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Monday, 24 May 2010
Page: 3754


Mr RANDALL (7:23 PM) —In speaking on the Appropriation Bill (No. 1) 2010-2011 and related bills this evening I declare that this budget is based on a wing and a prayer. It is a budget designed to wreck Australia’s outstanding resources sector. The Rudd government is relying on a $9 billion tax on the resources sector to put the budget into the black, even if only by a whisker. It is a tax grab that risks sending half a million Australian jobs, foreign and local investment offshore. And it is a tax on the so-called working families.

Labor’s economic credentials are historically dubious. The facts speak for themselves. They are currently borrowing $700 million a week—or, in other words, $100 million a day—to cove their reckless spending. This is because of a $1 billion blow-out on fixing a quarter of a million dodgy roofs from the tragic pink batts fiasco and $1 billion to manage the illegal immigration influx. They are spending to fix policy failures and learners’ mistakes, all completely of their own doing.

Next financial year interest on net government debt will be $4.6 billion and by 2012-13 the government will be spending $6.5 billion a year on interest payments alone. In just three short years Labor have proven what this country has always known to be true about Labor governments: they are big taxing and big spending. They have spent and sent ordinary Australians into a $93 billion debt. It took a decade of tough decisions and sound economic management by the coalition government to pay off Labor’s $96 billion debt. Mr Rudd has put Australia back there again in record time. In other words, after 13 years of Labor there was a $96 billion debt and Mr Rudd has taken two years to send us into that same $90 billion figure.

This election is now a referendum on the mining industry.


Mr Snowdon —What a load of rubbish!


The DEPUTY SPEAKER (Mr AJ Schultz)—Order!


Mr RANDALL —Labor want to penalise the one sector that kept this country out of recession. They want to steal from the coffers of companies—


Mr Snowdon —Steal from the coffers of companies? Get a brain!


The DEPUTY SPEAKER —Order! The member for Canning has the call and the minister will remain silent.


Mr RANDALL —that are creating jobs, supporting local towns and bringing huge investment into Australia. The flow-on effects are endless. After keeping the country waiting with bated breath to see the Henry review, the government has all but done away with its 138 recommendations, accepting only 2½ of them, rejecting 27 and shelving the rest. There was no 40 per cent resources tax proposed in the Henry review. What Ken Henry proposed was to make the tax system simpler. Instead of wading through the current raft of almost 100 taxes to consolidate and eliminate them, the government has just added another massive one on a massive industry.

As a proud Western Australian I see firsthand every day the benefits the mining and resources sector has on the entire state. Every job in mining and resources supports at least four others in other industries like hospitality, aviation, accounting and many more. If we are honest, it is clear that the Prime Minister has given up on Western Australia. Why wouldn’t he? Electorally there is little for Labor to gain in WA and by introducing this massive tax the Prime Minister is sending a clear message that Western Australia is just not worth it. He is happy to take but not give back—take Western Australian money, strip jobs and take security away from Western Australian workers. There are thousands of fly-in fly-out workers in Canning, not to mention those working locally for Alcoa, Boddington Gold and Worsley Alumina. In March 2007, 29,000 people were registered on AWAs in Canning, the second-highest number in the country. Conservatively, you can estimate that the resource industry supports more than 10,000 Canning workers and their families.

More than 500 mining and petroleum projects in WA will be affected by this resources tax. Let us not forget that Labor have already made such a grab. In their first budget the Rudd government hit Western Australia with a massive $2.5 billion additional tax on our North West Shelf gas project as part of a $20 billion increase in federal taxes and charges. The Wall Street Journal summed up the lack of logic behind super tax when it said, ‘This economic thinking runs counter to everything that made Australia rich.’

