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Tuesday, 22 November 2011
Page: 13388

Ms GAMBARO (Brisbane) (22:24): I rise tonight to speak about the Minerals Resource Rent Tax Bill 2011 and associated bills—11 bills in total, another 525 pages of legislation that this tax-and-spend Gillard government want to add to Australian law. These bills are a further symptom of the Gillard government's inability to model and to design policy and their failure to consider the full consequences of new taxes for the economy.

These bills are a short-term fix after years of government waste and mismanagement of the economy, which in the long term reduces Australia's international competitiveness and damages our economy. Firstly, the ostensible premise of this bill is to spread the wealth under the misguided assumption that the mining sector is not contributing enough or paying its fair share of the tax revenue. Anyone who has had contact with the mining industry knows the amazing opportunities that mining has opened up for people across Australia and the way the mining boom has helped grow and nourish many local communities all over this great country of ours.

As with the carbon tax, this bill does intend to share the wealth and redistribute hard-earned wealth from the rich to the poor. The government is taking money away from those who are willing to risk it to build an industry which sometimes takes many, many years to make any returns to shareholders and investors and giving it to those who are not. It is the typical return to class warfare that is regularly engaged in by those on the other side of the House. They take a static snapshot of the economy, they see that one particular industry or sector of the economy is doing well, and so what do they do? They tax it and tax it and tax it to breaking point.

The mining sector does in fact make a very large contribution to Australia's economy and the taxation revenue of this nation. According to the Australian Taxation Office itself, the mining sector in 2007-08 paid the highest effective tax rate of any sector in the Australian economy when considering net tax and royalties. The sector employs nearly half a million Australians, many of whom work as mining and environmental engineers or in capital cities—in electorates like the electorate of Brisbane. Many mining companies have offices in the electorate, including BHP, Rio Tinto, Newcrest Mining, Anglo Coal, Hancock and many other resource sector companies. BHP Billiton, just one mining company, estimates that there are approximately 500,000 Australian shareholders. These are not just institutional investors; they are mum and dad investors who are willing to risk their own money and hope to derive financial benefit themselves from the mining boom.

The member for Higgins yesterday tabled the dissenting report of the Standing Committee on Economics. It is clear from reading that document that this government is ignoring many worrying issues about the mining tax. The Treasurer is not being transparent about the fundamental assumptions behind the modelling, nor does he fully take into account the impacts on the underlying revenue over the forward estimates. The Treasurer has said that a project-by-project resource rent tax is much more efficient than a state based royalties tax, yet at no point in this government's plans and its design of the tax did it consult with any of the state or territory governments—you would think that, with a major reform like this, it would consult with the states and territories, but it did not do any of that—about this huge future reform opportunity to decrease state royalties. I note that Ken Henry's recommendation in that wonderful report that he presented to the government was that a nationwide tax should be implemented to replace a royalties structure. These are Ken Henry's words. This is what he had to say. But this lazy and incompetent government has put all of that in the 'too hard' basket; it is too hard for it to do. So Australia is left with one of the most complex, unfair and messy taxes ever. Instead, the government consulted only the directors of three of Australia's biggest mining companies, and since then the Gillard government has not been able to outline who will pay, what they will pay and how it will work under this tax. Treasury has not modelled the impact of the tax on jobs, on growth or on mining investment, yet the government still wants to go ahead with the tax.

This sounds all too familiar, doesn't it? It is very similar to the Gillard government's very flawed implementation of the carbon tax—even after passing both Houses of Parliament, to this day, we still do not know which of the 500 biggest companies will pay that tax.

There are some companies, like FMG, who predict they will not have to pay anything under the rent tax for years, given the favourable concessions to larger mining companies. On the other hand you have all these contradictions. You have these mid-tier and emerging mining companies that will be heaped with higher and higher compliance costs. Many small miners informed the House of Representatives Standing Committee on Economics of the administrative and compliance burden that they will face if this tax is passed. However, the government does what the government always does best: it refuses to listen to their concerns. It does not consult. Once again, we should not implement this tax until we are fully aware of the costs it will have on emerging mining companies and their employees.

Moreover, these 11 bills contain new revenue and expenditure measures and there is no guarantee that these proposals will be revenue neutral. Already, there is a $3 billion black hole after the state government of Western Australia and New South Wales announced an increase in state royalties of $2 billion and $1 billion respectively. There is also a shortfall in revenue relative to the spending in the government's own numbers to the tune of $2.8 billion for a total blowout of $5.7 billion. In the future, it would not be surprising to see other states increase their royalties due to the very poor design of this tax grab—and that is all it is: a tax grab. Over time, states could increase their royalties such that they collect all of the revenues previously intended for the federal government, while the expenditure measures of these bills remain in place and unfunded.

There are other revenue worries that relate to the nature of the mining industry itself. We have a government that has deemed this industry to be so successful that it is taxing its so called superprofits. Do we have a promise from the government that when there is no longer a boom, when mining companies are not doing so well—and it will happen; they have told us for many years it will happen—the Labor government will rescind this tax? I doubt it very much.

Mr Bradbury interjecting

Ms GAMBARO: The member opposite protests. He knows what I am talking about. Both the RBA and Access Economics have suggested that terms of trade and commodity prices have already peaked and are dropping off much quicker than originally expected.

The amount of continuing revenue that the government expects to receive is far from clear. The Labor government does not know what the states will do. It does not even know how the international market for commodities will    perform, yet it has locked in the spending aspects of these bills to further add to Australia's budget deficit.

There are also remaining questions about the effect of the tax on GST distribution. Currently, Western Australia loses billions of dollars a year in GST revenue, meaning that, for every dollar of GST the Commonwealth collects from the state, it hands back only 72 cents. Dr Henry confirmed during the Senate mining tax inquiry that 65 per cent of mining tax revenue over the next decade could come from iron ore production in Western Australia. However, we will not see a 65 per cent return of mining tax revenue return to that state. Again, this is an attempted short-term fix by the Treasurer, which will deprive the people of Western Australia of something that is rightfully theirs.

These bills will also hurt the perception by international businesses of Australia as a safe destination to invest their money, and we see that. The Gillard government is attempting to finish off the parliamentary sitting year by rushing through and implementing another ill-conceived measure that will reduce the confidence of international investors in Australia. In a submission to the committee, the Chamber of Minerals and Energy of Western Australia wrote:

Uncertainty around implementation and administration of the new measures increases the risk premium international investors demand from Australian investment.

We already have a carbon tax, we have a nationalised broadband network crowding out private investment and now we have the additional impost of a mining tax. These will make Australia a less attractive place to invest. Most of all, it is the inconsistency that businesses see in this government. No-one, much less people from outside Australia, know what they will come up with next, and whose agenda it will serve.

It is true that mining is not an industry that value-adds—to iron ore or coal, for example. Consequently, what this tax will do is direct investment to other countries which mine the same materials at the same global prices but have more business-friendly tax regimes. The world is an international supermarket; companies can go anywhere. Other countries have expressed their delight at Australia's mining tax. When Kevin Rudd first announced the now dropped resource super profits tax, the first person to hit the airwaves was the Canadian finance minister, who said:

If it is what it appears to be, a significant tax increase, that's another competitive advantage for Canada.

Canada was out there spruiking how fantastic it would be for Canada. There are new markets emerging everywhere in the world. We have competitive markets in Brazil, Peru, Mexico and many other nations. They are all beginning to open and be attractive to global mining companies. This is not the time to reduce Australia's competitive advantage. If Australia has a mining tax, there is no doubt about it, there will be jobs lost. There will be money sent out of the country.

Finally, the Gillard government decided again to ignore the advice from the Henry tax review. It did not recommend an increase in the superannuation guarantee from a rate of nine per cent up to 12 per cent. As the dissenting report noted, there is no direct link between the mining tax and superannuation itself. The argument that Australia needs a mining tax to finance superannuation is based on a fallacy.

Labor attempts to bolster its case by saying that superannuation is a tax on employers—and many believe this fallacy. What we have is a government that is incompetent. We have a government that continues to tax and tax and tax. The coalition believes that Australians should have the liberty to make fiscal decisions about what is right for their families. There are many families out there who have mortgages and children, and their ability to finance their cost of living will be severely impacted by an increased rate of superannuation payments, because what happens is that there is a trade-off of less take-home pay.

It is clear that this government is willing to damage the long-term prospects of the Australian economy merely to apply a bandaid to the precarious fiscal position which they have put us in. It is just another tax grab. The mining tax that this government devised is fundamentally flawed. They did not consult with industry, they did not consult with other levels of government. They did, however, introduce 11 bills that have a highly volatile revenue stream that could leave the budget in a much worse position than it was before they began. This government has shown us consistently why we cannot trust them to manage the economy. We cannot allow them to use a damaging tax to again damage the Australian economy. For these reasons, we must reject this tax.