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Wednesday, 24 September 2008
Page: 5560


Senator MILNE (6:30 PM) —I rise tonight to support the proposed end to the exemption on the tax on condensate and to say that I am very pleased that the free ride has come to an end, because that is what this has been for a very long time—a free ride for this industry. Before I hear any more people here telling us how hard it is going to be for Woodside and for the other multinationals on the North West Shelf, I would like to remind the House that on 28 August this year Mr Voelte, the CEO of Woodside, announced a record half-year profit of $1 billion. Then we hear, ‘Oh dear, the industry cannot pay its taxes.’ What is more, we hear that the industry is doing it so tough that it is going to have to pass on the additional costs to householders, except that that claim by Mr Voelte was contradicted in evidence to the Senate Standing Committee on Economics by the chief executive of the North West Shelf Venture, Eve Howell. Asked whether the tax rise would be passed on, she said:

What I can say is that our current domestic contracts are in place and will be honoured.

And on and on it goes. This is an argument about equity. I could not agree more with Senator Cameron, and I note with interest the remarks by Senator Cash earlier in relation to Western Australia’s pensioners. I want to talk about Western Australia’s pensioners and the nation’s pensioners. I want to talk about Western Australia’s public schools and the nation’s public schools. I want to talk about health funding around the country—in Western Australia and everywhere else.

I would like an answer from the coalition to the question I put to them last night in relation to the luxury car tax. If you oppose the imposition of taxes, where are you going to get the money for the $30 rise in the pension? Where is that money going to come from? I did not get an answer from the coalition last night. I asked them: do you intend to spend the surplus? Is that what your intent is? If so, let’s hear it. Let’s hear where the money is going to come from, as they are big on wanting to deliver services and grandstanding on what might impact on pensioners.

The reality is that if a nation is to have the consolidated fund capacity to deliver services around the country the money has to come from somewhere, and the money ought to be coming from those who can afford to pay, especially when those who are making megaprofits are doing it from the nation’s resource. It is not a privately owned resource. These are global commons we are talking about here, and in this context they are Australian commons. These companies have been given the privilege to exploit part of Australia’s wealth and, in return, they ought to return an appropriate amount of revenue to the public purse so that we can deliver services which make us proud as a nation, which give our young people the opportunity to meet their full potential, which address the issues in Indigenous communities, which provide health care in rural and regional Australia and which will allow us to roll out public transport around the country. It is not as if we do not have an arms-length list of all the services that we need to deliver. Yet we hear from Mr Voelte that, in spite of the fact that they made a record half-year $1 billion profit, the company cannot afford to pay. On the contrary, this company can afford to pay and the other multinationals up there can afford to pay as well.

It is absolutely laughable to think that we are still giving this subsidy. It was given in the first place as a form of infant industry assistance and that status has long gone. How ridiculous to imagine that a subsidy you got for industry development should still apply to a company which can announce a record $1 billion half-year profit. The point is that when you give subsidies like this you take away from others. We should be making the transition to the low-carbon economy. In that transition to a low-carbon economy, those companies, especially those that are exporting natural gas, are the ones who are going to make megaprofits in the short term, because it will be seen as a transitional fuel. I would argue that we need to be rapidly moving to the renewables. Nevertheless, there is no scenario in which Woodside could convince anybody that their future prospects are for anything other than having absolutely golden dollars rushing in for them. There is no other way that you could look at it.

On the other hand, those renewable energy companies which do need the infant industry assistance now are told they cannot have it because we would prefer to continue to subsidise those making multibillion-dollar profits. How ridiculous is that? We are seeing some of our best innovators go overseas because we apparently cannot afford to commercialise solar energy. Companies they are going off to Germany for example. Solar Heat and Power have gone to California. We are told there is tremendous potential in wave power and in geothermal. We know that we have got the potential to go there. These are the infant industries that need the same kind of assistance that was being talked about 31 years ago for the LNG industry, which was the whole purpose of this subsidy in the first place. I am a supporter of developing and bringing on Australian innovation and commercialising it here to the public benefit. But if you are going to do that you have to have an industry policy which phases out that assistance and brings it on for other things that are coming on line.

