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Wednesday, 26 May 2010
Page: 4305


Ms MARINO (12:09 PM) —I rise to speak on Appropriation Bill (No. 1) 2010-2011 and the related bills. This is a big-taxing, big-spending budget and further proof that the Labor government cannot manage the Australian economy. Taxes are up by $33 billion and government spending is up by $12 billion, and the government will spend $40 billion more than it receives. The budget deficit this year is projected to be $57.1 billion, and government debt will increase to nearly $94 billion in 2013, with interest bills of $4.6 billion in 2010-11 and $6.5 billion in 2012-13.

The Labor government will have to borrow $700 million every week—$100 million a day—for three years, which will continue to put pressure on interest rates for small businesses and families, to fund its spending waste and gross mismanagement of programs, programs such as the failed, tragic and appalling Home Insulation Program, which needs a $1 billion repair job. There is Minister Gillard’s $14.3 billion BER program, which has now blown out by $1.7 billion and has been typified by waste and poor value for taxpayers’ money. The Computers in Schools program, which has seen 220,000 of the promised one million school computers actually delivered, has blown out by $1 billion. Then there is the National Broadband Network, with its $38.3 billion blow-out.

This budget also includes $1 billion for the extra detention measures needed since the Labor government weakened our border protection laws—128 boats have arrived in less than three years, at a rate of three per week. Taxpayers in Western Australia have to cover the cost of accommodating accused and convicted people smugglers in the state’s prisons. Any single one of the government’s billion-dollar blow-outs could have funded critical road, rail, port, water and airport infrastructure in my electorate, to underpin the economic development of the south-west as well as assisting south-west inner-regional defined students qualify for independent youth allowance.

This budget is built on a big new 40 per cent tax on the mining and resource industry, with an additional $12 billion increase in net tax revenue in the first two years alone. This is a tax that threatens WA’s mining industry and has the potential to push mining investment and jobs overseas. This tax is directly affecting the value of emerging Australian mining companies. As I said, the Labor government is taxing its way out of debt, largely at the expense of Western Australia and its 500 mining and resource projects, which produce $70 billion worth of products, including industries and businesses in my $11.3 billion GDP electorate. It also puts at risk over $170 billion of planned mineral projects. This tax means Australia will be forcing our mining sector to pay some of the highest taxes in the world, and certainly risks driving future investment overseas. We know that 500,000 people are employed, directly or indirectly, in the mining sector; and there are also construction jobs and work for contractors, service industries, suppliers, small businesses and valuable and diverse Indigenous programs at risk.

The government is making Australia’s most successful industry pay for its continuous wasteful spending and debt, as well as increasing the risk to Australian taxpayers with the proposal for taxpayers to have to pay back 40 per cent of future losses from mining operations. I note that in the WA state budget business investment was forecast to rise 11.5 per cent in 2010-11 and 12.25 per cent in 2011-12, on the back of world-scale projects. However, these projections were finalised before the Labor government’s announcement of its resource superprofits tax.

The $280 million surplus in the WA budget—and, I would add, the only state government in Australia with a surplus—is mainly because of the resource sector, discipline and prudent management of state funds. I understand that, of the $3.3 billion, or 48 per cent, increase in WA’s royalty revenue over the next 12 months, 82 per cent will come from iron ore, the very same iron ore miners who are the prime targets of the Labor government’s tax. This is a very real risk to Western Australia’s economic capacity. The Premier of WA has said that the prospect of this new tax on business, large and small, has already impacted the outlook for Western Australia’s growth and will inevitably impact jobs growth. The Premier described the tax as an:

… attempt to raid on our state’s finances, because mining royalties and payroll taxes go back into our schools and hospitals. They paid for seniors and pensioners to take seven million free trips on public transport last year. They have allowed us to put $14 million into upgrading the Coalfields Highway over the next two years. They pay for services which protect the vulnerable and initiatives which advance the state.

