Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

The President has received the following letter from Senator Cormann:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

The Gillard government's ongoing mining tax fiasco and its implications for the budget.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Labor's mining tax is in a complete mess. The reason that it is in a complete mess is the complete incompetence of our Treasurer.

The mining tax has been in a mess from the start, and the reason it has been in a mess from the start is that Wayne Swan, our Treasurer, did not follow a proper policy development process. He did not consult; he just came out with an ill-considered cash grab imposed on an important industry for Australia without thinking things through properly. Mr Deputy President, if you remember the time of the resource super-profits tax fiasco, it was our then Prime Minister, Mr Rudd, who lost his job while Mr Swan got a promotion.

Of course, the reason that the Labor Party pursued the mining tax back in 2010 at the time of the 2010-11 budget was that they were in desperate need of some more cash in the lead-up to that election. They wanted to create the illusion of an early surplus in 2012-13 as part of their narrative going into that election. They knew that after years of debt and deficit budgets, and after excessive spending that had left the government's budget exposed, they were politically exposed in the lead-up to that election because of their complete mismanagement of our budget.

So there was Mr Swan: he came up with the resource super-profits tax, which was clearly a bastardised version of what Dr Henry had recommended in the Henry tax review, which itself was supposed to lead to a simpler, fairer, more efficient and less distorting tax system. That first RSPT—that first resource super-profits tax—was supposed to raise $12 billion over the first two years, $37 billion over the first four years and a staggering $100 billion over the first decade. That was based on much more conservative commodity price and production volume assumptions than those which were subsequently adopted by the Treasurer, based on advice by the three big miners, who negotiated the subsequent mining tax deal with him. The reason he upgraded those mining tax revenue assumptions at the time was that he wanted to mask the true fiscal impact of the concessions that he and the Prime Minister had made in those negotiations with the big three miners.

From the RSPT to the minerals resource rent tax, the rate went down from 40 to 22½ per cent. The base was seriously contracted from all resources to just iron ore, coal and petroleum. The government, of course, gave an open-ended commitment to credit all state and territory royalties on iron ore, coal and petroleum against any resource rent tax liability, and as part of the mining tax deal they have introduced for the first time this commitment for the three big miners in particular to be able to use the market value of their assets as the starting base to depreciate the cost of their capital assets against any mining tax liability.

Despite these massive concessions, despite the significantly lower rate, despite the significantly smaller base, despite the open-ended promise to credit all state and territory royalties, including future increases, and despite the capacity to deduct the market value of relevant capital assets against any mining tax liability, the government wanted us to believe at the time that the impact on the budget bottom line was just $1½ billion from the initial resource super-profits tax to the minerals resource rent tax.

That was never believable—it was never believable! The way that the Treasurer achieved that magic trick was by upgrading commodity price and production volume assumptions significantly. When we asked him to show us the assumptions that he had used so that the Senate could scrutinise properly his mining tax revenue estimates to see whether there was any likelihood at all for those revenue estimates ever to be realised, he said, 'I can't give you that. That is commercial-in-confidence for those big three miners, who have given me those commodity price assumptions in the first place.'

Here we have a situation where those three miners not only were allowed to design the tax but were also the ones that were able to give the government the commodity price assumptions it was to use. They are hardly disinterested parties when it comes to choosing a level of commodity price assumption for the government. Then nobody else, other than those big three miners and the government, was allowed to know what that assumption was.

What has become progressively clear since then is that those mining tax revenue estimates that the Treasurer told the Australian people about back in July 2010 were never credible, because at every turn since then they have downgraded them and downgraded them more, from $37 billion over the four years of the current forward estimates under the RSPT to $22½ billion over the current forward estimates under the initial MRRT, down to $13.4 billion at budget time, and down to $9.1 billion at MYEFO time earlier last week. Now it turns out that the government have not raised a zack. No wonder the Treasurer was so desperate to keep his commodity price and production volume assumptions secret. No wonder the Treasurer was so desperate to rush the Mid-Year Economic and Fiscal Outlook out the door last Monday before he would have been forced to include the information about the actual mining tax revenue collections in the first quarter of this financial year in his budget update. No wonder the government have delivered $173 billion worth of accumulated deficits. No wonder the government are confronting yet another $120 billion budget black hole.

If you have a Treasurer in charge who comes up with a complex new tax which is costly for the government to administer, which is costly for the mining companies involved to comply with and which does not raise a cent when the government have already spent all of the money they thought they would raise, and more, no wonder you end up in a deficit situation. Labor's mining tax was a fiscal train wreck in the making right from the start, because in order to be able to raise that revenue in 2012-13, which was to help with their budget bottom line and which was to help create the illusion of an early surplus, and in order to sell that new tax politically, they attached a whole series of promises which were to take effect from 2013-14 onwards and progressively ramp up.

