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Wednesday, 26 May 2010
Page: 4231


Mr MARLES (Parliamentary Secretary for Innovation and Industry) (5:34 PM) —It was once said by a great man—it may have even been the great man referred to by the member for Dunkley—‘When my arguments are weak, I always find the best strategy is to speak a little louder.’ And haven’t we heard some noise on the part of the coalition in this debate and the scare campaign that they have run against the Resource Super Profits Tax. The matter of public importance today is:

The adverse impact on small business of the Government’s Resource Super Profits Tax.

I start by saying that the only adverse impact to small business that will arise from this is if the opposition ultimately opposes and votes against the government’s Resource Super Profits Tax. In so many respects, the RSPT is actually designed as a tax program to help small business.

We can start by looking at the smallest sector of the mining industry itself and at the resource exploration rebate. This provides a tax break for mining exploration by increasing the types of activities for which a tax break can be provided in terms of exploration but, importantly, provides that tax break in circumstances where the mining company is in a situation of tax loss, which is often the situation with a new mine getting off the ground. A tax credit is provided in that circumstance. This is a plan that is going to help mining exploration and help new mines get going. Because tax credits are going to be paid in these circumstances—I think the economic lingo refers to the ‘countercyclical’ nature of this tax—the risk associated with mining exploration, which, of course, is one of the key features of that industry, will be ameliorated.

This tax plan will most certainly see more tax paid in times of resources boom but will also see the resources industry being supported when commodity prices are lower. Importantly, this is a tax plan which replaces an existing state based royalty scheme, which is a tax on production, with a tax on profit. It is a far more efficient tax which is charged at the end of the line. You are not charged on the volume of the resource being taken out of the ground; you are charged on the value of the resource being taken out of the ground. If you make less money in mining, you will pay less tax under this program.

If you cut through the scare campaign which is being run by the opposition, you will find that the way this tax program has been designed will see a greater amount of mining exploration under this program. It is designed to put in place assistance for those who are engaged in expanding the mining industry. KPMG Econtech modelling expects that investment in the mining sector will go up by 4.5 per cent under the RSPT, expects that employment in the mining sector will go up by seven per cent under the RSPT and expects that the output of the mining sector will go up by 5½ per cent under the RSPT. When we are talking about small business in a broader sense—small business across the entirety of the economy—the significance of the government’s RSPT is what it will ultimately end up funding. It funds a whole regime which is designed to support small business.

The RSPT will fund a cut in the company tax rate, down to 29 per cent from 2013-14 and down to 28 per cent in 2014-15. But small business gets a two-year head start on that, where it will provide a cut in the company tax rate down to 28 per cent from 2012-13. That is an enormous benefit to small businesses in this country. Importantly, it will also provide a $5,000 write-off exemption for assets. At the moment, small businesses can only write off assets up to $1,000 a year. This will increase to $5,000, which is a huge benefit to the cash flow of a small business. Also, the complex situation at the moment, where there are two depreciation schedules for different classes of assets—one at a rate of 30 per cent; the other at a rate of five per cent—will be collapsed into a single system of depreciation at the higher rate of 30 per cent for all assets except buildings. That is a much simpler program for small business. That is a program that will see much greater cash flow for small business.

We are getting into the detail here. Scare campaigns do not like detail. Scare campaigns like broad statements of rhetoric which do not actually go to the heart of the matter. This is the kind of detail which is absolutely critical to small businesses in this country. The write-offs alone are worth $1.5 billion to the collective bottom line of small business in this country. The RSPT is going to fund greater infrastructure in Australia. For the first time we are going to have a dedicated flow of money into infrastructure—$700 billion starting from 2012-13. That infrastructure will help see the expansion of mining in this country. All of that infrastructure—roads, rail and ports—will be used by the small business sector, and that will see our economy grow. KPMG Econtech estimate that the growth in GDP associated with the RSPT will be 0.7 per cent. That is growth in the Australian economy which will be enjoyed by the small businesses of this country.

Consider the suite of reforms along with other government activities aimed at small business. For companies which have revenue of less than $20 million annually, the R&D tax credit, which comes into play from 1 July this year, will see an effective doubling of the tax concession applied to the expenditure involved in research and development in those small businesses. That expenditure is absolutely critical in driving the kind of innovation which will see the productivity of small businesses in this country increase. That is a really important measure for small business in this country. The stimulus package, which was voted against by the opposition, is currently seeing a whole lot of small businesses—such as tradies around this country—building school classrooms, school halls and trades training centres around Australia. It is keeping this country working. It is keeping small business in this country going. When you combine all of that with what has been put in place through the RSPT, it is fair enough to say that in 2010 the Labor Party is now the party for small business.

By contrast, the Liberal Party has absolutely abandoned small business. The Liberal Party had one policy for small business—and I say that in the past tense—and that was the $1.7 billion small business tax loss carry-back. But in the circus of the budget reply that we saw last week, that one policy that the coalition had to support small business in this country was completely axed. That was in writing. That was not something said on the run that we do not have to believe. That was one of the gospel truths that the Leader of the Opposition told us we can rely on because it is in writing. That was axed. When you look at the opposition’s paid parental leave scheme, which sees a great big tax of 1.7 per cent on everything—which is certainly going to flow through to small business—and look at what it is doing in blocking the RSPT, it is absolutely clear that the opposition has completely let go of small business in this country. It has totally abandoned the small businesses of Australia.

What the opposition have engaged in with this RSPT debate is nothing short of a massive scare campaign. They are saying that this is going to kill the resources sector, but you only need to look at what is happening with Gorgon—the biggest resources project in this country’s history. It has been under the regime of a 40 per cent profits tax. They say that mining stocks are going to go through the floor—they say that during the day—but you only need to look at what the shadow health minister is doing at night: he is busily buying up BHP stocks.

The Minerals Council of Australia—a totally self-interested party in this debate—is showing shameless paid ads predicting doom and gloom, and on the other hand, on this very day, 20 of Australia’s leading economists, who do not have a self-interest in this debate, are saying that this is the right way to go, that this is an efficient tax and that this is what we should be doing. What we really need to see when we come into this place is people taking up the national interest in the great debates of this country, but what we have seen the opposition do is no more than simply being the puppets of the Minerals Council of Australia—not giving us the national interest but just parroting the lies that we see in those paid ads, and we ought to expect better. (Time expired)