Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise this afternoon to comment on the Minerals Resource Rent Tax Amendment (Protecting Revenue) Bill 2012. This is a very important piece of legislation introduced by the Greens, and it goes to the heart of the question of what sort of nation we want in this century. It goes to the heart of that question because, if you want to make and put in place the kinds of plans and the consequent infrastructure that the country needs, you have to raise the money to be able to do that. The Greens have said for a long time that we need to massively move towards a low-carbon or zero-carbon economy. We would like to see in Australia high-speed rail linking our cities. If you go to Europe or see what is happening in China—Japan did it years ago—it makes eminent sense for this country to move to high-speed rail. If you want to put in place the kind of infrastructure that will anticipate the extreme weather events that global warming is bringing us then you have to have the dollars to be able to do it. Equally, the Greens have secured Denticare, a new capacity to assist people to meet the needs of their dental health, but again it requires funding. My colleague Senator Siewert has been running a strong campaign around the country to get people out of poverty and to make sure that we can allow Newstart to be increased by $50 a week, but the question becomes: where is the money going to come from? The Prime Minister today has announced infrastructure funding to anticipate extreme weather events—with the Warragamba Dam, for example—but $50 million goes nowhere near the kind of infrastructure that is needed. Even $100 million, as she has suggested for the whole nation, goes nowhere near the kinds of changes that need to be made.

Then—the fact is that, in an Asian century, we need to be competitive—we need to lift our education standards. That means a massive investment in education, the arts, innovation and entrepreneurial skills. For that to happen you need to implement the Gonski review, and that requires billions of dollars and should not be back-ended to 2020. Then you have the National Disability Insurance Scheme. I do not think anyone disputes the fact that we need a national disability insurance scheme in this country, and the Greens are the first to agree. But all of these promises are essentially hollow unless there is the money to roll them out. You cannot just put a tiny deposit down in the lead-up to an election and say that somehow you have delivered on these things. You need to raise the money.

That is why Australians should be getting a fair return for the mineral resources which are owned by the people. These mineral resources are not owned by the mining companies; they are owned by the people. And they are, in many cases, non-renewable resources—in fact, in all cases they are non-renewable resources when it comes to ores: you dig them up and ship them away once and that is it. So we need to make sure we are getting a decent return on those.

One of the most grave crimes against future development in the nation occurred in 2006 when the Prime Minister, Mr Howard, and the then Treasurer, Mr Costello, gave back the huge benefits of the boom at that time by giving tax cuts all around. There were headlines like 'Manna from heaven,' and rivers of gold pouring out all over the nation. That money should have been kept and invested in proofing the country against climate impacts, and, recognising that we are facing peak oil, in building massive public transport infrastructure around the country. There were huge opportunities then to invest the money, but instead it was just thrown out into the community in massive grants to everyone to make everybody feel good, and now we are left with a need for infrastructure—in terms of brains capital and human capital, as well as physical infrastructure—for the country. So the Greens are saying that we should get a fair return from our mineral resources and that the problems with the current minerals resource rent tax need to be fixed.

This bill would amend that tax to correct one of its most egregious flaws, and that is the rebating of any future increases in state royalties, which allows the MRRT revenue to be further eroded by state governments. This flaw gives a blank cheque to state governments. They can lift royalties, knowing that they will effectively be paid by the Commonwealth government rather than by the large mining companies. That is appalling. This bill amends section 60.25 of the Minerals Resource Rent Tax Act 2012 to provide that any increase in royalties after 1 July 2011 should be disregarded when calculating royalty credits for the MRRT. It is a first step towards ensuring that the mining sector makes a fair contribution to the society whose assets it consumes in generating its wealth. It is essentially the amendment that the Greens sought to make to the bill in March 2012.

This design flaw has not been criticised just by those on the left. It goes against what the original designer of the mining tax, Dr Ken Henry, advised. It has been criticised by the OECD, by conservative economists such as Henry Ergas, and by Nick Greiner and other members of the GST Distribution Review. It is only in the bill because of the weakness of the Treasurer, the Prime Minister and the Minister for Resources and Energy, when they sat down with the big mining companies and tried to appease them so that they would call off their advertising campaign. Effectively, the miners wrote their own tax, knowing full well they would never pay it.

The wording used in the heads of agreement between the new Gillard government and the big three mining companies said: 'All state and territory royalties will be creditable.' Then, after the 2010 election, the Policy Transition Group, chaired by former BHP chair Don Argus and resources minister Martin Ferguson, was established to sort out the technical details of the MRRT. It recommended that all current and future state and territory royalties on coal and iron ore should be credited, which the government accepted.

Restricting the crediting of royalties to the rates in place at 1 July 2011 would raise an additional $2.2 billion over the forward estimates. The government has made a mess of the treatment of royalties in the MRRT, and the Australian people are paying. No group is paying more significantly than single parents, who have had their support payments taken away while the mining industry collectively has only paid $126 million. In fact you have Marius Kloppers walking away with $75 million—as a handshake, as his retirement benefit, as his walking-out-the-door ticket—and single parents left without that support payment, and those on Newstart with none of the extra money that they need. Yet BHP is essentially only paying $77 million in the tax—$2 million more than Marius Kloppers walked away with.

The other significant flaw in the MRRT is the ridiculously generous depreciation provisions. The legislation allows companies a choice for determining their asset base for the purposes of depreciation. One of the choices is a market-value approach. This is an extraordinary departure from standard accounting practice and allows companies to claim deductions for costs they have never incurred. Why on earth would the Treasurer, the minister, Martin Ferguson, and the Prime Minister agree to allow the companies to claim deductions for costs that they have never incurred? Market value is not a measure of costs paid out but of the amount the market is prepared to pay for an asset. This benefits the big miners, who have well-established mines now worth a lot more than their initial investment.

I have circulated an amendment to stop this rort and remove this choice so that only the book-value approach can be used. The amendment commences on 1 July 2013, so it affects payment not for this year but for those years into the future. I note that the book-value approach is generous in its own right as it includes an uplift rate. We should not be giving the billion-dollar multinational mining corporations more than that. If passed, the amendment would raise an additional $2.2 billion over the forward estimates.

Dr Parkinson, the current Treasury Secretary, identified at estimates five factors that determine the revenue raised by the MRRT: commodity prices and volume, the exchange rate, state royalties, the starting cost base against which the mining companies can claim depreciation, and the difference between prices at the mine and at the docks.

In estimating the depreciation costs Dr Parkinson said Treasury had relied on initial estimates from the mining companies which they may well have changed since. In effect he admitted Treasury had developed their assumptions based on conversations with the mining companies before the tax came in, but the mining companies had had the opportunity, once the tax became law, to rethink what their starting base would be. Why on earth would you have given the mining companies the ability to determine how much they would pay and adjust the formulas according to what they wanted?

Former Treasury Secretary Ken Henry, in an appearance before the Senate Select Committee on Fuel and Energy in July 2010, admitted that no Treasury officials were directly involved in the negotiations between the government and BHP, Rio Tinto and Xstrata. I find it extraordinary that the Prime Minister, the Treasurer and Minister Ferguson thought that they could manage this negotiation without the expertise of Treasury. That is an extraordinary thing. What it will do is put out there into the heartland of people who perhaps thought that if there was one thing that Labor could do it was actually manage the economy—in terms of accounting practices at least—that, when push came to shove, the Prime Minister, the Treasurer and Minister Ferguson excused the experts and brought in the people who were looking after their own interests absolutely, 100 per cent—Rio, Xstrata and BHP—and allowed them to determine the terms. You can only assume from that that the deal was that the mining industry agreed to a tax that they knew they would never have to pay and that the government would appear to have a win, to have negotiated an outcome, knowing that in fact the outcome would not deliver anything. That is the only conclusion you can reach.

Again, it goes to the heart of the competence of the negotiators in that negotiation. That is why I have been asking: where is the Minister for Resources and Energy, Mr Martin Ferguson? He has not been seen for months. Whilst the Prime Minister and the Treasurer have been out there trying to defend their role in this, the minister whose job it is to look after resources and energy seems to have gone AWOL. If you go to his website, he has not got a single transcript on there from after September last year. I have to ask: where does that go to in terms of transparency, or is the minister hoping that no-one will notice, that the people of Batman will not notice, that he is nowhere to be found in terms of his accountability, and culpability, in relation to this particular disaster?

