Joe Ludwig (Queensland, Australian Labor Party) Share this | Hansard source

The government has shown its true colours with the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 [No. 2]. The minerals resource rent tax is an efficient tax designed so Australians can share in the wealth we all own. We have a fundamental view that Australians deserve to share in the benefits of minerals we all own.

The repeal of the associated measures will hit Australians right across the board, especially those who can least afford it. It is an attack on all corners of society. Low-income earners, and women disproportionately, will suffer with the removal of the low-income superannuation contribution. Then there are the children of ADF veterans. Small businesses will suffer from increased taxes and compliance costs. Over 50s on the Newstart allowance who require income support to deal with unexpected living costs will not get assistance.

Another associated measure—and the list does not stop—is the discontinuation of company loss carry back. On that one alone I really cannot understand where the Liberal free enterprise spirit is. They do not want to assist small business; they do not want to help small business. In fact, they have said that a good tax and a good system, such as discontinuing company loss carry back, is plain dumb. This will hurt small business. You should be ashamed of yourselves.

Then there is the reduction of the instant asset write-off threshold from $5,000 to $1,000. Why do you hate small business? It does not make sense. Why do you hate small business? They want to discontinue vehicle accelerated depreciation. Again, why do you hate small business? There are many small businesses that could use the loss carry back and higher threshold for accelerated depreciation. Do you think small businesses ride bicycles? That is the only solution I can think of.

Then there is amending the geothermal exploration treatment, rephasing the superannuation guarantee increase and abolishing the schoolkids bonus. There is not a corner of society that they have not attacked in this repeal legislation. We oppose this repeal because it is economically irresponsible and hurts most those who can least afford it.

I was interested to read in The Australian this week that the Reserve Bank Governor, Glenn Stevens, has echoed concerns that we on this side have about the minerals resource rent tax. I think the heading says it all: 'The resources boom should have delivered more'. We benefited from the upswing of the mining boom and welcomed foreign investment—well, not all of us; some of the Nats in the corner over there probably did not welcome it as well as they should have. As we know, they are doormats to the Liberals. They rolled over with the Korean FTA, they really did. Thank goodness they did. We benefited from the upswing and welcomed foreign investment and jobs for construction of railway lines and infrastructure. However, we can draw a line here. The investment phase of the mining boom is coming to an end and the extraction phase is beginning in earnest. So the rivers of iron ore and coal are flowing but, unlike in the investment-construction phase, there will be fewer returns for Australians and more of the returns will flow overseas should this bill pass tonight.

That does not change investment decisions because investment decisions are long-term. They were made five, eight or 10 years out. We all follow that when you have a construction phase you then have a production phase. We are now entering the production phase where there will be opportunities for a return on the investment. This bill is going to squash that just when it should be working.

Economists are in agreement that most other taxes are less efficient than a rent tax. Cutting the minerals resource rent tax just increases the reliance on the more inefficient and less equitable taxes. But I am not surprised. This government has embraced taxes. It loves taxes. It used to say that we should lower taxes. If you look at the range of work that they are doing now, they are embracing taxes. We will get an opportunity to see their outcomes.

Let us turn to the associated spending measures. The Reserve Bank Governor is notoriously reserved. For example, he said in his monthly report about challenges for the Australian economy, 'Public spending is scheduled to be subdued.' Statements like this are perceived by the market to mean that the government's budget cuts will impact growth by reducing overall demand in the economy. It is not such a subtle message. I think the Reserve Bank has overreached itself in making things plain. It normally resorts to more subtle language. In plain language, in language we would understand: taking money out of the economy as the mining boom changes from investment to extraction puts Australia's growth at risk. That is what it does, short and simple.

I was also interested to read an article by Moody's Analytics about the effect of the government programs on the economy in the US. Tax cuts to high-income earners has little effect on increasing the GDP. There is only 35c extra GDP for every $1 of high-income tax breaks. Again you are using bad opportunities when you have good ones in front of you. However, the American child tax credit resulted in $1.38 increase in GDP for every $1 spent. The Washington Post said of this effect:

… tax cuts for lower-income Americans have a much larger multiplier effect on the economy … as they're more likely to spend their tax savings immediately rather than tuck them away into savings accounts.

We, on this side of the chamber, know this is true from our lived experiences. It is a pity some of those on the other side do not have the same lived experiences.

The money from the schoolkids bonus is not squirrelled away for a rainy day. It is needed for the expenses of children at school. The schoolkids bonus is designed to go to people when they need the extra money. When the schoolkids bonus is removed for the purposes of this bill, low- and middle-income families will be hit to the tune of $410 a year for primary school students and $820 a year for high school students. The expenses for parents of school-age children are great—new shoes, schoolbooks, maybe a laptop, maybe an iPad, new uniforms, and the list goes on. That money that is spent by parents goes straight into the non-mining economy. It is also worth noting that the non-mining economy needs some help after the hit to consumer confidence from the budget and the pressures on the Australian manufacturing industry caused by this government.

What about the over-50s who require income support to deal with unexpected cost of living increases? We know this allowance also goes straight into the economy. The over-50s will not get assistance if this repeal is successful. It is a modest payment, that is recognised, of just $210 extra per year for singles and $350 extra per year for couples. The abolition of this payment is opposed by National Seniors Australia. Who would doubt that the seniors need this payment? Who would doubt this payment goes straight into the economy, paying for the emergency plumber or those unexpected medical costs? You do not see seniors squirrelling the money away for a rainy day; it goes into the economy.

The mining companies may squirrel money away. Where will the majority of their gift from the government go? The gift from the government of $3 billion from the resources that we own will go to the owners of the mining companies, which are predominantly overseas owned. This is money that lost to our domestic economy. The Australian Institute states:

... this package as a whole transfers income from something like 10 million Australians, including the poorest ... The main beneficiaries … are a handful of foreign owned corporations that are collectively worth $200 billion.

