Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Innovation, Industry, Science and Research (Senator Carr) to questions without notice asked by Senators Abetz, Cormann and Macdonald today, relating to research and development.

The minister’s answers to the questions asked today bordered on absolutely delusional, and they demonstrated to the people of Australia just how out of touch and just how disconnected the Labor Party are with both the domestic and the international reaction to Rudd Labor’s supertax. The minister had the gall to call us on this side economic—what was it?—‘knuckle draggers’. I have to say the only economic knuckle dragger in this place is the minister.

This proposed tax is economic vandalism; it is economic lunacy from a dangerous government that does not have a clue about economic management. Even the Labor premiers are now running a mile from Rudd Labor and its proposed supertax. Look at what the Australian says today, under the headline ‘Labor states back big mining companies on resources profits tax’:

South Australia’s Labor Treasurer, Kevin Foley, has declared he plans to travel to Canberra with BHP Billiton to lobby his federal colleagues to change the resources tax, while Queensland Premier Anna Bligh yesterday called on the Rudd government to “get it right” on the tax or it would threaten jobs around the country.

This is the impact of Mr Rudd’s announcement to date. The article continues:

Mining investment and exploration continued to be threatened yesterday as $300 million was chopped off the takeover bid for Macarthur Coal in Queensland … Incitec Pivot stopped drilling for phosphate; Xstrata cancelled projects; and Macquarie Bank advised clients Australia was “now seen as being a high sovereign risk destination to invest” …

What an absolute joke! Under this government, Australia’s sovereign risk is now being questioned.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Sterle interjecting—

Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

Senator Sterle, the people of Western Australia are listening today, and you should be ashamed of yourself. Stand up for the people of Western Australia; do not sit back there and cop what Mr Rudd is going to do to our state, which is to well and truly finish it off. This is nothing more and nothing less than a blatant tax grab by the Rudd Labor government.

The bottom line with those opposite is that you are part of a big-spending, economically irresponsible government, and the only reason that you need to tax the living daylights out of the industry that is this country is that you have record levels of debt, which has soared up, and you need to satiate your out-of-control spending. Mr Rudd claimed he was a fiscal conservative prior to the 2007 election. I tell you the Australian people are not laughing at that, because they actually took him on his word, and he blatantly misrepresented himself. It is the Australian people who are now going to have to pay back the debt that the government have incurred.

But the bad new for the Australian people is they will not have jobs. They will not have jobs because you are going to destroy the industry that employs hundreds of thousands of people in this country. The joke going around at the moment—and this is from Labor people back in my home state—is that Mr Rudd is the worst prime minister since Billy McMahon. Then the Labor people offer their apologies to Billy McMahon for actually putting him in the same category as the underachiever, Mr Rudd. Mr Rudd is nothing more and nothing less than an underachiever. He is going to destroy this country. He is dangerous for Australia.

This so-called superprofits rent tax will have dire consequences for the industry in Australia which is the most significant to this country, and dire consequences will flow on to the Australian economy. You have to begin to worry when the Canadians actually send a delegation over here to work out what investment they will take as it is driven offshore. Chinese companies are on the record as already redirecting investment to Africa, Asia and South America. And, in relation to the impact on the average Australian, forget about the so-called increase in superannuation; no amount of increase in the superannuation levy is going to make up for the damage that you have done to superannuation investment with your announcement. This new superprofits tax will discourage investment in our mining industry, put projects at risk and send jobs overseas. But what is new with you lot over there?

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I know I have only five minutes—I would love to have a lot longer, and my turn will come—but there are a few things that I think we need to correct for the record. As a proud Western Australian who made my living on the back of supplying the mining towns in the far north and the goldfields, I think there is no more important industry, certainly in Western Australia, than mining. I am not belittling our other industries, which employ a lot of people, but I think we have to clear up the hysterics from the other side and unfortunately from News Corp et cetera—they love to run the hysterics too.