This tax risks upwards of $100 billion in planned minerals projects. Minerals production is a competitive business, with Australia only contributing to 10 per cent of global exports. If it becomes too expensive to do business here, investors will take their money offshore. The impact is not short-term; it would damage the Australian economy for decades. Gina Rinehart has said ‘Australia does not have a monopoly on minerals and must compete for funds to develop its projects.’ It is a no-brainer. Australia has only about three per cent of the world’s natural gas reserves, but our advantage is that the industry is established, infrastructure is in place and the investment has been there to back it. We need to make the most of it before countries like Russia and those in the Middle East, which have around half of the world’s reserves, come on stream to be really competitive. Iron ore production accounts for 44 per cent of the world’s minerals and petroleum output and is increasing by up to 15 per cent a year. Western Australia alone accounts for almost 20 per cent of global output and 97 per cent of Australia’s, which comes from the Pilbara. It is a huge industry, supporting 25,000-plus jobs, that this tax could see become stagnant.

Over the last decade mining companies have paid $80 billion in royalties and company tax, making up a solid eight per cent of the economy. The industry pays its fair share of tax—18 per cent of the nation’s tax revenue. Mr Rudd wants to make the Australian resources industry the highest taxed in the world at approximately 58 per cent. Estimates today show that some companies could be paying anywhere from 50 to 75 per cent.

To put this in perspective, these rates apply in other countries with big mining operations. For example, this graph shows quite clearly that the US currently taxes at 40 per cent; Brazil taxes at the same rate as Australia does presently, at 38 per cent, and we know that we compete with Brazil to sell iron ore to Asia, particularly China; in South Africa it is 38 per cent; Peru, 32 per cent; China, 30 per cent; and Chile, 26 per cent. Of course the Canadians are absolutely rapt, because their tax on the mining sector is only 23 per cent. To make it clear, I have been fortunate enough to be in Chile, where BHP has the largest copper mine in the world, Escondida. Chile’s resource tax is 26 per cent, and BHP CEO Marius Kloppers said, about the risk:

If you pay twice the tax in one country that you pay in another for the same product, then relatively speaking that other country will become more attractive.

It is very simple. I doubt anyone would argue with that.

Together with my Western Australian colleagues I have met industry leaders, and key principles have been proposed as to how to make mineral resources tax reform fair. Let me make the point that we are willing to sit down and listen. There was certainly no industry consultation prior to the tax announcement, and now they still do not want to talk about it. The richest man in the country, Fortescue’s Andrew Forrest, cannot even get the Prime Minister or the Treasurer to return his phone calls, when previously they were all over him like a rash. Industry is willing to negotiate. It suggests a tax should apply to new investments only, with a focus on keeping the sector competitive on a global scale, not retrospective, as proposed now. The tax rate should vary according to the mineral, because the profit margins differ, and it should also apply to the mineral itself and not other activities that are already subject to company tax.

These are crucial issues. For example, we have seen the Labor minister out there peddling the spin that projects like Gorgon, which is home to 40 trillion cubic feet of natural gas, is at roughly the same tax rate as it would be with the super tax—the petroleum rent resources tax. As Paul Murray, a journalist in the West Australian, rightly pointed out in the newspaper, this is just a blatant lie. Gorgon partners will pay an extra five per cent in tax because the petroleum rent resources tax only kicks in when profits reach the government bond rate plus five per cent. When we are talking about a $40 billion investment, five per cent is a massive amount of money.

So what have been the effects to date? There is complete market uncertainty—the share market fell to a nine-month low last week. Fortescue Metals have shelved the $17.8 billion expansion of their Pilbara operation, potentially costing upwards of 30,000 jobs. Consumer confidence has fallen by seven per cent in the last month. The real estate agency Satterley has warned that the tax will add an extra $20,000 to the cost of building a new home, pushing first home buyers out of the market, because, as you know, anything quarried or mined will become dearer. It has risked the sale of Griffin Coal in Western Australia. It has risked the $20 billion expansion of Olympic Dam. Mineralogy’s Clive Palmer has slashed exploration in South Australia and put his Pilbara iron ore project on hold. It has risked Santos’s investment and 5,000 jobs at the Gladstone LNG project, and Xstrata Copper’s $30 billion exploration program in North Queensland has been suspended. But you will not hear any criticism or critical analysis in the West Australian newspaper from the left-wing economics commentator and journalist Shane Wright. At least I am standing up for Western Australia, Shane.

