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Monday, 31 October 2011
Page: 12254


Mr CROOK (O'Connor) (21:40): I did not support the mining tax at the election, I do not support the mining tax now and I will be voting against the mining tax when it comes before this parliament. I have consistently stated that I do not support a Commonwealth mining tax. I believe that Australia's natural resources are owned by the states and not the Commonwealth. As such, I believe that the current royalty regime is the appropriate tax for natural resources. A Commonwealth mining tax is yet another attempt by the Commonwealth government to erode state rights and state royalties. A Commonwealth government mining tax will be yet another impost on the state of Western Australia. It is part of the triple assault on WA by the federal government: mining tax, carbon tax and the unfair rate of return of GST revenue.

As well as my opposition to the mining tax generally, I have issues with the negotiation, design and application of this particular mining tax, referred to as the minerals resource rent tax: firstly, it will harm Australia's miners by damaging their international competitiveness; secondly, the mining tax was the result of secret negotiations between the Prime Minister and the three biggest multinational, multiproject mining companies; and, finally, it will deliver advantages to the three big miners who negotiated the tax, while delivering competitive disadvantages to smaller emerging miners, who were excluded from negotiations.

The mining tax as we know it must be scrapped. The current mining tax was designed behind closed doors with the big three mining heavyweights: BHP, Rio and Xstrata. These three companies are multinationals, with numerous projects that post tens of billions of dollars profit each year. Excluded from these negotiations were the 320 smaller mining companies, who compete in the same global market as the big three. Also excluded were the state and territory governments, including the governments of Western Australia and Queensland, where most of the mining industry operates. The secrecy that surrounded the negotiations has also extended to the assumptions, modelling and figures used by the government to underpin its forward estimates. Compare this to the Western Australian government, for example, which publicly provides assumptions underpinning royalties forward estimates in its budget. I implore the government to listen to the industry, listen to the people and scrap this tax. However, if the government refuses to scrap the tax, it must at least make changes to ensure that it is fairer for the mining companies excluded from negotiations.

I have opposed this mining tax passionately, because my electorate of O'Connor is the home of many mining companies and many of those companies' employees. These companies employ, train and upskill many of my constituents. Further, these mining companies, more than any other industry, continually make valuable voluntary contributions to the community through the provision of infrastructure, through the funding of charitable projects and through sponsorship. For example, a natural resource company operating in the port of Esperance recently constructed the town's first overpass—a major infrastructure project that will continue to provide benefits to the town for many years to come. More than $4 million was spent on local goods, services and contractors during the construction of the bridge.

However, you do not need to live in an electorate such as O'Connor to oppose the mining tax or to be outraged by the grossly unfair the way this tax was negotiated and finalised. In fact, most Australians would feel very uncomfortable with the way this tax is set to unfairly advantage the three biggest and most profitable mining companies at the expense of the rest of the mining industry. Shame on the Labor government, the government that holds out the values of fairness and equity, for devising and imposing a tax that advantages the three richest, largest and most powerful mining companies at the expense of smaller mining companies in Australia. Shame on the Prime Minister for trading off the interests of the unrepresented mining industry to help seal her own leadership deal. This tax should be scrapped. If the federal government insists on a mining tax, it should start fresh negotiations in good faith for a fairer mining tax. It is my position that if the legislation is passed, and I truly hope it is not, then at least it must be fair.

Unlike the government, I have spent considerable time consulting industry on these issues. Industry has serious concerns about the inequitable application of the mining tax to the companies that were not privy to the secret negotiations. Modelling and studies conducted by the industry and academic institutions have indicated that the application of this tax will lead to the emerging and smaller miners paying the mining tax earlier and at a higher rate than the big three miners who negotiated the tax. This competitive disadvantage was confirmed in a study conducted by a professor of economics at the University of Western Australia. Following a question during question time on the UWA study, the Treasurer offered me briefings by Treasury officials on this report. In these briefings officials from Treasury confirmed that the modelling figures and conclusions of the study were correct and that emerging miners will pay a higher rate of mining tax than the three big established miners.

We must ensure that smaller miners, perhaps with single projects, do not have cost disadvantages with the bigger miners with multiple projects; after all, they are all selling their product in the same global market. At the very least, we need to ensure this tax is fair. After lengthy consultation with industry, there are at least two ways we can make the tax fairer for industry members excluded from negotiations. Firstly, the miners that were completely excluded from the negotiations of this tax should not be subject to the tax. Given that the three big miners were the only companies that negotiated the tax, these are the companies that should pay the tax. If some of the miners excluded from the negotiations are unfairly forced to pay then there should be a much higher threshold before the mining tax liability kicks in. Secondly, and additionally, the government should commit in legislation that smaller miners will not pay the mining tax any earlier, or at a higher rate, than the three big mining companies. These proposals will not fix this mining tax. However, these proposals would at least make the tax fairer for the smaller mining companies excluded from the negotiations.

Finally, I would like to discuss the proposed use of the mining tax revenue. The government's rhetoric in the budget papers and as recently as today's question time is that the mining tax is 'investing in our mining regions' and 'further investment in our regional communities'. It is hard to believe these statements from the government when over 50 per cent of the first billion dollars from the mining tax fund will be spent on upgrading the roads, freeways and bridges around the Perth city airport under the Gateway WA project. What I would like to know from the government and the relevant ministers is: how many of their nine Regional Development Australia committees in WA have endorsed the Gateway WA project as the No. 1 regional development project in my home state? I think I know the answer and it will be either none or, at the very best, one. I hear the government is trying to justify this project as regional development, but the reality is that it is nothing more than pandering to marginal electorates and further supporting a fly-in fly-out workforce, which has a devastating effect on regional development in Western Australia. I urge the regional members of this House, especially those who have a resource industry, to consider the merits of the mining tax for regional development and regional Australia.

This mining tax is bad for industry, bad for Western Australia and bad for my electorate of O'Connor. Further, this particular mining tax is grossly unfair for smaller and emerging miners and every mining company excluded from the Labor government's deal with the big three.