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Tuesday, 22 November 2011
Page: 13264

Mr EWEN JONES (Herbert) (13:31): I rise to speak on the Minerals Resource Rent Tax Bill 2011 and related bills, including the Superannuation Guarantee (Administration) Amendment Bill 2011. I will just pick up from the member for Braddon. He is a good bloke, and he is sitting there saying that this new tax on the mining industry is not only a tax but an incentive and that they should be feeling great about it. Honestly, it is the same as the carbon tax. Nine out of 10 households are going to be better off, and what do they say? Give us three or four of them. Give us a half dozen of each. Load us up and, before you know it, we will all be rolling in the money.

This government has taken a bad idea and managed to make it worse. This is a tax on smaller and emerging miners and a tax on development. This is a tax that allows the three biggest mining companies to write government policy in return for giving this bad government a free ride at the last election. This overtax and overspend government, as the member for Mayo said so correctly in his great speech in here, simply cannot handle money. The popular spending agenda they have tied to these bills is completely ignorant of the revenue that this tax will generate, adding around $20 billion to the deficit in the long run—on optimistic forecasts. And the spending is locked in even if the optimistic forecasts do not come to fruition.

Treasury estimates for the MRRT revenue have jumped between extremes of $7.4 billion and $24 billion. This should be a warning sign of just how volatile international resource markets are. Resource prices are at a record high at the moment, but this will not always be the case. With economic turmoil in Europe and sluggish economic conditions in America, Britain and elsewhere, there are far from any guarantees that the good times will continue, yet that is exactly what this government has assumed when spending the MRRT revenue. Even if everything does go according to plan, we know this boom will come to an end. Both the Reserve Bank and Access Economics have stated that their beliefs are that commodity prices have already hit their high water mark and are in decline. This has fallen on the deaf ears of this government. As the boom finishes up and revenue from this tax drops, the spending does not. In fact, the cost to the government of the proposed superannuation increases will only begin to take full effect as the mining boom and the tax revenue starts to wind down.

This brings me to the false claim that the government has been making about superannuation. Let me be very clear about this: neither this tax nor this government is paying for superannuation increases for anyone other than government employees. It is employers who will be paying for the vast majority of workers. This is despite the Labor Party's endless bragging about providing a super increase for all Australians. I think every member in this House will get a phone call from people saying: 'How are we getting this? Who is paying for this? Is this mining tax really going to fund my super increase?' No, it is not.

At every stage of policy formation the Labor Party has managed to mess this up. They have ignored the Henry tax review recommendations to use superprofits to replace royalties. We have seen a Prime Minister backstabbed over this tax. We have seen the Labor Party antagonise an industry that propped up our economy during the GFC. We have seen them make a rushed, behind-closed-doors deal with only the three big mining companies to keep them company, and the whole purpose of that was to keep them quiet during an election campaign. We have seen them make yet another change to the policy that further punishes smaller miners to benefit the three biggest mining companies, which were given exclusive negotiations. It has been blunder after blunder after blunder on policy that should never have seen the light of day in the first place.

This is not just a mining tax. This is a targeted tax aimed directly at the small and emerging miners, and that is how it was designed to work. There were 135 recommendations in the Henry tax review that this government completely ignored. One of them advocated a lower tax burden on smaller mining ventures to foster them and to help struggling businesses survive. Instead we have a government that now wants to throw the burden of a new tax on these emerging miners to benefit the three big mining companies in the industry. And is that any surprise when they refuse to negotiate with anyone from the industry other than the executives from the three big mining companies? There are around 3,500 companies in our mining sector, and the government would only listen to three of them. Not even Treasury officials were allowed at this behind closed doors meeting. It is clear that an absurd negotiation process like this one could not be anything other than a purely political stunt. They were looking not to improve this tax but to give Rio Tinto, BHP and Xstrata whatever it took to end their advertising campaign during the election. So how much tax will these big mining companies be paying after this top secret meeting? According to a BDO study of BHP and Rio Tinto, neither of them will have to pay a cent of this tax for the first five years. This leaves the small and emerging enterprises to shoulder the burden of this tax's revenue.

It is outrageous that this government can justify a carbon tax, because they are only going after the big polluters—an absurd excuse in itself as everyone will pay—and then turn around and negotiate a mining industry policy with only the three biggest mining companies. There is more to the mining industry than BHP, Rio Tinto and Xstrata. To restrict industry negotiations to just three companies is anticompetitive and will serve to only further entrench their dominance. The Labor government has claimed this tax will allow all Australians to get the benefits of the mining boom. How does burdening small businesses help us get the benefits of the mining boom? How does discouraging new companies from entering the industry help us get the benefits of the mining boom? That those on the other side genuinely believe this is good for Australians is a sober reminder of how out of touch this government is with Australia's mining industry.