The Parliamentary Budget Office has costed a revised mining tax with the following reforms: a 40 per cent rate of tax, royalties credited at rates in place at 1 July 2011 and the depreciation starting base restricted to the book value. If you take those three things together, those three improvements, that would raise an additional $26 billion over the forward estimates. I began my speech by saying it is a hollow promise to say you will deliver the Gonski education reforms or the national disability insurance. There is no hope at all for people out there on Newstart if you are not prepared to take on the mining industry to raise the money to be able to fund these critical pieces of social infrastructure which benefit the entire community. We need to be putting money into physical infrastructure—for example, high-speed rail and public transport systems. There is no use standing up in Western Sydney talking about more freeways; what Western Sydney needs is light rail. As the Parramatta City Council and the Greens have been saying, we need to be able to invest in the infrastructure of the future. We need to get people off freeways and into much more efficient public transport systems. Everywhere you look in the world, the competitive cities are the ones that have got rid of congestion, got people onto public transport and made cities more liveable with more green spaces, more pedestrian access, more public transport, more cycleways and fewer freeways. And that is what is necessary in Western Sydney.

But where are we going to get the money to drive this kind of infrastructure if we do not make the mining industry pay their way? The Greens have argued for a long time that we need a sovereign wealth fund and that it should be set up so that you genuinely use the benefits of the boom to accumulate not only the balance of the fund but the interest on the fund in order to invest in the kinds of social and physical infrastructure I am talking about. We need a first-class education system; we need to invest in research and development; we need public transport; we need high-speed rail; we need to get ourselves rapidly moving off the old coal fired generators and into the new energy providers, 100 per cent renewable energy, as quickly as possible. We need these things and that is why you have to raise the money to pay for them.

The Parliamentary Budget Office costed that royalty change in this bill on their own. They determined that it would mean raising an additional $2.2 billion over the forward estimates from 2012-13 to 2015-16. The PBO costings showed that making the depreciation amendment on its own would have resulted in the MRRT raising an additional $2.2 billion over the forward estimates over that same four-year period. So I would encourage the Senate to support this bill. We have the bill in the Senate and we have now successfully moved for a Senate inquiry into the flaws in this bill. We also need to provide for the opportunity to fix it, to improve it, so that we secure the funding. The Greens have no interest in allowing the mining industry to walk away when 80 per cent of the profit from these big miners go to overseas shareholders. These profits leave the country. We want to make sure that those big mining companies actually pay a fair return on the resources that belong to the people in this country.

Surely it is not too much to ask a parliament to secure those resources.

The only reason we have not secured them is political. When you think about how this happened, you will see it happened as a consequence of Prime Minister Rudd losing the prime ministership over the fact that the mining industry bullied the government of the day by running a massive advertising campaign—a $20 million advertising campaign—that has saved them billions of dollars. They are laughing all the way to the bank. After succeeding in bringing down one Prime Minister, they succeeded in diddling the nation through inept negotiations between the next Prime Minister, the Treasurer and the minister. That is what happened. It was the politics of the day that did the Australian people out of a fair return which would have enabled us to spend on the things the nation needs.

That is where the coalition are disingenuous in this, because the coalition do not want a mining tax at all. They do not want the big miners to pay a fair return to the Australian people for our resources; they are more than happy to have the profits leave the country. The question to the coalition is: where are they going to get the money from to be able to invest in improving Newstart, to be able to invest in high-speed rail, to be able to invest in education, to be able to invest in Gonski reforms and to be able to invest in national disability? That is not to mention the five per cent emission reduction that they say they are committed to, which they do not have the dollars to actually do; nor do they have the dollars to upscale to the level of emission reduction necessary as a to face up to the science of climate change. So we have a coalition who do not want the miners to pay at all and a government who have been inept in negotiating with the miners to the point where they have embraced the interests of the miners at the cost of the people.

The Greens are standing here saying: 'We care about the people of Australia. We care about the environment.' We clearly have a vision for the future: to transition to a low-carbon economy and then a zero-carbon economy, and to have a society in which people are well educated and well cared for, where we have a decent health system and Denticare rolled out and we do not have people absolutely constrained in situations of poverty and homelessness because we say we do not have the money to deal with it. We have the money to deal with it if we have the political courage to take on the big miners. The Greens are prepared to stand up to the big miners. I would urge the rest of the Senate to support the bill. (Time expired)

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

Before I address the content of the Minerals Resource Rent Tax Amendment (Protecting Revenue) Bill 2012 before the Senate, I want to rebut some of the points that Senator Milne just addressed in her contribution to the discussion. She made the point at the outset that budget commitments need to be funded. I must say on behalf of the government that we are in staggering and startling agreement on that point. That is why we participated in negotiations and agreed to the creation of the Parliamentary Budget Office and funded that; that is why we assisted Treasury and Finance to become parties to the protocol, so that the office can carry out its central function on costing issues associated with undertakings made by any and all political parties. With that little bit of rhetorical flourish, let us just say that the government also shares that view.

Senator Milne then went on to develop a point. Because she is an intelligent woman, I presume the point she addressed is one of rhetorical flourish—that somehow or other all of the minerals and, by implication, all of the oil and gas in and around mainland Australia are owned by all of us, by that amorphous mass called 'the people'. I presume she put that as a rhetorical proposition as we are on broadcast. As everyone in this chamber knows, and they learnt this in their first lesson in Constitutional Law I: minerals under the ground are vested in the Crown in right of the state. That has been the case for I do not know how many centuries and it has certainly been the case in this country since European colonisation in the latter part of the 18th century. But, 240 years since that time, as we consider the utility of the proposition I just outlined in rebuttal to Senator Milne, there is considerable sense in minerals under the ground being vested in the Crown in right of the state: it enables the state, at Commonwealth level, territory level or state level, to essentially regulate and control the use of land, whether that is done in an agricultural sense, a mining sense, an extractive sense or whatever. By 'regulate' I mean allowing access, allowing development and having proper regard for environmental considerations, on both the agricultural side and the mining side.

Consider the only sensible opposition to the Crown not having rights with respect to minerals under the ground. By definition, it would go to some other body. Most logically, that other body would be the individual landholder or leaseholder. We know how that system works, because it works in the United States. One only has to look at the huge degree of development with respect to the coal seam gas industry and the shale oil gas industry in the southern states of the United States, where mining companies pay the owner of the land a fee for access to minerals and the like under the soil, and the development goes ahead willy-nilly. There are a range of benefits from that system to individual landholders and to industry from the cheap gas that emerges from that process. That is probably a debate for another day. On balance, the system we have in this country, of the Crown having control of access to land and land use, is probably a better system. There is a terrible sense of deja vu about this debate. We have been having it every year—we had it in 2009, 2010, 2011 and all of last year—and now, as Senator Milne just said, there is further reference to the application of a minerals resource rent tax.

The bill before the chair attempts to amend the MRRT to achieve two purposes, and Senator Milne succinctly outlined them: firstly, that any increase in state royalties after 1 July 2011 be disregarded when calculating the royalty credits for the MRRT; and, secondly, to disallow provisions of the MRRT so that miners can no longer use the market value method to determine their starting base. So the bill before the chair attempts to remove, to negate, to disallow, the two most critical features of the MRRT Act that is currently proclaimed law in this country. If passed, this bill would totally neuter, make useless, the purpose and intent of the existing MRRT.

When one thinks about that ambition it cannot be described as small. It is no mean purpose that is sought to be achieved in this debate late on Thursday afternoon. But before we can properly discuss the bill before the chair a little bit of a history lesson in the development of the MRRT over the last three or four years would be useful. What does that little bit of history show us? It shows the following. First, the current MRRT Act was one of 11 bills discussed and passed in this chamber on 19 March 2012—almost 12 months ago. That package of bills—there were 10 or 11 bills—addressed a range of matters at that time: an overview of the position of the positive impact of the mining industry; how the MRRT was intended to operate; the revenue forecasts associated with the MRRT; a range of ways in which Australians might share from the benefits of the MRRT; and other tax conveniently avoided up this end but paid in large numbers by firms in the mining industry.