The mining tax, even if it had raised what the government thought it would raise initially over the current forward estimates, was actually going to leave the budget worse off, because the cost of the promises the government attached to the mining tax revenue was higher than the revenue the government were going to raise, even if all of their predictions had come through. Guess what? Now we do not have any revenue at all from the mining tax in the first quarter. That is the reason we suggested at the time—and we tried to get the support of the Greens—that the Senate should flex its muscle and refuse to deal with the mining tax legislation until the Treasurer transparently released his mining tax revenue assumptions. We had no confidence at the time that the mining tax revenue estimates that he put forward as part of the legislation were ever going to eventuate, and of course we have been proven right. At the time, the Senate in our view should have stood firm and said, 'We're not going to deal with this legislation until you actually give us the information that we require in order to be able to scrutinise the credibility of your mining tax revenue estimates.'

The Prime Minister got the Greens off her back by promising monthly updates on mining tax revenue collections. Guess what? We are now nearly four months into the mining tax and not a single monthly update on resource rent tax revenue collections has happened. This government continues with the cover-up. When you have a Treasurer who is incompetent, when you have a Treasurer who stuffs things up and when you have a Treasurer who made a complete mess of the mining tax, you have a Treasurer who has to cover up all of his tracks. He does not want to be transparent and accountable to the Australian people because he is embarrassed by the mess he has made.

I am sure that even on the Labor side there must be reasonable people who say, 'Enough is enough.' Surely even on the Labor side of the parliament there must be people who say, 'We don't want to continue with a tax which imposes costs on business, which makes them less competitive internationally and which does not actually raise any revenue at all.' The government have made a mess of tax reform. They should scrap the mining tax and start from scratch with a proper tax reform process.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

The resource investment which is expected to drive new business investment is at a record high in Australia as a percentage of GDP over the forecasted period of MYEFO. Across Australia's economy we have a very strong investment outlook, with something like $20 billion at an advanced stage boosting the productive capacity of our economy. As part of that, capital expenditure is set to rise as well by 45 per cent in 2012-13 after growing by 75 per cent last year. This is all part of the good work and the good policy decision-making that has been done by our Treasurer, Wayne Swan.

The opposition's stance makes it crystal clear that they would rather give a tax cut to Gina Rinehart and Clive Palmer than help out everyday Australians. This is exactly what the MRRT is about: helping out everyday Australians and sharing the benefits of the mining boom. There is very much a stark contrast between Labor and the opposition—between those who stand up very much for working Australians and those opposite who kneel to the feet of vested interests; between those who believe that, when commodity prices are booming, all Australians should benefit and those opposite who want prosperity to belong to only a very fortunate few. That is a clear policy difference between Labor and the opposition. On any day, I am very proud to say that I stand on this side of the Senate chamber in support of Labor and our policy position to spread the benefits of the mining boom to all Australians. We are of course talking about resources in the ground that, as I said earlier, can only be dug up once.

Unfortunately, the opposition are clearly happy to follow the lead of Campbell Newman in Queensland and o cut services that Australians very much rely on. I think they are quite happy to do that. What we have seen unfold in Queensland is just a taste of what the country could expect under an Abbott led Liberal government, because it is the Liberal Party way. Every single measure in Newman's budget got the tick of approval from the Leader of the Opposition and the shadow Treasurer. In September, the shadow Treasurer praised Campbell Newman's savage cuts, saying, in the Age newspaper:

… all strength to his right arm, he's showing incredible courage …

Fourteen thousand Queensland workers have been sacked by Campbell Newman, who specifically told them before the election that they had nothing to fear from a Campbell Newman led government—nothing to fear. If his government do not think losing your job is something to fear, then I do not know what they think having a livelihood, let alone a prosperous life, is all about. That is very much something to fear, having a government come in and slash and burn jobs right across the state—14,000 jobs in Queensland. This was a very cruel and destructive budget by a cruel and destructive Liberal Party, and I think this Queensland budget is just a sneak peek at the type of damage a federal Liberal Party government would do to Australian jobs and the Australian economy. Newman's wrecking-ball approach is straight out of the Liberal Party playbook, and it is exactly the same destructive approach that Tony Abbott and Joe Hockey would take to fill their $70 billion crater that they continue to be unable to explain to the Australian people how they will fill.

