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Monday, 6 December 1976
Page: 3346

Mr DEPUTY SPEAKER -Order! I ask the honourable gentleman to address the Chair.

Mr Kevin Cairns (LILLEY, QUEENSLAND) -It was such a delightful interjection, Mr Deputy Speaker, that I could not resist it. The honourable member for Blaxland has an appreciation of what is involved in the mining industry but his taxation provisions cannot be seen nor can they be proposed completely within a vacuum. The other proposition that concerns me is that when people look at the mining industry the first thing they say is that the industry is receiving too much assistance and it needs to be cut down. On the other hand they say that the industry needs to be looked at very suspiciously because it does not have Australia's interests at heart.

There is one notable example which works against that proposition and which has been evident in recent days. Everybody knows that devaluation has certain effects within an economy. It has a principal effect on exporting industries, depending on how their orders are written, and it has a more indirect effect on industries which can shelter behind an increased barrier to overseas imports. That is simple enough. Some people may say that the mining industry always wanted devaluation, but let me remind them in respect of the great mining companies in Australia, and one of the oldest, Mount Isa Mines Ltd- for which devaluation was a boon and from which it was always designed to make very greatly increased profits- that Sir James Foots in his annual report made it quite clear that he, judging Australia's position, was not in favour of devaluation. That is a testament to manifest goodwill which ought to be acknowledged as such.

With respect to the great part of the coal export industry, especially that part which is situated in Queensland, where the contracts were written in terms which were designed on a devaluation to earn it very greatly increased profits, it would be acknowledged that the chairman of the Coal Exporters of Australia also indicated, on a judgment as to Australia's position, that there ought not to be devaluation. I am not saying from this argument that devaluation was incorrect. I am saying that when people look at the mining industry in toto and regard its members as robber barons they are making a very unfair and incorrect judgment. In both cases against personal interest they judged that a certain course of action was appropriate for Australia.

I am concerned also to see that the mining industry should be allowed to expand because I know its effect, even in a domestic sense. Whether it be Mount Isa Mines Ltd, the Utah Development Company, Thiess Peabody Mitsui Coal Pty Ltd or even little sand miners, I know that the employment multiplier in the region and in the State in which those operations occur is four to five. For every one person employed by a mining company, particularly at a time when it is undertaking some significant capital expansion, four to five other people within the State in which that company operates would be employed on account of that mining operation. One knows that there is another multiplier of four to five that has to be applied particularly in those parts of Australia in which mining occurs to determine the population that is supported. For example, the open cut coal mines, which for a long time were scarified, were looked at jealously by people in parts of Australia where there were underground coal mines. It was said that open cut coal mines were not supporting many people. At one stage 3 years ago when 3000 people were employed in the great open cut coal mines of Australia, within that State alone, quite apart from export income, between 60 000 and 65 000 people owed their support and their living conditions to that direct work effect. That is quite apart from the transfer effect which I said occurred from the fitter and turner at Mount Isa to the fitter and turner working for Ford or Chrysler.

I merely say that to illustrate that mining is of absolutely incredible significance in Australia. I do not believe that its significance can be overstated. I doubt that we shall be able to devise any tax system, any income system or any beneficial system in a fiscal sense that would enable Australia to become a very great or significant exporter of manufactured goods. So we shall rely increasingly on mining and in the years ahead we shall rely to a very significant extent on uranium, if those standards of living are to be maintained and if imports are to be paid for.

It is for that reason that I welcome the provisions in this legislation that relate to mining. Their value will not be short-term but will be very long term indeed. Even though some of the provisions are generous- the 20 per cent reducing balance write off is generous and it is somewhat in excess of what was proposed in the Industries Assistance Commission report- who could say, having looked at what has happened to the balance of payments in the months subsequent to that report being brought into operation and being aware of the tragically increased need in Australia for export markets, which is associated with the devaluation last week, that assisting a currency to retain its value is going to be detrimental to this country? It is not. So I do not believe that the 20 per cent write off provision on a reducing balance is an overstatement. Even though it is quite clear, for example, that on a $100m investment, even assuming the investment allowance which would apply to 55 per cent generally of mining equipment was somewhat lessMr Keating- More.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - That is doubtful. But even presuming that the rate of inflation goes down from 10 per cent to 6 per cent over 5 years, in present money terms the contribution of the Government towards that $100m initial investment would be between $48m and $54m, depending on the cash flow in early years. But in view of the other ripple effects that would occur through an economy as a result of the undertaking of an operation that would not otherwise be undertaken, that would be money very well spent indeed and it would spread throughout the rest of the country.

What I have said relates principally to 2 parts of this legislation. My initial remarks reflected upon the general taxation background involved in the legislation. That general taxation background and what has occurred in previous years cannot be wished away or seen in isolation. The honourable member for Blaxland (Mr Keating) whom I believe has a great understanding and sympathy and a far greater sense of balance than many others in his own Party have in respect of mining -

Mr Martyr -You surprise me.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - He certainly has. The honourable member for Blaxland cannot argue the case of mining by isolating himself from the great total of tax revenue which a government has to levy from its people. The mining industry cannot be seen in isolation. It would be impossible for a government under the advice of the honourable member for Blaxland to be sympathetic towards a mining industry if its Treasurer and Prime Minister were socking every taxpayer or company in Australia. Australians would not stand for that kind of disproportion. Yet unknowingly, and I believe with good will, the propositions of the honourable member for Blaxland would lead precisely to that situation.

Mr Keating -That is not true and you know it.

Mr Kevin Cairns (LILLEY, QUEENSLAND) -I said that it is unknowingly. The proposition has been demonstrated and I think demonstrated quite clearly. Without going into the private company aspects of this legislation- there certainly is no time to go into them- I merely say I am delighted that the excess distribution provisions which applied to private companies have been deleted from this legislation. In view of the provision of investment allowances, income equalisation deposits and other inducements to iron out the fluctuations that occur in the fortunes of private companies, it is appropriate that the excess distribution provisions should be done away with.

In today's circumstances assistance to mining has to become one of the most important characteristics of any government's economic policy. It cannot be put aside and it should not be looked at narrowly. I believe it needs to be emphasised that it is a contradiction in real and sensible terms to suggest that a socialist government which wants government to be bigger can at the same time masquerade as a government which wants taxation to be smaller. That contradiction is so enormous that sometimes, like the light of the noonday sun, people fail to recognise it.

Mr DEPUTY SPEAKER -Order! The honourable member's time has expired.

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