In the last six months I have had the pleasure of assisting the Hon. Gary Gray, the member for Brand—

Opposition Senator:

Opposition senator interjecting—

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

If you do wish to listen, you might learn something, you peanut. Sorry, Mr Acting Deputy President, I retract that—it’s not fair to peanuts. I have had the pleasure of assisting the member for Brand, the Hon. Gary Gray, who is the chair of the Prime Minister’s National Resources Sector Employment Taskforce. In all fairness, I do not expect those opposite to know what was going on, because the government has been quietly getting on with the work. That task force was put together by the Prime Minister to provide an answer to Minister Ferguson and Minister Arbib on where we will find the labour for all of the 84-odd projects announced, which are probably to go to final investment decision in the next couple of years. Unfortunately there are some wild—

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

Senator Cormann interjecting—

Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Cormann!

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. I suggest that Senator Cormann should listen; he may learn something.

Eric Abetz (Tasmania, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Doubtful!

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Yes, you are right, Senator Abetz; that is doubtful. I agree with you! I am being very hopeful in saying that Senator Cormann could learn anything!

There are a lot of mistruths and ridiculous figures being espoused around the country about how many workers we may need, should these projects go to final investment decision. With the great work of the task force, which includes mining representation, gas representation, tertiary education representation and construction representation, the best figure which has been agreed to by the members of the task force is that we would probably need about 80,000 construction workers if these projects were to go to final investment decision. As best as we can ascertain, those 80,000 workers would be needed in the next five to 10 years. Of that, we would need some estimated 30,000 production workers to run those plants. That is a far cry from the figures that we have heard today.

The West Australianand it is fine newspaper—has unfortunately been conned or fooled by the Chamber of Commerce and Industry in Western Australia into thinking that, in a state with a population of some two million, in the next seven years we will need some 441,000 workers just in WA. I can tell you now, Mr Acting Deputy President—and it is on the record—that, if you were to check with the Chamber of Minerals and Energy, with the Minerals Council of Australia, with APIA or with whomever else you may want to check, you would find that that figure is absolute nonsense.

To come back to the figures that have been thrown around today—and you can see where the hysteria and the hype come from—they go off the record and become absolutely ridiculous. I encourage opposition senators, if they are going to get up and speak for the big end of town, to do a couple of things. One, through you, Mr Acting Deputy President, if you on the other side have financial interests or shares in any of these mining companies or resource companies, the decent thing to do would be to declare it before you start ranting and raving and attacking the Rudd government. That is a process of the Senate, one which I would follow if I had those shares or those interests, which I do not.

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

I don’t have shares!

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Cormann says that he does not have any. I did not actually mention Senator Cormann; I just said that, if any of you Western Australian senators had financial interests, you should put your hands on the table and declare them.

I do not have a lot of time left but I will use this opportunity to say that there is a very devious cause being run too. It is coming from the Minerals Council of Australia through their CEO, Mitch Hooke, who made it very clear in the Australian on 9 April 2010 that he wants predominantly 457 visa workers employed in this industry. (Time expired)

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I would like to have my say on the answers given to questions put to Minister Carr here today. Senator Carr said that this great big tax on our mining industry will increase job opportunities. How, when you increase the taxes on industry, when you reduce investment and when you reduce exploration, is that going to increase jobs? I find that amazing.

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

This is straight out of North Korea!

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Straight out of North Korea—exactly! It is a $9 billion tax. Those on the other side should be honest about this and tell the Senate that this is about a $9 billion tax collection to pay the interest on the debt that the Rudd government has accumulated. We are today looking at a $140 billion gross debt. In simple figures, five per cent on $140 billion is $7 billion. But, wait, there’s more: the debt has grown by more than $1 billion a week.

What this is about is tonight’s budget. It is so that the Treasurer can say, ‘We are bringing the deficit down; we are bringing $9 billion extra in every year by strangling the goose that lays the golden egg in Australia.’ That is what this is about. This is the industry about which Mr Rudd, prior to the 2007 election, said: ‘We must change our economy; we cannot be reliant on the mining industry. If it falls over and commodity prices crash, we need to have another source of income.’ What is he depending on? It was the mining industry, but now he is depending on taxing it as much as he can. I find this amazing. This is simply a great big tax to finance the great big debt.

