Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

Let me begin by thanking the Greens for bringing forward this private member's bill, the Mining Subsidies Legislation Amendment (Raising Revenue) Bill 2014. I think it is a worthy debate for this chamber to be having. Whenever there is an amount as large as $5.1 billion in credits, it is worthy that, from time to time, that is justified and that we have this kind of debate in this place. It is also worth acknowledging the role of former Senator Christine Milne, who actually first introduced this private member's bill. Former Senator Milne was very passionate about these issues and had very strong views about these issues. While they were not issues that I necessarily always agreed, I came at them from a very genuine place. She is currently in Paris and no doubt she is watching this debate, because she cannot possibly get enough of this place!

I will not be supporting this Mining Subsidies Legislation Amendment (Raising Revenue) Bill 2014 and the Labor Party will not be supporting this bill, unless they are going to surprise me and all vote differently to the way I am going to vote. It is worthy for us to ask questions when there is an amount as large $5.1 billion in credits. We believe this is a worthwhile pursuit and a worthwhile credit to have in place. Senator Waters gave a passionate and detailed speech, and she outlined her case quite well. But I do not think Senator Waters would disagree that she does not come at this from an industry-blind perspective. Her views are shaped by the impact that she believes the fossil fuel industry is having—something which I agree with. Nonetheless, she is not looking at the issue as to whether this is a worthwhile credit in itself; she is looking at the industry as a whole.

There is no doubt that Senator Waters and others come at this from the viewpoint of wanting to see as much damage as possible done to certain sections of the industry. It shapes their views. Just as we say in the education space, which I am now in on a policy level, that the debate has to be sector blind; this debate about whether this is a worthwhile credit has to be industry blind. We have to be careful that sometimes the arguments that are being used for removing this are being used by Greens and others to argue the exact opposite on other industries, be it manufacturing or other industries. I think a little consistency here is needed.

Let us be clear here—and I think Senator Canavan outlined this more eloquently than I will be able to—there are no fossil fuel subsidies in our tax system. The fuel tax credit scheme was originally intended as a road-user charge. It pays for our roads and it pays for their maintenance. The excise on petrol and diesel is a tax on business inputs as well as on final use by households. Businesses that are using petrol and diesel as inputs into their production processes pay an excise of 38.143c per litre. Under the fuel tax credit scheme, eligible businesses can claim a rebate in full or part of the excise they have paid.

In 2010-11, the value of these credits amounted to $5.1 billion, which is a very, very significant amount. Again, that is why I think this is a worthwhile debate to be having in this chamber. The main recipients were—and these are the 2010-11 figures, the best set of figures available to me—the mining industry at just over $2 billion; transport, postal services and warehousing at just under $1 billion, at $998 million; and agriculture, forestry and fishing at $646 million. And the theory goes that taxes on intermediate goods—that is, goods used to produce other goods—can reduce productive output and, ultimately, living standards.

The diesel fuel rebate has the effect of preventing the taxation of a 'business input', and what I mean by that is the cost of fuel as a business cost, which is an accepted principle of good taxation policy. Public finance theory says that taxes should not be imposed on these intermediate goods, as it would distort the allocation of resources. Thus, reducing taxes on intermediate goods reduces distortion and increases output. The fuel tax credit scheme is designed to relieve industries of the excise that they pay on the petrol and diesel they use. As Treasury itself notes:

Fuel Tax Credits are not a subsidy for fuel use, but a mechanism to reduce or remove the incidence of excise or duty levied on the fuel used by businesses off road or in heavy on road vehicles.

The Productivity Commission prepares a Trade and Assistance Review every single year. These reviews identify and, where possible, quantify government assistance to different industries. The reviews do not include the rebates paid under the fuel tax credit scheme as a form of assistance. The easiest and most efficient way to administer that charge is to tax all fuel and then rebate those using the fuel for off-road or private use. A road user charge should not apply to a diesel-powered ship or boat conducting environmental surveys off the Great Barrier Reef. If the government were to keep these tax receipts, it would become a tax on business input. Business input taxes are widely known, recognised and seen as poor tax policy. The diesel fuel rebate applies to all businesses.

