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Monday, 21 November 2011
Page: 12954


Mr TONY SMITH (Casey) (16:02): I began my remarks on the mining tax legislation in the minute or two just prior to members' statements earlier this day. At that point I was recalling the long and winding road of this mining tax that began about 18 months ago. It began, as I said, when the Treasurer, Mr Swan, finally, after six months of consideration, released the Henry review into taxation just days before the budget. At that point he announced that the government would have a mining tax. All honourable members, many members of the public and those listening today will recall that the government, after announcing this measure, sought through the then Prime Minister, the member for Griffith, to attack the mining companies who had the temerity to criticise this very bad tax proposal. We all remember how the then Prime Minister, the member for Griffith, criticised our most successful mining companies on the basis of their levels of foreign ownership. As we all recall, the mining tax eventually was the subject of much negotiation. The government had to concede they had got some of the details wrong, but they would not concede the essential point that you would think they would know in their hearts and that is that this is a very bad tax proposal that will damage investment, damage jobs and harm our mining industry—one of the great strengths of the Australian economy.

We now come here to this House to debate this package of bills. As the member for Higgins outlined a couple of hours ago, these proposals and this mining tax went before the House of Representatives Standing Committee on Economics. The process in that committee alone says so much about how the government has fumbled and stumbled at every turn in trying to implement this bad tax. Submissions were open and closed within a three-day period. There were two half days of hearings but, unfortunately, it would not have mattered what evidence went before that committee as the Labor members of that committee—the majority—had made up their mind that no matter what the evidence was they would support the imposition of this bad tax.

As I was saying prior to question time, it will not only create a black hole for the mining industry but also create a black hole for the budget. The shadow Treasurer, in speaking on these bills on behalf of the coalition a few weeks ago, made points about the government's chaotic process and how that of itself has caused a lack of certainty. Those points have also been made by many people other than those on this side of the House. If those opposite do not want to listen to those of us on this side of the House, at least listen to some of the witnesses who, in that short period of time, had the opportunity to come before the various committees and make the point about the government's approach. In fact, they should listen to the comments of Yasser El-Ansary of the Institute of Chartered Accountants in Australia—an esteemed body that calls it as it sees it on issues of tax design, tax administration and tax policy generally. He recently said:

The government's approach to consultation and policy design in respect of the new resource tax arrangements during the course of 2010 can only be described as abysmal.

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If there was an international prize for the best worst policy consultation process in a sophisticated open market economy, Australia's efforts during the course of 2010 would win hands down.

He went on to say:

But while the consultation process around the original resource super profits tax announced in early May 2010 was bad, the subsequent consultation process that involved striking a deal behind closed doors with three key mining groups in July 2010 was even worse. It would not be unreasonable to say that that represented a low point in Australia's economic and political history. It is a low water mark which most Australians would prefer not to see repeated in our lifetime. I think you would be hard pressed to find anyone to support the view that that is a good way to make public policy decisions.

The government have heard that and they have ignored that. They have decided to push on, for one simple reason: they want to collect some revenue. We have heard the Treasurer and the Assistant Treasurer talking about the revenue they wish to collect and the fact that they have linked that to expenditure on a number of levels. I will address the government's approach on that in some detail because it does tell the story of this government and its fiscal incompetence and irresponsibility in so many ways.

An important point that others have made in this debate is the issue of sovereign risk. The shadow Treasurer made this point in some detail in his contribution in the House. Clearly, the government is looking at a key performing industry, namely the mining sector, and setting out to hamper it. It is an important sector in Australia and it gives Australia an important comparative economic advantage. I will not take the time of the House to recite all of the important statistics that the shadow Treasurer and others on our side of the House have rightly used to illustrate that important fact but, needless to say, in this highly competitive sector Australia competes with a number of countries, including Brazil, Chile and Canada. We compete for investment right through those industries. The government's approach to this issue and the actions it has taken in seeking to introduce this tax has very much undermined confidence in the policy architecture of Australia. The signal has been sent that this government will chop and change.

The signal of uncertainty has been sent, and again I would refer honourable members to the comments of those within the industry. I will quote the CEO of AngloGold Ashanti, who said at a Commonwealth Business Forum in Perth in October that Australia is one of the top sovereign risk countries in the world on the basis of government policy and its demonstrated behaviour in terms of taxation policy and inconsistency in policy. Those are the words of a key player in the industry. That has not deterred the government one iota. For those members opposite who are debating these bills this day, I urge them to think about the comments of those who are experts within the industry. Indeed, the CEO of the Minerals Council of Australia, Mr Mitch Hook, explained in his testimony to the parliamentary inquiry just a few days ago that the mining tax has already eroded the investment climate in Australia by increasing the perception of sovereign risk. He cited the Fraser Institute in Canada, which is an independent think tank that surveys more than 400 CEOs around the world. It looks at 51 jurisdictions of resource-rich nations down to the state or provincial level. What has gone on up to this point with the debate over the MRRT has been enough—without the bills even being passed—to drop Australia from 18th out of 51 to 31st out of 51 in what the Fraser Institute calls the Policy Potential Index.

The Chamber of Minerals and Energy of Western Australia expressed similar concerns. I quote:

Uncertainty around implementation and administration of the new measures increases the risk premium international investors demand from Australian investment.

And I could go on. In the final minutes that I have remaining, I would like to address the issue of the fiscal irresponsibility of what the government is doing. As I outlined a few minutes ago, the government says that it wants to take the additional revenue from its badly conceived tax and fund a number of things that it has linked within the budget. As the shadow Treasurer has pointed out, even on the figures the government has produced, this opens up a black hole within the budget. Also, should there be a reduction in the forecast revenue, there is no reduction planned by the government in the spending which it has handcuffed to the revenue it expects to get. What that clearly does is open the budget up to a black hole in the future that this government does not care one jot about.

This very issue was raised during the inquiry of the House of Representatives Standing Committee on Economics. Let me just say that it was obvious from the testimony of the Treasury officials that this was a government decision and one the government had to answer for. The government is putting in place programs in perpetuity, relying on a revenue base that will move around and wobble. But we all know that our record terms of trade, whilst welcome, will not continue forever and a day.

The government has, every step of the way in the last 18 months, shown why it cannot manage the budget and why it cannot manage the economy. This is a bad proposal from a bad government, and it deserves to be rejected.