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Tuesday, 1 June 2010
Page: 4890


Mr GRAY (Parliamentary Secretary for Western and Northern Australia) (8:02 PM) —I rise to speak in favour of Appropriation Bill (No. 1) 2010-2011 and Appropriation Bill (No. 2) 2010-2011 and related budget bills. It is not possible to speak on these budget bills as a Western Australian and not address the resource super profits tax. There has been too much anger, too much self-interest and too much overblown rhetoric about this tax. We have heard too much self-interest masquerading as concern for the national interest. At a time when we want apprentices and workers to look to the mining sector for careers, we hear rhetoric that destroys public, employee and investor confidence in the sector. That is irresponsible.

It has been claimed that this tax is a 70 per cent tax on company earnings. It is not. It has been said that every element of this tax is set in stone. It is not. It has been said that this tax will be imposed on top of royalties. It will not. And it has been said that it will be imposed on top of company tax. It will not. Royalties will be refunded, and the resource tax will be deductible against company tax. It is the case that a project earning less than the uplift factor, the long-term bond rate, will pay significantly less tax. The tax will replace royalties and, where royalty payments are greater than the tax, firms will get a rebate for the difference. The tax will replace multiple royalty regimes which do not optimise investment. Mining companies will not pay the proposed tax on top of royalties. They will pay it instead on royalties and then only when they make above threshold profits. It has been said that every dollar of return above the long-term bond rate, currently about six per cent, will be taxed. It will not be.

For 40 or 50 years, Australia’s mining towns have been company towns. In the 1960s, concessional royalty rates were created recognising the cost of provision of social infrastructure. Companies did not pay local government rates but they did pay for local social infrastructure such as power and housing in mining towns. Swimming pools, cinemas, community halls and even hospitals in the Pilbara were provided by miners, and miners benefited from concessional royalties. In their own tax returns, mining companies wrote off the social investments as depreciating assets.

However, by the 1990s, without local government rates being paid and with dwindling social investment by miners, our mining towns were being strangled. Mining towns can be hard places to live in, hard places to get houses in and hard places to raise families and children in. They are hard places because by the 1990s mining companies were banking the concessional royalties and sending the cost directly to mining families. Mining companies stepped down support for mining communities. The Pilbara Regional Council reflected on this practice five years ago by referring to it as a form of cost shifting from the large companies to local governments and families in remote and regional communities. The Pilbara Regional Council at that time made the observation that they genuinely felt companies should either be subject to increased royalties or pay local government rates. The new tax will change this. It will fund community infrastructure in regional resource communities.

I know the importance of this. I grew up in a company mining town—Whyalla in South Australia. This debate is not trivial and its purpose is not to be ignored. We can have a better tax for miners. We can have better sustainable returns for Australians living in regional mining communities. We can have better mining communities with infrastructure funded by these tax measures. Think about the benefit to regional Australia in years to come. We can and we will get this tax right. The process of diligent engagement by the mining community with the resource tax consultation panel is a good one. It is one that will better shape and inform the implementation of this tax. Although the principles of this tax are set in stone, the detail of this tax is not set in stone. Australia’s resource sector deserves the best tax, the best environment, the best occupational health and safety, and the best regulatory framework in the world. That is what I am committed to. It is what the government is committed to. The ultimate detail of this tax is currently being built through the process of engagement with the resource companies, directed by the Treasurer. Revenues from the tax will cut company tax rates for all businesses and fund community infrastructure, providing amenities for years to come.

It has been said that the announcement of this tax caused the stock market to fall, superannuation accounts to collapse and the dollar to crash. It is true that the value of stocks in Australia have fallen since early April, it is true that the value of the Australian dollar relative to the US dollar has fallen and it is true that the prices of mining stocks have fallen, as have all stocks and shares around the world. It is too great a logical leap to blame all of the international and domestic share activity on the RSPT. The falling domestic share market has many drivers.