We know where the great big debt came from. We can talk about Building the Education Revolution and the waste of money there. You will hear more about that in the near future, despite the Auditor-General’s report. We can talk about the waste in the pink batts fiasco, where we had a $2.6 billion program which is now costing $1 billion to clean the mess up. That is what this tax on the mining industry is about: collecting money to pay for the huge debt that the Rudd Labour government put our nation into. But that is nothing new: look back at the history of Labor, whether it be at the state level or the federal level, and tell me of one Labor government that, when they were thrown out of government, had reduced debt. Name one occasion.

Eric Abetz (Tasmania, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Never!

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Never! This is what they are about: building debt and throwing money around willy-nilly. Then all of a sudden they say: ‘Well, now we have a problem. We have a $7 billion, $8 billion or $9 billion interest bill. How are we going to fund it? Oh, we will go up to the big end of town.’

Who owns those industries? Who owns Rio Tinto? Who owns BHP? The workers of Australia, those with superannuation, own them. What we are doing is strangling the future, the retirement fund for the working families, the working Australians that the people on the other side of the parliament are supposed to represent. You are strangling their retirement, because they are the people who own those industries. One accountant has given me figures today saying that 10 to 20 per cent of investment portfolios are directly in mining shares—for example, BHP and Rio Tinto. So you are strangling the workers’ retirement funds. You have already seen the damage that you have done to the stock market because of the announcement of this huge tax on that industry.

There is one thing that is interesting: when this tax is brought in and implemented by the Rudd government, Australia will pay about twice the tax of the mining industries in Canada, Brazil and China, yet we are expected to compete. What we are going to see—and we have already seen it—is the pulling out of investment and of exploration. Companies will tend towards South Africa, Indonesia, Brazil—you name it—anywhere where there are fewer costs so they can get the same product and make more profit. That is how free enterprise is. What this government is doing is simply scaring business out of our nation.

The one concern I really have is the fertiliser industry. Incitec Pivot have told the Stock Exchange that they will stop drilling for phosphate as a result of Labor’s new mining supertax. We have been importing our fertiliser onto our farms for years and here is an opportunity to have our own fertiliser in Australia and get a distinct benefit for our nation, but our Incitec people have said, ‘What’s the point of going ahead; we’ve been taxed out of existence.’ That is what this tax is going to do, and that is why we on this side of the parliament will oppose it from the very beginning until Mr Rudd does another backflip and does away with it.

Jan McLucas (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I have to say that, in the last 20 minutes, the debate around this issue has been characterised very much in the sorts of contributions we have had from senators across the way. It has been extraordinarily hysterical, and it has been littered with misinformation. Unfortunately, Senator Williams, you are leaving the chamber. It would have been an opportunity, potentially, for you to get some clarity on what this tax is about. The government’s tax reforms are about making Australia a more attractive investment destination, including for the resources sector.

The resource superprofit tax is designed to ensure that Australians get a fair share from valuable non-renewable resources. Resource taxing is a better way to tax resources because it taxes only the profits and it fully recognises the large investments made in mining. A tax such as this rebates state royalties. Royalty and excises are based on volume or value and they do not rise with profits. It is important to remember that in 2008-09 the resource sector generated close to $90 billion of superprofits. Superprofits are profits above what a competitive business would normally expect to earn. In that same year state royalties and Commonwealth excise returned only $12.3 billion to the Australian budgets. The effect of these proposals is in fact a rebalancing. Ten years ago Australians, through their government, received $1 out of every $3 of profit reaped by the resource sector. Today it is $1 in every $7 of superprofit. Surely that needs some attention.

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

So what is a superprofit?

Jan McLucas (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I will go back to that, although I did explain. They are profits above what a competitive business would normally expect to return. As I said, 10 years ago $1 in every $3 of profit was returned to Australians from rental on a non-renewable resource. Today it is $1 in $7.

Profit based taxation does work. For example, the 40 per cent petroleum resource rent tax has existed for over 20 years. The $50 billion Gorgon project was approved under the 40 per cent petroleum resource rent tax. To say that it does not work is simply a furphy. In fact, I encourage leaders of the large mining companies and LNG producers to work with our government to roll out the delivery of the resource superprofit tax for our community.