But there were a range of other matters before the chair that day. One went to increasing superannuation from nine per cent to 12 per cent. Some of us might have liked to have gone from nine per cent to 15 per cent in one fell hit, bringing it forward in bites of one per cent a year every year for six years until it reached 15 per cent. There was removal of superannuation age limits. There were benefits in low-income superannuation contributions. There was simplification of asset depreciation arrangements. There was the introduction of accelerated initial deductions for the purchase of motor vehicles by small business. And there were a range of other benefits to sectional interests in our community.

So the MRRT Bill, now the MRRT Act, was not the only matter that was up for discussion back in March 2012; it was one bill as part of a total package of 11 or 12 that were discussed at the same time. Those measures affected the mining industry, the offshore petroleum industry, small business, superannuation beneficiaries and those who enjoy depreciation arrangements for capital investment. When the MRRT package of bills was put up for a vote, the Greens and the current government combined 38 to 32 to support that package, including the MRRT, without amendment. The only parties to oppose it were the opposition over there.

Right from day one Labor government and the Greens brought forward a package of bills. Both parties voted for it, there were no amendments, it went to a division and it was carried 38 to 32. What does that mean? It is very simple: the Greens in the bill currently before the chair seek to negate what less than 12 months ago they stood and voted for, stood and supported, stood and endorsed.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Guillotined as well.

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

Guillotined as well. Maybe we did guillotine it. That is what happens when you have the numbers. Thirty-nine is more than 37. Welcome to the real world. I do not know if it was guillotined. If it wasn't, it should have been. The point was this: we did not have 39 votes in our own right; we wandered down to the end of the chamber. They said, 'Yeah, that's a good package of propositions in there,' about the capital investment, the superannuation improvements, the bringing forward of write-offs for small business for motor vehicle purchases, the improvements in the petroleum rent resource tax and the imposition of the MRRT. They said, 'Gee, we don't like bits and pieces here.' We responded, 'Hey, we also don't like bits and pieces.' As I said at the outset, some of us would have liked to increase superannuation not to 12 per cent over eight or nine years but to 15 per cent over five or six years. But in the negotiation process the eventual outcome was that what was put in this chamber, and the Greens and the government had full knowledge of its content and supported that package.

So it is a bit rich now, barely 12 months after the ink is dry, and after a little bit of adverse evidence from the Secretary of the Treasury a couple of weeks ago in estimates outlining what everyone in the world knew about the design of the MRRT, to use that as an excuse to come back in here and essentially renege on an agreement fully entered into, fully supported, on the basis of—what?—full information. It doesn't get any better than that. The blind, deaf, dumb and ignorant might have a reason to go back on their word. But when you have participated in all the negotiations, sat through all the committees, sat through the debate here, agreed to a particular outcome and voted for the outcome, you do not get to come back 11 months later and say, 'Hey, we don't like that; we want to do something else.'

The inquiry into the bill before the chair, conducted by the Economics Legislation Committee and tabled earlier this month, addresses that point exactly in paragraph 1.12. It says:

Following negotiations with the mining industry and the deliberations of the Policy Transition Group (PTG), which was established to advise on the implementation and technical design elements of the MRRT, the government agreed to the PTG's recommendation 'that there be full crediting of all current and future State and Territory royalties under the MRRT so as to provide certainty about the overall tax impost on the coal and iron ore mining industries.

That statement was released under the authority of Mr Swan and Mr Ferguson on 24 March 2011. Everyone knew what was going on. The government had accepted the recommendations of the Policy Transition Group and had put out a press release in writing to that effect, and everyone in the government and everyone in the Greens knew that.

The time sequence in this discussion is clear, and for the last four years the Greens have been fully aware, fully consulted and, to a very, very significant extent, involved in a lot of discussions. In December 2010 there was the report of the Policy Transition Group. In March 2011 there was government acceptance of that recommendation that I just read out. In March 2012 there was an inquiry into the then MRRT Bill, and on 19 March, barely a fortnight after the recommendations of that bill inquiry came down, the Greens voted for the two measures that were at the heart of the then bill, now act, and are at the heart of the bill they bring before the chair today to renege on. You cannot do business like that.

Turning now to the bill before the chair, chapter 2 of the Senate Economics Committee report is instructive, and it deserves to be put more fully on the public record. It outlines the process of inquiry into this bill. It is only a very brief report. It is only in two chapters, no more than 10 pages. The inquiry was conducted from November 2012 until February 2013: November, December, January, February. It went for almost four months, knocking off a month for January, of course. There was one significant extension of time granted by the committee at the request of the Greens, presumably to get more submissions into the inquiry so we could have a fuller discussion at the appropriate time.

In that four-month period, do you know how many submissions that committee inquiry into the bill before the chair received? It received only six submissions. There were four months of examination and four months of writing to interested parties. The database in the economics committee of interested players in this debate, as you can imagine, goes to hundreds and hundreds of individuals, groups and associations, and only six put in a written comment. Of those six, a full five opposed the passage of the bill before the chair. So after a four-month inquiry, an extension granted at the request of the Greens, six submissions were received. Of those, five opposed the bill, and only one supported the bill before the chair. The committee, in its wisdom—it must be said—decided not to hold a public inquiry on the basis of only six submitters, five of which opposed the bill. We did the report on the papers, and it is before us today.

But what can one conclude from a bill inquiry on a subject which is apparently of great public notoriety when hundreds and hundreds of individuals, groups, associations, companies, governments and the like are invited to put in a submission that essentially goes to a reworking of the MRRT Act? What conclusion can we draw? The conclusion we can draw is that there is just about no interest in this country in revisiting the design features of the MRRT. You would have thought they would have been lined up in their thousands, seeking to come in and say how onerous it is, how heavy it is, how inefficient it is, how bad it is, how whatever it is. You would have thought that the churches would be organised, along with some of the community groups and some of the NGOs. But, no, there was a wailing silence between November and February, because nobody—I beg your pardon, I mislead the chair—rather, one person in Australia took the trouble to write a submission supporting the bill before the chair. Nobody else cared. Nobody else wrote. Talk about Orphan Annie!

I have never been in a bill inquiry, in all the time I have been here—and I have been in inquiries on a whole range of matters—where there were only six submissions, with five opposed to the content of the bill and only one supporting it. Think back over the years. How many contentious pieces of legislation did we handle in opposition and have been part of government policy for the last five years? How many inquiries have people in this chamber participated in, written reports on and given speeches about? I, for the life of me, cannot recall one where there was only one submission in favour of the bill.

Perhaps I have drawn the wrong conclusion on that; perhaps there is a great deal of interest out there in this proposition. We are going to find out because, in addition to all of those matters that I outlined in 2010, 2011, 2012 and 2013—legislation inquiries, the Policy Transition Group, the pre-existing bill under Mr Rudd, the reform bill under Ms Gillard and the numerous inquiries—less than an hour ago, the Senate Economics References Committee accepted another reference to inquire into the MRRT. It seems to me that the norm is now that you get about 17 bites at the cherry. We dress up the conclusion, in terms of the argument about wanting to have money to spend on Gonski, or disability— (Time expired)

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

If Senator Milne's speech at the National Press Club was in effect the decree nisi for the political union between the Greens and the Australian Labor Party then the decision to debate the Minerals Resource Rent Tax Amendment (Protecting Revenue) Bill 2012 at this time represents the decree absolute. Senator Bishop in effect gave expression to that here today. But the thing that confuses me greatly is why this political marriage between the Greens and the Australian Labor Party happened in the first place. I am certain it is something that confounds Senator Bishop as well—as one of the clearer-thinking members of this chamber. He is turning red, as I know he often does when I speak.

