Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 22 November 2011
Page: 13224


Mr LAMING (Bowman) (10:45): I thank the previous speaker for a very powerfully read speech, but I will disappoint her by saying we will not be supporting this tax, and for that there is a very simply reason. Apart from during the very unique conditions in the 1970s, when we had the petroleum resource rent tax, it has not been the habit of the Australian government to hack into sectors to try to capture some of the surpluses in one sector, when it looks like it is doing well, to the exclusion of others. Like most countries in the world we have always had an economy-wide income tax, an economy-wide withholding tax and an economy-wide company tax, and that is by far the best way to protect an increasingly internationalised world of trade and commerce—the golden goose that is laying the egg for Australia.

Let us make no mistake about just how important the tens of billions of dollars being generated through the mining sector are to Australia. It is just a little too easy for government to say, 'Gee, wouldn't I love another cut of that.' The bottom line is that if mining is doing well Australia does well, and we reap the benefits. We do not need little exceptional rules for each sector when they are doing well. We do not need to go to the banking sector and say, 'Gee, they were good profits last year. Why don't we hack into that as well?' It is a very simple principle that all sectors have an Australia-wide company tax system, and it works exceptionally well.

I can understand that many in the gallery may well say: 'But it looks like a cheap source of money. There is not much that those big nasty mining companies can do about it. All those profits are being repatriated overseas.' It is almost irresistible to delve into this sector and try to claw back just that little bit more. For what? To help pay for our out-of-control spending, of course. That is the motivation and we know it very well. Everyone knows, and it is no great secret, that this government has never balanced its books. It has never balanced the budget in the time it has been in office. The whole problem with the continual proposition of taxes from this government is that they are only trying to cover up their out-of-control spending. The problem for this government is that every tax they conceive of and dream up never quite covers up their runaway spending.

The great problem for the government as they negotiate this MRRT is that they can see that even by 2019-20 the mining tax will not be large enough even to cover one of their commitments: the increase in superannuation for workers. This will cost $3.6 billion in that year, but the mining tax is projected to raise only $3 billion. Of course, that is a decade away, and we do not need to think about that now. However, this government is not mesmerised, not preoccupied but utterly fixated on dreaming up new taxes to partially cover up their out-of-control spending. It is on this platform that we are having this debate today.

I want to make three very simple points. The first point is that the government is repeatedly referring to these 'non-renewable' resources as if one day we will wake up and they will all be gone—as if there will come a time when we have dug up everything and Australia simply has no more to give the world. Nothing could be further from the truth.

The second point is that it is a misconception that these minerals can only be dug up once. Throughout the history of gold exploration we have seen that once you leave a mine prices change, and the very tailings you have dug up suddenly become a gold mine again. We have no idea what the price of resources will be 10, 20 or 30 years from now. On current levels of exploration and by predicting prices we can arrive at estimates of the life of resources. I will quote the people who know best. I do not need to restrict my comments to just coal and iron ore, which are under consideration in this bill. In 2008, black coal was projected to last for 90 years. Then, in the following year, that figure was revised to 100 years. The projection for brown coal is 4.7 centuries. No-one is saying that we will exhausting those reserves. The notion that we had better capture some of the resources through a rent tax on coal, before it runs out, is completely spurious. Coal will be around in this country long after we have shifted off coal and onto something else.

The third point concerns iron ore. It has an expected 70-year life. In 70 years time, when we are moving into the next century, we will be talking about completely different materials which yet do what iron ore does right now. I do not know what they will be, but one thing I am pretty sure of is that we are not facing a situation where our resources will run out tomorrow. The lives of the other minerals are as follows: bauxite, 85 years; copper, 95 years; lead, 55 years; mineral sands, such as ilmenite from my own electorate, 110 years; nickel, 145 years; and, uranium, 140 years. My simple point is that I do not think we need to panic today that those resources will not continue to be available for a significant period.

What we need to do in these circumstances—and I think most people viscerally get it, even though it is tempting to say, 'We would love a bigger slice of the pie,'—is to say: 'How do we make this pie bigger? How do we guarantee that our kids can get a job in that sector? How do we make sure that the actions of that lot over there do not lead to a simple shift—what we call the internal shift—in investment to other continents where there is no mining tax in place? Where there are two otherwise equal reserves, one in Africa with no minerals tax and one in Australia with a minerals tax, the tax will distort investment decisions. I need to make sure the next big investment in mining occurs here in Australia. I want the next big piece of plant and equipment right here.'

With due respect to the government I would not say that all investment will stop with a mining tax, but there needs to be only a one, two or three per cent distortion—perverse investments resulting from tax and sovereign risk under this government—for the tax to affect the jobs of people sitting up there in the gallery, and their families.