In recent weeks, tensions on the Korean peninsula have dominated regional geopolitics. Instability in Greece has seen financial shock waves travel around the world, pushing up the US dollar and depressing the euro. These factors have combined to cause disruption to world currency markets, and yet today the Australian dollar is trading at around 83c against the US dollar, similar to what it was two years ago, at about 85c. The fact remains that stock and currency markets do move up and down. That is why Peter Dutton, a Liberal MP, bought BHP shares—and good on him. It shows confidence in our mining sector. Revenues from this tax will go to sustainable investments like the superannuation accounts of 8.4 million Australians, lifting contributions from nine per cent to 12 per cent on average weekly earnings.

The opposition says that the RSPT is a damaging tax for superannuation returns; however, the superannuation industry does not support these claims. David Whiteley, chief executive of the Industry Super Network, has said:

Asserting mining stocks have plunged as a direct result of the RSPT when all stocks have fallen to a similar if not greater degree is plainly deceitful.

The former leader of the New South Wales Liberals, John Brogden, has also refuted the claims of the opposition. He does not think the argument that the mining tax has erased superannuation is correct and that the argument does not hold up:

It doesn’t hold up in the short term; it won’t hold up in the long term.

Those opposite are claiming that low-margin commodities like limestone, clay, aggregates, quarry materials and gravel will have to put prices up because of the RSPT. They have said that it will add an additional $20,000 to the cost of building a house. This is simply unsustainable logic. In fact, low-value commodities like limestone, clay, aggregates, quarry materials, sand and gravel may benefit from the RSPT. They will have low RSPT liabilities, whilst their royalties will be refunded under the proposed model.

Those opposite are also claiming that the cost of living will increase for Australian families. This does not stand scrutiny either. Details of this tax are not set in stone, but we can be definitive about a few things. The modelling done by KPMG estimates that prices will fall, including transportation costs down by 1.7 per cent, footwear costs down by 1.3 per cent, household contents and services down by 1.1 per cent and food costs down by almost one per cent. Why? Because cuts to the corporate tax rate from 30 to 28 per cent flow into lower prices for domestically produced goods and services.

I have worked in the resources industry, and I have great respect for the long-term commitment to resource issues. I respect friends and people who have accomplished great deeds through mining; they built great businesses and employed hundreds, thousands and even tens of thousands of people. Miners like Andrew Forrest, Reg Howard-Smith of the Chamber of Minerals and Energy in Western Australia, Michael Roche of the Queensland Resources Council, David Flanagan at Atlas Iron, George Jones at Gindalbie, Barry Cusack, Alan Cransberg, Neil Hamilton, Sam Walsh at Rio Tinto and, of course, my old mates John Akehurst, formerly of Woodside Petroleum, Don Voelte, currently at Woodside Petroleum and Keith Spence, formerly of Woodside Petroleum. They are all friends whom I know and value. But for a month my door has been open to dozens of Western Australia’s finest business leaders and entrepreneurs. We must keep talking to ensure that we get the tax implementation right. I know that this has been a hard time, but we will get the tax right—we have to.

Earlier this year I spoke about the East Kimberley Development Package, and I would like to update the House on the progress of the package. It is an excellent example of all levels of government working together to benefit communities in northern Australia. To date we have partnered with the Western Australian government, the Shire of Wyndham East Kimberley and Indigenous bodies to increase housing, employment and health services in the East Kimberley. The East Kimberley Development Package has been rephased, and $78 million will now be spent in the 2010-11 and 2011-12 financial years. The change is testimony to the benefit the projects are delivering to the north. Let me remind the House that the East Kimberley Development Package commits $195 million through to 2001-12 by investing $50 million in health, $64 million in education and training, $50 million in housing, $15.4 million in transport and $15.6 million in community infrastructure.