What also confuses me is that, when the Prime Minister assumed that office, one of the three policy areas that she said she would fix was the situation around the mining tax. The Prime Minister went to the election. Subsequent to the election, with the support of the Australian Greens, she formed government. Subsequent to that the Prime Minister had that now famous civil union ceremony with former Senator Brown where all the participants and witnesses were sporting sprigs of wattle in a festive spirit. At the time that the Australian Greens entered that union with the Labor Party, the Prime Minister's intentions were known in relation to the future of the minerals resource rent tax. At the time that the legislation went through the parliament, the union between the government and the Greens was formalised and the Greens had access to full and comprehensive briefings from their alliance partners on this legislation. So the Greens came into this chamber to support the MRRT legislation with their eyes wide open. It was with complete knowledge that they entered this arrangement—certainly more knowledge than the opposition had as to the background of the negotiations behind this legislation. The Australian Greens are in effect co-authors of the MRRT legislation. I think Senator Bishop was quite right to express his surprise that a little more than a year after the legislation passed this place the Greens are now walking away from their own creation. I wanted to give a little background as to the confusion that I have as I stand here today.

Our proposition has always been that the minerals resource rent tax is a bad tax. It has always been that it came out of it an improper process, it came out of a bad process and it came out of the process that the Greens fully, completely supported. Labor's mining tax, we have long contended, is so inefficient, so distorting and so bad for investment in a very important industry for Australia, so bad for our economy and so bad for the budget that it should be scrapped and not further expanded. The bill before us would make a bad tax even worse.

The coalition, not surprisingly, emphatically rejects this bill—for different reasons to the government, obviously. But we do call upon the Senate to oppose this legislation in anticipation of a bill after the next election—should the Australian public bestow the privilege of government on the coalition. After the election we would scrap the MRRT altogether.

The basic premise that this Greens bill is based on is fundamentally flawed. The bill seeks to disregard any increases in royalties after 1 July 2011 when calculating royalty credits for the MRRT. This is of course inconsistent with the commitment the Prime Minister and the Treasurer made in the mining tax deal that they negotiated personally, exclusively and in secret with the three biggest miners, when they promised that all state royalties would be creditable against the mining tax. Despite attempts by the government to revisit the definition of 'all' in relation to state royalties, even Ms Gillard and Mr Swan had to recognise that 'all' meant all and that 'all' included any future increases in state royalties.

It is, of course, not particularly competent that Ms Gillard and Mr Swan signed up to such a commitment without engaging the states and territories first and without seeking their formal agreement in relation to the royalty arrangements. This is not the fault of the states, it is not the fault of the territories and it is not the fault of the miners. Royalty arrangements are a matter for the states. There is nothing the Prime Minister and the Treasurer can do to stop the states from increasing their royalties as they see fit. In fact, their mining tax deal provided a direct incentive to state and territory governments to increase their royalties. The idea advanced by sections of the Labor Party and the Greens that state royalty crediting arrangements and market based depreciation arrangements are actually loopholes in the MRRT is completely wrong. To present these as loopholes is more than wrong; it is dishonest.

These are not loopholes; they are deliberate design features of the MRRT. They are the government's design features and the Australian Greens supported them in this place.

There is much that is wrong with the mining tax deal that the Prime Minister and the Treasurer negotiated, exclusively and in secret, with the three biggest miners. It is important to consider how this all started. Why is it that the royalties are credited under Labor's mining tax in the first place? Even though Labor's mining tax was never anything other than an attempt at a grab for more cash to support the reckless spending of this government, it was sold as important long-term reform designed to make the system simpler, fairer and more efficient. Instead, it made resource taxation arrangements more complex, less fair, more distorting and less efficient. The Henry tax review recommended that a national profit based resource rent tax would replace state and territory royalties. The argument was that royalties were inefficient because they were imposed on production irrespective of profits, whereas a profits based tax would only apply if there were profits.

The problem was that, for a number of states, royalties represented a significant part of their own source of revenue. Yet the Treasurer, whose deficits, I should add, are more than fiscal, never even talked to the states about the implications of the mining tax for them. Instead of replacing royalties, Ms Gillard and Mr Swan came up with complicated crediting arrangements. As soon as they promised to credit all state and territory royalties, they provided an incentive to states and territories to increase their royalties, as any increase in royalties would be creditable against the MRRT. In fact, the MRRT deal removed any incentive for states to keep royalty rates low or provide discounts to attract investment to their states, as part of competitive federalism, because any benefit from discounted royalty rates would go to Canberra through increased MRRT revenue and not actually help attract investment to particular states.

So the entirely rational and predictable result was that five out of six states, including the Labor states of Tasmania and South Australia, have increased royalties on iron ore or coal since the mining tax deal was signed by Ms Gillard and Mr Swan. Every increase in royalties since the deal was signed did, of course, blow a hole in Labor's mining tax revenue estimates, as any increase in royalties courtesy of the deal reduced MRRT revenue.

Labor's mining tax is more complex, distorting, inefficient, costly to administer and costly to comply with than the previous resource taxation arrangements based on state royalties and company tax. The MRRT is a failed tax which came out of a bad and now widely discredited process. The MRRT should be scrapped; it should not be expanded. It is a distorting, inefficient tax grab which inappropriately targets an important industry. As I have said already, it is bad for investment and bad for the economy.

Two previous Senate inquiries into the mining tax have clearly exposed the many deep flaws of Labor's mining tax. Those inquiries predicted the mess that would ultimately result and the fiscal train wreck that it would be. Ironically, as we debate the bill, the Greens have established an inquiry to look at the flaws in the tax which they helped to pass and which they are now trying to make even more economically destructive. The Greens' supposed fix to the MRRT is a grab for more tax by punishing states for the flaws in the Gillard-Swan mining tax design. I repeat: the MRRT is a bad tax because it is bad for investment, bad for the economy and bad for the budget.

It is a complex and distorting tax—I cannot say that often enough. It is designed in a way that favours the bigger miners, who were given the opportunity to sit around the table, at the expense of the smaller miners, who we would want to be the success stories of tomorrow. It has failed to raise any meaningful revenue, when the government have already spent all of the money they thought it would raise and more. When the MRRT deal was announced on 2 July 2010 by the Prime Minister and the Treasurer, they said it would raise $4 billion in year one and $22.5 billion over the first four years. In the 2012-13 budget, that shrank to $3 billion in year 1 and $13.4 billion over the first four years. In the most recent Mid-Year Economic and Fiscal Outlook, it then shrank to $2 billion in year 1 and $9.1 billion over the first four years. Those were net revenue estimates—that is, they took the company tax effect into account. Given the MRRT is a tax deduction for company tax purposes, 30 per cent of whatever gross revenue came from the MRRT would have been collected anyway.

We now know that the MRRT raised only $126 million in gross revenue in the first two of three instalments for 2012-13. Once we take the company tax effect into account, that becomes a $88 million net revenue figure, which is comparable to the budget estimates. Once we take the $53 million in ATO administration costs for the MRRT into account, that becomes $35 million. Once we take the $38.5 million the government allocated to the RSPT advertising campaign into account, the taxpayer is actually $3.5 million short from the MRRT.

The premise of the MRRT was false from the start. The proposition that the mining industry does not pay its fair share of tax is false. This financial year, iron ore and coal miners will pay more than $8 billion in state royalties alone. They will pay more than $20 billion in royalties and company taxes.

The previous system worked: the more profitable a company, the more tax they would pay; the more valuable the non-renewable resource, the more royalties they would pay under the ad valorem royalty system. Labor's profit based resource rent tax concept is flawed, because the practical consequence of it is that, without profit, miners could extract the valuable non-renewable resources from the ground for nothing—and that is wrong.

Ms Gillard and Mr Swan's handling of the mining tax negotiations was incompetent. They never knew what the cost of the market-value based appreciation arrangements were when they signed the deal, and they still do not know what the cost is. If you are going to have a mining tax—which we do not think you should—then to be internally consistent you would have that feature of the mining tax deal. But a competent government would have had it properly costed before spending the revenue the MRRT would raise. Incredibly, when it came to costing the impact of some of the key features of their mining tax deal on mining tax revenue estimates, they forced Treasury to fly without vision. As the Treasury secretary, Dr Parkinson, made clear in Senate estimates, they were unable to consider the cost impacts of changes in market-value based appreciation and net-back arrangements because they could not see them. These and other matters do deserve scrutiny and report from a further Senate mining tax inquiry because the government have consistently hidden the truth behind the numbers.