The ramifications do not stop there. Superannuants who were hit by the bank guarantee are now bleeding money, with most super funds investing in the resources sector. Almost 10 per cent of Australian superannuation is invested in minerals and mining stocks. Funds are taking a massive hit because of shares prices losing $6 billion following this announcement. The Prime Minister’s veiled attempt to link the great big new resource tax with Labor’s three per cent increase in superannuation from nine to 12 per cent—against the recommendations of the Henry review—is just spin, because we know that businesses pay superannuation, not governments. In fact, small businesses in particular will be paying the nine to 12 per cent increase and it will not click in for years, whereas this tax comes immediately and small business just cannot afford it. So to say that government is doing this to pay superannuation, particularly on the eastern seaboard, is just a blatant untruth. Essentially, the government has just passed on another cost to Australia businesses at a time when they are doing it tough with rising interest rates and low consumer confidence.

In another anti Western Australian move, Labor will short-change the state on GST revenue. In the GST carve-up, Western Australia will collect only 68c of every dollar spent on the GST compared to Victoria’s 93c and New South Wales’s 95c. Despite being home to 10.3 per cent of Australia’s population and producing more than 13 per cent of gross domestic product, WA will collect only 7.1 per cent of GST. The reduction will cost $443 million in revenue—in other words, $200 for every Western Australian man, woman and child. If WA received GST per capita, it would be $1.5 billion better off.

WA’s share of the GST revenue has continually declined in recent years, despite the state being credited with keeping Australia out of the worst of the global financial crisis. You might have noticed, Mr Deputy Speaker Sidebottom, that last week the Western Australian state budget had a surplus of $280 million. I suspect it is the only state government in Australia with a surplus. That has a lot to do with the resources sector and the fact that it is managed in a proper way in Western Australia. Yet this is what Labor would do to that industry in our state.

We hear that oft-quoted, xenophobic line that these foreign companies are taking all this money overseas. Xstrata explained recently that, as a totally international company, since they have been in Australia they have earned $44 billion yet they have spent $45 billion. In other words, everything stayed in Australia and more went on exploration. We hear about minerals belonging to all Australians. Sorry, but you pay royalties to a state government because they are state owned resources. So they belong to each particular state.

When the GST came into effect on 1 July 2000, Western Australia received 9.7 per cent. It only gets 7.1 per cent now. Throughout that time we heard state Labor crying foul at the Howard government about not getting its fair share of the GST. You wonder where that candidate who was running against me is now. That candidate was saying, ‘We’re not getting our fair share from Canberra.’ Now, under federal Labor, Western Australia is getting far less than it did before. The position is getting worse. As I said, all Western Australians know about the tax grab by Canberra.

The truth is that during the coalition’s time in government WA’s share of GST rose as high as 10.3 per cent in 2004-05. For the 2006-07 financial year, just before Mr Rudd was elected, Western Australia was receiving 10 per cent. So the bottom line is that since federal Labor was elected Western Australia’s share of the GST has fallen by almost three per cent to 7.1 per cent. One has to wonder if it has anything to do with the fact that we now have a Liberal state government in Western Australia, with Premier Barnett sitting at the COAG table.

We know that the government makes monetary policy on the run, which costs valuable projects and programs. My attention has been drawn to the funding arrangements for the 2009-10 round of the Grants to Voluntary Environment and Heritage Organisations. These grants help fund real, on-the-ground outcomes. But because the Department of the Environment, Water, Heritage and the Arts is reviewing guidelines—or, more likely, busy rectifying the pink batt and solar panel fiascos—the minister is simply going to award funding under the program for 2009-10 based on the grant payments for the 2008-09 financial year. Is this really fair?