The Coalfields Highway, in my electorate, is a very important transport link between the major industrial centre of Collie, with its focus on power generation, coal and aluminium. As well, as workers shift times change, the usage of this highway is extremely high. And the road has required significant upgrades in the installation of additional overtaking lanes. The Liberal state government upgraded the highway between Rolands Hill and the Wellington Weir turnoff in the nineties. However, plans for further major upgrades were shelved by the incoming state Labor government in 2001. It has taken the return of a Liberal-led government to achieve further upgrades to this key piece of road infrastructure.

The Labor government’s resource tax will affect nearly everyone in Australia, both directly and indirectly. I am aware that approximately 9.3 per cent—or around $111 billion—of Australia’s $1.2 trillion held in superannuation assets is invested in resource stocks. These investments, in which thousands of families, individuals and small business owners have put their life savings, have lost billions since this tax was announced. A very clear majority of workers have a stake in Australia’s resources sector through their superannuation, and 778,000 self-funded retirees depend on returns from their superannuation. My office has been contacted by ordinary investors and self-funded retirees who have seen the value of their superannuation fall dramatically in the past week.

This government is ignoring the fact that superannuation performance depends on a strong resources sector. It is also clear that there could be less taxation revenue from mining for future generations because Australia will have the highest taxed mining sector in the world. The S&P/ASX 300 Metals and Mining Index has fallen significantly, and losses equate to serious falls in the balances of superannuation funds. The mining tax has hit the Australian dollar, with global investors recognising the sovereign risk now attached to investing in Australia.

I note that Labor is claiming that the mining sector pays between 13 and 17 per cent in corporate tax. However, ATO taxation statistics of 2007-08 show that the average effect of the corporate tax rate paid by the mining sector, including royalty payments, is 41.3 per cent compared to an average of 27.18 per cent across all industry sectors. The question quite rightly being asked is: who is next in the government’s efforts to nationalise profits? What sector generating over six per cent in profits will be in the government’s sights next? I am sure Telstra shareholders would have a definitive answer.

This tax will have a major impact on regional Australia, particularly in my electorate of Forrest, with its over $11 billion of GDP largely centred on the mining and resources sector. How will this tax be applied to each individual enterprise in practical terms? When will bauxite be deemed to be alumina? Where in the mining and processing stream will the tax apply and the profit be calculated, or will it be applied across the business as a whole? At what point is the tax applied to coal feeding into a power station? In my electorate, Wesfarmers Premier Coal general manager Patrick Warrand was quoted in the Collie Mail:

“… there is no doubt that any increase in taxes will impact on future growth decisions, as the mining industry has higher levels on investment risk which has to be considered when making investment decisions,” he said.

The Chief Executive of BHP Billiton—Worsley Alumina’s operators—is quoted as saying:

 …the proposal would seriously threaten Australia’s competitiveness, jeopardise future investments and adversely impact the future wealth and standing of living of all Australians.

All of these companies are very aware that their international competitors mining in Canada, Brazil, Central Asia and Africa are lining up to compete in their export markets. They also know that the seriously flawed ETS will be delivered in the next term of this government. Small quarry and pit owners, excavators, and sand, gravel, stone, salt, limestone, fertiliser, mineral sand and dredging companies are all non-renewable mineral resources defined by the government. South West Haulage, road-building and subdivision developers, need to know now whether they will have to pay the new super tax and at what point it will be applied to their businesses. Homeowners and homebuyers will have to pay more for their homes, as well as increased prices for electricity.

We all know that for every job in the mining sector four jobs are created in the wider community, and that is very evident in my electorate. Many of the over 14,000 small businesses in my electorate are both directly and indirectly dependent on the mining and resources sector. There are numbers of surveyors, real estate agents, financial services, manufacturers and construction companies in retail and hospitality, for instance. I recently spoke with a real estate agent in my electorate who said that a major contributor to their property sales was mining workers. However, since the announcement of the new resources tax, sales have stopped. The thousands of mining workers spend their wages in regional areas. They buy houses and cars, they pay for entertainment and they pay taxes. An article in the West Australian newspaper reported:

Investor panic over the resources super profits tax is disproportionately hammering the value of WA companies, even those not connected to the mining industry, with local stocks hit nearly twice as hard as the wider sharemarket in the past month.