The Prime Minister and the Treasurer have persisted with their dishonest talking points, blaming commodity price volatility, exchange rates and state royalty increases as the reasons why revenue from the MRRT came in more than 90 per cent below forecast. Those assertions were comprehensively discredited by Dr Parkinson at Senate estimates. Dr Parkinson made clear that Treasury were able to take commodity price volatility, changes in volumes and in exchange rates, and increases in royalties, into account when revising their MRRT revenue estimates. That is why estimated MRRT revenue went from $4 billion in 2012-13, when the MRRT deal was announced, to $3 billion in the last budget and to $2 billion in the last MYEFO—they could not take the change in cost of the value-market based depreciation arrangements and net-back arrangements into account. Yet, despite that very clear, compelling and independent evidence, the Treasurer continues to peddle his spin on what is to blame for lower-than-predicted mining tax revenue collections.

The other lie is that the people cannot possibly complain about the damage the mining tax has done to the important mining industry because, after all, they did not have to pay much tax. That is false. The mining tax was very much disruptive at a challenging time for an important industry, an industry that helped keep Australia going post-GFC. The tax is complex and costly to administer. Smaller miners alone had to spend more than $20 million in administering increased red-tape requirements under the MRRT while the ATO spent more than $50 million administering the tax.

The bad tax, the tax that was improperly negotiated, has had a detrimental effect on our sovereign risk profile as an investment destination. And, of course, the tax has hardly raised any revenue, when all the money the government thought it would raise—and more—has been spent. That is why we are now dealing with this bill. And for so long as this ineffective MRRT is on our statute books there will be other bills to try to expand the MRRT in one way or another, I am sure.

The MRRT is, as I have said, a bad tax because of the way it was negotiated. The MRRT is a bad tax, as I have said, because of the way that it was designed. The MRRT is a bad tax because it is a red-tape nightmare. And the mining tax is a bad tax because it is a dagger at the heart of Australia's mining prosperity. It introduces a new tax on an important industry on top of existing royalty and income tax arrangements, and that makes our tax system more complex and less fair. It reduces our international competitiveness as an attractive investment destination. It gives an unfair competitive advantage to three big multinational, multi-commodity and multi-project companies, who were given the exclusive opportunity by the government to negotiate the design of this new tax, with all their competitors and other stakeholders locked out.

We need to make sure that our mining industry continues to prosper, that high-paid mining jobs are preserved. The government's poorly designed MRRT will not be fixed by trying to penalise the states to benefit the Commonwealth. The mining industry pays the states for extracting the resource and pays the Commonwealth through company tax. The Greens bill reveals them, and by association the government, for what they really are: desperate for cash from an industry that they have always hated.

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

It was worth sitting through that speech just to get to that last bit, Senator Fifield—because that really exposed you. You started with confusion, which I will try and assist you with—through you, Madam Acting Deputy President—and you concluded with ignorance, which I am afraid I cannot help you with much at all.

We will start with the confusion, however, because it is a fair question: since Labor senators have looked to us, as Senator Bishop did, and coalition senators did as well, and you passed this tax—so then, in indication to the crossbenchers, how can you now come back and want to review it? I will help with that confusion. Our options in this place, as the crossbenchers, when a bill is brought forward by either of the major parties, are twofold—and we need to choose. This place does not always tolerate ambiguity: when it comes to a vote you need to pick one side of the chamber or the other to sit on. Our options in the instance of the MRRT were twofold: the ALP, the government, on the one hand—a major party that for a brief period of time chose an evidence based approach—set a task before the Treasury secretary and then adopted it, more or less as proposed, after a long process of review and design, such that the extraordinary profits being raked off by the resources sector could be, without any kind of structural damage either to the economy at large or to those individual companies, once the profits got to a certain level, redirected and redeployed through a super-profits tax. This would not be the first jurisdiction in the world, you would be aware, where this has been tried.

Following that initiative by former Prime Minister Kevin Rudd, there was a $22 million public relations onslaught, which I think unbalanced the government and caught them somewhat by surprise. Because of some of the rhetoric we heard a moment ago from Senator Fifield, you would be aware that the Greens are used to the kind of invective being directed at us by people like Senator Fifield, who effectively just read in a bunch of press statements from the Minerals Council of Australia, and not particularly original work. You do appear to have stolen Mitch Hooke's homework there, Senator Fifield, because there was not an original word spoken.

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I thought I was quite gentle about you.

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

More gentle than I would have been, Senator Ludlam.

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

You will get your chance, Senator Mason. You will get your opportunity. In all honesty I do not think the government was actually prepared for the brutal and dishonest campaign by the mining industry. They passed the hat around and collected $22 million and did you over, and it was an ugly thing to watch. I can recall the television ads that ran. It evidently destabilised the ALP to the degree that it cost Kevin Rudd the prime ministership of the country. We have not seen that kind of thing in modern political history before.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

He had lost his way

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

A good government that had lost its way, to paraphrase you there, Senator Williams.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

The Prime Minister—

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

That is correct. It was in the aftermath of a really vicious and personal advertising campaign that effectively repeated most of the themes we just heard from Senator Fifield, from whom he pinches his homework. That is what we faced on one side. That was part of our choices. That internal destabilisation then cost a Prime Minister his job. What happened then is that it appears the Prime Minister and the Treasurer, delegating to Resources and Energy Minister Martin Ferguson—the inside man—who handed a pen to the mining sector with which to write their own tax law. And what do you know? What came out of that process was something that was highly permissive and effectively geared towards a form of legalised—

Senator Fifield interjecting—

I promise I will get to that Senator Fifield. I promise I will allay your confusion. I can see you struggling with it. I will get there. Here is where I can help to resolve Senator Fifield's confusion. Our other choice is to sit on the other side of the chamber when a bill such as that is put to the vote—notwithstanding the amendments we did move, which I will get to in a moment—where there is the Abbott opposition, a political party that does not have the courage to take on the mining industry at all.

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

So it is our fault.

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

We have a choice between a flawed tax, which we can try to amend through the process available to us, or no tax at all. Senator Fifield, I must have allayed your confusion, because you are on your way.

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

It is all so clear.

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

It is all so clear now. Total capitulation. A policy that has rolled over on its back and is waving its legs in the air that somehow, Mr Tony Abbott, the Leader of the Opposition, has the political gift to turn into a show of strength. Complete and utter capitulation to the mining industry has somehow been able to be portrayed as tough and fearless leadership and as sticking up for ordinary people. There is real political genius at work there. It is fundamentally dishonest and nasty, but it is very clever.

So these are the choices we face on the crossbenches: a flawed tax or none at all. I can remember this very well because I participated in the debate. The amendments that the Greens moved both at the second reading and at the committee stage were shot down—what do you know?—by the combined numbers of the government and the opposition. That then leaves us with a stark choice at the end of the debate: vote for a tax we know is flawed or vote for no tax at all. So when Senator Fifield reminds us that the tax picked up no more than $126 million in gross revenue in the first two quarters of its operation, that is $126 million better than nothing, because that is the opposition's counterproposal.

The amendments we put at the time were voted down by the major parties on the basis that the Labor Party figured that was the best they were going to get, and the opposition will vote against anything that appears to try to redeploy some of these extraordinary profits back into the public good. We can try again, for example, with the bill we have brought to the chamber tonight, or we can try again through future inquiries, such as the one that Senator Milne, with the concurrence of Senator Cormann, has just initiated. Senator Cormann's motives are very clear. He has not tried to hide them. He wants to destroy the tax. He wants to pull it completely to pieces. At least that is transparent. Our motives are that we will use the mechanisms available to us in this chamber, as is one of our primary roles, to improve the legislation and to bring amendments forward to fix it. That is the purpose of this inquiry and I am very glad it is occurring.

