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Thursday, 21 June 2012
Page: 7510


Mr HOCKEY (North Sydney) (15:16): I thought the acting Prime Minister was going to stay for my address but he was like Captain Emad. He was out the door. Captain Emad, what happened to him?

The DEPUTY SPEAKER: Order! The member for North Sydney may follow if he is not careful.

Mr HOCKEY: Madam Deputy Speaker, the Westpac consumer sentiment index was released last week and Westpac described their latest survey for June as 'another disappointing result'. The National Australia Bank had its monthly business study last week and their chief economist, Alan Oster, said:

I have never seen a result like that ever.

He added that the degree of weakening in activity over the past couple of months suggests that the economy is struggling with conditions in some of the previously strong industries—namely mining and finance. Business and property are also looking somewhat laggard at present.

We get accused of talking the economy down. We get accused of negativity. Here are the worst consumer sentiment surveys that have been seen by the surveyors, and we get blamed for it as if it is our fault. The government is the one that is in charge of overseeing the Australian economy. The government is the one who is responsible through its policies for the direction of the Australian economy and this week alone we have seen the government bury and resuscitate policies in biblical proportions that have not happened for more than 2,000 years. Policies that came out during the budget were killed and then resuscitated by the Prime Minister last week. The first was company tax cuts. The second was the passenger movement charge CPI indexation which the government increased in the budget but this week dumped. The third one truly takes on Lazarus proportions—withholding tax on management investment trusts. It was announced in the budget that the government was going to reduce it from 30 per cent to 7½ per cent. The budget said it is going to go back up to 15 per cent.

An opposition member: It bounced.

Mr HOCKEY: It has not quite bounced, but they put it in their bill that was before the House yesterday. Then they excised it from the bill yesterday and today they have reintroduced it. So at first the government reduced it from 30 per cent to 7½ per cent. Then in the budget they said they were increasing this tax to 15 per cent. Yesterday they said they are dumping it back to 7½ per cent and today they have introduced a bill to increase it back to 15 per cent. And they are wondering why people are confused about the direction of this government. Seriously, it is a yoyo tax policy; it goes up and it goes down, it goes up and it goes down. But this is consistent with Labor in government.

We know the almighty proposal from the Prime Minister that there would be no carbon tax under a government she leads and then a few weeks later she introduced it. At the time, the Treasurer and I were on the 7:30 Report. That is when Kerry O'Brien was still hosting it. Red Kerry was still there interviewing. He asked a question of the Treasurer. He said, 'Would you introduce a carbon tax?' The Treasurer said: 'That is a hysterical assumption, a hysterical allegation. We will not do that.' Of course, Australians took him at face value. And here the Treasurer was giving us a brief analysis of what hysterical is today. He is the man hysterical because he is in a week and a half introducing the world's biggest carbon tax.

But this is part of the litany of broken promises from Labor. I thought I would get a list. There are more than 37 election promises broken, promises made solemnly by the government to the Australian people, promises that have resulted in back flips and contortions on a grand scale. You remember community consensus on taxing carbon. That was one of the love-ins. They said they were going to cut company tax—a $500 standard deduction on tax returns is what Labor promised. They dumped that in the budget. They promised to deliver the millennium goal on foreign aid. Well, they have dumped that. They have dumped a 50 per cent discount on interest income. They were so committed to dealing with the challenge of carbon dioxide emissions that they had a grand plan to give green buildings a tax break. They have dumped that. They promised to increase defence spending. They said there were going to be cuts in the defence budget but they were going to reinvest them in defence. The Prime Minister has broken that solemn promise and broken it quite spectacularly, because Australia is now at the lowest level of defence spending as a percentage of GDP since 1938, but that is what the Prime Minister calls a defence spending increase.

Believe it or not, those opposite said they were going to spare the Public Service from budget cuts. I believed them, too, because the Public Service is 20,000 larger in number than it was when they came into government just four years ago. They are making some cuts, but in the wrong areas. Remember gambling reform? Remember the agreement with the member for Denison? He remembers it, but you guys have forgotten. There is more. We know about onshore processing. We could get Captain Emad in here again. Where is Captain Emad? He has gone out the door with Swanny! And we remember the offshore processing centre in East Timor. What the hell happened to that? The Prime Minister forgot to tell the Timorese she was going to build a processing centre for refugees in their country. That is like reopening Fort Denison in Sydney and the Prime Minister of East Timor announcing that he is going to shuffle people there.

Of course, we had cash for clunkers—they believed in that. That did not even get to legislation. They had a big review into the Building the Education Revolution program, led by Mr Orgill. They promised to implement all the recommendations and they have implemented none of them. What happened to the Solar Credits scheme? And how about the national school curriculum, which the Prime Minister said was definitely going to start on 1 January this year? We are still waiting.

