David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Assistant Treasurer (Senator Sherry) to a question without notice asked by Senator Ryan today, relating to the budget.

Kevin Rudd, Canadian mining man of the year—

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

Order! You must refer to the Prime Minister by his proper title.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Kevin Rudd, Canadian mining man of the year: that is what they have been calling him in the Canadian press in the last couple of days. What have they actually been saying? As reported in the Financial Times yesterday:

Gordon Peeling, chief executive of the Mining Association of Canada, an industry lobby group, said the Australian tax “probably makes Kevin Rudd (Australia’s prime minister) the mining man of the year in Canada, because he’ll bring a lot of investment our way”.

The fact is that Canada is a real alternative to Australia when it comes to mining investment, because it has abundant deposits of the very minerals that Australia is famous for delivering: gold, copper, coal and uranium. It is a real competitor to us in terms of our mining outputs and the exports that have underpinned the stunning performance of the Australian economy over the last 10 or 12 years—even in the last two, under this government. The article goes on:

In contrast to Australia’s left-of-centre Labor government, the ruling Conservatives in Canada are in the process of lowering corporate taxes.

That is right: ‘lowering corporate taxes’. The article goes on:

The basic corporate rate is to fall to 15 per cent in 2012, down from 22 per cent in 2007, and is the lowest among major industrial countries.

Yet what are we doing in Australia? We are looking at increasing the taxes on our mining sector—the most productive sector of the Australian economy—whilst our major competitors, who have the very same minerals that we mine and rely upon, are looking to reduce their taxes and increase their competitive situation compared with us. British Columbia’s mining minister, Randy Hawes, is also impressed with the Australian Prime Minister, according to the article. He said:

We’re very appreciative (of the Australian tax) … They should carry on and get all the revenue they can get.

He went on to say, noting that Canada’s metallurgical coal exporters have higher transport costs than their Australian rivals, that the proposed super tax is:

… ‘a very good way to level the playing field.’ Many of the world’s mining companies had offices in Vancouver and ‘they are all completely aware of what’s happening in Australia and what we’re doing in BC.’

This most recent article is not the only comment internationally that suggests that our competitors for international investment in our mining projects are salivating at the idea of the Rudd Labor government’s great big new tax on mining—particularly in Australia. There have been plenty of comments already from Canada, and I will quote some of those as well. Canadian Conservative MP Brad Trost has no doubts that the RSPT will drive mining offshore. He wants to cash in on the adverse reaction by mining companies. He said:

Canada, as is Australia, a major mining player and I think we see an opportunity to have some money come north.

He also said:

Well money goes where the biggest profits are and when you raise taxes profits tend to go down. So I’m sending out the message—Canada wants Australian business.

The dollars are going to move. People are scared because their profits are going to go in taxes so they should come to Canada—a low taxed, mining friendly jurisdiction.

What else did he say? He said:

Canadian companies pay the same tax rates as all other companies—

He is talking about mining companies—

and corporations do. And by 2014 we’re aiming to have a combined average of 25 per cent tax rate.

In response to the question put to him that the Australian government’s argument is that big mining companies make huge profits at times and the Australian public has a right to benefit from those profits, he said:

I’m fine if the Australian government wants to make that argument. I just want the jobs coming to Saskatchewan. The question is always what more can you get.

He went on to say:

But you ask yourself this question: If you’re a mining executive where would you sooner put your investment?

           …         …         …

We won’t get all the business. We know that. Australia will still have some of the business. But if we can get a percentage, an extra percentage, a little bit more because of this blunder by the Australian Government, we’re willing to help ourselves.

Senator Ryan referred to comments by Vancouver based Teck Resources boss, Don Lindsay, who said that the tax could be beneficial to him because Teck did not produce from Australia. He said, ‘If Australia really does it, then logically there will be less investment there, particularly in coking coal. That would mean less coking coal, so prices would be higher.’ That is what Mr Lindsay told Canada’s Globe and Mail newspaper on 15 June:

We went through a version of that (a tax increase) in Alberta when a new resource royalty regime was put in and there was a big backlash. Billions of dollars of investments were cancelled.

