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Tuesday, 22 November 2011
Page: 13319

Mr ALEXANDER (Bennelong) (17:23): In just over a week's time we will celebrate the 157th anniversary of one of the most infamous episodes in the history of our nation. The date 3 December 1854 will be forever remembered as the day of one of the most significant domestic conflicts. Many historians now consider this event to be the birth of democracy, as it led to a big step towards universal suffrage. The event is, of course, the Eureka rebellion: an organised movement of civil disobedience by miners in the goldfields of Ballarat, protesting against the crippling effect of increased taxes and the burden of regulation imposed by government authorities.

The miners, mostly small operators, found they were dealing with authorities that would not listen and did not care. So they stood their ground. They built their stockade. They defended their rights, kind of like on olden day 'Occupy Ballarat' movement. The result was an assault by armed troops using the most uncompromising methods, and over 30 miners were left dead. The battle may have been lost, but a larger war against tyrannical authorities was won. To show the degree to which the world turned following Eureka, rebel leader, Peter Lalor—a man identified as being so antiestablishment that he was hunted with the offer of a £400 reward—would become so revered by the people that years later he was elected as Speaker of the Victorian parliament. No-one sums this up better than Mark Twain, who, during his visit to Australia, wrote:

The ... miners protested, petitioned, complained—it was of no use; the government held its ground, and went on collecting the tax. And not by pleasant methods ...

By and by there was a result; and I think it may be called the finest thing in Australasian history. It was a revolution—small in size; but great politically; it was a strike for liberty, a struggle for a principle, a stand against injustice and oppression ... It is another instance of a victory won by a lost battle. It adds an honorable page to history; the people know it and are proud of it.

This struggle for a principle contributed greatly to the Aussie legend.

The Southern Cross symbol of the Eureka flag has become permanently linked with struggle, more recently perverted by Norm Gallagher and the Builders Labourers Federation during their fights against the Victorian Labor government in the 1980s. Now, 150 years after Eureka, we see that little has changed. We have a government operating with a total lack of understanding for how businesses operate and with a foundation so entrenched in unionism and wealth redistribution that they seem to have forgotten what the Eureka flag actually stands for.

When the minerals resource rent tax was first proposed, coupled with an increase to superannuation contributions from nine to 12 per cent, I was doorknocking in the Bennelong suburb of Ermington. I visited mostly older Australians who had paid off their mortgages long ago and proudly saw the prudence of a time when Australians were encouraged to be responsible for their futures, proud of their achievement of home ownership and secure that the government could not devastate their life savings with poorly conceived policy. On announcement, the market judged the government's new tax by slashing the value of such blue-chip stocks as BHP and Rio. The proud old homeowners of Ermington, with savings safe in the bank, were now feeling vindicated—their prudent ways of living within their means, paying off their home and saving for a rainy day. Their concerns were for their children and grandchildren and the behaviour of their party. Reckless policies and criminal waste shook even the most faithful.

They did not like what Kevin Rudd was doing, but they liked even less what followed. Enter Julia Gillard, not through a democratic process but as a crowned factional princess. The people and the people's wills were not what she had to answer to. They were not her master. Her first course of action was to modify the next tax for the approval of the big three miners. Three was to become a very significant number for our new Prime Minister. The claim was made that she worked tirelessly with her Treasurer over six days to develop this new deal for the big miners, yet this claim did not even survive the gentlest of scrutiny as, at the last minute, the Treasurer took his old school mate's seat at the front of a plane and, for two days, attended the G20 table in Toronto, and there were two days in travelling time. Working tirelessly with the Treasurer? I do not think so.

Never mind; the new PM was on a roll. A pattern of behaviour was developing. By appeasing the big three miners, she would be safe in her position, and we, the people of Australia, would pay. We then moved to an election to vindicate her position, and three was again her number. The pattern of behaviour was repeated. A deal was done with three Independents, as kids would trade sports cards. The PM's position was safe and we paid. The final assault on democracy was the marriage to the Greens, which has resulted in her having to endlessly explain her promise to the Australian people that 'there would be no carbon tax under the government I lead'.

If we are to believe our Prime Minister, the only conclusion that can be reached is far more dreadful than our PM lying to us, and that is the conclusion that Bob Brown actually leads the government and we have a carbon tax under the government he leads.

The consistent modus operandi with this Prime Minister and her government is that deals are done with three and the ones who will pay will be ye, so that the Prime Minister will remain she—not a great day for democracy and not a great day for the people of Australia. In the simplest terms these traumatic times define the chasm of difference between our two parties: Labor taxes with promises of spreading the wealth, with a sizable amount of waste along the way; our 12 years in government demonstrating our capacity for fiscal responsibility and an ability to achieve budget surplus.