That is why, for example, I am a strong supporter of a national gross feed-in tariff for renewable energy. I recognise that in the early stages you have to provide a framework which will enable people to take up the technology. But my bill, in terms of the feed-in tariff, allows the minister to set the tariff so that it can be changed over time to reflect the extent to which the various technologies become commercialised, are rolled out and are profitable, so that they do not continue to experience the same level of support over time. That is the most logical and rational industry policy. But, no, what we hear from the coalition is, ‘We must reduce company taxes, we must reduce income taxes, we must protect the wealthy from any luxury taxes at all and we must continue to subsidise the fossil fuel sector’, whilst at the same time saying, ‘We support small government. Let the market decide.’ It is interesting, isn’t it? We hear ‘let the market decide’ every time, until we hear that the subsidies might be taken away. If you took a very hardline economic view, you would take away all subsidies from these industries and say, ‘Let the market decide.’ But, no, when it comes to the privileges that these companies have had, to the detriment of the taxpayer and of the delivery of services, what do we get? We get; ‘Let’s keep the handout.’

What is even more disgraceful in the case of Woodside, in particular, is that, at the very same time that they are saying that they do not want to lose this free ride that they have been given over many years, they also want another free ride in terms of climate change. At exactly the same time as Mr Voelte was out in the media saying how dastardly it was to take away this industry assistance program from his multibillion-dollar-profit company, he was also saying that, in climate change terms, Woodside should be exempted from any costs associated with carbon trading and, at the very least, be given free permits. I say: why? Why shouldn’t the fossil fuel industry pay in the manner in which they need to pay in order to get the transition to the low-carbon economy? The ideal scenario, actually, is to remove all subsidies from fossil fuels and shift those subsidies to those infant industries which need to be rolled out, which need to create the jobs in Australia and which will create the jobs in Australia but which are actually creating many more jobs overseas because we have not put in the enabling legislation here. We should be shifting those fossil fuel subsidies.

For the benefit of the Senate, I would like to refer to a report that was done that showed that the total energy and transport subsidies in Australia—this was in 2005-06—were between $9.3 billion and $10.1 billion. I will repeat those figures, because it is extraordinary that this community should be subsidising the fossil fuel industry in Australia to the extent of $9.3 billion to $10.1 billion. What would it do for the pension, for public schools, for public health or for a public transport system in Australia if we removed those subsidies from the fossil fuel producers? Why should we do it? Firstly, because of the climate imperative to move to a low-carbon economy and, secondly, because if we are going to respond to climate change then we have to be able to invest the money in those technologies which will get us into the future and out of the fossil fuel economy that we have.

We hear from the coalition, particularly the Western Australians, about how it would be a terrible thing to increase the resource tax—the rental, if you like—for a public resource; this is, as we said, the Australian commons. But I would just like to remind the Senate that in the Western Australian election we had the Liberal Party in Western Australia saying that they were going to increase mining royalties. Can you believe that? That seems to be a little inconsistent here. You have the Liberal Party in Western Australia saying that they would be prepared to increase the mining royalties in that state—and good on them; so they should. In the middle of a commodities boom, when those companies have made so much money and are going to make even more—because we know about the global demand for commodities and for petroleum based products as the world responds to peak oil—the Western Australian Liberals had the good sense to say, ‘These companies are not paying enough for the public resource and should pay more,’ and good on them. What a pity that we do not have the same level of consistency with the national representation in this Senate from the Liberal Party from Western Australia as we clearly have from their state Liberal Party colleagues.

When the new Western Australian government takes on the treasury bench, it will be very interesting to see whether they think they have enough money for public health, public education and so on, because, interestingly, Western Australia will be compensated under this arrangement. If everybody is going to suffer so much in Western Australia because we get rid of this concession, how do you account for the fact that there is going to be money compensating Western Australia for loss of revenue in relation to this particular bill? I have not heard so much nonsense in a long, long time. Talk about fiscal irresponsibility!