Canning residents are getting ripped off in more ways than one. The distribution of funds under the government’s area consultative committees replacement, Regional Development Australia, indicates more discrimination against WA. Western Australia has nine RDA committees, one of which is in Peel, in my electorate. Over the 2.3 years to 30 June 2012, those nine committees will share in $3.8 million, or an average of $278, 649 per committee each year. Peel will receive $208,000 each year until 2012, which not only is below the average but represents a fall of 20 per cent.

Thousands of Canning residents are still waiting for their promised high-speed fibre-to-the-node broadband. The NBN is just a pipedream. In this budget the government has committed $16 million—which it cut from the Australian Broadband Guarantee, by the way—to advertising a scheme that does not exist, while Canning families remain reliant on slow, dial-up connections that are no longer capable of meeting the household’s needs.

I speak often in this chamber about Canning’s priorities. To put these in perspective, the $1 billion wasted on the pink batts, split evenly across every electorate in the country, would offer many communities the chance to get some real outcomes on the map. For example, in Mandurah, under its city strategy for 2010-14, that money could have provided for the major upgrade of Pinjarra Road to dual carriageway, estimated to cost $9 million. It could have funded the Sutton Street upgrade, worth $2.5 million, and built the sporting oval at Ocean Road Primary School for $700,000. It could have put $13 million towards a new pool and leisure area at the Mandurah aquatic facility and constructed joint community facilities at the Mandurah Bowling Club for $8 million. The population of the city has doubled in the last 15 years and is expected to grow by three per cent each year over the next four years.

In Armadale, investment is sought for the world-class White Water Park at Champion Lakes, which is being championed by Colin Thorpe and his associates in Canoeing WA. Investment is also needed in the upgrading of Armadale Road to dual carriageway, extending the Tonkin Highway to the growing communities of Byford and Mundijong, and building more community facilities like playgrounds and halls in the growing suburbs of Harrisdale and Piara Waters. The Pinjarra Bypass remains a priority, as do upgrades to the Pinjarra Bowling Club and construction of a community hall in Preston Beach. The area always needs more environmental funding to manage waterways and to implement the Landcare projects around Waroona and the Peel Harvey Estuary. The Rudd government has stripped away the funding for the Peel Harvey Catchment Council, which is an absolute disgrace and puts in tatters its green credentials.

A coalition government that has a proven record in sound economic management is far better placed to deliver. Governments that rack up huge debts leave communities going without—or those communities end up paying those debts for generations. What Mr Rudd is doing to this country is racking up intergenerational debt. If you believe that he is going to pay it off within three years, you would have to say you believe in the tooth fairy. The previous Labor government, for the whole of their existence, could never bring in a balanced budget. They could never, ever pay off their government debt. As was stated previously, it took a coalition government’s prudent and wise management to pay off the debt. Then we put money into the Future Fund, to save it for future generations, and into an education endowment fund and had a surplus.

What has happened? The incoming Rudd Labor government have raided all those, bar the Future Fund. Mind you, they have said that that would be an ideal place from which to take $46 billion for the NBN rollout. That was going to be delivered within the term of this government. We have not seen it delivered at all. In fact, they still have not selected anyone to do the job. There is a bit of work being done in Deputy Speaker Sidebottom’s state. Tasmania seems to always have a special place in the rollout of these things. Remember Senator Harradine and the leverage that he seemed to have.

The Labor government’s misjudged priorities in economic management risk the prosperity of our nation and its people for generations. I will be very interested to hear the member for Hasluck standing up for WA when she delivers her speech on this issue shortly. This is not a bill that we can be proud of, because it puts us into debt. It is a referendum on our resources industry, particularly on its effect on Western Australia.


The DEPUTY SPEAKER (Mr S Sidebottom)—Thank you for your contribution and your very kind words about Tasmania.