So there are opportunities to fix the mistakes that are made. I will remind senators that the mistakes have been out in the open for all to see. It was a pretty blunt instrument that Minister Ferguson enabled for the mining industry and effectively handed to the big three. We had people with very detailed inside knowledge of the mining industry, people like AMEC, who represent the juniors and the mid-tiers in Western Australia, telling us, 'We are going to get done over in this process. You have given this to the big three to handle in their own interests, and here is what is going to happen.' They spelt it out in detail that even Treasury officials were unable to validate. They said, 'We are going to need to wait to see the figures, for example, on the way that the depreciation provisions are written into the bill.' Treasury would not touch it at the time. They said, 'We are going to need to see industry's numbers.' On the afternoon of the inquiry that Senator Bob Brown and I attended, AMEC spelt out for us exactly what was going to happen.

Professor Henry Ergas is not somebody I tend to quote at great length in this chamber. But he does appear from time to time and offers the benefit of his views on these sorts of matters. He is opposed to the super-profits tax and opposed to the MRRT. Nonetheless he is well aware of how these things would be gained. He spelt it out for the committee and it was quite an enlightening session. He has quite detailed knowledge of the way our tax law works and the way that the targets of taxation can try to wriggle around and sleaze their way out of paying the tax. At the session—it must have been the Senate Economics Legislation Committee, on 21 February 2012—he said:

When you impose a significant tax you are always going to provide incentive for people to minimise the tax that they pay.

It is not necessarily illegal; it is just what happens.

One of the ways in which they are going to do that is to try to shift income out of the taxed pool into the untaxed pool. To that extent, yes, this tax does invite that.

I put to him a question about whether the complexity of the tax and the fact that the miners got to write it open it up to being abused. He essentially agreed in principle. I asked him then, 'What are the vulnerabilities?' As a professor of economics, he was reasonably well placed to answer the question. If he was going to game it and try to write his way out of having to pay any tax under this thing—if he was working for the companies who got to draft the bill—how would he do that? How would he shift income, as he put it, out of the tax pool and into the untaxed pool? Here is what he told us:

In all fairness I have not devoted all that much time to that. But I think the issues that will arise, even under the tax as it is currently proposed, will include timing issues, revenue recognition issues and particularly cost allocation issues; what the allowed rate of return on the downstream assets should be; how that allowed rate of return should be allocated; what the relevant asset base downstream is; and at what pace those downstream assets should be depreciated. All of those issues will doubtless arise in respect of this tax.

There you go, colleagues. I am very happy to agree on this occasion with Professor Henry Ergas, who forecast exactly what it was that the miners were going to do with the tax law that they were allowed to draft by resources and energy minister Martin Ferguson, on behalf of an Australian government, desperate and bruised as it was at that time by the assault of the mining industry on television and in the newspapers through both paid and unpaid coverage of their advocacy. It looked as though new Prime Minister Gillard just wanted the pain threshold turned down—just wanted the temperature turned down—and the assault to stop. And they gave the mining companies the pen.

It is not our role to be apologists for those who did the deal or for those on the other side of the chamber who oppose any deal being done at all. It is our job to recognise the mistakes that have been made and to correct them in the public interest. As Senator Milne said a short time ago, we should not come in here saying that we need to rip money off single parents, we need to delay the introduction of a disability insurance scheme, we cannot afford the rollout of large-scale renewable energy in Australia, we cannot afford the provision of decent public transport, we cannot afford to look after the environment or we need to set aside any of the many priorities that assail us across this country. We have the means to raise the revenue; we know that we do.

The beauty of a profits tax on an industry that does provide a substantial revenue base—and it certainly does in my home state of Western Australia—is that the tax does not kick in until you are doing extraordinarily well. That is the purpose of it. It is not a royalty receipt based on the tonnage that comes out of the ground. It only cuts in when you are doing very well. All the hysterical frothy hyperbole from those on other side of the chamber about how it is designed to assassinate the goose that lays the golden egg are basically them simply reading in statements from the big end of town, which is doing everything it can within the law—which they get to write—to avoid paying tax. It is a game that is probably as old as the concept of tax. It is not good enough for us to stand in here and pretend that there is nothing that we can do about it. As legislators, it is our job to do something about it. We in the Australian Greens take that job very seriously indeed.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I speak in opposition to the Minerals Resource Rent Tax Amendment (Protecting Revenue) Bill 2012. One thing that we can never be certain of is the future. All good governments and businesses prepare budgets about proposed allocations of funding based on revenue sources. But neither the business community nor governments throughout the world can ever be certain of the outcomes in relation to those budgets. When we came to government in 2007, the international economy was flying high. There was an asset boom and particularly a housing boom, not only in Australia but throughout the world. The Australian economy had undergone about 20 consecutive years of growth.

But then the global financial crisis hit, and it hit hard. It affected governments and businesses throughout the world. As a result of the global financial crisis and in particular the effects on businesses and their revenue streams, businesses changed their budget positions. They changed the way that they were investing their funds to deal with those changed circumstances. Governments were no different. Good governments change budget allocations based on revenues received. In the wake of the global financial crisis, this Labor government proved itself to be quite adept at meeting the challenges of falling revenues—revenues that have fallen to the tune of $160 billion since the global financial crisis—finding the money to allocate to programs and, importantly, to continue to grow our economy.

It is in this context that I believe that this bill before the Senate this evening is short-sighted and politically motivated. It is scant on detail and modelled effects and facts. It fails to recognise that the current provisions of the Minerals Resource Rent Tax were developed as a result of a comprehensive review of our taxation system undertaken by Mr Ken Henry. It also fails to recognise that the details of this tax have been extensively negotiated after consultation with participants in the mining industry and the wider Australian public. It is a profits based tax. There will be years in which profit levels in the mining industry will not be the same as in previous years. By its nature, the revenue generated by this tax will fall and rise depending on the profitability of those companies that are subject to its provisions.

The tax has only been in existence for six months—not even one fiscal year. It is way too premature to be sounding the death knell of this particular tax. We need to take a long-term view of the way that this particular tax should work. There are issues associated with it, and the government is aware of them. But we are, as good governments should, consulting with industry participants to work through those issues. In particular, we want to work through those issues using a cooperative federalism model through the COAG process.

The Henry tax review looked at the issue of resource taxes. It determined that Australia needed a form of resource rent tax and found that such a tax would provide a more consistent treatment of resource projects and promote more efficient investment and production outcomes. Such a tax would also ensure that the Australian community received an appropriate return for its non-renewable resources. Australia has an abundant wealth of non-renewable resources, which are expected to continue to command high prices, driven by demand, particularly in China and India. Non-renewable resources such as petroleum and minerals are a significant asset of the Australian community. Australia has the world's largest economically demonstrated resource reserves of brown coal, lead, mineral sands, nickel, silver, uranium and zinc and the second-largest reserves of bauxite, copper, gold and iron ore.

The charging arrangements prior to the introduction of the minerals resource rent tax distorted investment and production decisions, thereby lowering the community's return from these resources. Further, the pre-MRRT taxation arrangements failed to collect a sufficient return for the community, because those royalties were unresponsive to changes in profits, particularly given that they were based on an output calculation method. For example, the taxes as they existed prior to the introduction of the minerals resource rent tax, and the royalties, claimed a declining share of the return to resources over recent years, despite the increased profitability of the resources sector. In the years 2001 to 2002, about $50 billion was collected. That had fallen, pre-MRRT, down to below to $20 billion. That reflects the decreasing nature of the return that Australians were getting from the profits that were increasing in that particular industry.

So, in the wake of the Henry tax review, the government consulted with the industry. And, importantly, we got an outcome; we reached an agreement to levy a tax that was much more efficient than the royalties system and met the needs and requirements of the future, in particular, when it came to raising sufficient returns from non-renewable resources.

