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

I move:

That the Senate take note of the answers given by the Minister for Climate Change, Energy Efficiency and Water (Senator Wong) to questions without notice asked by coalition senators today, relating to the mining superprofits tax.

Clearly the Minister for Climate Change, Energy Efficiency and Water, Senator Wong, had no idea what she was talking about when she was answering questions from coalition senators about the government’s supertax on mining today. This is just one further example of absolute failure and incompetence by the Rudd Labor government. The minister is not across the brief that she represents in this chamber. Why is that? Very clearly, this is yet another policy decision that was made by a very small circle of two without the proper cabinet processes, without proper procedure and without making sure that everyone that should be involved was involved.

We have a Prime Minister in Australia who has completely lost the plot. Whatever he has touched he has stuffed up. He inherited a healthy balance sheet and he stuffed that up with reckless spending, giving us record deficits and record levels of debt. He was going to bring down the price of fuel and groceries and he stuffed that up—remember GroceryWatch and Fuelwatch. He was going to protect our borders, presenting himself as a mini-me John Howard and he stuffed that up, 137 boatloads of illegal immigrants having arrived on our shores since Kevin Rudd softened the strong border protection policies he inherited from the Howard government. He was going to bring in an emissions trading scheme and he stuffed that up too because he was too frightened to engage in a proper debate about the massive flaws in his scheme. So wherever you look there are failures, incompetence and broken promises. What is the reason for that? We have a government that does not go through proper process. Ministers of the government are not aware of what is being done and why it is being done. That is the reason Minister Wong was not able to answer some very basic questions today.

This supertax on mining is a bad tax. It is bad for Australia and it is even worse for my home state of Western Australia. It is going to cost jobs and it is going to reduce investment, yet this government was waving around the KPMG Econtech modelling report to suggest that, no, things are not going to be so bad, investment is going to go up and jobs are going to go up, all of which is of course completely counterintuitive. The argument on which the government based that assertion is to say that marginal projects are going to be better off; a profit based system instead of the system of state and territory royalties will make sure that marginal projects will be able to survive and thrive where royalties might choke them. Part of that is the big assertion made by the Rudd government again and again that they would like royalties to be abolished altogether, but because the states have not agreed with this—because they have not consulted the states about any of this—they will just refund them. But in the fine print is that the only mining ventures and companies that are going to get their royalties refunded are those that are subject to the so called superprofits tax.

If you make a profit of zero to six per cent, you will continue to pay state royalties as before and you will not be eligible for a refund of those state royalties. That means that for those marginal projects nothing is going to change. They are not going to be any better off, there is not going to be any additional investment and there are not going to be additional jobs. We are going to have the impact at the top where the government is going for this lazy tax grab from those projects which have a regular and reliable profit, those projects which have taken on all the risk, which have made all the hard decisions, which have gone through the challenging times and which have a regular and reliable cash flow. From those projects the government is coming in and saying, ‘We want to take 40 per cent off the top of that, thank you very much.’

The reason the government is imposing this tax retrospectively is that there is no money for the government in new projects. We have a Prime Minister who wants to fix up his massive deficit and his record levels of debt, so he goes for this lazy tax grab from the mining sector because he thinks, ‘We can sell that to the Australian people—that’s not going to be too hard.’ But he has not explained the fine print. This is a bad tax. This is a tax which is going to be particularly bad for Western Australia. WA Labor members and senators have been missing in action on this. If they had any courage, they would stand up and call on the Prime Minister to axe this tax now. If they cared about Western Australia, they would call on the Prime Minister to dump this terrible tax which is going to be bad for Western Australia. But, of course, the only way to axe this tax is to axe Kevin Rudd. So we call on the Australian people to axe this government. This is the way to change this tax.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Cormann runs some criticisms of the government, but the government’s position on the mining superprofits tax has been absolutely clear and unequivocal since it was first announced many weeks ago. There has not been one iota of change. There has not been one iota of deviation. Why is that? It is because the policy, as announced by the Prime Minister and other relevant ministers at the time, was an efficient policy, it was a well-thought-out policy and it was a policy that was good for the mining industry, good for the mining states, good for investment and good for the future of this country. It was an excellent job that was done at that time.