That is a real-life example. (Time expired)

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Senator Bushby’s contribution only goes to show that there are some people in Canada who know even less about this tax proposal than he does. I think quoting what people on the other side of the world might think about something they have had no time to consider—and that is demonstrated by the consideration that Senator Bushby put and in some of the quotes—is nothing more than a contribution to the scare campaign the coalitions are wheeling out about this tax.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Simple economics; basic economics.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Let us talk about the simple economics of it. When you move away from a volume based tax that is based on what you take out of the ground to a profit based tax, you actually make some of the more marginal projects more competitive and enable them to proceed. They will not actually pay tax until they make a profit. Instead of paying tax on what they take out of the ground—

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Why are they opposing it?

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

See, this is your argument. This is what you have failed to understand all the way through. What we are taxing is the high-profit end of companies once they start to make profits, rather than taxing what they actually take out of the ground. It is a much more efficient and much more market based way of addressing this industries tax. This is what the mining industry asked us to do. That is what they asked the Henry tax review to consider, and that is what it did.

What the mining companies are actually complaining about is the amount of tax. Let us be very clear about this: the campaign being run by the mining industry is one of pure self-interest. They are actually getting half of what they want—that is, the way the tax is going to be applied on profits not on volume, not on what they take out of the ground. That is what they asked for and that is what they wanted. What they are really complaining about is how much tax they are going to have to pay. Their attitude is pure self-interest. That is why they are fighting. That is why they are spending up to $100 million blitzing the country with their constant advertising. They are only self-interested. Quite frankly, they think the assets in the ground belong to them. They do not; they belong to the Australian people. The Australian people require their fair share.

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

They belong to the people of the states.

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

Order! I am not going to put up with a shouting match across the chamber. Senator Marshall has the call and he shall be heard in silence.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I know Senator Back is passionate about the fact that he believes that it belongs to the states. He does not believe it belongs to the Australian people. Being Western Australian, he believes they should be seceding from the Commonwealth. Good luck with that, I suppose. I do not think it will secede—

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

Succeed.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Yes. It is a bizarre argument that they run. If they want to split hairs and argue that it belongs to the states, they can continue to run that. What we know and what the Australian people know and understand is that those resources belong to them. The Australian people want their fair share. Those resources do not belong to the mining companies. They belong to the Australian people and they want their fair share.

Let us be very clear on what this argument is about. It is about how much tax the mining companies want to pay. Is anyone really surprised that the mining companies that face increased taxation—even though it is set in a way that they like and in many instances they will in fact pay less tax at many levels up until the super profits stage—the richest and most profitable ones, the ones with the most profitable mines, are complaining? They will pay more tax—that is true—when they get into the super profits situation, but many will pay less tax under this arrangement.

Who is putting in the big bucks in the campaign against the tax? The big mining companies, because they know they make super profits. They want to keep all the massive profits that we have seen double, triple and quadruple over the years. They pay less tax now as a percentage than they ever have before. Australians deserve their fair share. This government put Australia’s interests first. It puts the interests of Australians before the interests of the big companies. They will still make lots of money. Let us not make any mistake about that. These companies will continue to make billions and billions of dollars, as they always have. But if it is a question of whether they can save some extra money here and there, they say, ‘Let’s do so; let’s run a campaign against the government,’ because they have a compliant opposition—an opposition which they know will simply roll over because they are looking for any issue to be at odds with the government on. The mining companies think: ‘Okay, we can buy them. We can put them in our pockets and we will try and change the government. They will do what we want them to do and move away from this tax so Australians do not get their fair share.’ That is what they have done. They have effectively bought the opposition. You are the paid servants of the big mining companies.

Fiona Nash (NSW, National Party) Share this | Link to this | Hansard source

Just when you thought the government could not come up with another bad idea, here comes another one, wham! It is unbelievable—bad idea, after bad idea. It is just extraordinary to watch how many stupid ideas this government can actually come up with. This one is an absolute ripper. What have we got here? They say, ‘Higher taxes are going to lead to investment.’ Ooh! That is something a rocket scientist must have thought up—higher taxes are going to lead to investment. Isn’t that extraordinary? Everywhere else around the world, they seem to be saying, ‘It’s actually lower taxes that lead to investment.’ Maybe the Prime Minister read the advice a little wrong and he put ‘higher’ in when he should have put ‘lower’. This is one of the most stupid ideas that a government has ever come up with. Guess why? If you threaten the viability of the mining industry, you threaten jobs. It is as simple as that. It does not matter how many complicated arguments you want to put around this, if you threaten the viability of the mining industry, you threaten jobs. We hear a lot of talk about Western Australia and Queensland in this debate, but so many of those jobs are in New South Wales and people in New South Wales are very worried about losing their jobs.

