Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

I thank the member for Blair for his question. Members of the House would be well aware that global prices for Australia’s commodities, Australia’s resources, have soared in recent years and that, after a dip during the global financial crisis, those prices have returned to record levels and are expected to be at very high levels for some years to come. As a result of that, the proportion of the returns that the Australian community, the owners of those resources, get from the sale of those resources has dropped significantly. It is critical to note that these resources are non-renewable; they can only be sold once. A tonne of coal or a tonne of iron ore, once it is extracted and sold, cannot be sold again. The mining boom has also been putting pressure on other sectors of the economy. It inevitably draws labour and capital from other sectors and increases prices for labour in particular, thereby generating higher costs for other sectors. It puts upward pressure on the Australian dollar, which in turn puts pressure on other sectors like tourism and manufacturing, and of course it increases the cost to governments, both state and federal, due to the provision costs of infrastructure and skills.

Last week the Australian government announced a new taxation regime with respect to resources, a resource superprofits tax. It is designed to impact on profits above a basic return on capital and is similar to the petroleum resource rent tax, which has been in place for 25 years. It is a more efficient regime than royalties which tax volume and which tax production. It is a more efficient regime of taxation because it taxes profits and therefore gets a genuine return to the Australian community, the owners of these resources, in return for the exploitation of these resources. Independent economic modelling by KPMG Econtech, which is up on their website, has indicated that in the long haul this change in taxation will improve Australia’s output, it will improve investment, it will improve jobs in the sector and it will increase our GDP by 0.7 per cent in the longer term. But there is a critical point here that the opposition need to really understand before they embark on yet another sabotage effort, yet another attempt to block reform by this government.

The question is: where are the proceeds from this tax reform going? The proceeds of this tax are not going to reduce the deficit and they are not going towards social spending. They are going towards wealth creation overwhelmingly through cuts in business taxes, cuts in tax on small business and cuts in tax on business generally through greater investment in superannuation as a result of cuts in tax and through greater investment in infrastructure for resource states. That is where the proceeds of the government’s Resource Super Profits Tax are headed.

The opposition—the party that says it is the party of small business—is proposing to stand in the way of a company tax cut for small business. It is proposing to stand right in the way of a big increase in the amount that small businesses can write off immediately for tax purposes from capital expenditures from $1,000, where it is at the moment, to $5,000. It is proposing to stand right in the way of major new investment in infrastructure in mining dominated states. It is proposing to stand right in the way of a big increase in Australia’s superannuation system which, in turn, feeds into investment in Australia’s economy.

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