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Wednesday, 16 June 2010
Page: 3520

Senator FURNER (5:13 PM) —I rise as a senator for Queensland and I am proud to defend the Rudd Labor government’s resource super profits tax, from which Queenslanders will benefit with more than $2 billion for infrastructure funding for roads, rail and ports. As a senator from a state which has 40 per cent of this country’s mining production, I am proud to defend the $6 billion infrastructure fund that will be established by the government to reinvest the proceeds from the RSPT. The RSPT is about building a stronger economy and delivering a fairer share of profits from our resource industry to Australian families. And why shouldn’t they benefit from it? Australians own 100 per cent of this nation’s natural resources, yet their share of the profits has fallen while the mining companies’ profits have risen. Before the industry was booming, Australians received $1 in every $3 of profits through royalties and charges, but at the end of the boom they only received $1 in every $7 of profit. The government collected only an additional $9 billion in revenue, yet profits were over $80 billion higher in 2008-09 than they were at the beginning of the decade.

By replacing mining royalties with an RSPT, a fairer share of the mining boom will enable superannuation for working Australians to be increased from nine per cent to 12 per cent, which will assist 8.4 million working people. It will provide a tax break for 2.4 million small businesses and will reduce the company tax rate from 31.7 per cent to 28 per cent. And let us not forget the $6 billion infrastructure fund, which will benefit our mining states for roads, rail, ports and economic infrastructure. This tax reform will strengthen our economy.

But we understand it will not be an easy task. The opposition, along with their pinup boy, Clive Palmer, have started a massive scare campaign telling Australians that share prices have dropped because of the proposed RSPT. Opposition leader Tony Abbott said on 25 May that ‘our share market is under pressure, at least in part because the government has totally mismanaged its proposal for a great big new tax on mining’. However, conversely, Richard Grace, the chief currency strategist of the Commonwealth Bank of Australia, said on 25 May on The 7.30 Report:

We’ve seen a 10 per cent fall in the global MSCI stock market, 11 per cent fall in the S&P 500. We’ve seen oil prices fall over 20 per cent. We have seen base metal commodity prices fall over 20 per cent, and this is all since the start of May or late April. These are the sort of factors that have been going on which are not at all related to the mining tax. And just to further push that point home, some of the shares of the big offshore mining companies such as Vale have fallen by similar magnitude.

In fact, Australian shares have not fallen as much as they have in other countries. The London stock market has fallen by 10.4 per cent, the US Standard and Poor’s index dropped by 11.5 per cent and the Japanese stock market fell by 12.8 per cent, while Australian shares have only fallen by 10 per cent. Australian mining shares have fallen even less at 8.9 per cent and the bank shares have fallen by 12.3 per cent. Clearly the opposition is not listening to its own scare campaign when the member for Dickson raced out recently and purchased $2,000 worth of shares in BHP. If he thought the shares were going to drop, why did he rush out to make such an investment?

The opposition also claims that the cost of living would increase with the introduction of the RSPT, and we have heard some of that here in this chamber this afternoon. Tony Abbott said on 21 May that it is ‘an assault on our standard of living’. Then on 27 May the shadow Treasurer, Joe Hockey, said that mining companies are going to pass it on to everyone.

They’re going to pass it on to their clients … and it will flow through to every home. Everything—you think for a moment about everything in your life that comes from mining. Your car … Everything in your house comes from mining and energy.

It is just another blatant lie.

According to the Federation Fellow in Economics, someone who is a lot more knowledgeable about the economy, Professor John Quiggin, the scare campaign is hurting the debate. He said on 26 May:

A number of the arguments we’ve seen raised against the tax simply have no credibility at all … I think that’s about the least defensible. The reason that there are super profits to be taxed is because of high world prices for these minerals that are set on world markets. So there’s no reason at all to think that the tax is going to affect the world price of these minerals, and therefore that that’s going to feed in any way into Australian consumer prices. On the other hand, there’s potentially some benefit for consumers in the offsetting reductions in the general rate of company tax. So it certainly is depressing to see this kind of scare tactic put up, it really is just distorting the debate.

In fact, according to Econtech modelling, the tax reform will reduce the price of food and housing over time, making our economy more effective. According to the Econtech report, food is set to decrease in the long term by 0.9 per cent; tobacco and alcohol by 1.1 per cent; clothing and footwear by 1.3 per cent; housing, household contents and services by 1.1 per cent; health costs by 0.6 per cent; transportation by 1.7 per cent; communication by 1.4 per cent; recreation by 1.3 per cent; and education by 0.3 per cent. Financial and insurance services will drop by 0.8 per cent.

Commodities which are traded on the world market will have their prices set by that market. The myth about electricity prices going up because of the RSPT is exactly that: a myth. Because the RSPT is aimed at superprofits, coal-fired electricity stations are unlikely to be affected as they use low value coal therefore unlikely to make superprofits.

I am proud to stand here today and say that the Rudd Labor government has been nothing but upfront with Australians about the RSPT. We have established the Resource Tax Consultation Panel and have been open at every step—a practice which demonstrates our government’s willingness to discuss this very important tax reform and a practice which is completely different to the previous government’s. In 1995 John Howard promised ‘never ever’ to introduce a goods and services tax. In fact, he said, ‘There’s no way that a GST will ever be part of our policy—never ever—it’s dead,’ and five years later everyone knew what the letters GST stood for as a result of that broken promise.

We understand that tax reform is not easy, but it has been done before successfully. The Minister for Small Business, Independent Contractors and the Service Economy, the Hon. Craig Emerson, recently said the petroleum resource rent tax was just as controversial. He said:

It was just as difficult; it was an important tax reform and we implemented a profits-based tax that’s been in place for 25 years and has been consistent with the go-ahead of major projects like the Gorgon gas project and the Pluto project, and the extension of the life of Bass Strait for 30 years.

Even John Howard’s right-hand man, former Prime Minister and Cabinet secretary Max Moore-Wilton, and Tony Abbott’s finance spokesman, Andrew Robb, support reforming the current system. In fact, Tony Abbott seems to be the only one who doesn’t support this tax reform.

On 12 June Andrew Robb said:

Well we will look at any reform that is offered and if we think it will, um, you know improve incentives, improve fairness, you know, reduce the tax avoidance, all of those, be more efficient, less paperwork, there’s enormous scope in the tax system to do work.

On 11 June Max Moore-Wilton said, ‘Everyone likes the idea of a profits tax; it makes sense.’ In terms of the impact on small quarries, the RSPT will only be taxing superprofits. If the quarry is not making superprofits, it will not pay net tax. Depending on profits, some companies will pay more tax than others, but the mining industry is still expected to have 5.5 per cent growth in production. The Rudd Labor government is committed to building a stronger economy and providing a fairer share to Australians. The RSPT will benefit this economy by investing in our much needed infrastructure and assisting our small businesses and companies.

The opposition’s lack of support for this important tax reform shows that Mr Abbott is against a superannuation increase for working Australians. He denies small businesses a well-deserved tax break and instant tax write-off of up to $5,000 and denies a tax cut to companies to improve their competitiveness. Mr Abbott cannot be trusted to run this country, let alone a proposed budget— (Time expired)

The ACTING DEPUTY PRESIDENT (Senator Troeth)—Order! That concludes the debate.