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Wednesday, 10 September 2003
Page: 19648

Dr EMERSON (10:58 AM) —I take this opportunity in the light of the comments from the Parliamentary Secretary to the Minister for Finance and Administration to remind the parliament that the coalition opposed the petroleum resource rent tax with every capacity it had when we were trying to get this through the parliament in 1984 and that it was in fact the Democrats who joined with Labor in supporting this tax, which the coalition now says a good tax. So I suppose it is better late than never that they should have this conversion on the road to Damascus.

Mr Cox —It took us until 1987 to get it through!

Dr EMERSON —That is right. They talk about Senate obstruction. They did everything they could possibly do to stop the resource rent tax coming in. I must say Treasury opposed this tax initially. The way it used to work was that they would go off to a lunch with the petroleum companies in Bass Strait and they would work out the excise rates for the next year. If they needed a bit more revenue, they would jump the rate up a bit; if the companies were squealing, they would drop the rate a bit. This is the worst possible way of designing tax policy—doing it once a year and depending on the budgetary conditions and depending on how loudly the companies were squealing.

We said, `No, we need a more stable regime.' Now the minister is saying we need major changes to it. I suppose it is true to form; they are always prepared to bend over a little bit more or be a little bit more flexible. I think that the stability of this regime is very important, but I am very concerned to hear the parliamentary secretary saying that there are all these platforms and that all this is is a timing effect. What is involved here is moving from a PRRT regime into what is effectively an infrastructure activity. The cost to the revenue must surely take account of the fact that, under the proposed treatment, the rate at which the deduction is provided is greater because you have the combination of the company tax rate and the PRRT. So if you can claim that deduction for what is essentially non resource rent activity against resource rent tax you get a bigger deduction because it is the combined effective rate of the company tax and the PRRT. I would have been deeply troubled if Treasury had not taken that into account in their assessment of cost, but it is even more worrying—

Mr Cox —They haven't done an assessment.

Dr EMERSON —that they have not got any assessment of the cost. I was very disturbed to hear the minister saying how many platforms there are, how many production licences there are and how much oil production is going on in this country, because it just builds our concerns about the revenue implications of it. If there are so many platforms and so many production licences and Treasury does not have any estimate of the cost then we on this side of the House have a right to be very concerned about the revenue implications of what is being proposed here. As the debate has proceeded, the story seems to get worse and worse. For that reason, I reaffirm my strong support for the amendments moved by the member for Kingston.