There has been much commentary on the royalties refund and the fact that the states have increased their royalties in the wake of the introduction of the minerals resource rent tax. I want to concentrate on that fact for a moment. Those opposite have been claiming for some years now that the introduction of this tax would kill the goose that laid the golden egg, that the introduction of the minerals resource rent tax would put the brakes on the mining sector, would be a job destroyer. Yet, at the same time, Liberal and National Party governments in the various states were jacking up their royalties on these minerals in a much greater capacity and to a much greater degree than the minerals resource rent tax. So, on one hand you have the opposition criticising the minerals resource rent tax—a much more efficient tax—and on the other you have state governments pushing up their royalties. That is the weakness in the opposition's argument when it comes to this issue.

Despite that fact, the issue of royalties refunds and the approach of the states is an issue. The government is aware of this, and we are dealing with it, as all good governments should. Through the Policy Transition Group, the GST distribution process and the review, we have been working with the states to try to iron out these problems. In December last year the Treasurer and the state Treasurers agreed to refer this issue to the Heads of Treasuries process to work on a negotiated outcome. That is the way we should be approaching this. That is the way we should be approaching difficulties between state and federal governments when it comes to raising revenue in this country. Cooperative federalism is the way we should be dealing with the sufficiency of our revenue base to fund the services and infrastructure that our country dearly needs, and those discussions are underway.

The Greens are well aware that this process is being undertaken, yet they have introduced this bill in ignorance of that process—and way too prematurely; we still need to work out the outcomes of this process. They have also sought to amend the starting base for the purposes of calculation for some of the coverage that companies get with the minerals resource rent tax. Under the MRRT, miners get a one-off allowance to recognise the value of their existing assets as at 2 May 2010. Rio Tinto and BHP reported that the value of this allowance is around $1.7 billion in their financial statements in August, several months ago. It is important to note that this allowance is written off over the life of a mine and its assets; it is not on an annual basis. So, this reflects a one-off tax shield against minerals resource rent tax liabilities for up to the next 25 years.

The petroleum resource rent tax, for which a similar structure exists, has been in operation for 25 years and has raised about $28 billion. So it is way too premature to be sounding the death knell of this particular tax. It is much more effective and sensible to look at this as a long-term reform. It is really a reform aimed at delivering a fair return on non-renewable resources to our children and our grandchildren. And it will do that, because we have a strong pipeline of investment in the mining and minerals sector in this country.

I have spoken on many occasions to mining representatives in New South Wales, to those companies that are mining in the Hunter Valley and down around Wollongong, and their views of the long-term prospects of the industry are quite interesting and instructive. They have certainly been considered by the government in the development of this particular tax.

What they say is that there will be peaks and troughs, but the long-term prospect for this industry is growth based on the development of China and India. There will be peaks and troughs but the long-term outcome will be growth. And that is reflected in the companies' investment figures. It is reflected in the figures produced by the Australian Bureau of Statistics regarding mining investment in this country and into the future: $109 billion invested in mining in 2012-13—three times more than was invested prior to the minerals resource rent tax being announced by the government. It was $35 billion, in 2009-10.

Those opposite, again out of touch with reality, have been proclaiming the death knell of the resources sector in this country because of the introduction of this tax but the mining companies are laughing at them and saying, 'You're on your own with that argument—you're way out there with that—because we're going to invest three times the amount that we have invested in the past, prior to the introduction of this particular tax.' So the miners themselves and the people who put their money where their mouths are—the companies and the mums and dads who are investing in this industry—know the value of these assets. They know the value of what we are digging up, and which we can only dig up once. That is why the approach of the opposition, and indeed the Greens, on this is out of touch. Good policy analysis and a good approach is to adopt a long-term view of this particular tax and its benefits for the country.

The minerals resource rent tax is raising revenue. It is raising revenue to fund the programs that the government said it would fund. There is no doubt that collections raised through the tax have been impacted by the fall in commodity prices. The price of iron ore per tonne prior to the introduction of the tax was up around $160 a tonne. Over the last 12 months we have seen a dramatic decrease in the value of the spot price. It got down to around $80 a tonne at some point late last year. Thankfully, it has risen again. As I said earlier, this is a profits based tax, and miners' profits will rise and fall depending, importantly, upon the price that they can secure in the market for that particular commodity. But in that respect it is a much more efficient tax than a royalties based system. A royalties based, output calculated tax, is applied regardless of whether the commodity price is good, regardless of the level of investment; it is purely based on the output. When the price turns down and profits are reduced, miners will still pay the royalties—a much more inefficient system. So it is much more efficient to have a profits based tax in this industry. It is similar to the situation that we have had with the petroleum resource rent tax. As I said earlier, that particular tax has raised $28 billion since its inception.

Based on all of this I think the Greens and those opposite really need to have a Bex and good lie down, and calm down. This is a long-term economic prospect for our nation. We need to adopt a long-term view. As I said earlier, it is about the next generation and future generations of Australians getting an adequate return from these non-renewable resources.

The price of iron ore and coal will fluctuate. It will go up and down and the profits associated with this tax will go up and down, but over the long term—as the miners have said to me on several occasions—the forecast is for growth. As there is growth there will be returns from this particular tax for the taxpayers of Australia and the returns will fund programs that we envisaged they would fund when we developed this tax. The returns from this tax are reflected in the fact that there has been a massive downturn in government revenues—$160 billion since the global financial crisis—but this government has a strong record of finding the necessary savings to ensure that we can continue to provide adequate services and infrastructure, and, importantly, to grow our economy despite difficult circumstances.

Although the MRRT—the minerals resource rent tax—is naturally going to be volatile, it will, over the longer term, fund programs. One of those programs that is particularly important and which will be funded through minerals resource rent tax revenues is the boost in compulsory superannuation levels from nine per cent to 12 per cent over the next 10 years. We will be looking at that in the budget context but, as I said earlier, we have a strong record of delivering necessary savings and finding those savings in the budget to fund our programs. We will do that yet again. For the next year, that will be revealed in the May budget by the Treasurer.

The specifics of the bill we are debating today were referred to the Senate Standing Committee on Economics. The committee undertook an inquiry and submissions were sought for a period of four months. I understand that there were not many submissions received by the committee, so the committee determined that they would extend the deadline for the receipt of submissions. They received six submissions from companies and the community. Five of those submissions opposed the provisions of this bill. That was reported by the committee.

So, as I said earlier, the Greens need to calm down. The opposition needs to calm down and we need to take a long-term view of this project.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

We're calm; we'll get rid of it.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The opposition needs to be conscious of the fact that the states see, Senator Williams, that these miners have been making super profits on non-renewable resources that belong to the people of Australia, and that is why they have pushed up their royalties. They know that the community is not getting a fair return on these resources, and they have pushed up their royalties. It has caused some difficulties with this tax, but we will work those out. The crux of the argument, and the philosophy, is still the same. The Australian public were not getting an adequate return from these non-renewable resources, and that is why the government introduced the minerals resource rent tax. Over the longer term it will deliver for the people of Australia, and that is why we should oppose this bill.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

It was interesting listening to Senator Ludlam speaking. He said, 'Looking after the environment: that is what the Greens are about'. I noticed the wording of the formal motion about national parks today, where the feds would take over the national parks and not allow grazing. Just let the fuel levels rise and let the bushfires come along and have the savage, hot fires—like we had a few weeks ago at Coonabarabran, where 50,000 hectares of mainly national park and 33 homes were burnt. I am thinking: this minerals resource rent tax is about the environment.

If we look at the so-called greenest government the New South Wales parliament has ever seen—in one former Premier, now senator, Bob Carr—the Greens ruled that government. We saw them locking up country and leaving it, with virtually no hazard reduction burning and no grazing allowed. It is amazing that they do not allow grazing. They do not want hard-hooved animals in the national parks. It is about environment management, which relates to the very bill we are talking about. It is all right to have brumbies, wild pigs, feral goats or deer, but don't put any cattle or sheep in there to graze the country or get the fuel levels down so we can control the environment! Enough of that, as far as Senator Ludlam's farcical comment that the Greens are concerned about the environment. They actually destroy the environment. Their policies have been wrecking the environment, killing the animals and killing the trees, and savage hot fires have destroyed the seed on the ground for regeneration. I just had to comment on that while we are looking at this bill of the Greens.