I am not making a hysterical claim that the tax will close the sector down—even the mining companies do not say that. But I do know about the one, two or three per cent distortion that I mentioned. The ability of this nation to supply China and India needs to be allowed to take its own path under the existing income tax rules of the land. Those rules serve us perfectly well. They do not serve a government that cannot control its spending, but they serve everyone else perfectly well. They served every previous administration of this country perfectly well, but not this lot—they are out of control.

The government has more promises to meet and more special interest groups to suck up to, and the only way to do that is to come up with taxing ideas. Typically, with this tax the government is fining a sector that cannot fight back. It is fining a sector about which the average person on the street says: 'Yeah, have a hook at them. That'd be okay. I'd love to get some of their resources. I'd love to capture some of what they've got. I want to do a bit of naked rent seeking on the mining sector. Easy target, aren't they?' That is why we are having this debate today.

As with its promise in mid-2010 on the carbon tax, the government has lost their way on borders and on the mining tax. What we are debating here is, I believe, slightly better than what the previous Prime Minister came up with—but only barely. There has been no consultation with industry and no agreement reached with the states, who, until now, have been responsible for collecting the royalties on mining. Most of the consultation that has been done has been done in secret and has excluded sectors of the mining population, including small miners. Why did the government have to do it like that? Why can't a government simply speak to miners as a whole, speak publicly about the negotiations, take the recommendations of its own Ken Henry and implement them? No, that would be too messy and too exquisitely painful; the government would rather do a deal with the big three before the election and leave everyone else out of the equation. That is a new way of government, isn't it? That is an interesting way to work—leave out thousands of miners or, in the case of iron ore and coal, hundreds of operators.

The thing we ask for as Australians is not consultation so much as the basic principle of engagement: actually coming and talking about the impact the tax will have. If you go and visit a mining site in Western Australia, they will tell you, 'We've never seen a Labor person up here.' Short of someone flying in in a Learjet and flying back out in the VIP jet, do they see Labor members coming up and learning about Australia's greatest export sector? No, Labor members get lost there—they never go there. It is almost as if they do not want to go and talk about it. I respect the fact that there are significant interests involved, and when I talk to people in the street there is some support for a mining tax. But the simple fact is that previous administrations never stooped so low.

The income tax system of Australia was satisfactory for running our economy. I have talked about the one unique exception to that—setting up activities in the North West Shelf at a time when capital was extremely difficult to secure. Again, the federal government is trampling over the states. We know that this is predominantly a Western Australian and a Queensland issue, but the government has been unable to reach agreement even with these Labor states. We are not talking about renegade states from that other side of politics; these are Labor states with which the government cannot come to an agreement on this tax.

People on the other side may be able to cobble together deals and get Independents to support this bill. I can understand that; I can understand that at the most superficial level there is some attraction to seeing big dollar signs in front of your eyes. But I implore the Australian people to see this government for what it is. In fact, they already do see this government for what it is, but I implore them to look even more closely at this issue and recognise in it a government which simply cannot contain its spending, cannot contain its fiscal haemorrhaging and cannot make a truly tough decision about pulling back the money it provides to different parts of the economy to which it feels it owes something.

The government is now effectively holding our federal budget hostage to what state and territory governments do. That is also a significant concern, because this place no longer has the ability to talk about where we will be with a balanced budget in 2013-14. That is not good. Also, of course, the government is basically sucking $25 billion of $38 billion from a single state with no agreement about how best to do it and no agreement about how that state will benefit. I think it is fairly reasonable to ask for an open and transparent process, but N.O.—that has not happened. Has the process been inclusive of small miners? N.O.

Anyone who truly thinks about this tax should really expect better of their own government. The right thing is for this lot to go back and do it again properly. We do not want deals around Chinese restaurant tables in smoky rooms where the government cuts a deal with the big three miners. I would like to have seen the government talk to the Australian miners: the Australians who are domiciled here, the shareholders who actually support the innovative, fast-growing and risk-taking Australian companies. But no—that would have been too messy, so they have been left out.

I think I speak on behalf of many Australians when I say to this government: please get your spending under control. That is the big issue, isn't it? If we could get the spending under control, we would not need these distortionary taxes. It is almost impossible for us to convince those on the other side that mining is in fact an international enterprise. We live in a world of globalised and internationalised trade and commerce—and, of course, mining effort. In no way do the major miners want to remain exposed to the sovereign risk of Australia. They are involved in South America or in Africa. They will simply make internal supply changes and invest in Africa just that little bit more, but those changes will be enough to cost jobs. Never forget that three years ago we were always hearing from Labor members the guarantee that no single worker would be worse off under their extreme laws. These guys cannot make that guarantee for any single worker who is working in any Australian mine as a result of this MRRT. I urge every Australian to wake up to the reality of what is happening over here. We can have lower, simpler and fairer taxes, and they will be delivered by this side of politics. We will do everything we can to draw this government back to the fundamental problem it faces—its inability to restrain its spending.

Debate adjourned.