But they have alluded to one area in terms of filling their $70 billion black hole. Joe Hockey made the announcement that they would cut services for families and communities, including payments. Joe Hockey has confirmed that the coalition will dump the Schoolkids Bonus. It does not matter that families with kids at school need it. It is not the kind of thing that the coalition support, so of course it is easy to slash and burn the Schoolkids Bonus. This is Joe Hockey's 'end of the entitlement era', he claims—

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

Mr Deputy President, I rise on a point of order. Could the senator refer to members of the other place by their appropriate titles.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I remind all senators to refer to members of the other House by their seat names or their names with honorifics.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I will do so, Mr Deputy President. Mr Hockey's 'end to the entitlement era', he calls it—not 'reasonable reductions in middle-class welfare for millionaires who do not need it', of course. No, the coalition's strategy is a two-pronged assault on services and support for families, in a desperate attempt to fund their $70 billion black hole and in a desperate attempt to fund the opposition leader's politically motivated policies on the run.

Surprisingly, though, Mr Hockey claimed that the coalition was not able to support a bonus—that is, the Schoolkids Bonus—that is funded by the mining tax. Could the shadow Treasurer show a greater lack of understanding in saying that the Schoolkids Bonus is funded by the mining tax? I do not know where on earth he is coming from. It is absolutely incorrect to assert that the Schoolkids Bonus has been funded by the mining tax. But it suits the coalition's argument to package up the mining tax, which they are opposed to, with the Schoolkids Bonus, which they are opposed to, and say, 'We're going to get rid of that because it's funded by that,' when that is so incorrect. Again, they are just trying to muddy the waters, to somehow make the Australian public believe the shadow Treasurer's view that the mining tax is worth getting rid of.

One thing that is very clear is that there is a stark contrast between Labor and the opposition when it comes to spreading wealth in our country and ensuring that all Australians get a fair go. Those of us in the Labor Party believe in a fair go. It is an Australian value, one that has become a mainstay in the Australian community, and therefore we look at ways we can improve policy in this country so we can ensure that all Australians receive a fair go. But the record profits coming out of the mining sector are going to a very small number of people, and some of the mining companies are not even Australian owned. When we see those resources coming out of the Australian ground and the profits going into the hands of a very small number of mining magnates, Australians think to themselves: does this stand up to that value of a fair go? Is this ensuring that Australians get some benefit from the resources that we all own—that we all own—and share in this country? No, it is not, and therefore we came up with a policy that ensures that we do all get some benefit from the profits that come from our resources.

That is why we have put forward this policy, which will do that by boosting retirement savings and lifting the superannuation guarantee from nine to 12 per cent—all things that the opposition say no to. On top of that, we are giving tax breaks to 2.7 million small businesses—another thing that the opposition say no to. We are helping viable communities get through a tough patch by investing in their workers with equipment and ideas through a loss carry-back—another thing the opposition say no to. Labor will also provide cost-of-living relief to 1.5 million families and 1.4 million job seekers, students and parents on income support. Labor will build critical infrastructure through the Regional Infrastructure Fund. The contrast between these policy initiatives from Labor and the polices of the opposition has never been clearer. It is the contrast between a party which believes in a fair go and a party which just says no and, in saying no, continues to dig an even bigger black hole for itself—$70 billion. The opposition has not yet answered to the Australian public about how it is going to fund its promises—promises which already have a $70 billion black hole. The only saving they have offered up is, as I have shared with you, the slashing of the schoolkids bonus—something that so many families in this country rely on to ensure their kids have all the necessities for their education. (Time expired)

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

It was fascinating to sit and listen to Senator Cormann lecturing the government on a tax which does not collect any money—and I suspect Senator Joyce will serve it up as well in a few minutes. This is from a party which did not want to tax the industry at all. The net result of following coalition policy would also have been no tax taken. So it is remarkable to hear the coalition trying to have it both ways. Do you want to levy fair taxes on this industry or do you not?

I am keenly aware, as a senator representing Western Australia, of the role the mining industry plays in the Western Australian and national economies. I am also keenly aware that people employed directly by the mining sector are only a very small fraction of the Western Australian workforce. For those not on a mining wage, the mining boom has actually come at a severe cost. People here on the east coast bandy around the term 'two-speed economy' without, I think, appreciating what the impacts are on the front line in Western Australia—or, more specifically, on towns in the Goldfields and the Pilbara. The high exchange rate associated with the mining boom has seen trade exposed sectors right around the country, including manufacturing, tourism and education, finding it much harder to compete. The boom has also driven up the costs of operating a business—or a farm, for that matter. In August last year ASIC reported a 17.4 per cent increase in the annual number of failed businesses in Western Australia.

The boom has driven up, as well as the costs of business, the costs of living. House prices in Western Australia have exploded over the last decade and rents continue to soar. Between May 2006 and March 2008, the RBA increased official interest rates seven times and, on each occasion, high or rising commodity prices were explicitly mentioned as a factor.