There is no preferential treatment for the resources industry in our tax system, but it is worth noting that they are the largest beneficiary of a program that is available to everyone. If we are going to find the resources of the future that we need to support and grow our economy, we need the best technology driving the exploration processes. Most exploration—let's be clear here—actually finds nothing. It is difficult. It is a risky kind of business to be in but, once a resource is found and the work is done, all expenses have been made and an efficient tax treatment makes sense. Significantly, neither the Treasury nor the Productivity Commission consider the rebate to be a form of industry assistance.

Unjustifiably taxing business inputs is inefficient, distorts investment decisions, distorts Australia's export competitiveness and creates uncertainty for Australian businesses large and small. What worries me is that I suspect that, to a certain extent, those who are proposing this bill have no issue with that and would actually like a system that would distort investment decisions away from the resource industries and the resource sector. I do not agree with that. I do not support that. I do not think that is the way we should be tackling this and the challenges of this.

I note that Senator Canavan went on earlier about the subsidies that are given in the renewable sector and the environmental space. I believe that, if government wants to be encouraging certain types of business activities, giving that kind of assistance and support to industries that government wants to promote and help is the right way of doing it. I do not think unfairly creating this kind of treatment of business inputs simply because this happens to be an input that is used more by the mining industry than by other industries is a sensible or efficient way of doing this. I just want to stress this, because I think there has been a bit of distortion in some of the facts that have been presented. There is no fuel subsidy. This is not a fuel subsidy. The fuel tax credit scheme was originally intended as a road user charge, and it was used to pay for roads and the upkeep of roads.

So Labor will not be supporting this bill. Labor has a proud record of striking the right balance between ensuring and supporting a growing resources industry and making sure that we obtain a fair price for the mineral resources that we own as Australians and that there is not a free ride or an unfair system in place to favour some of these mining companies. Labor recognises that the resources sector is an important contributor to Australia's economic growth. The Australian investment pipeline overseen by a Labor government was the largest that any country in the world has ever seen. While there are people like me who have been very critical of how some mining companies and LNG companies have behaved in terms of their tax paid and how they have structured their companies, be it through Singapore trading hubs or through internal loan arrangements, to minimise their tax liabilities, none of that should discount the importance of the industry to our economy. Direct employment in resource operations is over 250,000 Australians, over double the 136,000 that were employed in the resources sector when Labor came to government in 2007. When Labor left government, there was a pipeline of an estimated $268 billion of committed capital investment in around 73 committed resources and infrastructure projects.

There are challenges in this sector. I think we have to be quite clear and serious. We have to make sure things like the tax treatments in this area are correct. I believe we have a sector that will take advantage of opportunities if they are provided and will try to minimise their own tax liabilities and what they pay, and they have demonstrated that they will do that. That having been said, however, this particular case is not an example of where that problem occurs. The rationale behind this is that business inputs should not be taxed and the fuel excise and road user charge should not be applied to private road user. This is not a policy that is about the mining industry. It was never about the mining industry. It is about improving roads and providing the funds for improving roads. Because the end user is the one paying for a business input cost, it would make poor taxation policy—and in fact, in some cases, double taxation—to pursue that path.

I note that there are other speakers that want to get to the debate today, so I am not going to drag on for longer than necessary. I will make sure there is sufficient time, because I note that Senator Di Natale wants to get a speech in as well.

I do want to just very quickly say that the policy here needs to be divorced from the ideology. The ideology being proposed by some is that the mining industry is a bad industry, that it is a dirty industry and that we should do whatever we can to make it as difficult or as unprofitable as possible for those in that sector. I do not support that. I think that is conflating two very, very different issues. This is a specific piece of legislation that has been proposed about a specific tax credit, and it would be unfair and wrong to be treating it differently simply because it relates to a sector that some people in this chamber do not support. That is the wrong way of handling it.

That being said, this is a worthy debate to have. I thank Senator Waters for pursuing this private senator's bill, and again I acknowledge the incredible work that Senator Milne did on that.

In conclusion, in a final act of completely unparliamentary behaviour, can I just say a very big happy birthday to Sarah Coward, from my office. Thank you.