Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Monday, 19 March 2012
Page: 2061

Senator FURNER (Queensland) (10:14): I also rise this morning to support the Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011. In doing so, the Australian Labor Party has always believed in a fair go for all Australians. We have always stood for social justice and a sense of community. We are the party who believes everyone should have the same opportunities no matter their background and we believe in rewarding hard work.

Our party believes that, through the good times and through the tough times, the great mission of Australian Labor governments for more than 100 years has been to provide for and improve the lives of ordinary Australians, giving every Australian opportunities through education and training, ensuring fairness at work and supporting Australians through the different stages and transitions of their lives. This is exactly the premise of the minerals resource rent tax. We believe all Australians should be able to share in the wealth of the resources of this country, not just the mining magnates. Why shouldn't they? The resources of this country belong to the people.

Treasurer Wayne Swan says prices of iron ore and coal have skyrocketed. The Prime Minister says commodity price increases have led to Australia's term of trade being at the highest point in 140 years, 'Driving the biggest resources boom since the 1850s gold rush.' This is thanks to the economic reform in Asia with mining investment being stimulated by Asian demand.

Mining profits have risen over the past decade by 262 per cent. A lot of these profits go overseas, which is why it is time to implement a policy to assist our hardworking Australians. The current system of royalties is inefficient because they fail to take into account production costs. As a result, they collect the greatest share of their returns from non-renewable resources when profitability is low or negative and collect a smaller share with their returns when profitability is high. The Australian future tax system review identified that delay was the case from 2003-04 to 2008-09 when mineral profits increased as a result of high commodity prices. The AFTS review noted that while governments can increase royalty rates in response to increases in profitability, this may discourage investment by creating uncertainty.

The MRRT rate will be 30 per cent minus a 25 per cent extraction allowance to recognise the use of specialist skills. It will apply to companies whose profits exceed $75 million, which means small miners will not be affected. Treasurer Swan states the bulk of this tax will be paid by the very large miners, make no mistake about that, and that is as it should be because they are the ones who are super profitable.

Let us remember the emphasis that this is a tax on profits. On 2 November, Minister Bill Shorten said

Unlike royalties, the MRRT recognises the massive investments that miners make. The tax does not apply to the value added by miners through processing. It applies only to profits attributable to the resources at the valuation point just after extraction. Under the MRRT, projects will be able to immediately write-off new investment and immediately deduct expenses. No MRRT will be payable until the project has made enough profit to pay for its upfront investments.

The Labor government does not believe that only a few should benefit from this resources boom. We believe everyone should be able to share in the wealth. Not only do we want to boost superannuation for our working Australians but we also want to lend a hand to small businesses and to invest in infrastructure for our generations to come. The Labor Party believes in nation building. We did it with our economic stimulus package and we are doing it again with the mining resource rent tax.

Through the Regional Infrastructure Fund we will be investing in roads, rail and ports to help with the transportation of export materials, increasing road safety by keeping large vehicles off local roads and improved transport efficiencies. The Regional Infrastructure Fund is worth $6 billion from 2011-11 to 2002-21, with $5.6 billion tied up with the MRRT.

The Department of Infrastructure and Transport states the objectives of the Regional Infrastructure Fund are to promote development and job creation in mining communities and in communities which support the mining sector, to provide a clear benefit to Australian economy development, to invest in Australia's resources of export capacity and to address potential capacity constraints arising from export production and resource projects.

My state of Queensland is a strong mining state and under stream 1 of the Regional Infrastructure Fund six projects of the eight with funding committed are in the Sunshine State. Gladstone port access road has an Australian government commitment of up to $15 million, Blacksoil interchange has up to $54 million, Townsville ring road has up to $160 million, Peak Downs highway has up to $120 million, upgrade of the intersection of the Bruce and Capricorn highways has up to $40 million and Mackay ring road study has $10 million. This is a great investment in Queensland, something we as a government should be proud of. Not only will these infrastructure upgrades support developing mining communities but they will also provide the infrastructure for freight transportation, improving safety and reducing congestion.

Queensland has been through tough times lately and Premier Anna Bligh is confident Queensland is back on track. At the state campaign launch recently, Premier Bligh told us that, despite everything, Queensland is 'outperforming the national economy of a nation that is recognised globally as having done the best job for coming through the global financial crisis.'

