000 people—a 20 per cent increase since the end of 2010—and RBA research shows that mining employs almost 10 per cent of the Australian workforce.

As I bring my contribution to a conclusion, I am obviously a very proud Western Australian—a state that contributes so much through its resources sector to the national economy. It provides the opportunity for states like Tasmania and South Australia, and after the natural disasters in Queensland, to be able to share that wealth nationally. Yes, we get a very low percentage of the GST; yes, we do want a lot more back; and, yes, we do want other states to endeavour to put their shoulders to the wheel more—and we know they will into the future. I just urge that people strongly support the repeal of the MRRT bill.