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Tuesday, 12 February 2013
Page: 937

Mr IAN MACFARLANE (Groom) (15:48): I must admit I did not learn very much from that. The one thing I did learn, though, was that when we said you cannot rely on income from a profits based tax when you have a royalty system underneath it we were right. We were right. There is no pleasure in saying that we were right except that the government continues to spend money before it gets it. They spend it before they get it. So here we are, six months into the MRRT, $126 million earned—$126 million less the $40 million that the companies would have paid in company tax, less the $50 million that the Australian tax office has already admitted that it cost them to set up this tax, less all the millions and tens of millions of dollars that have been spent by companies on accountants to prove that they do not have to pay this tax—and we have a government that has designed a tax that does not earn any tax.

They brought this tax in in a blinding rush. They were so desperate for money. The world's greatest Treasurer, so-called, decided that the industry would need to pay more tax because, he told the Australian people, they were paying no tax. They are the highest taxed industry in Australia. They pay around 46c in the dollar. They pay royalties of $3.5 billion on top of company tax and on top of payroll tax. What we have seen from this government is, in its rush to grab money because it spends it like it is going out of style, that they have actually designed a tax that does not raise any money.

There are so many flaws in this tax, you do not know where to start. It is a classic, clear example of the complete incompetence of this government when it comes to managing money. How can you fix a mess when you do not even understand how the tax works in the first place? It is a complete dog's breakfast, and the Gillard government has shown it does not understand how royalties work. It does not understand how depreciation works, and it does not understand the cost realities of the resource sector.

The Gillard-Swan team, the Prime Minister and the Treasurer, went in and negotiated with three of the largest mining companies in secret. They did not take their own Treasury people with them. They did not understand what was meant when the companies said, 'We want to deduct all state royalties.' They did not understand what was meant when the companies said, 'We want to value our assets at today's market value rather than net present value or depreciated value or book value,' two of which have two different values already. They did not understand what they were doing and they got absolutely skinned alive. The Treasurer went from a swan to a plucked duck in one day—absolutely, totally done over because he did not understand what he was doing. He does not understand what he is doing now. He does not understand the way depreciation works.

This just highlights the overall incompetence—the total incompetence—of this government. They keep saying we are going to have a surplus. Wyatt Roy, the youngest member of the House, is still waiting to see one in his lifetime. The member for Longman is still waiting, in his lifetime to see a surplus from a Labor government. You wonder why these people cannot produce a surplus: you have only to look at the MRRT.

There is only one solution and that is to scrap it. Even the last Prime Minister of this place, the member for Griffith, intimated today that he has no idea how they arrived at this conclusion. No-one knows; there were no officials there. All we saw was a hurried response to get this issue sorted out before the election. And what has happened is that we have a tax that has damaged our foreign investment profile—our foreign investment rating—so much that now we see Mongolia and Mozambique rating on the same level as Australia. That is not an investment rating.

Dr Emerson: Who were those rating agencies?

Mr IAN MACFARLANE: If you want to go out and have a look at some numbers, I will give you some numbers which show that mining investment—

Dr Emerson interjecting

Mr IAN MACFARLANE: I am talking about mining investment; if the trade minister cannot tell the difference between mining investment profiles and overall investment ratings, again, I guess it just proves my point.

I will use some stats: mining investment in Australia has fallen six per cent to just under 15 per cent of the world's share of investment in mining since 2008 as billions of dollars of extra capital are invested in Russia, India, China and Africa. This is only one of the many things they have done to destroy the foreign investment profile of Australia's resource industry.

Dr Emerson interjecting

Mr IAN MACFARLANE: If the Minister for Trade wants to show me the forward numbers on investment I will be very happy see them, because I have seen them. I have seen the thousands and thousands of jobs that are getting lost in the mining industry, as we speak, as a result of the incompetence of this government.

We have seen a government that has not only introduced a half-baked tax that does not raise any money but, of course, they have introduced a carbon tax which has had a major impact on the mining industry—particularly the coal industry, which has its own issues. This is a tax which they promised. They, the Treasurer and the Prime Minister: the same negotiating geniuses who went in and negotiated a tax with the mining companies that does not raise any money. Those two people, the Prime Minister and the Treasurer, said categorically before the last election there would not be a carbon tax. And of course there is.

There are those over there who think that it is just me saying this about the mining tax. Let me quote to you someone who actually does know a fair bit more about this than me. Paul Young of Deutsche Bank said:

There are so many moving parts in this tax, and so many assumptions about company profits, carrying values and prices, it is near impossible to predict what instalments will be and what the future MRRT will be on an industry wide basis.

He did not have to wait until now to say that. He did not have to wait until February 2013. Paul Young said that in October last year. How right he was. When the Opposition was saying, 'It is reckless and it is irresponsible to be spending the money from the mining tax before you even get it,' we were right; Paul Young from Deutsche Bank confirmed that.

It is not just the damage that has been done to Australia's mining reputation by this tax; it is the damage that has been done to our economy. The government put these figures in its budget. The shadow Treasurer gave the numbers, but it was hundreds of times. Both the Treasurer and the Prime Minister went out there and said we would have a surplus, but of course we have not. Of course we haven't! We know this government can never live within its means. We know this government spends every waking moment working out how it is going to raise more money from taxes so it can make up for its reckless spending.

There is only one solution, and that is a change of government. There is only one solution that is going to restore the confidence of the international resource sector in investing in mining in Australia, and that is a change of government. A coalition government led by Tony Abbott, the member for Warringah, will not only remove the mining tax but will remove the carbon tax. But more importantly we will give investors certainty that every second day we are not suggesting a change to a tax or a new tax. Right now the resource industry is coming and talking to me, not just about the mining tax and what might change there and not just about the carbon tax and what might happen there but they are worried about what taxes may be in the May budget. Will there be a change to the diesel fuel excise rebate? Will there be a change to the thin capital rules? Will there be a change to the depreciation rates on investment assets in resource projects? No-one knows, because whatever the Treasurer says has been shown not to be the case. Whatever the Prime Minister says has been shown not to be the case. Australia and our reputation has been left in tatters by a government that cannot manage money, that cannot even understand how its own taxes work.