Why do I say those things? I say them for this reason. What have the mining industry and major corporates been asking for year in, year out? They have been asking for two particular things: (1) a profits based taxation regime and (2) for taxation and other measures to be levied on a project or subindustry basis. They have been asking, firstly, for a profits based tax so that more profits are paid to government as the enterprise or project becomes more successful and, secondly, for taxation to be levied on an industry or subindustry basis. How do we know they have been asking for that? We know that because it was in their submissions to the Henry review. That has been in their submissions to numerous Senate committee inquiries. There was nothing shy or backward about it. Publicly and openly that has been their position—and the position of the Minerals Council for many years.

What did Minister Ferguson repeat yesterday when he discussed the government’s current position, which is the same as it was six weeks ago, with respect to taxation in the mining industry? He said, ‘We’re going to give to the mining industry what it wants, a profits based tax. We’re going to have a different regime for different sectors,’ and he outlined three sectors by way of example: firstly, the coal gas development up in Central and Northern Queensland; secondly, low-value industries where you turn big rocks into small rocks and use them for aggregate and the like on roads; and, thirdly, mineral and metal type industries, which have been around for donkey’s years in this country.

Over the last 30 or 40 years Western Australia, Queensland, South Australia and the Northern Territory have gone ahead in leaps and bounds as more and more projects have come online, more and more sites have been developed, more and more investment has been made, more and more projects have gone ahead and more and more employment has been created. Minister Ferguson said in an interview yesterday that we were happy to accede to the wishes of the mining industry as they have expressed them publicly: a profits based taxation regime and a regime based on individual subunits within the overall mining industry.

What also did we offer? We offered, by way of negotiation, generous transitional arrangements. Of course, every company, Australian or foreign, that wants to invest in this country seeks to have negotiations with the appropriate level of government, and they always discuss the appropriate regulatory regime, the appropriate taxation measures and the timing of taxation measures. So we said, ‘Yes, that’s legit, that’s upfront and we will accommodate your desires.’

In terms of the existing regimes, everyone in this chamber and out there in the industry knows that there has been a boom in the mining industry in the last 10 or 15 years, particularly in Western Australia and Queensland and latterly in South Australia. The state governments have been less than efficient in garnishing the appropriate amount of resources from their state based royalty regimes. They are now belatedly, latterly, seeking to increase it by 1½ or 2½ per cent, but still the lion’s share goes missing. And who should have that lion’s share? The lion’s share, an appropriate share, should go to the Australian people. Those resources are in the ground, and of course they are invested in the Crown in respect of each state

What are the states doing now? They are turning themselves into mere convenient administrative subunits. One only has to look at what happened in the health and hospitals negotiations, where they gave away the one thing they have been seeking since Federation, an independent taxation regime. (Time expired)

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

I am tempted to ask for extra time for Senator Bishop, because I think he was about to destroy and tear apart the great claims the government make about health reform and how important health reform is. He seemed to be saying it was a disgrace that the states had given away their GST income. There were many remarkable things about what Senator Bishop just said. I note firstly that Senator Bishop did not mention Kevin Rudd’s name once in his contribution. I wonder why that is. He did not have the courage to mention Kevin Rudd’s name.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Order! Senator Birmingham, you must refer to the Prime Minister by his proper title.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

Sorry, he did not mention Prime Minister Rudd’s name once. He mentioned Minister Martin Ferguson several times. He mentioned the minister who was not consulted in the development of this tax, who is playing catch-up to try to restore his credibility with the mining industry and to try to restore the government’s prospects. Minister Ferguson is left playing catch-up on this.

As Senator Bishop, this whole chamber and the Australian public know, only two people made this decision, a gang of two: the Prime Minister and the Treasurer. They were the two, they are the ones who did it and the rest of the government are left defending something that none of them really believe is a good thing. They know it is not a good thing because, of course, everybody can see that this is going to have consequences into the future. Those consequences go to the very heart of employment, jobs and investment in Australia.

Frankly, this is a government that has taken the most cavalier attitude to jobs and investment seen in recent Australian history, and we saw that on display from Minister Wong today. Minister Wong, of course, is the only South Australian in the federal cabinet. Yet, when asked about the damage to jobs in South Australia of this tax, she demonstrated not just a cavalier attitude but that she really did not care and had not looked into it.