The promised mining resource rent tax has now identified Australia as a country of sovereign risk, driving would-be investors to safer venues, like war-torn Africa. This government is introducing a tax against our miners that is divisive, complex, unfair, fiscally irresponsible and distorting—reducing our international competitiveness. Just like the other tax that was passed in this parliament earlier this month, this is a bad tax which came out of a deeply flawed process.

For those with short memories, here is a reminder of events. In 2007 Prime Minister Rudd commissions a root and branch inquiry into our tax system. The Henry tax review produces 138 recommendations. The government adopts 3½. One of these recommendations is the resource super profits tax. This new tax, representing the biggest new tax imposition in a decade, is announced with zero consultation with industry and zero consultation with state and territory governments, despite serious implications for their own revenue. The Henry review had recommended a national, profit based resource rent tax to replace state and territory royalties, giving the federal government responsibility for negotiating the federal-state financial relations implications of this change in policy. However, the government simply were not up to the job of engaging with the states and doing the hard yards on genuine tax reform. Instead, they developed what they ironically called 'work-arounds', to avoid doing any work, to get the system right—instead, making it far more complex and messy than it needed to be.

The pushback from the community costs the Prime Minister his job, the policy gets aborted, and, in secret, a new policy is negotiated exclusively between three government ministers—without their expert advisers—and the managing directors of the three biggest mining companies. Much like the small miners in Ballarat, the competitor companies to the big three were totally excluded from the negotiation process, and of course a tax is designed which further entrenches the dominant position of the three big players, acting as an anticompetitive policy against any of the entrepreneurial dynamic smaller players in this important industry.

More than 12 months after the government is re-elected, after coming within a whisker of being the first single-term government in nearly 70 years, we observe that there is yet to be consultation with any of the state and territory governments about the implications of the mining tax. This is despite major implications for GST-sharing arrangements for all states and the fact that resource royalties represent 20 per cent of the West Australian, nine per cent of the Queensland and six per cent of the New South Wales state government revenue.

The Henry tax review was initiated for root and branch reform with the intention of delivering a simpler and fairer tax system. Instead, we have 287 pages of legislation that is significantly more complex and considerably less fair. The mining resource rent tax gives an unfair competitive advantage to the big three companies who were allowed to design the policy, such as the introduction of the market valuation system to calculate applicable deductions, which gives the big three a significant tax shield not available to small- and mid-size mining companies. Smaller miners will be forced to either pay the new tax sooner or continue to pay royalties on production while also being subject to increased compliance burdens. This is despite the Henry tax review—in recognition of the significant investment costs inherent in new mining ventures—actually recommending a lower tax burden for smaller mining ventures to help start-up companies grow and prosper.

Earlier this afternoon the shadow Treasurer spoke in this place with his usual eloquence and rhetorical flourish about the ineptitude of this government and their attempts to achieve the first Labor budget surplus since 1989. He highlighted that the mining tax package will actually leave the budget worse off. In particular, over the medium to long term it will worsen the current structural deficit.

Over the first year since the mining tax was first announced, revenue estimates have jumped from $12 billion under the original Rudd model, doubled to $24 billion with revised commodity price assumptions, gone back down to $10.5 billion under the Gillard deal and gone further down to $7.4 billion after taking into consideration changes to the exchange rate—and now the estimate is $7.7 billion with further exchange rate predictions.

Treasury documents released under freedom of information requests have shown projections of mining tax revenue to reduce over time to 2020, yet the government's costs will continue to grow. The cost of the proposed increase in compulsory super to 12 per cent alone is expected to rise to $3.6 billion in 2019-20—which is when it would be fully implemented. That same year, Treasury projections of mining resource rent tax revenue is $3 billion. There is that number three again. This mining tax deal makes the federal budget a hostage to state and territory government decisions to increase royalties on iron ore and coal. It will impose significant additional compliance costs and reduce the efficiency of our tax system. There is even a serious question mark over the constitutional validity of this new tax.

But there is a better way. Genuine and sustainable tax reform can only be achieved through an open, transparent and inclusive process involving all relevant stakeholders. Just like those legends that came before us on the stockade and stood up against unfair taxes and regulations, it is our duty as representatives in this place to stop this divisive, complex and unfair tax from going ahead and to force the government to start again, to focus on getting spending under control and to implement lower, simpler, fairer taxes and genuine tax reform that is based on a proper process, giving everyone a fair opportunity to have their say and be heard. The Australian tradition of struggle for a principle, extolled so beautifully by the words of Mark Twain, would demand no less.