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Tuesday, 22 November 2011
Page: 13210

Mr SYMON (Deakin) (09:45): I speak in support of the Minerals Resource Rent Tax Bill 2011 and related bills, including the Superannuation Guarantee (Administration) Bill 2011. The MRRT is a tax on the economic rents miners make from some of Australia's mineral resources—specifically, iron ore and coal. It will be applied at a rate of 30 per cent to all new and existing iron ore and coal projects. An extraction allowance of 25 per cent recognises the miners' use of specialist skills in the extraction of these resources. Companies with MRRT profits of less than $75 million a year will not pay the tax and miners with profits of between $75 million and $125 million will benefit from a partial reduction in their liability. Small miners investing to grow will also benefit from the immediate deductibility of upstream capital investments and will only pay the MRRT after a project has made enough profit to pay off these upfront investments.

The MRRT is being introduced in an era when the mining industry has been receiving historically high prices for Australia's resources. When you look at the trends and the movements in these prices it is quite extraordinary. For example, in September this year the price of iron ore was $177 per metric tonne; 10 years ago, I am told, the price was $12 a tonne. As recently as December 2007 the price was $36 a tonne. This massive increase in the price of iron ore has sent company profits through the roof. The net profit margin on iron ore to December 2010 was an astounding 48 per cent compared to an across-the-economy average profit margin for business of around eight per cent.

When you look at the effect this price rise has had on mining company revenues the figures again tell the story. In the six years to 2010 gross mining profits have risen around 250 per cent—from $25 billion to $88 billion. As an example, BHP Billiton made a profit of $4 billion in 2001 but 10 years later, in 2011, the company made a $22.5 billion profit. Only four companies in the world have ever made so much profit in a single year; the other three were multinational oil companies. And BHP Billiton produces oil as well.

The MRRT is designed to ensure that the massive wealth being generated by the sale of minerals such as iron ore does not go just to the private companies that mine the resource. Large miners, especially the two largest miners in Australia, have substantial foreign ownership. That means much of the record profit is actually heading overseas. And local miners are also gaining record profits from the sale of minerals. Gina Rinehart, the sole owner of Hancock Prospecting, is now Australia's wealthiest person. She is personally worth US$9 billion. And her fortune, made from the mineral resources of Australians, has climbed from US$2 billion to US$9 billion in the past 12 months alone. That is a US$7 billion jump in her net worth in one single year. In June 2011 Citigroup estimated that she is on course to become the richest person in the world. On this trajectory Citigroup expect her to overtake Carlos Slim, the Mexican magnate worth US$74 billion, and Bill Gates, worth US$56 billion, mainly because she owns her company outright. To quote Citigroup: 'It is possible to see Rinehart's portfolio of coal and iron ore production spinning off annual profits approaching US$10 billion, giving her a personal net worth valuation of more than US$100 billion.' On current projections, that will soon make her the richest person in the world.

Gina Reinhart has been very outspoken about the MRRT, speaking publically on the issue at every opportunity. In a recent article in the Australian Resources and Investment magazine, she talked of the need to attend rallies against the MRRT and to write to your local MP to oppose the MRRT. But I do not buy the story of a poor billionaire standing on the back of a ute whingeing that they pay too much tax. If anything, behaviour such as that should lead to the question of why there isn't a super tax on billionaires in this country.

Gina Reinhart also talked about the importance of slashing 'time and money wasting approvals permits and licences' and the urgent need to import short-term guest labour from Asia and India. Whilst people like Gina Reinhart gobble up Australia's minerals and grow ever-fatter profits, most of this bounty does not find its way to the ultimate owners of these resources, the people of the states and territories of Australia. I can only imagine that her passion and fight to halt the MRRT boils down to the impact it will have on her trajectory to becoming the richest woman in the world.

