Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Hansard source

I think I was on the Senate committee inquiry, so your revelation about the attitude of the Minerals Council of Australia is not news to me, but I think what you and the government choose to ignore is what I would characterise as at the heavily caveated points made by organisations like the Minerals Council of Australia, AMEC and others. What they are saying is that the transformative effect, if it is to be achieved, is not through the tax credit but by tackling these other imposts which escalate project costs. That is what they are saying. What we are saying is: not only are those project costs undeniably increased as a result of rigidity in the industrial relations market, duplicative environmental processes and poor access to land; in addition to all of those additional project costs, which the government is not interested in tackling, the government is now adding a layer in the form of the community-benefit principles. In evidence to the committee, Treasury officials would not concede or acknowledge that there would be any reduction in any other regulation that is already covered or that is proposed to be covered in the community-benefit principles. So I totally understand how industry is excited about a tax credit. Why wouldn't they be? That is the normal style of operating a business when the government puts a lucrative financial offer in front of it. What we're saying is that the approach is wrong because it doesn't tackle—it doesn't even seek to go near tackling—the key contributing factors to high project costs for manufacturing and minerals processing in this country.

More than that, not only do you not want to tackle those fundamental issues; you're now adding on top of that the community benefit principle rules, which eligible companies must get through before they get to the tax credit. The explanatory memorandum makes it very clear at 1.51 that, if an organisation should fail or not meet the community benefit principles, or if a company does not comply with specified requirements in the rules, the offset that a company is entitled to for an income year is reduced by a proportion. Not only are you adding to the regulatory burden, which everyone says is too great and driving up project costs; you're then adding a set of new regulations in the form of the community benefit principles, and, if an organisation doesn't comply with them, they get penalised. That is what we're objecting to.

This is not transformative. This does not go to the heart of the issue of high project costs faced by Australian industry. That's the key point here. To be fair, in all of the comments from the Minerals Council of Australia, AMEC and others, support for the tax credit—we don't dispute it is clear—is heavily caveated by their view and proposition that more needs to be done on other issues. In this bill, recognition of that is completely absent. Indeed, in its broader policy agenda, much of what the government seeks to do exacerbates the problem; it doesn't improve it. Minister, if a company does not have a union agreement that satisfies the Treasurer, will their tax credit be reduced, or can it be reduced?