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Tuesday, 22 November 2011
Page: 13245

Mr BRIGGS (Mayo) (12:10): I rise to speak on the Minerals Resource Rent Tax Bill 2011 and cognate bills before the House. I cannot describe these bills any better than the Senate committee report from the Senate Select Committee on the Scrutiny of New Taxes, compiled largely by Senator Mathias Cormann, who has done an outstanding job in largely revealing the truth about this flawed process and this flawed tax. The report was named The mining tax: a bad tax out of a flawed process.

We all remember the process. The foreign minister particularly remembers the original process, because this was the initiative of the foreign minister and the former Prime Minister when he announced the original version of the mining tax in early May 2010. It was what led to his downfall just seven weeks later. The process that evolved from that has given us this new version of the mining tax. There was negotiation with the then new Prime Minister and several major mining companies—I think it was four of the major mining companies—who sat in a room over a couple of days.

Madam Deputy Speaker Burke, you will remember that there were several things on a list that the Prime Minister wanted to get done before calling an election: stopping the boats, which of course has failed; the East Timor solution, which sank without a trace; and the mining tax was one of the to-do items, and we have ended up with the process and tax before us. It will be a disaster for our economy. Taxing the industry which is performing so well at the moment makes no sense at all.

In the last few weeks we have seen the Prime Minister at several international fora, including here last week with the President of the United States, talking about the Asia-Pacific century and what an important role Australia plays in the Asia-Pacific century. I agree that this is a unique opportunity for our country in the coming years. Probably the major reason is that we have such an abundance of minerals wealth in our country. We are blessed with the opportunities that it provides us.

Those on the other side often say that the minerals in the ground are in the ownership of all Australian people. They say that we all own the minerals in the ground and therefore we should be getting as much from them as we possibly can, which of course is simply not true. The minerals are useless until someone invests a significant amount of capital, takes a chance and employs a lot of Australians to take the minerals out and process them—which, granted, is sometimes done in other countries. They need to go through the process of extracting the minerals in the first place. What this government does not understand is that, if you put more tax in the way of companies and entrepreneurs seeking to do this, you will have fewer people seeking to do it in the first place. We will not always have the unique opportunity of a growing China and a growing India and for our minerals to have such value in a growing world. It reminds me of my favourite President Reagan quote—and he was probably the best President of the United States in its history. The quote could be perfect for this government. He said:

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

The minister at the table, Mr Butler, would have been at many protests in his student union days in the eighties against President Reagan and all the things those opposite now stand for—selling uranium to places like India, and so forth—but Reagan was a great President and summed up this government perfectly.

'Profit' is a dirty word to those on the other side. How dare a company make a profit in an economy! It would be a terrible outcome if a company invested its capital, employed a lot of people, made a profit and paid a lot of company tax and royalties along the way! The other side would say we will have to find a new way to tax it because it is a river of gold and nothing we do will get in its way. That is simply not true.

I think the most damaging aspect of this tax is the signal it sends to overseas investors—which is you can no longer trust that the Australian government will have a consistency of policy approach. The consistency of policy approach in tax in this area has been that the states have always looked after the royalty taxes and the royalty arrangements when it comes to the extraction of minerals in our country. This process seeks to circumvent that to a large degree—and, of course, we have already seen it run into a massive hole because of it, with the states standing up for their constitutional rights when it comes to their ability to tax and raise revenue from the extraction of minerals in their territories.

That leads to the first genuine problem with this tax, and that is that, like the carbon tax, this is yet another tax that the government seeks to implement on the economy—and it does not even pay for itself. It is going to cost the budget more than what the tax will raise. The shadow Treasurer rightly pointed out yesterday in question time, and Senator Mathias Cormann has been saying this for some time, including in the Senate report, that this tax will take less than it will raise. Just like the carbon tax, it will cost the budget more.

This government cannot manage money. It spends more money that it earns. It came to government with a $20 billion surplus, and we are now some $110 billion in net debt and over $200 billion in gross debt. We have two big new taxes being foisted on the economy that do not even pay for themselves. They cost more than what they will raise. That just shows the economic incompetence of this government and its Treasurer, who simply do not understand how these decisions impact on the future opportunities of our country—all at a time when we are seeing Europe in complete tatters because governments for too long have spent too much money, have not taken care of the books and have not ensured their policies are fiscally well costed and that they are sustainable for the future.