I heard Senator Cameron say that Senator Abetz, for example, had said in the committee that no-one should pay any tax. I wonder what economic school that comes from. It is the Fannie Mae and Freddie Mac school of economics that the coalition are obviously graduates from. It is: take as much as you can, set up the most deregulated financial market that you can, get the government out of the way and maximise the profits. Then fall in a great big heap and take everyone else down with you and go to the President and say: ‘Let’s have some money to bail the country out of this mess. Let’s nationalise the mess that we’ve made.’ That was the solution, and that is the completely discredited economic world view of the old economic rationalist. If anyone here is old fashioned in terms of an economic analysis or an appropriate economic model, it is those who have argued for deregulation and small government. In terms of the level playing field, it is hypocritical to stand up arguing time and time again against the progressive technologies on the basis that they should stand on their own feet and not be subsidised and, at the same time, to spend between $9 billion and $10 billion on subsidies for the fossil fuel sector, which has never been making greater record profits than it is right now.

So I am pleased that the government has taken this on. I am pleased to be standing here for the Greens today supporting the getting rid of this exemption, which has no place in trying to get an equitable distribution of resources—an equitable regime whereby we tax those who are renting the public resource from us so that we have the money to invest in the services that this country needs and so that we have industry assistance money to assist genuine infant industries and take them to the next stage.

I am also pleased to be saying that we should be moving out of the fossil fuel subsidies. My only concern about the way the government might spend this revenue that we are getting through this change—in getting rid of this free ride, this subsidy—is that it may become a revolving door. I suspect that that is what is going to happen: that Woodside will be over here saying: ‘You’re taking away that much money from us. We want the same amount of money back in terms of free permits under an emissions trading scheme, we want exemptions—as many as we can get—and we want as much money as you can pour in for carbon capture and storage or anything else we want to spend money on.’ Companies will expect the government to come back and, under the low emissions technology program, under the Prime Minister’s carbon capture and storage hub program, to have the money come in one side of the revolving door and go straight back out to the very same companies that the government is taking the money from.

I just want to put the government on notice here. There is an obligation to spend the revenue raised on the services that Australians want, need and deserve. If we are going to be a country which prides itself on the fair go—if we are going to be an egalitarian society—we need to raise revenue from those who can afford to pay in order to spend it on services so that everybody in Australia gets a fair go and everybody has decent health and education services. I am very interested in Senator Cash’s concern for the pensioners of Western Australia, so I particularly put to her: where is the coalition going to get the money from to increase the pension? I think it is a really important question if you are not prepared to raise revenue through taxation measures—through getting rid of a fossil fuel subsidy; a free ride that has gone on way too long.

There have been changes made to this subsidy over the years. One of the changes was meant to result in about $77 million and it ended up with a windfall gain of $1 billion. For all Mr Voelte’s talk, did he ever reduce the price of gas to the people of Western Australia when Woodside was making record profits? Did he go up there and say, ‘We no longer need to charge you so much because we are making so much’? Of course not. But now, of course, he wants to pass on to the pensioners of Western Australia the full costs that Woodside might incur. So if you are genuinely concerned about pensions, if you are genuinely concerned about public education and public health, then either support getting rid of this free ride to companies making multibillion dollar profits, or at least have the decency to tell this parliament where the money is going to come from.

You are not responsible in economic terms unless you are prepared to recognise that, for expenditure to occur, you must raise revenue. I would also be interested in the philosophical view of the coalition on what principles should underpin the raising of revenue. I have not heard that from the coalition at all. All I heard is that we should have lower company tax lower income tax and we should continue the subsidies to multibillion-profit-making firms. I have heard an occasional afterthought about pensions, schools or hospitals but it is really just a token gesture, because if you look at where the real money goes you find that the real money goes off to multinational companies owned outside of Australia, largely, with shareholders overseas raking off megaprofits to the detriment of our children, our frail aged and our communities.

Debate interrupted.