Why was the MRRT first introduced? It was because this government got into such a financial mess—we will see the figures again tomorrow—with $263 billion of gross government debt. That is just the federal government. I am sure my colleague Senator Mason will remember the luxury car tax. It put the clamps on General Motors-Holden. No-one should be able to afford to buy those Statesmans! You have worked hard, you have put some money away and you have dreamed of your luxury car, but you had better pay more tax. There was the alcopops tax. That was going to save all the young ones from binge drinking. Instead of buying a can of Bundy and cola they would buy a bottle of Bundy rum and a bottle of coke. What is the effect of that? Then we had the LPG tax—the clean Australian fuel that we produce here. Ninety-five per cent of taxis run on it. What a good way to lose an election: upset the taxi drivers who talk to so many people every day and every night of the week! Then we had the flood tax, the carbon tax that we were never going to have, and then we got to the minerals tax. The brutal, savage, political guillotining of former Prime Minister Kevin Rudd—the axing of a prime minister who was elected by the people—will go down in our political history.

We know about the presidential-style elections we have these days. Prime Minister Gillard said the government had lost its way. It was Mr Rudd who proposed the super profits tax. The word 'profit' is a naughty word in the eyes of this government and their left-wing partners in politics, the Greens. This word 'profit' is a dirty word—to have a business run at a profit and to have a business grow. Every big business started off as a small business, and they worked hard and they worked smart.

Senator Polley interjecting—

We will get to that later on, Senator Polley. I will wait for Senator Heffernan to back me up. So, apparently, this word 'profit' is terrible. The then Prime Minister, Mr Kevin Rudd, said, 'We'll get into these profits; we'll get some of this money off them.' Of course, that all turned to tears. One of the jobs of the now Prime Minister, Ms Julia Gillard, was to clean up the superprofits tax—and 'We will give you the minerals resource rent tax.'

Senator Mason, I wish you had been on that select committee that I had the privilege to be on with our colleague, Senator Cormann, when they brought out the document signed by the Prime Minister and the Treasurer saying that all state royalties would be credited. We got into a bit of an argument with Senator Cameron—which is not unusual—and I asked one of the witnesses, 'Will you please take on notice and give the committee a definition of "all"?'

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

You wouldn't increase the royalties to Queensland.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I take your interjection, Senator Furner. So all the royalties would be credited. Who do the minerals belong to? Who is responsible for them in the ground? The Crown. That is correct, isn't it, Senator Ludwig?

An honourable senator: The Aboriginals.

'The Aboriginals', Senator Ludlam says. So they own all the resources? Here is another tack thrown in. The way Campbell Newman has increased his royalties is on a pro rata basis. Once the price of a commodity gets over, say, $100 a tonne, then the royalty increases. But, if the price goes down, the royalty is reduced, to give business a fair go. I have no problem with the states raising the royalties. They have control of the minerals in the ground—the same as coal seam gas and oil, after the then Premier of New South Wales, Neville Wran, took control off the farmers in New South Wales in 1981. The same thing happened in 1971 in South Australia and back in 1915 in Queensland. Senator Ludlam, that is when the states took control of those resources off the farmers.

I have no problem with the states raising royalties. I think it is only fair that we get a fair share. The states can then use that money on their schools and their hospitals. All this federal government had to say in the COAG meeting was: 'You state blokes, you state guys, you state ladies, you state ministers, raise your royalties and we will give you less money from Canberra,' and do a balancing around the states—of course some states have much more mining than others—and just let the states raise their royalties. It is their commodity; it is their resource. They are finite and we want to get our share to benefit all the people who live in our states. And the feds would just simply pay less money to the states. Money saved is money made. But, no, they wanted to go and get control of it, and the states of course became recalcitrant and said, 'We'll raise our royalties'—as they have every right to do.

That is what this is about. It gets back to the point about the budget surplus. How many times did we hear about the 'not negotiable', 'ironclad' budget surplus that we were going to see in the financial year we are in now? Was it two or three hundred times? It will be interesting when we get to Mr Swan's budget come May to hear what his predictions are for this financial year. But, Senator Mason, we know one thing for sure: there will be no surplus. We need this Labor Party government to go to the dictionary and actually see what the word 'surplus' means, because they do not know what a surplus is. During the 13 years of the Hawke-Keating government the Labor government delivered four surpluses, and we have had five years of this government. So 13 and five is 18. After 18 years in government there have been four years of surplus. It has been many, many years—we are probably talking about decades—since we have seen a surplus from a Labor government. So they have probably forgotten what it means. We know they will not deliver one of them.

As far as this tax goes, we argued that it was no good and we argued that it was rushed—have a look at the recommendations that Senator Cormann's select committee handed down—and we stand here in hindsight and say, 'We told you so.' But it came into this chamber, and the Greens—who are very big supporters of guillotining debate in this place and teaming up with the Labor senators to get the numbers—pulled the guillotine down and said: 'Stop debate. Don't have any more discussions; let's just pass it.'

But now it is all wrong. It has all turned to tears, so we will guillotine the debate on this tax, rip it through the Senate and get it into place. Then it all turns to tears when it does not work. But there is one thing worse: the money that has not been raised has been spent. That is the problem. Labor said, 'Yes, we'll give company reductions to small business.' That would be good, but we never saw them. 'We'll put into superannuation to build up the super funds.' No, stripping the money from these big companies, which are owned in some respects by the super funds, is taking money away from every working Australian. That is where they have their money invested to get a return for their super funds.

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

Shambles.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Shambles is a very good description. The whole thing has turned to tears and like many other things—just look at the government—this whole minerals resource rent tax was not about a fair share for all Australians of the finite resources in the ground. It was about the federal government's budget that was in a state of disarray. Remember when Labor was elected to government the ceiling of the debt was $75 billion. You raised it to $200 billion. Then you raised it to $250 billion. Then last May, in a year in which we were meant to have a budget surplus, you raised it to $300 billion. Why did you need to raise the ceiling debt, the credit card limit for the Australian people, when you are going to have a budget surplus? Because you knew there was not going to be any surplus—and history will prove that correct.

During the Christmas break when we were away from the cameras, Treasurer Swan said, 'It's unlikely it'll look like a surplus now.' Blind Freddy could have told you that there would be no surplus. Get the equation right: the Australian Labor Party in government equals debt—borrowing, debt, waste. It has happened all my life. I can take you back to the states and I am sure my colleague Senator Ronaldson would remember that the Cain-Kirner government in Victoria set that state back by $60 billion of debt, and Premier Kennett was left to clean up the mess. He was asked why he sold the electricity company. He got $19 billion for the sale and every cent went to pay off debt that the Labor Party had built up. Perhaps we should look at Queensland's finances now.

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

With $80 billion in debt, a shambles.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Running on a par with Ireland, 4½ million people. The sad thing about this is that Queensland was debt-free for decades. I remember when former Prime Minister Bob Hawke called the tax summit when he won in 1983 and one Sir Joh Bjelke-Petersen said: 'Why don't you be like Queensland and not run deficits?' They laughed at him—a debt-free state and now it is on the point of bankruptcy. But that is what happens when you have no idea about running business so you simply borrow, spend and waste.

Senator Furner interjecting—

It is late in the week and I will not take your interjection, Senator Furner—only for the reason I did not hear it properly.

The most laughable aspect of all this is what Prime Minister Julia Gillard said. This is a big point and it is what the minerals resource rent tax is all about. The Greens have a bill saying we need a bigger cop, but let me quote the Prime Minister for anyone listening:

You can't run this country if you can't manage its budget.

It is a pretty good statement; the words are good. Let us have a look at the reality of what is happening. I reckon at about $10 billion the penny will drop when we get the actuals in September. When we get the actual debt for this financial year in September, because this minerals resource rent tax has only returned $126 million, two things are going to happen. On 14 September we are going to have an election—you beauty, a lot of people say. Two weeks after that we are going to find out the actuals of this year's financials.

I wonder why they plan the election day two weeks before the Treasurer will give the real budget figures of this financial year? A cynic would say it is because there is going to be another big hole; not a big black hole, but a big red hole, a hole of red ink of more borrowings. If all goes well—

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired.