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Tuesday, 22 November 2011
Page: 13393

Dr STONE (Murray) (22:48): I also rise to speak on the package of 11 bills which form the minerals resource rent tax legislation 2011. The introduction of the carbon tax was a big blow to the mineral industries in Australia, and now this minerals resource rent tax requires the minerals sector to dig even deeper to fill the holes left after Labor's profligate spending.

We are told this tax was negotiated with three large companies: BHP, Rio Tinto and Xstrata. This is rather extraordinary behaviour. Their competitors, particularly the small- and medium-size mining companies—the little ones who are out there risking all, looking to prove up new deposits, the ones who take on Indigenous employment and offer great hope to families who have never had such amazing jobs, the ones who give them all sorts of great starts in life—were excluded from the negotiations.

This is unprecedented and extraordinary business, taxing the minerals companies, after only the merest and smallest discussions with the state and territory governments. They, after all, have been receiving royalties from the mining companies for many years, and you would have thought that consultations with the state and territory governments re the coordination of their royalties and this new mining tax would have been essential. But we are led to believe there has not been any in-depth discussion.

The revenue from the MRRT is highly volatile, with estimates ranging from $7 billion to $24 billion annually. That is to be expected in a sector where it is literally bust or boom. You often go for many years with exploration before being able to prove there is any value under those there hills. According to estimates made by Deloitte Access Economics, the minerals industry will probably pay a record $23.4 billion in combined company tax and royalties in 2010-2011. That is before the MRRT even comes into existence. In his evidence into the Senate select committee's inquiry into the new taxes, Ken Henry, the then Secretary to the Treasury, agreed that the MRRT would impact on mining company investment decisions and their production decisions. What country would set about making it more difficult for high-risk ventures to go about their business and stay there?

Over the last decade, direct revenues from federal company tax and state and territory royalties generated by the minerals industry have exceeded $110 billion, again according to Access Economics. This is, under anyone's estimation, a substantial amount of money coming from mining companies; but, according to the Gillard government, $23.4 billion generated before this new tax is simply not enough. They need more. They have a very particular need.

This government is going further into debt each day they are in power. They are taxing an already heavily taxed industry so they can try to return a coalition type surplus by the next budget. This has been promised repeatedly by Treasurer Wayne Swan. The mining boom has been dubbed a once-in-a-century opportunity, and this government is therefore determined to milk the cash cow so they can try to cover their financial mismanagement—their great expenditures and debts—while they can grab that surplus.

According to the Minerals Council of Australia, the implementation of the MRRT will have a critical bearing on investor confidence and on the future competitiveness of Australia's minerals sector. Why would offshore investors want to invest in mining companies in Australia that will be outrageously taxed by the world's biggest carbon tax and now the MRRT? They can easily go to more competitive and inviting economies such as Brazil, Canada, China and South Africa, where they will not be faced with a crippling set of government grab-mes.

James Edwards, Executive Officer, Economics and Tax, at the Chamber of Minerals and Energy of Western Australia, has said that we do not have a monopoly on resources and we must maintain our international competitiveness. That is just plain obvious and common sense. According to this Gillard government, we need to spread the benefits of the mining boom through taxing the mining companies higher—well, taxing some of them higher. Not only does the minerals industry already pay billions of dollars to state and federal government; it has also given thousands of Australians jobs, and some of these are the best jobs their employees have ever had. Under this government, the Australian unemployment rate is now about 5.3 per cent. Is it possible that this new tax will dampen investment and so cut jobs in the minerals sector, leaving Australian workers and their families much worse off? Why would we do this?

This government has created a financial crisis for itself through reckless spending on whacky and wasteful schemes. Who can ever forget the overpricing and rip-offs in the multibillion dollar BER program, the life-threatening pink batts—billions of dollars blown away there—and the set-top box debacle? My constituents in Echuca still cannot get digital TV. And who can forget the $900 cheques in the mail for dead people and people in New Zealand who had long left the country. Who can forget the hundreds of millions of dollars wasted in buying low-security water—or no water at all—for environmental flows that could not be delivered in the Murray-Darling Basin? Who can forget the billions of extra dollars now spent on detention centres and wages for wardens because this government cannot get its asylum seeker and people smuggler policy right? Who can forget the GroceryWatch and the Fuelwatch schemes, and the My School website which have done nothing but cost money—and, in the case of My School, blame and shame poor schools for having struggling students?

As the shadow Treasurer reminded us today: 'This Labor government inherited from the John Howard government a $20 billion surplus with more than $45 billion in the bank. They inherited an economy with no net debt and in just over four years this government has accrued $150 billion in deficits, more than $200 billion of gross debt.' That is the end of the shadow Treasurer's quote—but of course he can go on indefinitely, as all of us can, about the fact that every Aussie now carries on their back the equivalent of some $4,000 in debt that this government has accrued in its few years in government.

The Treasurer, Mr Swan, tells us that he is going to have us all back in surplus very soon. How is he going to do that? I think this government decided that, since they seem incapable of efficiently and cost-effectively managing government programs, they will instead lean on the middle and small sized mining companies to fill their coffers. You might wonder, however, why the Labor government needs the MRRT when it is about to raise $27 billion through the new carbon tax. The problem is that the carbon tax is going to cost them $31 billion in expenditure. So the new carbon tax is not going to do it. It is not only going to cripple the competitiveness for every energy-intensive export-exposed workplaces; it is also going to leave the budget $4 billion worse off. That is the carbon tax for you. What a dilemma!

Where else can this government find the cash to fund the surplus—the surplus Mr Swan has promised? I think the minerals sector knows where they have found the magic pudding. Many qualified tradespeople from the Murray electorate have jobs in mines across Australia, and they particularly sought those jobs during the worst drought on record—one that we have just suffered through. These tradespeople work weeks at a time away from their homes and their families. They make great sacrifices to find that employment and to bring their earnings back to their families in Victoria. They make a very good living. I do not want people in my electorate to face more hardship because of this government's policy squeezing the jobs out of the sector.

Experience shows that we cannot trust this government to spend the revenue raised from this new tax or the carbon tax responsibly. I repeat: when the Rudd government came into power in November 2007, it was handed a substantial surplus of $20 billion, with no net debt and $45 billion in the bank. As we have been saying to ourselves repeatedly: 'Where's it all gone? What have we got to show for it?' Sadly, because this is a city-centric government, rural and regional Australia has nothing to show for it—that is, unless of course you are one of the Independents or Greens whose position in sharing the power depends on being promised some largesse for your electorates.

This government's failed initiatives have heavily impacted on the people in my electorate of Murray. We had, as I said, the worst drought on record. Some of our farm families could not survive that drought with equity left in their properties. They were forced to think the unthinkable and that was to sell their family farms. Fortunately, there was a program called the Exceptional Circumstances Exit Package—a program that had been initiated by the Howard coalition government. We needed only about another $5 million to assist those farmers who had already committed to sell their properties with the inducement of a $150,000 grant to set them up and retrain them for a future. About $5 million was all that was needed. This government announced that of course the Exceptional Circumstances Exit Grants would be extended for another 12 months. That was announced in the last budget. We were stunned when, only six weeks after that budget announcement, we were told: 'Oops! Sorry. We miscalculated the funds for the EC exit grants. They are all committed.' How can a government not understand before a budget announcement how much is actually committed in grants which in fact take four to six months to determine? What an extraordinary mismanagement. But what heartbreak and devastation that extraordinary decision has left.

Some of my families are now financially devastated from selling their farms. They were forced to sell their farms by circumstances beyond their control, but with an expectation of having some funds to buy at least a home. Those farm families are now hoping that an act of grace might come their way from this government, but that needs to be about $5 million. I hope, therefore, that this government understands that every dollar counts in this economy. Every dollar has been hard-earned by taxpayers or by those who pay resource rentals or excise. Every dollar is hard-won. It should be the end of profligate spending when it comes to this government's future behaviour.

We have before us a bill to bring in a new tax, the minerals resource rent tax, which is not even going to be spread evenly over the industry sector. We are told, triumphantly, by some of the biggest miners that they do not expect to pay a cent with this new tax. Some of our largest mining companies are warning their shareholders that this tax is a debacle and that it is going to be a serious problem for them in terms of their future competitiveness and whether they even want to stay in this country. So we have to worry very much about this new tax.

In order to get this legislation through, the government has done deals with the Independents and the Greens—but, unfortunately, they are not driven by delivering benefits to all of the Australian community; they are driven instead by sharing power with this government. It has to be more than that. If we are going to have an economy that can recover quickly from an extraordinary round of spending, wastage and bad value for money—if that is going to be achieved—we have to look harder at how we tax a sector like the mining industry.

This industry has done us well in the past. We were built on gold in Victoria in the 1800s. Western Australia is now built on a bigger range of minerals. Western Australia, South Australia, Queensland, New South Wales and Victoria have had an enormous bounty as a result of our mineral wealth. Let us not see that sector as purely a cash cow to cover the profligate spending of a government that does not know how to manage its books.