So when it comes to cuts and increased taxes, where does this government look primarily? It does not look to the big mining companies—it does not there at all. It looks to those on low and middle incomes. This is bad for the economy.

Let me make a prediction. We can expect a negative effect on the GDP for every dollar taken out of their pockets. The cuts associated with this bill and the other cruel cuts in the budget target those who can least afford it. Not only is this cruel to those on low incomes and those with children; it damages growth and damages business confidence. But hurting the economy is just one reason not to remove the measure associated with the minerals resource rent tax. The repeal of these measures will cause real hardship for hardworking Australians. I have ready touched on the hardships that families will feel from losing the schoolkids bonus, a hardship at a particularly tough time. I have also touched on the income support bonus, a payment of little over $200 that goes to Australians who are most in need. Children of veterans aged under-16 who are homeless or living away from home, or those under 25 who are unemployed or studying full time would have been entitled to receive this payment. It is a small thing to recognise their service, but the coalition have decided that these people do not deserve our country's support. Quite frankly, that is a shame.

The removal of the low-income superannuation contribution, despite a promise by the Prime Minister to not implement adverse changes to superannuation, will affect individuals by cutting the super of millions of Australians earning up to $37,000. But it will increase the super for the 16,000 people who have over $2 million in super balances. I think that says it all. That represents the modern coalition government. They will take from the poor and make sure the rich get richer. The MRRT repeal will increase superannuation taxes on one in three of Australia's lowest paid workers. This is a very strange move from a party that claims to be the party for lower taxes. No wonder Senator Cory Bernardi thought they had lost their way!

It is those on low and middle incomes, especially those in rural and regional areas, who will be disproportionately affected by the removal of these measures. Twenty-four of the 25 electorates that will be hardest hit by the removal of the low-income super guarantee are in—guess where?—rural and regional areas. They will be impacted the hardest. I have no doubt that the National Party will go out and tell them that! They will walk out of this place and go to their electorates and say: 'By the way, we've got rid of the MRRT and in the meantime we are also taking super from you. Isn't that fantastic!' I would have expected the National senators to have opposed this and to be up in arms. But we all know their histrionics. They like to play the game in here, but they go back to their electorate and there is not a whisper.

It has been a long time since the Nationals have stood up for working people in rural and regional Australia. One surprising proposal is their cuts to local government. That will hurt local communities.

Senator Mason interjecting—

Senator Jacinta Collins interjecting—

That's fantastic! I had a letter from the mayor of Cowra telling me that cuts to the financial assistance grants will hurt the shire—$38,000 out of their budget in the first year that will not be spent on local roads and community bridges and infrastructure. And you wonder where the Nationals are when it comes to their local communities in regional areas Nowhere. They may be here, but they are not there supporting their regional communities. Cuts to superannuation hurt infrastructure. Superannuation invested in super funds drives investment in infrastructure in Australia. Industry Super Australia estimates that, combined with the proposed delay in increasing the superannuation guarantee to 12 per cent, the removal of this superannuation will reduce national savings by $53 billion by 2021-22. That is $53 billion less invested in projects like Australian infrastructure. The reduction in available capital for infrastructure investment is forecast to be $5 billion based on current industry-wide asset allocations. This is at a time when the government is scratching around for funding streams to finance new infrastructure projects. Rural communities especially need this vital infrastructure.

Low-income superannuation contributions are important for many reasons while, for high-income earners, superannuation does have tax advantages. However, for low-income earners there are effective incentives to encourage superannuation contributions. That is why they structured the low-income superannuation contribution, because it addresses this very issue and stops low-income earners being at a disadvantage when it comes to savings. The Financial Planning Association of Australia was clear on this point. They said repealing the low-income superannuation contribution will disproportionately affect already disadvantaged members of Australian society and dissuade low-income earners from engaging with their superannuation. The removal will particularly hit women; 2.1 million women will be affected. Many are mothers working part-time while looking after young children. This is exactly the part of a woman's career where an additional $500 a year going into superannuation will be of the most benefit for building savings now and into the future for her retirement.

The 20 big miners are going to get a gift of $3.3 billion, and Australian businesses and taxpayers will lose out. The budget—and the approach that the government has adopted since taking office—says a lot about the values of this government. A tax grab on millions of Australian low-paid workers to give a tax refund to large mining companies seems to now be Liberal Party values. The minerals resource rent tax is not paid by a young family; a pensioner does not pay this tax; a truck driver, a farmer and a shearer do not pay a cent of this tax. The only group that pay this tax are mining companies with profits over $75 million. Only those with profits over $75 million begin to pay this tax—fewer than 20 companies in 2012-13. However, the people who suffer from the MRRT repeal are more diverse: small businesses, parents, school children, people saving for their retirement, those on low incomes, those exploring for geothermal energy, and the children of veterans.

The coalition rails against class warfare. However, when you look at the coalition and this bill, they practice class warfare to a tee. They are taking from small businesses, retirees, pensioners, parents and school children to increase the rent extracted from a shared resource by a select few who are earning profits over $75 million. That is the stark difference between the coalition—supported, surprisingly, by the Nationals—and us. The removal of the associated measures will impact on those members of the community who can least afford it. And you only have to look at the results of this. Again, I go back to where I started: I cannot fathom why you hate small business so much that you will not give them the tools to be able to have loss carry-back, to have accelerated depreciation, to have an asset write-off at $5,000—it does not make sense to me. Those on the other side have always said that they embrace small business and that they support small business. They are certainly not showing their colours now.