The investment is significant. Direct investment in the Kimberley is the right thing to do. It will mean long-term benefits in the East Kimberley region. So far we have approved 29 project plans worth $95.6 million, and transferred the funds to the Western Australian government, the Shire of Wyndham East Kimberley and two Indigenous corporations. From sound community based consultation and engagement the projects are progressing quickly. The people of Wyndham are already benefiting from the completed community swimming pool, hospital refurbishment and an expanded residential rehabilitation facility.

In Kununurra on the weekend, I saw that the patient transfer facility at the airport is now well advanced. Soon, and for the first time, there will be a place to care for sick patients before they are moved by the Royal Flying Doctor Service to a larger hospital in Perth or Darwin. This is an important development for residents and visitors to the region, who are the mainstay of the local economy. Twenty-three of the hundred dwellings funded by the package are currently under construction in Wyndham and Kununurra. The rest will be completed by December 2011. This will mean more housing for the region for mums, dads and their children who are currently doing it tough due to overcrowding.

The WA government is currently assessing tenders for work on the larger, more complex health and education projects which will start later this year. Delivering a package of this dimension in a location as remote as the East Kimberley was always going to be challenging, but it is being done. It is only with hard work at all levels of government and the close involvement of the community that the East Kimberley Development Package can be a success. It is to be applauded. While we are keen to see projects completed as quickly as possible, there are social outcomes, like community engagement, training and jobs, which also need to be met. We are working towards these, and I congratulate community leaders and the government for their hard work.

During the development of these project plans, I worked closely with WA Minister for Regional Development Brendon Grylls; Minister for Health Kim Hames; Minister for Education Liz Constable; Fred Mills, mayor of the Shire of Wyndham East Kimberley; and Jeff Gooding of the Kimberley Development Commission. We worked together to make sure the project outcomes meet community needs. I thank them for the spirit in which they have engaged on these projects. The Office of Northern Australia and the Western Australian Department of State Development have engaged community members and organisations to deliver services while the projects are fleshed out. We now have detailed plans, with a demanding work program that matches what the region really needs. Scheduling the work, and finding the people to do it, taking into account the weather, the need to keep schools and hospitals open and the need to keep the Wyndham port and Kununurra airport operating has not been easy.

The delivery of the package will rely on local businesses and local workers, as well as bringing in major contractors who have experience in the East Kimberley. There is a focus on maximising employment for Indigenous people, including an apprenticeship program established in partnership with the Western Australian government. Working with local businesses and contractors gives us the best chance of efficiently completing our projects and to increase training and job opportunities for local people. To support the Indigenous employment effort, the Commonwealth and the state of Western Australia are appointing local employment coordinators to work with job service agencies, trainer groups, Indigenous organisations and employers to link job seekers with real jobs and to make sure that the support is there to keep locals working.

Long-term benefit is a key principle of the East Kimberley Development Package. The development of transitional housing is a great example of the government working with East Kimberly organisations like the Shire of Wyndham East Kimberley, the Wunan Foundation and local Indigenous traditional owner groups Mirrawong Gadjurong and the Gelganyem Trust to look at different ways to engage Indigenous people in training and employment and to keep them working.

Of the 100 houses to be constructed under the East Kimberley Development Package, 50 will be earmarked for transitional housing. This is for Indigenous people who no longer qualify for social housing because they are working but who will still need support before entering the private rental market. Over the past year, all levels of government have looked at different ways to manage social housing. We have looked, and we are still looking, at how we can do things better. The Western Australian government has specifically examined different models for social housing management in the region, which include greater community participation in decision-making through a full community management model. I must acknowledge Peter Stubbs and former Western Australian Treasurer Troy Buswell for their cooperation and support and, in the case of Peter, inspiration with this work.

We are listening to the people in communities in Northern Australia and working in partnership to deliver on their expectations and to achieve common goals. This way of doing business in Northern Australia provides a model that could be extended to other communities, and no doubt we will continue to learn from this experience about how to do it better. I will continue to work with the Office of Northern Australia and my Western Australian government colleagues to see that the project is complete and that the benefits of the package continue. I commend the bills to the House.

Debate (on motion by Mr Hawke) adjourned.