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Thursday, 3 November 2011
Page: 12730

Mr ROBB (Goldstein) (12:46): I rise to speak today on the Minerals Resource Rent Tax Bill 2011 and associated bills. I think the comments by the most recent speaker, the member for Wakefield, say it all. He mentioned early in his speech that 'any mug can deliver a surplus in a growing economy'. I remind the member for Wakefield that the government he is a part of have proudly talked about keeping the economy growing and yet at the same time have presided over the three biggest deficits in this country's history—by a country mile.

This is the level of economic incompetence that is running this country. This is what we have to deal with. This is what industry has to deal with. This is why we have seen such enormous frustration from industry, not just the mining industry but also so many other areas of industry, who are just gobsmacked by the economic illiteracy of those opposite—and it was characterised today by the member for Wakefield. He said it all, and he said it on behalf of all his colleagues. They do not understand business. They do not understand economics. They are all about politics and spin.

We heard recently from the CEO of the New South Wales Minerals Council, Dr Nikki Williams—and, again, I think this says it all:

"We are the darlings of the business pages, yet we painted as demons in the early general news.

"We help treasurers keep budgets healthy and give Australia the strength to stave off the threat of recession, yet our industry is a lightning rod for the most adversarial of political debates."

The report goes on:

Dr Williams said Australia was in the middle of one of the longest mining booms in the nation's history.

"Yet we face multiple policy, regulatory and legislative challenges that might collectively render our sector a less attractive destination for international investment than countries such as Indonesia, Colombia or even Mongolia," she warned.

This is at the heart of the problem that we have with this stupid tax, this dangerous tax, this tax born of envy and paraded as a subject of envy when in fact it is ensuring that Australia, in a policy sense, once again under this government shoots itself in the foot.

The attempted implementation of this mining tax over the last 18 months has been one of the most shambolic policy episodes this country has ever seen. This legislation comes 18 months after the Treasurer announced his half-baked so-called resources super profits tax. The first version brought down one Prime Minister, who had not even seen out a term. This second version is contributing significantly to the imminent demise of another, if we are to believe the private talk of those opposite—and are they talking! And are they worried! The member for Wakefield should be in one of the safest seats around, but even he has problems.

Mr Champion: I'm not worried about you!

Mr ROBB: This tax is yet another symbol of the gross incompetence of this government. Firstly they tried to nationalise 40 per cent of the resources sector—

Mr Champion: What are you going to do with your taxing measures?

Mr ROBB: Mr Deputy Speaker, do I have to put up with this ignorance from the other side?

The DEPUTY SPEAKER ( Hon. DGH Adams ): Order! I ask the honourable member for Goldstein to keep to his speech and not take any notice of interjections.

Mr ROBB: It is very difficult, Mr Deputy Speaker.

The DEPUTY SPEAKER: Order! And I ask for the interjections to cease or I will have to deal with people.

Mr ROBB: Thanks, Mr Deputy Speaker. First they tried to nationalise 40 per cent of the resources sector. This is unprecedented, and it spooked investors around the world. Now this tax targets the mid-tier miners. It is a highly discriminatory tax. It is still in a very dysfunctional form as a tax. It has not received any favourable treatment except from the three big miners. It is seen as a bungled proposal and it reinforces that the government's core instinct is to tax, spend and borrow.

If you are responsible in any organisation—whether you are in business, sport or government—the first thing you do is identify your strengths. Once you have identified the two or three major strengths of your business or your country, you then seek to nurture, develop and protect those strengths, because they underpin your success. You do not see a football team send their champion player out onto the ground with a lead weight around his neck. You nurture your best players. They are the ones that give you the premiership. They are the ones who do something magical in the last half of the last quarter.

Clearly the mining and resources sector is one of our nation's great strengths. But what do we see? We see a government that has sought to introduce not just a carbon tax but also a mining tax into the environment of a mining boom when our mining and resources sector, perhaps our greatest strength, has contributed so importantly to the quality of life that we have enjoyed in Australia for well over 100 years. This government is imposing in the middle of a mining boom two new taxes. It is ignorance and it is envy, but, most importantly of all, it is dangerous. It is dangerous in terms of the lost job opportunities and the lost investment opportunities—and we are seeing sovereign risk manifest itself as a consequence.

