Arthur Sinodinos (NSW, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Conroy. I refer to a statement by the Secretary of the Treasury, Martin Parkinson, in estimates on 14 February, where he said in relation to revenue from the minerals resource rent tax:

What we have not done is adjust the estimates for things that we cannot see … What we cannot see is the starting cost base that the firms are able to pick, nor can we see the netback arrangements …

Why did the government agree to a tax which its own officials now admit contained serious design flaws?

Stephen Conroy (Victoria, Australian Labor Party, Minister for Broadband, Communications and the Digital Economy) Share this | Link to this | Hansard source

It is unfortunate that the question was based on a false premise and that Senator Sinodinos sought to put words into the Secretary of the Treasury's mouth and then draw implications from them. It is unfortunate. Clearly the MRRT collections have been lower than Treasury expected. As Mr Swan said last month, there is no doubt that when you look at the data the PRRT and MRRT will both be down substantially. But the MRRT is only six months old, and mineral prices, particularly iron ore, have been volatile over that period. Resource rent taxes are by their nature difficult to forecast, and some volatility in revenue relative to the estimates is to be expected. This is similar to the PRRT, a profits-based tax that has been around for over 25 years and is also a volatile but important source of revenue. The volatility of the PRRT collections exceeds that of any other revenue.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Mr President, I rise on a point of order on the question of relevance. The minister was not asked about the PRRT; he was asked about the MRRT. I ask you to direct him to the question.

John Hogg (President) Share this | Link to this | Hansard source

The minister is answering the question. The minister still has 35 seconds remaining.

Stephen Conroy (Victoria, Australian Labor Party, Minister for Broadband, Communications and the Digital Economy) Share this | Link to this | Hansard source

As I have already stated clearly, the MRRT collections have been lower than Treasury forecasted, but anyone with an ounce of credibility can also see that commodity prices have taken a huge hit and that is flowing through to the MRRT collections. The MRRT, as I have said, is only six months old, and prices have varied and have been incredibly volatile. As I have also said, in answer to the earlier question, it takes months for higher spot prices— (Time expired)

Arthur Sinodinos (NSW, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I refer to a statement by Mr Rob Heferen, from Treasury's Revenue Group, in estimates, where he confirmed that there would be only three MRRT tax instalments in 2012-13. We have one remaining MRRT instalment due this financial year. The tax having raised only $126 million so far this year, how does the government expect to raise $2 billion in net terms, after deductions and allowances, from the only remaining instalment in 2012-13?

Stephen Conroy (Victoria, Australian Labor Party, Minister for Broadband, Communications and the Digital Economy) Share this | Link to this | Hansard source

As I have already stated, it can take months for higher spot prices to be fully reflected in MRRT revenue, as trades can be conducted on monthly or even quarterly averages. Resource rent taxes are, by their nature, volatile and difficult to forecast on the basis of spot prices. As the ATO commissioner has noted, collections rose significantly between the first and second quarters. This is at the same time as we begin to see some recovery in commodity prices. So it is clear, as I have said, that Treasury forecasts were ahead of the actual revenue coming in, but this is due to the volatile nature of resource rent taxes and the difficulties of forecasting. (Time expired)

Arthur Sinodinos (NSW, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Why did the government agree to these features of the MRRT, which the Secretary of the Treasury admits relied on things that neither Treasury nor the government could see in real time, and commit to spend the proceeds of the tax before it actually knew how much revenue the tax would raise? As the Prime Minister said that she had obviously stamped her authority on the negotiations, will the government now take responsibility for the obvious flaws in the tax which she and her Treasurer negotiated?

Stephen Conroy (Victoria, Australian Labor Party, Minister for Broadband, Communications and the Digital Economy) Share this | Link to this | Hansard source

The MRRT package is fully reflected in the budget bottom line. Resource rent taxes are, by their nature, volatile and difficult to forecast. All profit based taxes have taken a big hit in recent times, but this does not mean we should take the opposition's advice and abandon and repeal this tax. We are going to continue to stand up for households and ordinary Australians against those opposite, who simply get down on bended knee to the vested interests like Ms Rinehart and Mr Forrest. Those opposite want to see that there is zero tax collected from these companies under the MRRT. That is your preferred position. Do not come in here and pretend that you are remotely interested in a fair tax system. Do not come in here with those crocodile tears. (Time expired)