So the question we would put is: what is the best way to ensure that Australians benefit from the boom—a boom built on the liquidation of finite resources? While the company tax rate is 30 per cent, the average rate paid by the mining industry in 2008-09 was just under 14 per cent, mostly because of generous deductions available to the industry—for example, we cop their diesel bill. Taxpayers subsidise the diesel bill of mining companies. In 2009, Andrew Forrest's FMG admitted that it had not paid a cent in company tax in seven years of operations. On 7 March this year, Treasury Secretary Martin Parkinson observed that mining companies account for about a fifth of gross operating surplus yet only about a tenth of company tax receipts.

It is in this context that the federal government introduced a mining tax which failed to raise a single dollar of revenue in its first quarter of operation. The failure of the mining tax to raise any revenue at all demonstrates the folly of Labor's capitulation to the big three mining companies. The Henry tax review made the case for a 40 per cent tax on mining profits above $50 million a year. Labor allowed themselves to be bullied by the mining industry—cheered on by their ever faithful servants in the coalition—and watered the tax down to 22½ per cent on profits above $75 million and then radically reduced the number of commodities it applied to. The original Henry tax designed by Treasury would have stemmed some of the flow of mining profits out of the country. But the government blew it. Having watered down the tax in response to an entirely misleading and aggressive $22 million propaganda campaign and only applying it to these two commodities, the scale of the government's surrender is now apparent.

The coalition of course performed its usual role as the uncritical sock puppets of the big mining companies. They have demonstrated economic illiteracy of the highest order in opposing any kind of tax whatsoever on mining superprofits and making the kind of hysterical doomsday predictions that the Leader of the Opposition has turned into something of an art form—predictions which have been proved completely dishonest time and again.

A big wind turbine is 200 tonnes of steel. Solar PV cells require rare earths and silicon. Electric vehicles require high-capacity lithium batteries. It is not possible to do these things without mining, so the myth that the Greens oppose mining per se is obviously absurd. What we do object to is the idea that, because of its financial clout, the mining industry should be entitled to throw its political weight around like some kind of cartel, dodge fair taxation and punch holes in environmental protection and heritage laws built up painstakingly over a period of decades.

Government annual resource reports indicate that we have eight or nine decades more of iron ore mining at present rates of extraction—another 80 years or thereabouts. The caveat—'at present rates of extraction'—is critical. None of the proponents in the Pilbara, North West Shelf, Goldfields or anywhere else have any intention whatsoever of proceeding at present rates of extraction—and their shareholders would sack them if they did. The mining industry and the oil and gas industry intend to double rates of extraction across the board as soon as possible—and that of course halves the depletion horizon. The boom is coming to an end one way or another, but we have been hypnotised by the laws of supply and demand and the powerful magic of price signals to believe that it can last forever. The mining boom will not last forever. Geology says otherwise—and geology will win.

We must therefore make the most of the boom while it lasts. A properly constructed superprofits tax would have raised funds for hospitals, health care, public transport, affordable housing, desperately needed large-scale investment in renewable energy, training facilities and support for the nation's schools—the need for which was documented in the Gonski review. A properly constituted and levied mining tax, one which only kicks in when the industry is doing exceptionally well and harvesting superprofits, would lay the foundations for a sovereign wealth fund. Such a fund could help to lock in for future generations—as other more farsighted countries, such as Norway, have done—the once-in-a-generation benefits of a commodities boom.

Instead, the government has wasted almost 2½ years since Treasury first advocated a mining superprofits tax—longer than that now. A strong mining superprofits tax could have fostered the diversification of the Western Australian economy by funding training and R&D and start-up grants to small businesses. Instead, Western Australia's AAA credit rating is in peril because of our narrow economic base, because of our dependence on mining and because of the tunnel vision of the major political parties.

The coalition, of course, has approached the debate as though mineral resources belong to Clive Palmer and Gina Rinehart as some kind of birthright. Labor members have noted in this place that Australia's mineral resources belong to all of us by way of their being the property of the Crown. But what is almost ignored is that these minerals come from country: they come from Aboriginal land. In Canberra, thousands of kilometres from the West Pilbara, parliament debates how to share the bounty from a once-in-a-lifetime mining boom—though the coalition does not want to share the bounty of the boom at all—while traditional owners and Aboriginal people of these exploited lands live in conditions of degrading poverty in the midst of the mining boom. Every Australian, especially those in need, should be benefiting from our publicly-owned mineral resources. It has not been lost on the Greens that some of the worst and most destructive poverty in this country occurs side-by-side—within a stone's throw—of some of the most lucrative extractive industry developments in the world.

It is not too late to reconstitute the minerals resource rent tax, and the Greens stand ready to work with the government or the opposition, if—heaven forbid!—they have a change of heart, to fix the tax, to harness the boom and to make work for all Australians this once-in-a-generation opportunity. Or we can continue to let the mining industry continue to rip a fortune out of this country, liquidate within a generation the natural capital assets of this ancient continent while other industries suffer with no place in the future for what happens after the boom.