Today we had leading investment analyst Morgan Stanley come out and talk about the Olympic Dam project. They are not a mining company. They are not spokespeople for a mining company. They are independent investment analysts. What did they say of the impact of the Rudd Labor government’s mining tax? They are reported as saying:

… under the RSPT as proposed the project has no economic value in our view.

               …            …            …

Including the RSPT at 40 per cent, the Olympic Dam project would fail to achieve an adequate return on invested capital in our view.

We think under these fiscal conditions, the project would be unlikely to be developed.

Minister Wong had clearly not even heard of the Morgan Stanley report when she was asked about it. She tried to brush it off as one of numerous reports, tried to pretend it was a mining industry report—tried to do everything she could to avoid talking about it and the threat to investments and jobs in South Australia. This is a $20 billion investment, creating thousands and thousands of jobs—6,000-plus jobs during the construction phase.

OneSteel are a major employer in Whyalla and a value-adder to our resources industry. They are one of the few value-adders, in many ways. They do not just mine the iron ore; they value-add and continue in steel production. What did OneSteel’s chairman have to say about this? He said that the new tax:

… fundamentally changes the economics of the Whyalla steelworks and threatens the viability and, hence longevity, of our steel businesses.

               …            …            …

Unless the Government makes substantial changes to the tax there is likely to be serious implications for our shareholders, employees and the local communities in which we operate.

Those serious implications are that their jobs and the future of their communities are on the line. That is what is at stake here—future investment, because mining capital is incredibly fluid. We saw from Senator Bernardi’s questions to Senator Wong that the Chileans, the Canadians and all those other countries with significant mineral resources are celebrating what the Rudd Labor government is proposing because they know that the fluid capital of mining investors will go to their countries—to Chile, to Canada, to Russia, to anywhere but Australia—because they will offer a better return on investment. The jobs will go to those countries and Australia will be poorer as a result. That is what this tax will do. It will crush the mining industry, it will crush value-adding in the mining industry, it will crush jobs and investment in Australia and it will hurt all Australians as a result.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

In Senator Cormann’s speech on his motion to take note of answers given by Senator Wong today in question time he spoke about payments of royalties. I find that very interesting because it is the one argument that often gets left out of this debate. That is because the proposed resource super profits tax replaces mining royalties. This makes the RSPT more efficient than existing arrangements. This means that some projects will actually pay less tax, particularly the marginal and less profitable projects that the coalition says are at risk.

Those opposite are so intent on running a scare campaign in relation to the RSPT that the first thing Senator Birmingham stood up to debate was how many times Senator Bishop had mentioned the Prime Minister by name. So let me get that out of the way to start with. I am happy to mention the Prime Minister, Mr Kevin Rudd. The Rudd Labor government has announced this super profits tax to ensure that all Australians get a fair share from our non-renewable national resources. That is what those on the other side just will not spell out to everybody. They are running a scare campaign in the media, and both sessions of question time so far this week have been taken up with it, as I am sure the rest of the week and next week will be. It is very similar to what happened in the last sitting weeks: just about every question turned out to be about asylum seekers because they were getting a bit of a media run and they wanted to keep that up. We are happy to take up the challenge. We are happy to point out to people the importance of this tax to everyday Australians, to working Australians, to those people that are not the big mining companies that you are supporting and that in return are supporting you with their billion-dollar campaign. They will be out there, as we heard today from Senator Sherry, being able to claim the tax on their big campaign. We know that you are supporting them because they are your mates.

Earlier you feigned support for working people. Let’s not ever forget that you were the government that brought in Work Choices. We know that Work Choices II—perhaps it will get a different name—will certainly be on Mr Abbott’s agenda should you ever be elected into government with him as leader. I hope that never happens for the people of Australia.

Let us remember that before the last mining boom Australians received $1 in every $3 of mining profits through royalties and charges, but during the last mining boom, as mining profits increased, we saw a decreasing share of profits returned to the Australian people. What has happened? The return has shrunk to $1 in every $7. Although profits were over $80 billion higher in 2008-09 than in 1999-2000, governments only collected an additional $9 billion in revenue. Australia needs to deliver a fair share of these resource profits to the Australian people because a fair share will mean, amongst other things, higher retirement savings; less company tax, especially for those thousands of small businesses; and more infrastructure like rail, ports and roads.