The list goes on. I could spend all day here, but do you know what? The first point to make is that this is what creates sovereign risk—these changes; these flip-flops on policy. We do not write the speeches. We do not write the press releases from business leaders and employers, not just here in Australia but also around the world, expressing grave concern about the incompetence of this government. The quotes I am about to give are all from 2012—this year. So I am putting aside all the legitimate criticisms of the Rudd government in 2008, the Rudd government in 2009, the Rudd-Gillard government in 2010 and the Gillard government in 2011 and just dealing with the concerns of employers, businesspeople and workers in 2012. Ian Matheson is from the Australasian Investor Relations Association—covering the whole region. In a report on the survey of the top 200 ASX companies he said:

In the comments from corporates, obviously reflecting what is being told to them by international investors, there is absolutely no doubt there has been heightened concern about things such as the carbon tax, the MRRT (minerals resource rent tax), growing industrial dispute activity and sovereign risk generally. That has been going on for 12 months now.

John Stanhope, former CFO of Telstra, said:

… people looking outside at Australia think we're a sovereign risk because of the uncertainty created by policy fluctuation.

Colin Beckett from Chevron, in charge of the $43 billion Gorgon LNG project in Western Australia, said:

The key is to create a policy and investment environment sympathetic to capability building for the long run—

pointing to the need for—

a tax system that provides … certainty, stability and low sovereign risk.

Bernie Ridgeway, Managing Director of Imdex Ltd, said:

You're taking a previously blue chip jurisdiction for investment (Australia) and we're turning into something where we've got sovereign risk and uncertainty.

I am going to keep going because I want to get these comments on the record. David Knox, Chief Executive Officer of Santos, said:

My clear message to the Australian Government is: do not create uncertainty.

Instead provide our investors with the confidence in Australia as a stable fiscal and regulatory region—allow us to stay competitive.

This is now extending overseas. David Denison, President and CEO of the Canada Pension Plan Investment Board, said—and I am sure the member for Leichhardt can add to it; he is providing plenty of commentary here:

… Australia’s budget that was tabled last week effectively doubled the tax burden on our real estate and infrastructure holdings in that country.

If we conclude that these kinds of risks within any country become significant enough to call into question the predictability and stability of cash flows that are at the heart of the investment rationale for infrastructure, our response will be very quick and rational—we will simply stop investing there.

This is about the withholding tax on managed investment trusts, which the government said they were going to reduce from 30 per cent to 7½ per cent. In the budget they went and doubled it to 15 per cent. Yesterday, they dumped it back to 7½ per cent and today they have introduced legislation to re-increase to 15 per cent. One of the biggest investors in the world is saying: 'What are you doing? We will put our money somewhere else.' And they do not just invest in mining; they invest in basic infrastructure like electricity, water, toll roads and transport more generally—and do you know what? They are saying it is getting too hard.

Ivan Glasenberg, CEO of Glencore, one of the biggest miners in the world and about to buy Xstrata, said in London:

At least in the Congo they need you, they want you there and if they start changing the rules on you, you may not continue investing.

   …   …   …

So Australia does have its risk, yes. We saw the carbon tax, we saw the mineral resource tax.

This is one of the biggest miners in the world saying that the Congo is proving to represent a lower sovereign risk than Australia under Labor. If you thought that was a one-off in London, Jac Nasser, who is the Chairman of BHP Billiton, is on the global board of News Limited and is a former global head of Ford, said:

I cannot overstate how the level of uncertainty about Australia's tax system is generating negative investor reaction.

He says Australia is increasingly 'one of the higher cost countries'. Tom Albanese, Chief Executive Officer of Rio Tinto, said:

I am sorry to say, now, frankly, when I meet with investors around the world they are saying, 'Tom are you worried about your over-exposure to Australia'  … that’s not a good thing, that’s a damming testimony for where Australia fits. It's not something to get fretful about, but it's something that should be recognised as a problem.

David Murray, former head of the Future Fund—I am going on, because these are important to list—said:

The consequence of introducing that tax at that level in Australia today is very, very bad for this economy, particularly in terms of its international competitiveness … it raises costs further within Australia. It reduces our competitiveness for export of energy related commodities and it therefore renders us less competitive in the future.

Bernie Brooks, Myer chief executive, said:

I'm not sure how you are going to get a greater degree of efficiency when you have the Fair Work Act—

I have hardly mentioned industrial relations—

which is going to cause an increased cost of labour … The reality is paying 225 per cent penalty rates on a Sunday is going to have a significant impact on business

We are not writing these things. These are people that employ other Australians. Bernie Ridgeway, managing director of Imdex, said:

You're taking a previously blue chip jurisdiction for investment (Australia) and we're turning into something where we've got sovereign risk and uncertainty.

Joe Ricciardo, Managing Director of GR Engineering, said:

It's in a de facto government arrangement where the Labor Party's being controlled by Greens and Independents and none of them are aligned to what needs to be done in the country.

Peter Agostino, Senior Managing Director of CBRE, said:

The Labor Party is in the hands of the Greens and Independents for every decision. The issue is we have a Government that doesn't have the ability to govern.

I can go on. Tony Sage, Executive Chairman of Cape Lambert, said:

Fund managers who control stock markets around the world all are telling me they are not investing in Australia because of the Government.

BGC owner Len Buckeridge says:

We have become the laughing stock of South East Asia as our reputation falls into a morass

I can keep going on. The bottom line is this: Labor is creating uncertainty in Australia. Labor is creating negativity in Australia. Labor's taxation incompetence and poor governance arrangements prove it is not ready to govern the country and should step aside. (Time expired)