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Monday, 4 June 1984
Page: 2405

Senator CHANEY —I address a question to the Minister for Resources and Energy in view of the widespread concern at the imposition of an extra tax of 45 per cent on off-shore oil as a resource rent tax on profits above a threshold of the long term bond rate of 10 per cent. The concern arises from the high risk of off- shore oil exploration and the importance to Australia of maintaining a high level of self-sufficiency. Will the Government reconsider its proposals and withdraw them? If it will not withdraw its proposals for a resource rent tax, will it reconsider both the threshold and the rate, both of which pose real disincentives for further off-shore oil exploration?

Senator WALSH —No, the Government will not withdraw the proposal. A Cabinet submission is currently being prepared. I cannot be sure whether a final decision will be made next week or the week after. Senator Chaney will get the details then. I know that Senator Chaney has been highly critical of this proposition. Not all of the industry has been critical of it. Some quite significant sections of the industry have been supportive. We all know what Senator Chaney would do. In a speech to the Australian Petroleum Exploration Association in Hobart on 10 April this year he said that his assessment of the case was that the Government was desperate for additional revenue and had decided to impose a resources rent tax. He said:

In that theoretical situation-

I interpolate that as being the perceived need of the Government for extra revenue-

the method I would favour would be some additional excise on fuel products generally, with the second best option being a levy on new oil.

I am grateful to Senate Chaney for having put on the record what a Liberal Government in which he was the Minister for Resources and Energy or its equivalent would do. He would not impose any rent tax or attempt to tax away any of the economic rent contained in Australian off-shore petroleum resources. He would jack up the price of petrol to the motorists. He would let big multinational oil companies keep a disproportionate share of the income that they gained from these fields while simultaneously jacking up the price of petrol for motorists. I hope that the electorate also is equally clear about what a Liberal Government with Senator Chaney as the Minister for Resources and Energy would do.

In the same speech to APEA, Senator Chaney said that if an arrangement such as this was in place a subsequent Liberal Government-should there ever be one; heaven forbid-would not necessarily reverse that arrangement. The very next day his leader, pro tem, who was addressing the National Press Club was asked a question as to whether a Liberal government would abolish a resources rent tax and a levy on new oil. After consulting with the discredited former Treasurer who, as we all know, is an expert on matters numerical, although not necessarily forthcoming to the electorate about his findings on matters numerical, Mr Peacock said: 'Yes, yes'. That meant that a Liberal government would abolish an excise on new oil and any rent tax which the Labor Government would put in place . From that response we can get some idea as to what a future Liberal Government -should there ever be one-would do. It would abolish two probably quite significant sources of revenue and quite justifiable levels of taxation on Australian natural resources and slug the motorist an extra $500m to a billion dollars a year through increased petrol taxes. I am glad that has all been put on the record very clearly by Senator Chaney and Mr Peacock. As I said earlier, I expect the final details and the final decision to be made by Cabinet either next week or the week after. I ask Senator Chaney to be patient until that decision is made.

Senator CHANEY —Since the Minister has seen fit to quote partially what I have had to say, I ask him a supplementary question. Does he agree that the need for additional taxes on the part of his Government arises from the fact that the rate of growth of government expenditure in real terms under Mr Hawke in his first year in government is four times as high as the average rate of growth of government expenditure under Mr Fraser?

Senator WALSH —This Government has yet to complete one full fiscal year. It inherited, as we all know, a desperate financial situation from its predecessor, an impending Budget deficit of almost $10 billion. The discredited former Treasurer and the discredited former Prime Minister were telling the public only the week before the election that the impending deficit was $6 billion when in fact it was $10 billion. Therefore, this Government had a tremendous financial problem with which to deal. However, so far as the petroleum rent tax proposal is concerned, there is no possibility even under the most optimistic assessment that that could yield any government revenue for about three years. Thus the revenue yield from that tax in the immediate future is not one that is relevant.