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

There have been many colourful claims made in the debate about tax reform recently, both by sections of the mining industry and of course the opposition. For example, sections of the mining industry chose very conveniently to exclude the effect of generous tax concessions when making claims about what percentage of their profits are taken in tax. But perhaps the most absurd claims with respect to the impact of the government’s tax package relate to its impact on Australia’s international reputation—to what extent Australia is an attractive location for international investment—and in particular to the issues of sovereign risk and alleged retrospectivity.

I would urge all members to have a look at a column about these issues today in BusinessDay in the Age and, I presume, in the Sydney Morning Herald by Ross Gittins, somebody who has in recent times been critical of the government on a number of matters but on this issue is absolutely bang-on. We are seeing the mining sector seeking to redefine the concept of sovereign risk to something very different from what it is generally understood to be. Typically it is understood to relate to issues of conflict, corruption or expropriation, but now sections of the mining industry want us to believe that sovereign risk basically arises whenever there are tax changes we do not like. That is basically their concept of sovereign risk. Even though prices for our resources have soared relative to where they were five, six or seven years ago and are likely to continue to be at elevated levels, and the Australian people are seeking through their government a better return for the asset they can only sell once, according to sections of the mining industry this raises sovereign risk issues. That is simply nonsense.

Second is the alleged issue of retrospectivity. This also involves a clever redefinition of the concept of retrospectivity. It effectively seeks to relate the tax incidence not to the activity—which of course is the usual concept of retrospectivity, and clearly we are not dealing here with retrospective taxation—but to the original investment. Some mining investments can last for decades, so the concept of retrospectivity that is being sought to be applied here is one that is totally unrelated to the normal use of that concept in taxation. You would never be able to change taxes without them being retrospective if this were taken to its ultimate extreme. Any change in tax that applied to any business, if taken back to an original investment decision that could have been taken 20 years earlier, would therefore be deemed retrospective.

Interestingly, it is notable that nobody is complaining that the proposed cut in company tax is retrospective. Nobody seems to be complaining about that, even though it has exactly the same kind of effect. Most importantly, these absurd claims about the alleged impact on Australia’s international reputation completely ignore the positive elements of the government’s tax package—the cut in company tax down to 28 per cent. Whereas the coalition are promising that their company tax rate will be increased to nearly 32 per cent, the government’s package involves a cut in company tax down to 28 per cent. What are the implications of a cut in company tax for Australia’s reputation internationally? According to the former Treasurer Peter Costello, it would increase attractiveness as an investment location, strengthening Australia’s prospects for investment and economic and jobs growth. That is the former Treasurer Peter Costello’s assessment of the benefits for Australia’s reputation of a cut in company tax.

I also want to draw the House’s attention to the benefits to our reputation of increased investment in mining infrastructure, better tax treatment of mining exploration and, of course, a stronger superannuation system which is already the envy of the world. In conclusion, if you ever wanted to see a better example of the ludicrous rhetoric and the ludicrous scare campaigns that the government’s proposals are being subjected to, I draw your attention to statements by Clive Palmer yesterday morning on the Meet the Press program. I preceded him on the Meet the Press program, but unfortunately it was not a debate, otherwise I would have had a bit of fun. I would have had some serious fun. His statements were these:

The perception overseas is that it is a 70% tax on mining in Australia, so avoid Australia and that perception will mean that there won’t be any further investment and there won’t be any jobs created. Mum and dads all over Australia will become unemployed. They won’t have the money to buy their Christmas presents for their kids. They will be out on the street.

We have not quite got to the plague of locusts and the seven years of famine and the four horsemen of the apocalypse, but by God we are getting there. This is just empty rhetoric, hysterical rhetoric, from a man who is the proprietor of the Queensland Liberal National Party. This is just ludicrous rhetoric, and it illustrates precisely why it is important for the government to explain its position as to why these changes are good for the Australian economy and good for Australia’s international reputation.

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