Between the mining industry and those opposite we have seen plenty of bizarre claims during this sketchy scare campaign. If they were so worried about it, why did one of the shadow ministers dash out and buy some shares in BHP? I think it was the member for Dickson, but I am happy to be corrected if I am wrong in that respect. The only reason they oppose this so vociferously is that it suits them politically. They will run their massive scare campaign because they can guarantee that it will be backed up, as I said, by those big mining companies. They will keep receiving campaign contributions from their billionaire mates like Clive Palmer. When Australians go to the poll at the next federal election they will have a clear choice, and I hope they remember it. They will have the clear choice of whether they want a 12 per cent superannuation guarantee or whether they want their super stuck at nine per cent. On this side of the chamber we stand for reducing the tax burden on small business and we stand for boosting the retirement savings of ordinary working Australians. We stand for infrastructure investment in the mining regions of Australia. (Time expired)

Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I stand today in strong opposition to this proposed mining tax and to respond to Minister Wong’s statements and answers in the Senate today and to respond to Senator Bilyk, who seems to have similar knowledge and understanding of this mining tax to the current federal member for Franklin. Senator Bilyk has indicated today that she thinks some mining companies are actually going to be paying less tax. I would like to know which mining companies want to embrace this great big new mining tax. Can she name them? Can she identify the mining companies in Tasmania or elsewhere that are going to embrace this great big new tax on mining? In fact, we will be the highest taxing country in the world on our mining resources, so how on earth has she come up with that proposition? It seems to be that her understanding and comprehension is similar to that of the federal member for Franklin, Julie Collins, who today at a doorstop was quite embarrassing. Is that right?

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

Very embarrassing.

Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

Yes. I have heard part of that. I have not heard all of it. It has been reported to me that she said again and again that she is still consulting, but she could not explain how the tax works and what level it is. She indicated that consultations were continuing. The fact is that Labor are in complete disarray with respect to this tax, whether it be the Prime Minister, his gang of four, the ministers or the backbench. What we do know is that uncertainty now prevails. Frankly, this tax is wicked. It is an iniquitous tax. The government’s assumption that the increase in tax on smoking is going to decrease smoking but the increased tax on mining is going to increase investment in mining is simply dumb, illogical, irrational and does not make sense.

I want to refer in particular to the KPMG report that has been released recently. Yes, it was funded by the Minerals Council. I say to them: congratulations—well done. It is a very thoughtful report. It says new projects relating to copper, gold and nickel will be economically unviable compared to and relative to the current tax regime. The fact is that it is going to hurt Tasmania big time. Gold, copper and nickel are particularly prevalent in Tasmania. Mining companies on the north-west coast are particularly concerned as a result of that. That report confirms that they will be unviable. This is a tax that is particularly bad for Tasmania. It is bad for the other states, of course, such as Western Australia, Queensland, New South Wales, South Australia et cetera—the mainland states—but for Tasmania this is particularly serious and the consequences need to be fully investigated.

I am very proud of the fact that Grange Resources have come today and represented their views to both the government and the opposition. They have pressed their case and I say congratulations. Well done on doing that. Last week we heard that they had put on hold $75 million of investment in their magnetite operation on the north-west coast. They employ over 600 people in Tasmania. They are the biggest mining company in Tasmania and they are pressing their case in Canberra today. I am not hopeful for a positive outcome but they are pressing their case and the fact is that jobs are on the line. Wayne Bould and Russell Clark have been doing a good job. I see Wayne Bould is in the gallery today, representing his company and those 600-plus workers. What I do know is that they spend $52.3 million in wages every year. I know that they put nearly $200 million directly into the Tasmanian economy every year. The fact is that this company is threatened by this tax. They oppose this tax and on behalf of the Tasmanian Liberal Senate team and on behalf of Gary Carpenter, the federal Liberal candidate for Braddon, Eric Hutchinson, Steve Titmus and Jane Howlett, I say we are as one in opposition to this tax. We will fight tooth and nail. We will go up hill and down dale. We will leave no stone unturned to ensure that this tax is axed. It is a wicked, iniquitous tax. The fact is that this company deserves a fair go and we want them to invest and to employ more people. They are vertically integrated. They have a 14-year life at least. They have been there for 42 years already. They are a great company doing good things. I rest my case.

Question agreed to.