Another local beneficiary of the mining boom is Andrew 'Twiggy' Forrest, from Fortescue Metals, a person who claims to be a 'small miner', whose personal fortune soared from $US4.1 billion to $US6.9 billion in 2011 due to the soaring share price of Fortescue Metals Group. This is a company that has never paid any company tax. Mr Marcus Hughes, Head of Tax, Fortescue Metals Group, made that admission to the Standing Committee on Economics inquiry into the MRRT. He said:

We have not cut a corporate tax cheque to date, no.

Andrew Forrest has called the MRRT 'un-Australian' and 'unconstitutional'. The word 'un-Australian' is much overused as a descriptor of behaviour, but I certainly think greed is an un-Australian trait that trashes the ethos of a fair go. This is the sort of greed that we have seen from miners. In August this year Fortescue Metals announced a profit result that increased 76 per cent from the previous year, based on a 69 per cent leap in revenue to a total of $5.44 billion, yet they did not pay any tax on that profit. Try explaining that to a worker on the minimum wage who pays their tax every week, every year.

These profits are generated by the extraction of Australia's natural resources and I think it is responsible to ensure that those resources are carefully managed and the people of Australia receive a fair return for their resource. As we all know, they can only be dug up once and they can only be sold overseas once; you do not get a second chance. There has been research as to how long the boom will last, how long the resources will last. Some estimates say that identified iron ore reserves at the current depletion rate will be gone by 2036.

The MRRT gives all Australians a fairer return on these national assets while they are being extracted. The MRRT will be used to help support all businesses, and in particular small business. A tax cut of one per cent for all of the 2.7 million small businesses, commencing 1 July 2012, will help to support businesses that may not be doing as well as the mining companies of the Pilbara. The MRRT will help fund a $6,500 instant asset write-off, which means small businesses can immediately write off each and every asset purchased up to this amount. This tax write-off will help small business invest in growth and will assist suppliers and the manufacturing industry, through new capital orders. The wider one per cent tax cut for Australian businesses is a great example of how we can use the benefits of the mining boom to support all companies.

The MRRT will also be used to deliver a historic reform to every Australian's retirement savings. From 1 July 2013 employer superannuation contributions will be progressively boosted from the current nine per cent to 12 per cent. This reform will mean that a 30-year-old worker today on average earnings will retire with an extra $100,000 of savings. And for those entering the workforce at the age of 18 today, they will be better off by nearly $200,000. The Australian superannuation sector is one of the great successes of government action in Australia with over $1.4 trillion of funds sitting in the world's fourth biggest pool of super funds. Compulsory superannuation was introduced by Labor in 1993, and the latest reform to increase superannuation to 12 per cent will ensure that the average worker has substantially higher superannuation when they get to their retirement. That is a very important thing. This initiative will boost the super savings of 8.4 million Australian workers by $500 billion by 2035.

The MRRT also makes it possible to deliver fairer super concessions for the 3.6 million low-income earners who currently get little or no concession on their employer superannuation contributions. The government will end the taxation of superannuation contributions for any worker earning less than $37,000 per annum. These workers can least afford to have their super savings being taxed. By removing the 15 per cent tax on their superannuation contributions, the end result is that their superannuation balance will be boosted. The government has also announced that the superannuation    guarantee will be paid to a worker who continues in employment beyond the age of 70 years , which is a very commendable move as more and more people work later into their lives. In addition, the MRRT will fund billions of dollars in new roads, bridges and other critical infrastructure. Much of this infrastructure will benefit the regions where the resources come from and where the workers and their families live, generating work and income for these communities.

The mining industry in Australia will continue to make record profits and create work. One only needs to look at the massive $430 billion pipeline of investment in the mining sector, including $82 billion this year alone, to see that the industry has great confidence in the future. The MRRT follows great Labor initiatives I have spoken about such as compulsory superannuation, which, I might remind people, the Liberal Party voted against when it was introduced and until recently they have been against any change to it. I have noted a sudden conversion in the last week.

Years from now the community will benefit from gaining a fairer share of our country's mining riches. Industry bodies support the change from a royalty based scheme to a profit based scheme. It appears that the only opposition to the MRRT comes from the coalition, which always says no to anything that may benefit our country, and from the vested interests of the big miners. I commend these bills to the House.