The Australian Greens stand entirely ready to work with everybody in this building or in the community to look at ways of recreating our economy post-boom. But surely resourcing the community and industries while the boom is in place with a properly constituted tax on the extraordinary profits which are still being raked out of agreement is an important place to start.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

The mining tax is a classic example to all Australians of how the Labor Party, if left to its own devices in a situation where it has to devise a tax in opposition to the best interests of others, stuff it up. Mr Swan and Ms Gillard went into a room with Xstrata, BHP and Rio Tinto and, obviously, Xstrata BHP and Rio Tinto absolutely did them like a dinner. These organisations said, 'What we'll do is write our assets off at market value over 25 years,' and any person who was even slightly competent would have replied, 'Hang on; that means we're never going to get anything—we're never going to raise any money from this tax.'

We argued against the mining tax because we understand the sensitivities in the mining industry, which are there because there are alternate venues to which the miners can go: Indonesia, South America and Africa. But the government said that it would go with the minerals resource rent tax anyway, and it then allocated the funds from the tax to various measures. The only problem is that the tax has not raised any money. With the super guarantee, the government was going to help small business, apparently by jacking up small business's superannuation liability. So they jacked up the superannuation liability of small business while saying that small businesses would have greater expenses because they would be paying more money out of their own pockets for superannuation and that Treasury would suffer a loss of revenue. Then the government said that it would cover the loss to Treasury by the minerals resource rent tax. The trouble is that the minerals resource rent tax didn't bring in any money. Then there was the $1.2 billion a year for the schoolkids bonus. Every time you hear the word 'bonus' you know that you have a problem. The $1.2 billion a year that was going to be spent on the schoolkids bonus was also going to be provided by the minerals resource rent tax; the trouble is that the minerals resource rent tax didn't bring in any money. The big one for regional people in my state is the $6 billion for the Regional Development Australia Fund. At the moment $573 million is hypothecated to go towards the fund. The problem is that the government is not getting any money from the minerals resource rent tax.

So where will the money for all these measures come from? The government is not making any money from the minerals resource rent tax. The government had about $1.4 billion in one fund, $350 million was spent after the floods and about $50 million went into the Rob Oakeshott Christmas club. That left the government with about $1 billion. Then there was about $200 million in RDA funding so far and $200 million for other projects which have been on the books. After all this, the government was left with about $600 million. About $574 million was hypothecated on the mining tax, and the mining tax is not raising any money, so we are left with $26 million—and that is hardly an amount to take to an election. The question that the Independents should be asking is: where is our money going to come from? It could come from the debt. Our debt is currently at $255 billion gross. The government repaid about $3 billion this week, but in the previous fortnight they borrowed another $8.1 billion.

All of this goes to show that the chaos of this government continues day after day. The Labor Party and the Greens might get some solace out of the polls today, but there is no solace when you look at the books, because there are massive debts and now our revenue stream is drying up. How are we going to run the show? The Financial Review reported a black hole of $120 billion out to 2020—and that was before the fiasco of the failure of the mining tax to raise any money. Originally, the long-term projection for the minerals resource rent tax was that it was going to bring in about $60 billion. But we found out that it was really going to bring in $40 billion, so there was a $20 billion black hole in the minerals resource rental tax even before this latest fiasco. What we are suffering now it has happened as a result of the sins of Ms Gillard, who said when she got rid of Kevin Rudd that she would fix the mining tax, fix the boat people issue and cool the planet.

I do not know how the cool-the-planet thing is going. It has been a bit cool lately, so maybe that one is working; I do not know. We certainly know that people are poorer. We certainly know that the tax is there, but the temperature of the globe seems to be carrying on as it was. We note that the boats are still turning up. And the mining tax is starting to turn into one of the greatest examples, par excellence, of a government that just has not a financial clue.

Maybe the current Minister for Finance and Deregulation of this nation, Penny Wong, used this as a recommendation in her Senate speech. Maybe this is the reason she ended up as No. 2. Surely there must have been some person somewhere in the Labor Party who realised at the inception of this tax that, because they had granted the mining companies the capacity to write off their assets at market value over 25 years, there was not a hope of gaining any money from this. That being the case, why on earth did you spend the money? Why on earth did you allocate the money—money that you were never going to have? Because you have allocated the funds that the minerals resource rent tax was supposed to get—as crazy as it was, and we should not have had it—we have to get it back from somebody else. Where are we going to get it? Where is that money going to come from?

The Australian people have to pay for it. They have to pay for it now. They have to pay for the outcome of one of the most tawdry and pathetic forms of financial accounting that this nation has ever seen. What you see now is that this allocation of basically $60 billion over 10 years has to be picked up by other people—$60 billion has to be picked up by the 22½ million people who live in this nation. If they do not pick it up, we are going to have to borrow it. If we do not borrow it, we have to cut the funding to it. It just goes on and on and on.