Not only did they bungle the proposal in terms of its design—it has taken 18 months—but it is now being rushed in as a symbolic attempt at achievement by a Prime Minister who is hanging by her fingernails onto the leadership. That is what this is about. The way this thing has been designed and the way it is being introduced is all about politics.

Agriculture is another of our great strengths, but look at the way they handled the live cattle job. The incompetence with which they handled that has added to sovereign risk. Our international education effort is another of our great strengths, but they introduced a visa requirement where families have to have three years of the education cost and accommodation to get a visa. Then they wonder why 20,000 Chinese students have stopped coming here. That is ignorance and incompetence. They are obsessed with taxing, spending and borrowing. That drives every policy of this government. They are an old-style socialist government—under pressure all they know how to do is tax, spend and borrow. This mining tax is nothing but a tax grab, pure and simple. It is a tax that will discourage investment. It is a discriminatory tax.

Let's look at where it falls. In research released today by BDO, a major research group, the mining tax liability on Rio Tinto was calculated for the first five years, and it was zero, zero, zero, zero, zero. They calculated the mining tax liability on BHP, and you will not be surprised to learn that, for the first five years, it is another five zeros. They have taken the real-life numbers of a small emerging miner who is making revenue in the order of $600 million to $700 million and calculated its mining tax revenue: first year—2012—zero; second year, $49 million; third year, $107 million; fourth year, $96 million; fifth year, $68 million; and the following year, $63 million. So we are seeing a total effective tax rate of 40.18 per cent in the first year in which they pay the tax, 45.68 per cent in the second year; 45.76 per cent in the third year, 46.12 per cent in the fourth year, and 46.20 per cent in the fifth year.

This is a scandal. We are putting a lead weight around the neck of our greatest strength in this economy. When you look at our competitors around the world—and they are significant, they are large and they are coming at us as they invest in infrastructure to move a mountain of resources that exist around the world—the highest effective rate of tax including royalties is 40 per cent in Canada. We are talking about mid-tier companies paying a 46 per cent effective rate of tax with this new tax. In other countries, such as Brazil and Mongolia and other major future competitors, they are paying in some cases as low as 30 per cent and less. This tax is a lazy and short-sighted attempt by an incompetent government to prop up its budget. That is all it is.

Let's for a minute examine the myth that the minerals sector is somehow not paying its way. They paid very little in 1999, but by 2002-03—when the mining boom was just taking off—they paid around $6 billion in taxes including royalties and corporate taxes. In 2010-11, that figure exceeded $23 billion, a fourfold increase. The profits-based company tax was in the order of $4 billion in 2002-03. That grew to nearly $15 billion. A massive new investment over the next four or five years and the reduction in costs offsetting profits will mean that revenue will continue in a very strong way, depending on the price of the product. So with the existing taxes we have a fourfold increase which is likely to get much higher in the next three or four years, yet the government wants to come in with a carbon tax and a mining tax which will add billions and billions to the tax that these companies are paying, and the effective rate of tax will head towards 50 per cent. This is nonsense. At a time when we should be locking in all of the potential investment that this great resources sector can produce, we are inviting competitors around the world as we see a supply response coming down the line. We think we are awash with resources, and we are. Our iron ore is 13 per cent of the world's supply, and our coal is 15 or 16 per cent of the world's supply. But there are mountains of it elsewhere, and this government is oblivious to that. They are inviting competition, they are ensuring that we will not be competitive and they are taking great risks. They have spent this money before they have earned it.

Then there is the prospect of China. Global reports came from Paul Wiseman yesterday that China's comedown is being engineered by its policy makers. They want to slow expansion just enough to cool inflation. If they get down to six or seven per cent growth—which will cool inflation—China will still have strong growth, but there will be a 15, 25 or 30 per cent reduction in prices. This government is vulnerable: our structural deficit at the last budget was twice Germany's and was 30 per cent higher than even Italy.

Mr Champion interjecting

Mr ROBB: The member for Wakefield smiles. He does not understand what a structural deficit is.

Mr Champion: I understand it.

Mr ROBB: It means we are highly vulnerable. With this mining tax and the carbon tax, the government are spending money they do not have. This means we are being put in a highly vulnerable position with deficits potentially for another 10 years.

This bill should never have come before this House. It is the result of the politics of envy. It means that, as a country, we are shooting ourselves in the foot. Under this appalling government it will turn away job creating investment, it will make our economy more vulnerable, it is antigrowth and it is just another piece of stupidity. If we get the privilege of government, we will remove this tax.