The government has labelled this a superprofits tax. I strongly object to the principle that we should tax companies for being successful. Where does that end? Should we put the handbrake on every part of our economy that is doing well? Only this Labor government could take a thriving industry, which employs over 180,000 people directly and 600,000 indirectly, and see nothing but a money grab. These bills are yet another sign that the Gillard government is taking the mining industry for granted. It was the mining industry and China's demand that pulled us through the GFC with minimal damage. We need to see this boom as an opportunity to foster growth in the industry, not an opportunity to cripple it with taxes. This is tall poppy syndrome at its absolute worst. It attacks our egalitarian ideal that, with a bit of hard work, anyone can be successful. Instead, the Labor Party is looking to punish mining companies for doing so well.

Make no mistake: this is just the beginning. Already we have the Labor Party's partner in government, the Greens, looking to expand the tax to gold mining and uranium mining. The Prime Minister had barely announced that Labor would reconsider uranium sales to India before the Greens decided to add that to the mining tax bandwagon. On top of that, Senator Bob Brown, the Greens leader, has made it clear that he thinks the tax rate should be set at 50 per cent. Given that they seem to be the ones calling the shots, it is only a matter of time before we are back here debating another blow they want to inflict on Australian mining.

We operate in a highly connected world. Multinational mining companies can easily move their investment focus to other resource countries. Canada, South America and a range of African countries are not blind to this reality. They eagerly await the opportunities for their own mining sectors that a superprofits mining tax presents. At the moment we are considered a safe place for mining companies to invest, but we cannot take this for granted. This mining tax will serve to reduce our international competitiveness in attracting further investment. Surely the Labor Party are not naive enough to think that we are the only resource-abundant country. The advent of ships with 300,000- and 400,000-tonne capacity has largely removed our greatest competitive advantage: proximity. Those ships bring a real economy of scale.

In pursuing this tax agenda, the government has continuously spread the idea that the industry does not pay its fair share of tax. Of course, this is a complete furphy. The industry already pays corporate tax, payroll tax and royalties. In 2010-11, mining companies were paying in excess of $23 billion. That includes close to $15 billion in company tax paid to the federal government and around $2.6 billion in royalties revenue for my state of Queensland.

That brings me to my next point. Our Constitution outlines that resources are owned by the states, not the Crown. If the government believes that mining companies do not pay their fair share of tax—and I certainly do not agree with that statement—then it is up to each state government to re-examine the rate of royalties; it is not up to the federal government to put a new tax on state government property. The states are already overly reliant on distorted and discriminating taxes such as payroll tax and stamp duties. Now the federal government is seeking to further take over state responsibilities by looking at taxing state property, and they are doing this without having consulted any of the state or territory governments. How can you pretend to have real minerals tax reform without even including other levels of government in negotiations? That, my friend, is a furphy.

It is hardly a surprise to have Ken Henry confirm that they also did not consult anyone on the constitutional validity of the MRRT. Maybe, if there had been some intergovernmental communication, the federal budget would not now be held hostage to state government decisions on royalty rates. This poorly constructed package promises mining companies full reimbursement for state royalties. We have already seen the state governments in Western Australia, New South Wales, South Australia and Tasmania move to increase their iron ore and coal royalties to the $3 billion detriment of the federal bottom line, and that is just the beginning. The spending keeps on going.

If this government wants to enhance the benefits of the mining boom, it should help the industry, not hinder it. The CopperString project in North Queensland is a perfect example of how this can happen. The north-west minerals province is rich in mining opportunities that would stimulate the region's economy, but vital infrastructure like CopperString is needed to provide power to this area. Instead, with the project at risk in recent weeks, we have seen the government refuse to come to the table and make this possible. This government is not capable of making the most of our mining boom. All it wants to do is tax enterprises and ignore vital infrastructure projects. That completely ignores the possibility of renewable energy and renewable energy targets being able to feed directly into the national grid. If the government wants to be serious about tax reform in Australia it is not too late, but a true transformation of our minerals tax base has to come on the back of transparent discussions with every group affected. It must coordinate all levels of government and it must be driven by policy outcomes, not political ones. The minerals resource rent tax is the product of behind-closed-doors negotiation between just three of the mining companies involved—a negotiation undertaken purely to make sure that a public relations campaign that sank one Prime Minister would not sink another one.

I do not support poorly designed, politically motivated, quick-fix taxes, and I certainly do not support this one. I have no mining in my electorate, but I have miners. I have airlines that fly them in and fly them out. I have engineers who produce equipment for them. I have caterers who feed them. I have schools that educate them. I have a port that takes care of their equipment. I have a railway that takes care of stuff. Every part of my community is part of their success or failure. Hamstringing them with the mining tax is like asking Don Bradman to bat left-handed just to make more of a game of it: 'Don, it's not fair that you're so good. What we should be doing is making it more fair.' They killed Phar Lap; let's not kill the mining industry.