Everything you see in the government is a sign of them just going out the back door. I will bet you London to a brick that before the next six to 12 months are out, if this crowd is still around, they will be running back wanting another extension on the credit card, another extension on the credit limit.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I call Senator Sterle, senator for Western Australia.

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

The Deputy President is from Tasmania. We had the pleasure of coming in at the same time. I too rise to make my contribution to the debate on Senator Cormann's matter of public importance today. Quite frankly—forgive me, Mr Deputy President—it has been a long year, and it is getting crazier as the year goes on. Fortunately, after today we only have four days and two weeks until we will be able to get out of here and get some clear air, without listening to some of the nonsense in this chamber.

I just want to go back, for those who have the misfortune to have to sit through this pain to listen to some of the nonsense coming out here not only from the opposition, which you expect, but also from the Greens, with their crystal ball wonderful view of the world: how it will all be sorted out over a cup of tea. It was not sorted out in Tasmania, I believe, when Paul Howes was trying to negotiate a sensible outcome with the Greens to get some mining, to get some employment and some productivity to Tasmania, which desperately needs it—but anyway, that is another matter.

I will take this house back to how the mining tax came about. It was part of the Henry tax review. Quite simply, it was a very torrid time in Australia's history. We had gone through a massive financial challenge in the GFC. Quite frankly, when the mining tax was announced, the hysteria that we witnessed coming from that side of the chamber, in cahoots with a handful of their mining mates, was nothing short of embarrassing. I remember travelling throughout Western Australia in 2010 for that last election. If someone were a visitor to these great shores from another country and they had the misfortune of having to listen to the unfolding Liberal campaign of what they were not going to do should they gain government—it really makes me wonder—they could walk away and think, 'How did this country ever make it into the OECD?' It really was ridiculously embarrassing, but that is history and we had to put up with it.

But you can understand why, because I remember when the tax was announced. It was very topical in Western Australia, particularly with it being a mining state and, as many commentators like to say, the engine room of the economy. Coal is nowhere near as big in WA as it is in Queensland, but iron ore is huge, as we are well aware. We saw the usual suspects. Didn't they come out of the woodwork! Didn't those poor, poor billionaires take offence! The first thing they did was put a phone call in to their mates in the Liberal Party: 'Help! The nasty Labor government's going to make us pay a profit based tax.' This is the part that really annoys me, even though it is November and it has been a long year. We are talking profit based. What we clearly said was—and we were told this numerous times by the Minerals Council of Australia—that mining royalties are a very inept tax. It taxes whether mining companies are in profit or not. The Minerals Council of Australia were welcoming a change to the royalties based taxation. They believe strongly, as does the Labor government, that if companies are making a good, decent profit, over $50 million, then it could be expected that they could put a bit more into the nation.

And then we saw them—and I remember on the causeway 'Axe the tax', I think it was, a really ingenious name for a rally. There was Senator Cormann standing next to the biggest set of pearls ever seen in Australia, and they were hanging around the neck of poor old Ms Reinhardt, whose profits I think have ballooned from $5 billion to $20 billion in the last couple of years, who had taken complete offence at the idea that she should have to or her companies should have to pay any more tax once they had profited by $50 billion—no, I am sorry; I just did a Senator Joyce; it is $50 million. It all rolls off the tongue pretty easily when you start getting over the couple of hundred I find in my pocket on a Friday! But there they were, singing out, screaming how unfair it was, ably abetted by none other than the other poor billionaire from WA, Mr Andrew Forrest.

There he was on the front page of the paper, whingeing and complaining because no-one would take his calls, saying how hard done by the mining industry would be, how unfair it was for the Australian government to expect ridiculously profitable miners to pay a couple more dollars in their taxation requirements each year should they break the $50 million profit margin and how bad it would be for his Solomon Hub. For those out there who are not familiar with the Solomon Hub, it is a huge iron ore resource in the Pilbara where Mr Forrest is or was planning to absolutely massively expand an iron ore mine. I believe it has run into a little bit of drama at the moment and money is a bit hard to get. In saying that, I hope he does get it. I hope he does expand. I hope he does make a profit. I hope he employs more Western Australians. I hope he employs more Australians. I hope he engages Australian steel manufacturing businesses to help build his mine. I also hope he makes more than that amount of profit and he can contribute to the mining tax.

But there was Mr Forrest, along with Ms Rinehart, whingeing like heck about having to pay more tax. Quite simply it finally came out that Mr Forrest's company, Fortescue Metals Group, had not even paid any tax. It was a ridiculously stupid campaign. It linked him with Mr Abbott's typical 'oppose everything' stance. Let's not talk about what fantastic views or ideas we have in education or health for this great nation, what we would do for generations of Australians to follow and how great we could make their lives and their contribution to the national economy. No, it was all about what he would not do.