The article went on to say:

Analysts said fears over the proposed 40 per cent tax on mining profits above a 6 per cent return hit WA stocks harder than the market as a whole because the State was weighted towards the resources sector—

and more exposed.

People in my electorate of Forrest who have worked hard to build their retirement savings have been hit with one attack after another from the Labor government. First it was the attempt to remove health concessions and private health rebates and now it is the big new tax that will undermine the performance of their investments, shares and financial independence. Western Australia is also being hit by reductions in GST payments. Last year $400 for each Western Australian was distributed to the eastern states. This year that rises to $670. WA’s share of GST has fallen to around 68c in every dollar, and the state’s share will fall by $211 million in 2010-11. By comparison, a similar state such as Queensland receives 91c in the dollar and New South Wales 95c. Just prior to the election of the Labor government, WA was receiving 10 per cent of the GST. This has fallen to 7.1 per cent.

The Labor government are also holding WA to ransom by threatening to withhold money for the aged care sector unless the WA government agrees to hand over a third of its GST revenue for their flawed health and hospitals plan, which will fund yet another layer of Labor government bureaucracy. Conversely—or should I say perversely—only seven per cent of Infrastructure Australia’s funds inherited from the coalition surpluses were directed to WA to facilitate the state’s continuous growth and development. In spite of its increased spending, this budget has again failed to invest in WA’s infrastructure needs.

One major downside of the budget is the cuts for the environment, with only $1.3 million from Natural Heritage Trust and Landcare. This means that established and potential community groups and individuals who care for our environment will see even more cuts in funding. The South West Catchments Council received $19 million to invest in the south-west environment in 2007-08 through the coalition government. Last year this fell to around $5 million. At the same time, the Department of Climate Change and Energy Efficiency and its 494 staff will cost taxpayers $215 million by July this year, and the government has allocated $30 million to spend on an advertising campaign on climate change. Recycling is a high priority, but $179 million has been cut from water recycling to install rainwater tanks or piping for grey water usage.

Around $314 million has been cut from mental health programs in the past two years, with the mental health industry and patients alike hit by the scrapping in this budget of the Medicare mental health rebate for social workers and occupational therapists. The government has been forced to defer the changes for nine months to conduct consultation. Unfortunately for health providers and eight per cent of the WA population using mental health services, this is just another example of policy on the run.

Then there is the increase to the superannuation guarantee levy which will be paid for by businesses. While many see the increase of the superannuation guarantee levy to 12 per cent as a positive move for employees, many small businesses in my electorate will simply not be able to pass on these additional costs to their businesses. One small business stated:

The salaries that I pay are a large proportion of our turnover, meaning that increased super payments would affect my income directly. I would not be able to pass on that cost to any other party.

There are small business owners suffering at the expense of another Labor government policy. These are some of the same businesses that are paying higher bank interest rates than other sectors or who have been badly affected by another bungled government program such as the insulation debacle and the cost of the bank deposit guarantee on their business.

The Labor government’s budget will add further financial stress to families through its continuous $700 million a week borrowing putting more pressure on interest rates, by cuts to child care support by breaking its promise to build 260 new childcare centres, and by providing no real action to tackle rising living costs.

I just wonder how the government can guarantee quarantine and biosecurity risk in Australia when boatloads of asylum seekers arrive right at the jetty at Christmas Island. The Labor government is cutting $14.3 million from customs and border protection services, cutting 250 jobs in cost-saving measures. AQIS is now externally inspecting only 30 per cent of shipping containers arriving through Brisbane. The Beale review reported that 23 per cent of shipping containers had some form of contamination, which seriously increases Australia’s biosecurity challenges and increases the threats and risks of insects and pests such as fire ants, snails, weeds and seeds.

In government, the coalition will provide strong economic management, rescind the mining tax, improve local health services, protect private health insurance and take real action to reduce emissions to protect our environment. The coalition will do everything we can to improve the strength of the Australian economy without grossly increasing taxes.