That is something for Queensland to be proud of and these investments are only going to assist Queensland further. Building our nation is important but so is building up our hardworking Australian nest eggs. We believe in rewarding people for their hard work and this is one of the Labor values. Under the Whitlam government we introduced a universal healthcare system, Medibank, later renamed as Medicare. Under the Keating government we introduced superannuation guarantee amongst many other things, and we will be increasing the superannuation guarantee so that Australians have more in the kitty when they retire.

With the MRRT, the Labor government will increase the superannuation guarantee from its current nine per cent to 12 per cent. This will benefit 8.5 million Australians with an average worker at 18 receiving an extra 25 per cent or $205,000 in retirement savings. An Australian who is 30 will see an additional 24 per cent or $108,000 and a 40-year-old will see an extra 15 per cent or $56,000. This is an extraordinary increase and one our workers are entitled to. I speak with some experience when it comes to superannuation. I reflect on my time on the board of the Labor Union Cooperative Retirement Fund when I was a union official with the National Union of Workers. LUCRF, the acronym, was the first industry fund ever created fought for by workers in the wool and hide industries, a marvellous achievement as a superannuation fund that resulted in workers receiving benefits so that they can invest and provide for their later lives of retirement. Also, interestingly enough, I picked up this morning a release from the Australian Council of Trade Unions indicating that a new national poll shows that 75 per cent of Australians support the lifting of the superannuation guarantee from nine to 12 per cent. The president, Ged Kearney, indicated that eight million workers throughout Australia will be better off in retirement as a result of the proposed new laws, with some workers getting up to $143,000 more. Ms Kearney said:

The Labor Government is again showing great national leadership on superannuation and the protection of workers’ retirements. This is in stark contrast to Tony Abbott’s opposition to the resources tax package and his recent attack on industry superannuation which both show he is not interested in protecting workers and acting in the national interest.

It is amazing to see that 75 per cent of people in our country support this outcome as opposed to those opposite. I recall when I first started as a union official, going out to workplaces when the superannuation guarantee was at three per cent, encouraging workers to understand the importance of a guarantee to provide them with some sort of retirement income in their later years and how it was embraced by those people in the many workplaces I visited. Gradually, over time, this Labor government and past Labor governments have provided that assistance to workers by making sure that entitlement is available for them when they reach the age of retirement. It is an entitlement that no doubt those opposite opposed when it was first legislated.

We not only want to look after workers but also our hardworking small business owners. They are the backbone of our community. Businesses that have a turnover of less than $2 million will benefit from an instant asset tax write-off of $6,500 per item. There is no limit to how many items they can write off and this will make tax time much easier for small business owners. Small businesses will also be able to write off the first $5,000 spent on a motor vehicle and enjoy a cut to the company tax rate. This cut to the company tax rate will apply to all businesses big or small. As you can see, the Labor government is committed to small businesses that provide important services to our community.

Those opposite would spruik that the minerals resource rent tax will discourage investment in the mining sector. Let me tell you that is not the case. In fact, in his second reading speech, Treasurer Wayne Swan said:

There is something like $430 billion in the pipeline with something like $82 billion in this year alone, which is up from $35 billion only two years ago.

We have also received endorsement of the MRRT in the OECD's 2010 economic survey of Australia. It states:

The proposed mineral resource rent tax on coal and iron ore operations along with the extension of the petroleum resource rent tax are justified on both equity and efficiency grounds. This resource rent tax is more efficient than the current royalty system as it raises taxation of finite and immobile resources. This will improve efficiency in the resource sector.

The House Standing Committee on Economics inquiry into the Mineral Resource Rent Tax Bills 2011 report concluded that the bill should be passed to introduce a fairer system. It stated:

Mineral resources are currently taxed through a combination of royalties and company tax. Royalties are an inefficient taxing arrangement. The Australia’s Future Tax System Review found that royalty regimes were the most distorting taxes in the Federation. Specifically, royalties are often set at rates low enough to operate in periods when commodity prices are low to average. This means that royalties fail to provide an adequate return when commodity prices are high as they are now and have been through much of the mining boom. In contrast to royalties, the MRRT takes into account the profitability of mining operations.

The higher the profits of the mining sector, the higher the return will be in the pockets of hard-working Australians, and that is the way that it should be. All of us own the natural resources of this country and all of us should benefit, not just the mining companies. That is fair, equitable, up to our Labor values and ensures that everyone benefits and is rewarded for their hard work. I commend these bills to the Senate.