On that, we must remember that the sky was going to collapse. It was going to fall in. This was Armageddon for the industry. This was going to destroy mining. It was going to destroy Australia. It was going to destroy mining jobs. This is regardless of the fact that we have a $260 billion investment pipeline in this country. There is a lot of investment going on. There is a lot of excitement around the mining industry. But we must not forget that the iron ore price has dropped. There is no argument: the iron ore price has taken a dive. I think the figures that just came out in MYEFO, the mid-year economic and fiscal outlook, expected commodity prices to drop, including 38 per cent for iron ore. Yes, that would make a difference. It would make it hard. We must remember that the mining resource rent tax is a volatile tax. If mining is up and commodity prices are up, then the tax will be collected.

But it is no different to what happened in the great era of the Hawke government, when Prime Minister Bob Hawke initiated the petroleum resource rent tax, which is a very similar tax but structured around oil and gas. At the time, those on the other side of this place and in the other house voted against the petroleum resource rent tax because they did not want their massively rich mates in the mining and resource sector to have to pay tax and contribute to Australia's welfare over and above what they were doing in their normal company taxes. They also opposed the mining tax. There they were, the Geppettos, the puppet masters. We know who they are—I have mentioned them already. I should also mention Mr Clive Palmer at the same time, as the largest contributor of financial donations to the LNP, who at the time thought it was not a good idea either.

But let's take one step further. That side of the chamber were opposing it and all this Armageddon was going to be created in Australia's economy. 'Let's look at the audacity of the Labor government introducing a tax—how bad is that!' But when a Liberal government introduces a tax that is alright. We have seen that. They are all very quiet on that side. I challenge them to pipe up, because they know darn well that they bagged us for three years about the mining tax, but when Mr Campbell Newman, the Premier of Queensland, implemented his money grab through a royalty charge— not a profit based tax but a royalty tax—they went quiet. Not all of them went quiet, though. One of them who did not go quiet was none other than Rio Tinto. I want to quote from the Australian Mining magazine. It is about Rio Tinto and it says:

Rio Tinto has announced it will slash more jobs across its coal mines in Queensland as the state raises its royalty rates.

It also goes on to say that Rio Tinto:

… warned last week that the Queensland Government's decision to raise the royalty rate would directly impact its operations.

Now a Rio spokesperson has said that "the Queensland Government's decision last week to increase royalties is the latest example of the cost escalations affecting the coal industry.

Did we hear a peep out of those across the other side? No, we did not. There was another Queenslander who had a bit to say: Mr Palmer.

Mining magnate Clive Palmer—

to quote ABC news—

says any increase in mining royalty rates will "kill" the state's economy and drive thousands of Queenslanders out of work.

Did we hear a peep from any of the usual suspects from Queensland who could not wait to bag the federal government's mining tax? We did not—not a word. I would like to hear them in here making their contributions, but of course I will not hold my breath because that is not going to happen. They are all hiding under their desks outside. Mr Palmer went on to say:

Increased mining royalties on top of widespread sackings is hardly a recipe for growth in this state.

I could not agree with him more, because it is not a profit based tax.

We will have to dig a bit deeper. We have to understand why there is so much confusion over on that side. Why is there so much negativity? Why is it more popular to be negative, not to contribute to what a great country we can be and should be? It all stems back, I believe, to none other than their leader, Mr Abbott. I have to raise a couple of issues with the chamber to show why there is such confusion and such negativity over on that side. I have in my hand an excerpt from the Age. It is by Lenore Taylor, that very distinguished journalist from the Age, and it is dated 25 August 2012. She is talking about Mr Abbott and his 'inconvenient fiscal truth'. It says here:

Undeterred in his quest for carbon tax-induced wreckage—

following on from the mining tax—

the Coalition leader appears now to be claiming as evidence any unrelated piece of economic bad news.

It goes on to say of Mr Abbott:

Hence he appeared in mournful procession with his South Australian MPs—

and I do remember them all following Mr Abbott like a pack of sheep out onto the lawn to do a press conference—

to declare that the carbon and mining taxes were, in fact, responsible for BHP Billiton's decision to shelveexpansion plans for its Olympic Dam uranium and copper mine.

I have to tell you that is absolutely unbelievable, because someone should have told Mr Abbott and all the South Australian MPs who just followed as if the rings through their noses were hooked to his belt, that the mining tax does not affect copper or uranium. Well, der! How incompetent can one opposition party be? I have to agree with Ms Lenore Taylor: it is Mr Abbott's inconvenient fiscal truth.