I went travelling right through the central west and western New South Wales—17 towns—a couple of weeks ago.

Kerry O'Brien (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

In your green car?

Fiona Nash (NSW, National Party) Share this | Link to this | Hansard source

Yes, in my green car. Thank you, Senator O’Brien. I will take that interjection. I could not find one person who supported this mining tax. And I am not talking about big miners from all those mines the other side say are making billions of dollars. I am talking about real people on the street and on the ground who know that their jobs rely on those mines. Out around where I am, small regional communities such as Cowal, Cadia and Northparkes rely on those mines to be profitable and sustainable. What is this government going to do? It is going to rip the heart out of the future viability of the mining industry. We talk a lot about coal. I am talking about the metals out there. We can see that this government is going to take away the viability of that industry.

Interestingly, Ken Henry apparently wants to just tax everybody. He said, ‘Let’s just whack this big tax on all sorts of businesses.’ What did the government say in response? It said:

The bottom line is the Government’s position in relation to the resource super profits tax is that it applies to non-renewable resources in Australia.

Who would believe the Prime Minister? He changes his mind so often and does so many backflips, who on earth would now believe anything he says? They do not. People out there across Australia no longer believe this Prime Minister. So what is next, Prime Minister? Is this tax going to apply to agriculture? Are we going to start seeing farmers being hit with a tax? Whatever the Prime Minister says, you can no longer believe him because he simply backflips on just about everything.

Talking about bad ideas, this mining supertax is at the top of the pile. But it is at the end of a long list of bad ideas. What have we seen so far, colleagues? The emissions trading scheme was a bad idea. That was a cracker of a bad idea. The list of bad ideas just keeps going. How about getting rid of the single desk? The single desk went two years ago today. That was a bad idea if ever there was one, because the wheat industry is in absolute turmoil. What else have got? We have the government getting rid of the $2 billion telecommunications fund. What have we seen there? They do not care at all about regional telecommunications. Let us look at another bad idea. How about the insulation scheme? That was a cracker. How about another bad idea, such as wasting money on school buildings? The list is endless—bad idea after bad idea.

Now we have the mining tax. Interestingly, how could anybody in this country ever think that the government could do it properly? They cannot do anything else properly. The country is going to the pack because this government have absolutely no idea how to run the country. It is like letting a bunch of kindy kids be in charge of a high school. Mind you, the kindy kids would probably run the country a bit better at the moment. It is appalling what this government are doing. They have no idea.

Speaking of bad ideas, we have another cracker coming up from this government with the sustainable diversion limits under the Murray-Darling Basin Plan. This one is going to be an absolute cracker, because they are going to completely ignore the needs of regional communities and the social and economic impact. They are going to weight it to the environment and it is going to be yet another bad idea, just like the mining tax.

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Talk about unbelievable—this is coming from a member of the National Party from New South Wales. One thing Senator Nash did not talk about was the National Party’s position on the Liverpool Plains, where they think they can have a position about opposing mining in central western New South Wales, which is going to create a lot of employment, and at the same time come down here and barrack for the miners and say that the tax will, as I think she said, ‘threaten jobs and lose jobs’.

I have been going out that way as well, Senator Nash. Most people know what sort of hypocrites the National Party are. You cannot have home and away games. You cannot go and protest on the Liverpool Plains to stop mining and then come down here and barrack for the miners. You cannot do that. That is unbelievable. Everybody in New South Wales knows that about the National Party. Even your journal, your bible, the Land, comments on the dual position of the National Party.

I want to talk about some of the contributions that have been made in relation to this tax today. Senator Bushby quoted a progressive conservative—that is what they call themselves—government minister in Canada. I wonder where the unprogressive conservatives are. I am assuming they are on the other side over here, because we have this opportunistic, progressive conservative cabinet minister in Canada claiming that they will do quite well out of the introduction of this tax. Last week the opposition pulled out a quote from a conservative minister from the Chilean government claiming that they would do well out of the tax. I think they pulled out a quote from someone from Brazil. I think it was a socialist minister from Brazil. They found him. In fact, I think Senator Mason and Senator Brandis wanted to make a contribution about whether the Cuban ministers had made a contribution about the proposed tax.

The fact is, Mr Deputy President—and you with your experience know this as well as I do—that once this tax is introduced in this country other Western nations will introduce the same tax. You know that as well as I do. Do not be misled by these opportunistic statements by fellow members of the dark side of politics. Do not be misled. You know that, I know that and everybody else knows that. The only person from the mining countries that the coalition have not quoted so far is President Chavez of Venezuela, who opportunistically just nationalises private industry.