Again we are seeing a big black hole in the mining tax, in the bills before the House. There is some $3 billion unaccounted for. I know it is mere petty change to those on the other side, with the waste and mismanagement we see all the time from this government, but it is a millstone around the future of our country, the employment opportunities for people in the future and for businesses to be able to invest with some certainty that the government of the day, the national government, has some competence in knowing what it is actually doing in what the Prime Minister describes as the Asia-Pacific century.

I think the greatest furphy that those opposite are running is that this is somehow good for small business, that there is a great bonus here for small business, with the revenue being raised out of the tax somehow being invested back in tax cuts for small business. This is not quite true, because what the government is doing as part of this process is actually getting rid of the Howard government entrepreneurs tax offset, which benefited the smallest of our businesses—the microbusinesses, the home based businesses, the mums trying to get back into the workforce, people who might have just entered retirement and are doing bits and pieces and those taking a chance on the idea that they have had. We know that those on the other side do not like that, because those people do not join unions. They would much prefer that these people were in a workforce and that they signed up with either the SDA or the 'MISOs' union—as the minister at the table would much more appreciate—than for these people to invest their own money, their own capital and their own opportunity in creating their own future and a future for their children.

The abolition of the entrepreneurs tax offset will cost these people. For those earning, for instance, up to $35,000 in their small business—which is many of them—it will cost them $563 a year. For those earning $50,000, it will cost them about $800 per year. For those people, that is a significant amount of money—all because this government cannot manage the economy properly and they have to find new revenue sources through taxes that will impact on future opportunities. In its place they have an asset offset program. Small businesses need money in the first place to spend to get the benefit of it. Therefore, that so-called tax break does not actually benefit most small businesses, because they do not have the capital in the first place to make those investments—made worse, of course, by a carbon tax which will send their electricity costs, their water costs and their rental costs through the roof. There are all these additional pressures on small business, and these people have the gall to stand there and say that this new tax is somehow going to be an economic paradise for them. Well, of course, that is baloney.

Worse than that, what these businesses will have to face in coming years is higher superannuation payments. We hear much about this great benefit that the additional three per cent will have for working people. Of course, we want people to be saving for their retirement, because we want them to be sustainable in their own retirement. But we on this side of the House believe that people are best able to make their own decisions with their own lives, and we do not think that putting significant additional pressure on small business at this moment and into the future is a good idea at all.

We know that what they have done with superannuation. Through the Fair Work Act they have required employers to put money into union super funds. We know that this is in part building these union super funds and that they are building more and more the percentage take of superannuation investment into union-run industry superannuation funds. This is an additional effort in pushing along that barrow. It is bad policy and it will have a genuine employment effect in the future.

It will either reduce wage increases, because businesses will not be able to pay, or—and I fear, more likely—businesses will have to foot this bill. This will yet again—like the state based payroll taxes, stamp duties and so forth which restrict the ability of a business to employ so much—be another employment disincentive now and into the future. We want people to be able to get opportunities. We want people to take their own opportunities with their own capital, with their own investment and with their own abilities. We want people to take a chance in their economy by starting their own small business and investing in their own small business.

Every step of the way, this government is putting hurdles in their way. Whether it is reregulation of the workplace, which I have mentioned in this place on a couple of previous occasions, or whether it is increasing taxes, which is increasing the amount of superannuation they will have to make for their employees, someone has to pay.

We are seeing in Europe right now that there is no magic pudding; there is no money tree at the top of Parliament House; the flagpole is not some sort of revenue channel which brings money down from the heavens and distributes it amongst the economy. Someone has to pay. The taxpayers pay their taxes and the government should spend that money wisely. Unfortunately, this government does not understand how to do that and they are therefore looking for way after way of implementing new taxes.

This is a bad tax out of a bad process, a process which cost one Prime Minister his job and is adding to the reasons that this Prime Minister is so unpopular in the electorate. People cannot trust this Prime Minister. They cannot trust this government. The government is spending far too much money. They are spending Australia into debt. They are burdening the economy with bad taxes at a time when we should be freeing our economy to take the advantage of the great opportunities that come out of the growth in China and India. The worst thing that we should be doing is trying to tax the strongest industry. We should be encouraging other industries to be like the mining industry and take these opportunities while they are there. We are opposed to this tax because it is a bad tax with a bad process to get there. We stand opposed to it and we will continue to stand opposed to it.