Let us take this one step further, to talk about inconvenient fiscal truth. I was not in that chamber when it did come up, but we all know it did—I am talking about the other house over there. I will quote another article from David Rowe from the Age, published on 11 October this year. Mr Rowe writes that Mr Abbott was in question time and he was resuming his attacks, this time on the carbon tax—and, guess what?—the sky hasn't caved in and it has been operating for a few months. But, anyway, let's not let the truth get in the way of a good Abbott story. Allegedly, Mr Abbott and the Liberals had produced an electricity bill from a Perth woman named Hetty Verolme. Mrs Verolme's electricity bill from early June to early August was $1,563.70, up from $736.25 in the previous period according to the document that Mr Abbott tabled in parliament. Mr Abbott went on to say:

With an $800 increase in just one bill, of which 70 per cent is due to the carbon tax, how can the Prime Minister possibly claim that Hetty's compensation is in any way adequate?

Mr Abbott then went on to say that the poor woman 'nearly had a heart attack'. I tell you who should have had a heart attack; it should have been the whole Liberal team sitting on that side of the chamber with Dr No. What the bill showed was that Mrs Verolme used approximately twice as much electricity over the most recent period when compared to the previous one.

This is incompetence from a fellow who wants to put himself up as the alternative Prime Minister that I would like to bring to the attention of all Australians. If you can be fooled by Mr Abbott—and he cannot even fool anyone for more than two seconds in question time—Australia needs to be very, very wary—(Time expired)

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

There is no doubt that the government anticipated huge revenues from the mining tax, and that their estimates of revenues which would come in varied enormously. For example, in July 2010 they estimated the tax would raise $10.5 billion over the first two years. Then came the 2010 MYEFO, when the revenue was downgraded to $7.4 billion. Again, in the budget in 2011 revenue estimates actually increased to $7.7 billion for the first two years and then were increased again to $11.1 billion for the first three years. The government, quite obviously, was living in a fantasy world because right from the start this tax was never, ever, going to raise any money.

Senator Joyce in particular has referred to this tax as a deal done between the three big miners—between Rio Tinto, Xstrata and BHP Billiton—and the government, in which it was agreed that the costs associated with the establishment of their mining operations over the last 25 years would be deductible against revenue received. If the big miners are able to claim the billions and billions of dollars that they have spent in setting up these great mines which we find today in the Pilbara and in other parts of Australia, such as Queensland, with the coal mines, or in the Northern Territory, then of course the end result is going to be something like negative gearing on an expensive property. The investor will be paying a lot more in interest rates, which are deductible, and interest payments than the rental which is coming in from the property. The net result is that, in the case of the mining companies with their huge deductions for the development of their infrastructure, there would be no super tax liability. That was a fact which was obvious from the start, and it is quite clear that this government has lived in a kind of fantasy about what this tax would deliver by way of revenue and what would be done with it. As I have said, it was very obvious right from the start that this tax was not going to raise the kind of money which the government expected it to.

The one group which did find itself liable under this tax, possibly, was the small miners—the AMEC level miners are the people who go out, explore and discover new deposits, but who, unfortunately, do not have the kind of level of deductions that the big miners have. So inevitably, were they to fall into the category of having excessive returns, they would have had to pay this super tax. But in fact it seems that even their income has not reached the levels which would make them liable for this tax, because there has been a great decline in the revenue from the mining industry—in part, I have to say, because of the introduction of this tax, which has changed Australia and the perception of Australia as a safe destination for investment by the mining industry. A country of very low sovereign risk is how we were perceived; but now the perception is that this country is no longer a safe country for mining companies to invest billions of dollars in, because the government is going to impose excessive and unreasonable taxes on such investments.

And that perhaps is one of the greatest outcomes of this tax. It has not raised any money, but what it has done is increase Australia's sovereign risk and decrease the perception that Australia is a safe place to invest.

Where has the investment gone? It has gone to Africa and other parts of the world. As we know, there has been a drop in mining income because the Chinese, in particular, have reduced their purchases of Australian iron ore and other commodities. The income of the mining companies has reduced—that was not predictable.

The government, it seems, was fantasising for a very long time about what this money would be spent on. Let us have a look at some of the proposed expenditures. It was in July 2010, for example, that the government estimated the tax would raise enough money to provide for a 50 per cent discount for interest income; a lowering of the company tax rate—a promise made but broken in the 2012-13 budget; an early start to cut the company tax rate for small business companies; a standard deduction for work related expenses and the cost of managing tax affairs and so on.

While this government was living in a world of fantasy, imagining that the MRRT was going to bring in billions of dollars in tax, even though right from the start that was obviously not going to be the case in the view of any objective observer, it was making all sorts of promises about how this money would be spent. It just shows that this government lives in a world of fantasy and does not deal with reality. This tax, as predicted, has raised no money and is purely and simply proof of the government's delusional approach to government. (Time expired)

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

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