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Thursday, 13 May 2010
Page: 3536

Mr CHAMPION (2:02 PM) —My question is to the Prime Minister. How is the government reforming the economy to secure Australia’s long-term prosperity?

Mr RUDD (Prime Minister) —I thank the honourable member for his question. The government is indeed committed to making major economic reforms to make the economy stronger and to build a fairer future for all Australians. As I travel round the country, what families want is an ability to work harder, save more and give greater opportunities to their kids. On top of that, they want something to look forward to for their retirement. The No. 1 priority which delivers on the above is to make sure that we are building the foundations of a strong economy. The government, through the budget and in actions taken earlier, is doing this in three specific ways. Firstly, we took strong and decisive action to keep Australia from falling into recession during the global financial crisis. Secondly, we took strong action in the budget to bring the budget back to surplus three years early and to bring it back to surplus before any other major advanced economy in the world. Thirdly, we have built a program of reform to set up Australia for the future.

On the question of reform, we must ensure that we are building strong foundations for the future. The Leader of the Opposition just made reference to the Secretary of the Treasury. In his tax review, the Secretary of the Treasury told the Australian people that we face a challenge in terms of the long-term competitiveness of our companies. That goes to the decision that we have taken in response: ensuring that we bring the company tax rate down. In the past, under the previous government we saw the rate remain static, with Australia among the least competitive nations across the OECD. Now it will fall in the centre ground of the OECD.

The Secretary of the Treasury also told us that Australia needed to boost its national savings. In response to that, we have done two things. Firstly, we are cutting the tax on bank savings. Secondly, we are also boosting superannuation for all Australians for decades and decades ahead, lifting the overall pool of national savings. We are also investing in our nation’s future infrastructure, not just through the $22 billion package contained in the statements made by the infrastructure minister on budget day but through building a further $5.6 billion fund over time to build roads, rails and ports and provide the future foundation stones for long-term economic growth.

Twenty-five years ago, when the Hawke Labor government introduced the petroleum resource rent tax, the Australian people and the Australian economy got behind that major reform because it was able to facilitate long-term and decent stability in the taxation system for our offshore resources. Most critically, it provided a fairer share for all Australians. That is what we seek to do with the resources superprofits tax.

Again I go back to the recommendations of the Secretary of the Treasury. He has recommended that what we need to do is to reform the way in which our resources onshore are taxed. He said that we need to replace the patchwork of existing royalties right across the states with a better system. He said that we need to have a system which does better than royalties, which are based on volumes not profits. That means that less profitable mines pay as much in royalties as more profitable mines at present. Furthermore, royalties discourage the development of minerals deposits with larger extraction costs. This is the reason why within the industry we have had such a strong level of support for changing the overall regime. Furthermore, royalties are not flexible enough to adequately share the benefits of the boom. Royalties are based on volumes not profits, and they have not been keeping pace with the mining boom. Bear this in mind: royalties have gone from taking $1 in $3 in mining profits 10 years ago to taking $1 in $7 in mining profits today.

Furthermore, the resources superprofit tax is a better way to share the profits of Australia’s natural resources with all Australians. That is why we, the government, are embarked upon this fundamental reform—because this will enable major infrastructure projects to proceed. It will enable, on top of that, a way to fund the superannuation earnings of Australian workers; a way to fund the future tax cuts for all Australian companies, including small businesses; a way to fund the changes that take place when it comes to taxation simplification proposals for 6.5 million Australians; and a way to fund the new taxation treatment of Australian bank deposits.

This is about not just delivering a reform to the mining industry which independent modelling demonstrates will boost activity, but building a fairer Australia for the future. This reform is good for the economy. This reform is good for the mining industry. It is also good for building the foundations of a fairer Australia for the future, because this government and this party in government believes in building a strong Australia, a secure Australia, a fair Australia—an Australia which will provide a proper future for our children.