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

I move:

That the Senate take note of answers given by ministers to questions without notice asked by Opposition senators today.

The mining tax has been a dog's breakfast for some time. The mining tax is an ongoing fiscal fiasco which we have argued for some time is a train wreck in the making. But not even the coalition thought that the mining tax would be such a fiscal mess as it has turned out to be. Last week we all found out that this complex new tax targeting an important sector in our economy, which is costly to administer, costly to comply with and which increased our sovereign risk profile, has not raised any revenue—at least not from those three biggest miners who were given exclusive access to the government to help design it.

One of the key implications of the fact that those three biggest miners are not paying any mining tax so far is that they will continue to accumulate royalty credits. You would be aware that back in July 2010 the Prime Minister and the Treasurer signed this mining tax deal with the managing directors of the three biggest mining companies. They had thrown out all of the officials. The officials in the Department of the Prime Minister and Cabinet were quite insistent in Senate estimates to say that on this occasion, before signing on the dotted line, the Prime Minister did not get advice from the Prime Minister's department. The Prime Minister on that occasion got her advice directly from the Treasurer. It was our Treasurer, Mr Swan, who advised the Prime Minister to sign this mining tax deal.

The government initially thought that this mining tax would raise $22½ billion over the initial four years of operation. That went all the way down to $13.4 billion in the most recent budget. In MYEFO we were told it would be $9.1 billion. It turns out that in the first quarter it has not raised anything, at least from those three big miners. No wonder the government was so desperate to rush out the Mid-Year Economic and Fiscal Outlook on the day it was released, because that was the same day that the first mining tax revenue collection was due.

Here we are and the government is not raising any mining tax revenue. In the meantime, courtesy of the deal that Prime Minister and the Treasurer signed with those three big mining companies, they are accumulating credits for the state royalties they have paid to the state governments. But there is more. Not only are those mining companies accumulating credits but also the government will have to pay compound interest on those credits. It is not a bad rate of return either. It is a risk-free rate of return, and anybody who can get a risk-free rate of return of more than 10 per cent would be pretty happy. That is exactly what the government signed up to in the mining tax heads of agreement that the Minister for Finance and Deregulation is clearly not across although it is a mere 1½ pages long. I suggest the finance minister has a close look at it. This is what it says:

All state and territory royalties will be creditable against the resources tax liability.

Then:

Any royalties paid and not claimed—

of course, you cannot claim any royalties if you have not paid any mining tax—

as a credit will be carried forward at the uplift rate of the long-term bond rate—

which right now is 3.12 per cent—

plus seven per cent.

That is a 10.12 per cent interest rate that is applied to the outstanding royalty credits.

I refer the minister to be government's Minerals Resource Rent Tax Act and specifically section 60-25 part (2) where it describes how royalty credits are treated. When you look at the operation of the MRRT royalty credits from year to year you will see that the interest in any year will include the accumulated credit of the previous year plus interest. It is interest on interest, and that is what you call compound interest.

We have said for some time that this mining tax is not going to raise any money for a long time. It is a complex tax which is distorting, making it harder for smaller miners in particular to be the success stories of tomorrow. At the same time this incompetent Treasurer has attached billions of dollars of expenditure to this mining tax based on the revenue he thought it would raise. This is just extraordinary. No wonder this government has delivered $173 billion of accumulated deficits. (Time expired)

Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to take note of answers to questions asked today of Minister Wong in particular. I was quite taken by Senator Cormann's alliteration. He loves to use the expression 'fiscal fiasco'. I do not know if he has heard of the latest fiscal fiasco in New South Wales where the Treasurer has discovered a $1 billion mistake in his budget which means that many of the cuts that the New South Wales government has made to community services and schools could be challenged and addressed. I will be taking that up with my local member around the issue of community services.

The questions today go in many respects to the fact that the opposition continue to talk down the economy. They fail to acknowledge the fact that we are doing so well. Last week I was at the IPU in Canada. In every bilateral meeting the question was: what is happening? What is the recipe for success in Australia? The recipe for success is responsible government spending as well as responsible government savings. We have made a serious effort and we are the envy of the world. It frustrates me to think that for people who listen to questions in question time and the discussions in our parliament, they do not understand how well Australia is performing in terms of the global the economy and the measurements that are taken by organisations like the OECD.

Senator Wong today reminded us of 21 years of economic growth. That is very significant, a stunning achievement that has not been matched by any other economy in the world. People want to know how and why we are doing it. Solid growth against the odds and low unemployment—significantly lower than in other developed countries. These are achievements we should be very proud of. We have also contained inflation. In Argentina last week we heard many discussions on the real concerns that inflation is increasing. Some people estimate that it is up to 25 per cent in Argentina. We do not have to deal with anything like that in Australia. We have strong public finances and strong public and private savings. We have solid consumption and we have investment growth. This is all very positive news.

We have low official interest rates. Again, Minister Wong spoke about how those rates compare internationally. We now have official interest rates lower than at any time under the last Liberal government. These low rates are of direct benefit to millions of families and to millions of small businesses. We have just overtaken Spain as the 12th largest economy in the world. But what we hear from the opposition is continued carping and negativity about Australia's economic situation. Anyone would think we are all going to be ruined, and it drives me insane that this is the case. We certainly will not be ruined by the outcome of the MYEFO and the decisions that were taken by Treasury to make sure that the economy maintains stability and that the budget is returned to surplus, because our fundamentals are strong, despite the global turmoil. We only have to think about what is happening this week in the US and how the costs of a natural disaster like that are going to impact on the US economy—

Senator Feeney interjecting—

No, not the US election; I am talking about the US economy. The extensive devastation and the break in productivity that will occur after this US disaster are things that we really do need to be very mindful of. This will have an impact around the world and it is certainly something that we need to be thinking about.

We need to make sure that we are doing the responsible things that we need to do as a government. That is what we saw in MYEFO. We saw responsible savings that will continue to ensure that we are performing well. The Treasurer and the economic team have continued to forecast the message that we as a government are going to do everything we can to ensure that low- and middle-income people benefit from a strong budget and a strong economy—and we will continue to do that. (Time expired)

Marise Payne (NSW, Liberal Party, Shadow Minister for COAG) Share this | Link to this | Hansard source

Interestingly enough, I have learned, as some of my colleagues would know, to become a student of form in recent years. And, given we are Spring Carnival time, I think it is probably a good time to study the form that is in fact to the fore of the debate here. On the form, on the history of Labor governments and, more particularly, on the sad and sorry story that is this Labor government, the form tells me that it is looking more and more unlikely that Labor will actually make a surplus. I think they might even abandon their promise to return to surplus, on the form that we see in front of us at the moment. After all, why else would they have brought forward the MYEFO to October—for only the third time in history? They must be worried about something.

They have themselves wedded to the 'return to surplus' mantra, but their resolve, it seems to me, seems to be weakening. Just listen to the change in words used by the Prime Minister and the Treasurer—moving from their 'promise' to much more weasely words. It was a surplus which was 'promised' to start at $3 billion but was reduced to $1.5 billion in the last budget. Now, if you just move the numbers around a little more under the thimbles, you get to $1.1 billion. So let us hope, for the sake of the Australian people, that those thimbles do not move too much further. They have brought $2 billion out of the Future Fund into the budget to save just over $400 million this financial year—and then they launch into the superannuation accounts of Australian workers to try to find themselves $500 million more.

There are a lot of things you hear in coffee shops around the towns and cities of this country. But I was actually sat back on my chair by a woman the other day who was talking to her ageing parents. She said to her ageing parents—

Senator Feeney interjecting—

Well, I did leave; there were some undesirables. She said to her ageing parents—

Senator Feeney interjecting—

No, they were members of the Labor Party, Senator. I heard her say to her parents, 'You know; if Gillard does that'—and I am quoting; not using an inappropriate term—'that's the end of it for me and it should be the end of it for every other Labor voter.' That is just coffee chat; that is not people on a political soapbox or anything like that. It is falling apart at the seams for this government.

Senator Feeney interjecting—

The person who should be listening to that is the member for Lindsay—but, of course, he and his glass jaw will be off somewhere else on a patrol boat doing something entirely different. This whole government is falling apart at the seams. It is a 'commitment' and a 'promise' that is apparently now a 'plan' and a 'determination' to deliver a surplus. It is absolutely typical of a crazy-spending, irresponsible government that has absolutely no plan to fill a gaping $120 billion black hole in its own budget. It is absolutely inconceivable that the Australian people would trust this government to deliver even a $1.1 billion surplus or any surplus at all with the red ink that is flooding across the pages of their balance sheet.

Apparently the Treasurer thought that delivering a surplus was as easy as raking off the record profits from Australia's miners through the MRRT. Wrong again. Now the government, apparently, is going to receive nothing meaningful from the MRRT. Only a government that could invent a carbon tax that costs more money than it recoups, than it takes in, could conjure up a tax that raises no money. If it were not so serious it would be funny. In fact, I am not entirely sure it is not an episode of TheHollowmen. I am just waiting for Rob Sitch and Lachie Hulme to pop up in various roles across the chamber—and, I am sad to say, neither Rob nor Lachie will be playing Senator Feeney in that regard—and to pop up in the House of Representatives and say: 'It’s ok; it was a joke. It's a script for TheHollowmen.' But, ladies and gentlemen, it is not a script for TheHollowmen; it is our country; it is our economy; it is the Australian people—it is their lives, it is their livelihoods, it is their businesses.

Fifteen billion dollars of the MRRT windfall was promised to people who probably fell for The Hollowmen joke and who thought that there really would be regional infrastructure funds paid for, superannuation increases paid for and concessions to small business paid for. But they will not be paid for by the MRRT; they will be lost in the vortex of Labor spin that is this government and this budget—and the Australian people deserve better. (Time expired)

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy President, through you, I would like to thank Senator Payne for sharing with us her thoughts about TV programs. But we are actually here today taking note of answers, to talk about the economy—because that is what question time was largely about today. The minerals resource rent tax was always likely to be a volatile tax. The PRRT did not generate the dollars that it was expected to at the time that it was introduced many years ago. In fact, it made about half the amount of revenue that was forecast. I am somewhat surprised that those opposite seem to be so opposed to the idea of progressive taxation as opposed to royalties on Australia's mining companies—particularly at a time when we know that commodity prices have fallen. We want to keep strength in the Australian economy, and it completely befuddles me why those opposite do not subscribe to the idea of progressive taxation—taxation based on profits, which have clearly fallen given the fact that commodity prices have fallen. It is not within their economic rhetoric. I do not believe that those opposite, when they were in government, taxed nearly enough of the super profits that were made by many of Australia's mining companies. Frankly, I would say the same of my own state Labor government under its royalties regimes. The simple fact is that this government has delivered a surplus. Those opposite have tried to argue that there is no surplus. We have just delivered a midyear economic forecast with billions of dollars worth of savings to return the budget to surplus as forecast. We are committed and we are very much on track to deliver it. This is really very important, because a budget surplus gives the Reserve Bank the flexibility that we want them to have to keep interest rates in this nation low—as it has several times in the past year when it has cut interest rates. This is of maximum benefit to the Australian economy and to Australian households.

What we are about are fiscal settings that will always be appropriate for our economy, for the nation and for the jobs that we seek to create. That will never change. These are Labor's values and Labor's priorities. That is why this government stepped in to support the economy at the height of the global financial crisis. We have had some debate today about the so-called success of the stimulus package. It was successful, and it is proven by the 200,000 jobs that were saved at a time when many economies around the world were losing jobs hand over fist.

What have we got from the opposition at this time? What have we got when it comes to their economic fundamentals? We have a Liberal Party with a $70 billion budget crater. We know, because they said it on Sunrise, and they have never been able to refute it. We have a party that has botched their costings, and we have a party that voted against the stimulus package—voted against the very measures that have saved hundreds of thousands of Australians' jobs and have kept momentum in our economy. If we had taken their advice during the global financial crisis, we would have been in recession and I think we would be in a much greater state of deficit. It would be much harder to come to surplus, because the momentum would be completely sucked out of the economy.

We should not forget that official interest rates are now less than half the level that the government inherited from those opposite. That speaks to our good economic management and the fact that we are making the right decisions to put downward pressure on interest rates. We have a proven track record of putting in place the fiscal settings that are appropriate for our economy. (Time expired)

Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

I have sat in this chamber for 14 days now, and I have endured 14 hours of question time. In that time, I honestly do not think that I have heard a question answered that has been put to the other side by the Liberal Party, the Nationals, the Independents or even the Greens. I am sure it is not a new phenomenon over the last 14 days. I am sure that questions have not been answered for a lot longer than that. I do not think that is acceptable. It is an extraordinary waste of everybody's time, and I think it is deflecting us from the real issues that we should be here talking about.

Today, again, there were a whole heap of questions asked in relation to the so-called budget surplus. It now seems that that budget surplus may not eventuate. I believe that over the last 18 months the Treasurer and the Prime Minister, collectively, have said 45 times that it was entirely not negotiable and we were going to have a budget surplus. So I can only hope that the assurances from the other side are true and that we are going to get a budget surplus.

The question that we really need to ask the Prime Minister and the Treasurer is: if this budget surplus is not going to be achievable, how long have they known that it was not going to be achievable and when are they actually going to come clean on it? Only a matter of a couple of months ago, I was running my own business. A lot of the decisions that I make in my own business are based on the information that is in the market. If this government knows that we are not going to have a budget surplus, they have got a responsibility to tell the people of Australia that we are not going to have one, so that they can use that market information to make the kind of investment decisions that they need in their business. I think it is an absolute disgrace if we are not getting that information. If business fails to provide that sort of information about the market, ASIC comes down on them like an absolute tonne of bricks. So why is it that the government can fail to provide information to the market that could reasonably be expected to mislead the market and have significant consequences?

Moving on from the fact that there seems to be one rule for the government and one rule for the rest of us, what of the MRRT? Where are the plans and what are the projects in relation to filling and plugging that gap with these billions of dollars that we were supposedly going to get but have not seen? We need to know what projects are going to be funded and what projects are not going to be funded. Are there projects that are going to be shelved? My understanding is that we did warn the government when this mining tax was brought in that it was highly unlikely that there was going to be any money earned from the tax—certainly in the short term. And yet now we have got a situation where they have not earned any money and yet they have allocated projects against the revenue before it was even earned.

As for so many promises that were on the agenda, we need to know which ones are going to be off the agenda, because we do not have the money to pay for them. It is the same as all those other projects that we seem to have been promised. Where is the money for the National Disability Insurance Scheme? Where is the money for the dental scheme? Who is going to fund Gonski? The list goes on and on and on.

I suggest that the people of Australia are, justifiably, getting pretty sick of these promises that are never likely to eventuate, and they are certainly understandably peeved they have been constantly misled. 'There will be no carbon tax under the government I lead'; now we have a carbon tax. 'There will be no cuts to private health insurance'; there appear to be. 'There will be a $9 million windfall from the mining tax'; there is not much to show or account for that at the moment. 'There will be a surplus in 2012-13'; it does not look like it.

So today we have had questions from the opposition on the mining tax, the budget surplus, the national building scheme, the stimulus package and education spending. Today, have we had answers to any of them? Senator Pratt chastised Senator Payne for talking about TV when we are here today to talk about the really important issue of the economy. Maybe Senator Pratt should go back to her frontbench ministers and say that when they are asked questions about the economy they might like to answer them.

Senator Wong says, 'Don't talk down the economy.' I do not think we are talking down the economy. I think what we want to know is the actual truth about things out there. We are sick to death of rhetoric. If you give us the answers, we will not be talking down the economy, we will just be providing correct market information. Finally, the public are not stupid, so stop treating them as if they are stupid and give us the information so we can decide whether you are a good enough government. (Time expired)

Question agreed to.