We know, as everybody else in public life knows, that to change tax and introduce reform is difficult. In the history of this Commonwealth it has not been done without a lot of debate and controversy. As I recall from reading history, the transfer of income tax powers from the states to the Commonwealth after or during World War II—I cannot recall which—was accompanied by a lot of debate. In fact we have a secessionist over here, Senator Back, who probably would have opposed it in the forties and continues to oppose any sort of contribution by Western Australia to the rest of the Commonwealth.

You know as well as I do, Mr Deputy President, that the introduction of the goods and services tax in this country was bitterly contested by this side and your side. It was introduced by Prime Minister Howard and he fought an election on it. As I said, it was controversial and it was contested. We are introducing another tax that is equally controversial and contested. It should be taken with a grain of salt that of course the large mining companies have a lot of self-interest in this. I have never met anybody who wants to pay tax. I have never met anybody who wants to pay any more tax. Understandably, they are arguing as best they can.

In my final seconds, I want to remind people what we are going to do with that increased money. We are going to reduce company tax. We are going to invest in infrastructure and boost national savings through increased superannuation contributions. It is going to be a great legacy that this government leaves Australia.

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

We have it from the executive of the Mining Association of Canada: Kevin Rudd, Australia’s Prime Minister, the mining man of the year in Canada. What a lemon of an idea that is. What lengths will this man go to to try and buy votes internationally?

I respond to the comments made by Senator Sherry in questions asked by my colleague. We see again nonsense at the mention of the concept of consultation apparently to the extent of: ‘We’re going to rob you. Which part would you like us to take first?’ He mentions the Henry review. By their own terms, the government only accepted 2½ of 138 recommendations of the Henry review—totally discredited by the government that commissioned it.

Let me advise you of a few facts associated with the mining industry: only 10 per cent of all exploration in mining in this country yields a mineable product; 90 per cent does not. By the criterion of 6.25 per cent or six per cent of the government bond rate, less than 20 per cent of all mining projects in this country historically could be regarded as having made a profit; 80 per cent have not. This government is proposing that the taxpayer will pick up a 40 per cent levy on failed mining ventures—the 80 per cent that failed.

Let us have a look at an arbiter called the banks. To what extent did the banks value at all this so-called outpouring of generosity by our Prime Minister of our money? The banks discounted it. The banks said that 40 per cent has got no value at all. Let us have a look at the level at which this tax is coming in: it is coming in at six per cent at the government bond rate. Even the petroleum resource tax comes in at about 11 per cent and more, and that has had some level of acceptance. But this tax, in contrast to the petroleum resource tax, is retrospective, so all of those decisions and investments that have already been made get picked up in it—some resource super profits tax.

What seems to have been lost in this debate is there is already a profits tax upon everybody, including miners, and that is called income tax and company tax. The difference between our side and that side over there is simply this: we believe in growing the size of the pie. If you make the pie bigger, there is more for everybody. If, on the other side, all you can do is see the size of the current pie, all you can do is keep dividing and dividing.

What a shame it is that Senator Marshall is not here. He made one accurate point: he referred to Western Australia succeeding. He is absolutely right—and thank the Lord for the rest of this country that Western Australia, Queensland and now South Australia with its current activities are succeeding. But there is no point our state seceding, because Senator Marshall would want to come with us, so we might as well stay where we are.

Senator Marshall spoke of royalties and the Australian Constitution in some way being bizarre. Quite how this Constitution is bizarre, I do not know, but let me inform him, as indeed the Western Australian Premier, the foremost Premier in this country, says so often—and I will repeat it—royalties are not taxes. A royalty is the sale price of a mineral asset to the company which wishes to buy it on behalf of the people of the state. In case Senator Marshall has a heart attack over it, we have a grants commission that makes sure that everything is balanced up so all Australians benefit. That is the reason regrettably at the moment why our state only gets 68c back in the dollar of GST revenue, and the states of Queensland, New South Wales and Victoria receive in advance of 90 per cent.

Royalties are a sale price of the asset by the people of the state. If this Prime Minister wishes to change that and call those minerals assets the ownership of the entire country then he ought to come clean and go to the Australian people with a proposal to change the referendum. Premier Barnett has indicated ably only in the last few days what true consultation is. It relates to iron ore finds, and in fact we ended up with those two companies accepting his adjudication.

Question agreed to.