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Tuesday, 5 May 1987
Page: 2320

Senator SANDERS(5.10) —I think we can operate on some basic premises in this nation. One is that the Hawke conservative Government will not allow anything to take place that will be disadvantageous to its rich and powerful friends in the transnational companies. Therefore, we can take it that the Petroleum Resource Rent Tax Assessment Bill 1987, the Petroleum Resource Rent Tax Bill 1987, the Petroleum Resource Rent Tax (Interest on Underpayments) Bill 1987 and the Petroleum Resource Rent Tax (Miscellaneous Provisions) Bill 1987 have the approval of the transnationals and the oil companies in general. Of course, the oil companies are screaming about the legislation, but they scream about anything, almost out of habit, and they have paid lobbyists who are making quite a bit of money from apparently opposing what the Government is doing. Of course, the Opposition is opposing this Bill because it is in the business of opposition, and I suppose it feels that this is a reasonable operation. But this Bill is very favourable indeed to the oil industry.

Senator Cook —That's right.

Senator SANDERS —Senator Cook agrees with me that it is favourable to the oil industry. An article in Australian Business of 15 April 1987 refers to what Senator Gareth Evans said at a recent conference of the Australian Petroleum Exploration Association and states:

He added that the benefits of a resource rent tax would only be understood when it was compared with the tax it replaces. It was pointless and unrealistic to say that no tax would be preferable, he said.

In other words, he was telling the oil industry that this is a good tax for it. The second reading speech on the Petroleum Resource Rent Tax Assessment Bill states:

Particularly in light of the current volatility of world oil prices, the resource rent tax system thus offers considerable benefits to the petroleum industry.

Senator Crichton-Browne —Try and tell them that.

Senator SANDERS —The oil industry knows it. As this discussion progresses, we will find out that it knows it all too well, and it will have to make some adjustments. Of course, this Bill has been coming for some three years. Apparently, the oil industry has been operating on notice that this Bill would eventually arrive on the scene. I think that notice was contained in a Press statement. Negotiations have been going on for three years, during which the Government has basically caved in to the industry's demands. During these negotiations the Government agreed to raise the threshold rate from about 25 per cent, which was the long term bond rate plus 10 percentage points, to the current threshold of about 29 per cent, which is the long term bond rate plus 15 percentage points, and to reduce the tax rate from 45 per cent to 40 per cent. In other words, the Government has given the oil industry everything that the oil industry wants.

We find that the Senate Standing Committee for the Scrutiny of Bills found some specific difficulties with this Bill. The Committee looked at the legislation and was quite critical of it in a number of areas. One area of concern was retrospectivity. The Committee states:

Although the Bill contains no clear statement as to its real date of effect, it appears that in certain respects it will have retrospective effect to 1 July 1984. Profits from the recovery of petroleum in areas covered by production licences granted on or before that date are expressly excluded . . .

. . . .

The Second Reading Speech indicates that it is not anticipated that any petroleum resource tax will be received before the 1989-90 financial year. However because any tax that will be payable will be determined after taking account of past project receipts and expenditure the Committee draws the retrospective application of the Bill to the attention of the Senate under principle 1 (a) (i) in that it may be considered to trespass unduly on personal rights and liberties.

The Australian Democrats are very much against retrospective legislation, as, I think, are all fair-minded people. We simply cannot run a country on the basis of changing the laws that exist. If a person does something, in good faith, which is legal when he does it, it is simply unjust for the Government to change the law some time down the track to make it illegal. Retrospectivity is just not on in a democratic society.

The Scrutiny of Bills Committee has other complaints about this legislation. One of the more major ones in my opinion is contained in the following statement from the Committee:

The Committee therefore draws clause 107 to the attention of the Senate under principle 1 (a) (i) in that by providing for entry on land or premises and the inspection of documents without a search warrant it may be considered to trespass unduly on personal rights and liberties.

Once again it mentions trespassing on the rights and liberties of the Australian public. The Committee also states:

The Committee therefore draws paragraph 108 (1) (b) to the attention of the Senate under principle (1) (a) (i) in that by failing to stipulate that the times and places at which persons may be required to attend and answer questions must be reasonable it may be considered to trespass unduly on personal rights and liberties.

So, once again, the Senate Standing Committee for the Scrutiny of Bills has said that this Bill will unduly trespass on the rights of Australian citizens.

The idea of a resource rent tax is a good one. I believe that the people of Australia, who own these resources, should have proper recompense from the companies which extract the resources. After all, it is the people's resources that the companies are using and making profits from. But the resource rent tax, which is basically a tax on profits rather than on productivity, must have proper threshold rates in order to operate correctly; that is where this Bill falls down. The Government has raised the threshold rates and reduced the tax rates to the point where, while in name it is a resource rent tax, in practice it is not; it is a give-away tax, a give-away to the oil companies. Basically, unless one applies the same principle to all taxpayers-that is, the payment of no tax until a minimum rate of return is earned-the petroleum companies have an unfair advantage. That is what happens. They do not pay any tax until they reach a profitable situation. The petroleum companies have some very clever and creative accountants. We can be sure that if they are doing their job-and they will be because they are highly paid and quite clever-the petroleum companies will pay no tax whatsoever. They have paid none in the last three years in this respect. I put it to the Senate that they will never pay any tax on this, and the Government knows this.

Because of the retrospectivity aspect of this Bill, with which we do not agree, and for a number of other reasons, we are unhappy with this legislation. We feel that this Bill pays no attention to renewable resources. It is time that we in the Senate, the Government and this country took some cognisance of finite world economics. We are still living in a fool's paradise. We still feel that the earth is made of minerals, of oil, of uranium or whatever. But it is not. These things will all run out. We are still planning our economy and our taxation schedule on infinite oil reserves. We do not have infinite oil reserves. We do not have very much oil left. Even if exploration were subsidised even more heavily than it is, and if the oil companies received even better tax incentives than they now receive, sooner or later we will run out of oil. It is that clear.

We must go to renewable resources. This Bill does not address that. It makes no provision for channelling any of the funds gained-if they are ever gained-from the resource rent tax into renewable resources. There is nothing about this in the Bill. At the moment we should be keeping our oil in the ground and using our technology and scientific resources to develop renewable resources so that we can use the oil wisely in the future in parallel with our renewable resources.

The Democrats will vote against this Bill-which will put the cat amongst the pigeons, because the oil companies thought we would vote with the Government. The oil companies have thus allowed the Opposition to oppose it. It will be quite interesting to see the Opposition do its flip-flop when the oil companies go to it and say: `Look, if the Democrats oppose this Bill and the Opposition opposes this Bill, it will not pass and the oil companies will not receive all the benefits that the Government has written into this Bill'. It will be interesting to watch the Opposition do its backflip to protect its masters in the oil companies. What the Australian Democrats want is a true resource rental system, with effective threshold levels that will benefit the people of Australia, not the oil companies. The Australian Democrats do not support this Bill in its present form.