Dan Tehan (Wannon, Liberal Party) Share this | Hansard source

The Minerals Resource Rent Tax Bill 2011 is what we are debating today. This is a tax out of Kevin Rudd by Julia Gillard. It is a dog's breakfast. It is another tax by a government committed to taxing. Let's take a quick look. We have had the alcopops tax and the new tax on Australians working overseas. We have had the cut in what Australians can put into superannuation tax-free. There are restrictions on business losses and changes to the employee share scheme. There has been a cigarette tax hike of 25 per cent and the impost of ethanol taxation increases and LPG excise increases. There have been tightening restrictions on medical expenses you can claim on tax. There has been an increase in luxury car tax and the impost of the flood levy. There has been a tax increase on company cars and the abolition of the entrepreneur tax offset. I could go on and on and on. And I still have not mentioned the great big new mother of them all—the carbon tax.

This is a government that is committed to taxing. As a matter of fact, we need a bit of mandatory pre-commitment on the government's ability to tax! That might be the only way we can get them to stop their addiction to taxing people. We on the coalition side of the chamber, on the other hand, are committed to delivering lower, fairer and simpler taxes. And we will be spelling out how we are going to do this in very good time.

Look at the process this government has undertaken. It decided that it should have the Henry tax review but it chose to ignore the majority of its findings. The Henry tax review took two years, cost over $10 million, received over 1,500 submissions, consisted of a panel of five experts and produced a report with 1,332 pages and 138 recommendations. And what did this government do with the Henry tax review? It decided that it would just grab a very small part of it and then make sure that even with that small part—the concept of a resources rent tax—it would do its best to twist, buckle, disturb and distort it in a way that would make this tax a complete and utter dog's breakfast.

The minerals resource rent tax is divisive. It is complex. It is unfair. It is fiscally irresponsible and distorting. It reduces our international competitiveness and was developed through a highly flawed and improper process. It is a bad tax, which came out of a deeply flawed process.

The initial tax was announced without consultation. There was no consultation with either industry or with the state and territory governments even though it was going to have an impact on how state governments tax resources. A very small committee was then put together, which left out all the small miners, to finally come up with what we have before us today: a very flawed tax. The Henry tax review was supposed to be about root-and-branch reform to deliver a simpler, fairer tax system. Instead, the Gillard mining tax is much more complex and less fair. Another 287 pages of tax law have been created by this bill. That is up from 161 pages when the government released its first draft.

The minerals resource rent tax gives an unfair competitive advantage to the big three companies, who were allowed to design the mining tax. For example, the introduction of the market valuation system to calculate applicable deductions gives the big three a significant tax shield not available to small- and mid-tier companies. Smaller miners will either pay the minerals resource rent tax sooner or continue to pay royalties on production while also subject to an increased compliance burden. It makes me again ask the question that has been asked by the opposition in this place quite often in recent times: what happened to that 'one regulation comes in, one regulation goes out' policy which the government proposed in opposition and took to the 2007 election? It seems to have disappeared by the way, very sadly, because the increase in the regulatory burden on Australian companies and on Australian small businesses continues to increase. This tax is just another addition to that increase in the red-tape burden.

The Henry tax review recommended a lower tax burden for smaller mining ventures. I wonder whether Ken Henry, in his new role in advising the Prime Minister, is sitting there and saying to the Prime Minister: 'You got this a little bit wrong, Prime Minister. What I recommended, which was meant to happen for the smaller companies, you're allowing now for the bigger companies.' I hope he continues to get into the Prime Minister's ear on that. The idea was to help start-up ventures grow and prosper and to keep mining ventures in their decline phase alive longer. Instead, smaller and mid-tier mining ventures will pay a higher effective tax rate under the Gillard MRRT than the big three, who were given exclusive access to the negotiations with the government—a flawed process which has led to a flawed tax.

The Gillard mining tax will reduce our international competitiveness in attracting further investment. The focus should be on growing the size of the pie, not on cutting the pie into smaller and smaller pieces. We need to grow those smaller companies so that they can provide competition to the big three, not make it harder for them.

The Gillard mining tax package, believe it or not, will also leave the budget worse off. In particular—and this, sadly, is the history of this government—over the medium to long term it will worsen the current structural deficit. While we have the Minister for Regional Australia, Regional Development and Local Government in here talking about the money which will go into the regions, we have a government introducing a tax which will make the structural deficit in the medium to long term worse. What does that mean? It means that ultimately there will have to be a tightening of the belt. There is no doubt, if the Labor Party is still in government, where that belt tightening will take place: it will be regional and rural Australia that they will hit first. It is Labor being true to form, and I have no doubt that regional and rural Australia will be hit the hardest. It beggars belief that a government could design a tax and a package that goes with it that would make the medium- to long-term structural deficit worse when, as the BCA so eloquently highlighted in a report recently, the medium- to long-term structural deficit facing the Australian economy is one of the key things that we should be dealing with.

The Gillard mining tax deal makes the federal budget hostage to state and territory government decisions to increase royalties on iron ore and coal. Only this government could design a tax that cannot properly forecast what the forward revenue received from it will be. They did not negotiate with the states, they did not sit down with the states and work out how this tax could be sustainable; they just bludgeoned through and left the whole tax captive to what state and territory governments do to their royalties from iron ore and coal. If those states rightly want to increase those royalties because of their own budgetary circumstances, it impacts on the federal budget. That is untenable. Only a prime minister as weak at negotiating as this current Prime Minister could deliver such an option for the federal budget. It has left us in a position where we cannot look to the medium to long term and say with surety that we can fix the structural issues, which are growing and growing under this government, with our budget. The MRRT will impose a significant additional compliance cost and reduce the efficiency of our tax system. As I outlined earlier, the red-tape burden of this tax is significant.

There is also a question mark over the constitutional validity of the MRRT. Ken Henry confirmed that the federal government never sought advice on the constitutional validity of the MRRT. Hopefully he is passing on that advice again in his role as an adviser to the Prime Minister. The MRRT is divisive. It has pitted the big miners against the small miners. Once again, only this Labor government is capable of designing a tax which is divisive, which increases the red-tape burden, which reduces the efficiency of our tax system and which is beholden to state governments to make sure that the long-term and medium-term structural deficit does not grow.

There is a better way. Genuine and sustainable tax reform can be achieved only through an open, transparent and inclusive process involving all relevant stakeholders—not just a chosen few. The parliament should stop the MRRT from going ahead and it should force the government to start again. When you have a tax which is out of Kevin Rudd and by Julia Gillard—

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