It is important to remember also that there have been many economists who do not oppose the introduction of this tax. I look to Professor John Quiggan’s commentary on this issue. He goes through a range of arguments about why it is a good idea—a sensible, fair and equitable idea—to introduce a profit tax rather than user royalties and excise. I think his most compelling argument is where he says:

The political economy argument. Ever since I can remember, and probably before that, mining companies have been threatening to pack their bags and go overseas. They’ve made these threats when they were upset about tax policy, about environmental restrictions, about Aboriginal land rights, about union wage demands and work practices and when they were in a bad mood for no particular reason. But, even though lots of Australian industries have disappeared, or contracted drastically for a range of reasons, the miners are still here. The reason is obvious. They can leave but they can’t take the minerals with them. It’s precisely this immobility that underlies the case for—

as he describes it—

RRT—

that is, a resource rent tax. (Time expired)

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

I rise to take note of the pathetic effort by Minister Carr to try to defend Prime Minister Rudd’s absolutely indefensible supertax on the mining industry in this country. In recent weeks, the Prime Minister has made Australia the laughing-stock of the world. He has put Australia in the situation where the Canadian Minister of Finance, Jim Flaherty, has indicated Canada will now have a tremendous competitive advantage. That minister is over here looking for opportunities. There has been a massive reduction in the value of Australian resource companies in the last week and a half. With it, we have seen a massive erosion in the value of superannuation and shares for Australian retirees and Australian workers—the very people those opposite should be standing up for and defending.

Amongst other things, the Prime Minister has vilified foreign investment in this country. When since 1788 did we use anything other than foreign investment to support and grow industries in this country? As has previously been said, we are already seeing the major mining companies walk away, close up investments and close up opportunities. We now have the Prime Minister and the Treasurer saying, ‘Why don’t they come and talk to us?’ Surely they learnt something from the emissions trading scheme—that is, that they should have gone and spoken to those companies in advance.

We have had figures presented to us in the last few minutes, but let me give you the figures from the Australian Taxation Office on the contribution of the mining sector to this country. According to the ATO, the resources sector pays 13 per cent more tax than any other sector in this country. In the last year alone, the resources sector paid to Australian governments, federal and state, $22 billion. When added to the $22 billion surplus that this government inherited from the previous government, they have squandered $44 billion plus, plus and plus.

Do not go past what the Wall Street Journal said last week. It said, ‘This economic thinking runs counter to everything that has made Australia rich.’ So what have we seen in recent times? We have seen losses. The super funds of retirees and working Australians have gone out the window. Seven hundred thousand Australians have shares in BHP, quite apart from those who have super funds. We just heard the senator opposite speak about the petroleum resource rent tax. Does she not understand this: firstly, it is a tax at the government bond rate plus five per cent, and it is only a prospective tax not a retrospective tax; secondly, the offshore oil and gas industry does not pay royalties to any states. In the petroleum resource rent tax we have this factored in. This stupid tax is being set at the bond rate, currently six per cent. I invested some money the other day for an elderly relative in a nursing home. I rang my bank and they said, ‘We’ll give you six per cent while that person does absolutely nothing for it.’

What an absolute joke this is. We have been made a laughing-stock. Only in the last week have we learnt about the $170 billion of projects in the mining and resource sector and the 500 companies—not just one, two, three or four big companies. As the Queensland Labor Premier and the South Australian Labor Premier have both said in recent days: ‘This is a disastrous tax; it has got to be reversed.’ Let us look at Labor’s gambling for a moment. Under this new tax, this nationalising of the Australian mining industry, we have the government sharing the profits.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Cameron interjecting—

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

But also, if Senator Cameron would take note, they will potentially share the losses. Mining is a very fraught industry, as we all know. The situation we will have into the future—and the Australian taxpayers need to know this—is that the government have forced themselves on the mining companies and the government will be paying out losses of up to 40 per cent, as mining companies do not always make profits. If ever there has been a widening of the difference between Labor and Liberal, we have it in the way the cake is made. Labor divides up the cake until it becomes crumbs; Liberals grow the cake to improve it for everybody. (Time expired)

Question agreed to.