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Wednesday, 12 September 2012
Page: 6769

Senator MILNE (TasmaniaLeader of the Australian Greens) (16:27): I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill and have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Government's mineral resources rent tax is a pale shadow of that recommended by the Henry Tax Review, with its low rate, exclusion of most minerals and other unjustified concessions conceded by the Government under duress after the mining industry launched a $20 million advertising campaign.

The particular weakness of the tax addressed by this bill is the interaction with mining royalties levied by the states. The Government has effectively given the states a 'blank cheque' to raise mining royalties by promising to rebate the cost of all royalties to the mining companies.

The Henry Review considered crediting companies for royalties paid. It said very clearly, however, that "the state royalty regimes would need to be fixed at a particular point in time to ensure that the Australian government does not automatically fund future increases in royalties". Under the Rudd Government's original RSPT the refund was limited to royalties imposed at the time of announcement.

The Government foolishly moved away from this principle in its negotiations with the big three mining companies and the subsequent deliberations of the Policy Transition Group and agreed to also rebate any future royalty increases. The Western Australian, New South Wales, and Tasmanian Governments have already announced royalty increases and the Queensland Government have foreshadowed increases in its budget. Under the terms of its current policy the Gillard Government will have to refund these additional royalty payments to the companies paying them, which could reduce revenue from the MRRT by around a cumulative $10 billion by 2020.

The Government has threatened to cut grants to states which increase royalties after July 2011 but this may prove difficult. It may, moreover, be circumvented by the Commonwealth Grants Commission's principles of horizontal fiscal equalisation.

The bill presents a better, clearer remedy to this problem of the Government's own making. We had warned the Government about this problem at the time, moving an amendment to the MRRT legislation on 19 March 2012. This bill essentially reprises that amendment, and will restrict the rebating of royalties to those in place as at 1 July 2011, protecting the MRRT revenue from erosion by the states. This additional revenue is especially needed when we want to fund the social reforms our county needs, particularly in education so that when the minerals start to run out or their prices drop we have a more educated and productive workforce able to generate sustainable incomes for Australia.

Senator MILNE: I seek leave to continue my remarks later.

Leave granted; debate adjourned.