Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

I notice his question is about the detail of consultation and the detail of negotiation. If the Leader of the Opposition had any experience on questions of the economy he would understand that, when you bring about fundamental tax reform, it involves complex consultations with companies and it involves complex negotiations with companies. That is what the government is engaged in. That is what any government engaged in the business of fundamental tax reform would be doing, and that is what we are doing. He raises more broadly the question of consultation. Can I simply draw his attention to the fact that—whether or not he or his colleagues have been asleep for the last two years—this entire debate has been out there through public documents released by the Treasury on where the overall direction of tax reform was going.

First and foremost, on 2 May 2008, the government announced that we would be having the review into the tax system. On 6 August 2008, a discussion paper was released on the tax review entitled Architecture of Australia’s tax and transfer system. That document, that discussion paper, raised the inefficiencies of royalties and pointed to a profits based tax. If you go to that paper it said:

These royalties can discourage high risk investments (for example, in the case of an ad valorem royalty, revenue can be collected even when net losses are being made).

It went on to say—if the Leader of the Opposition had any interest in the tax arrangements for the resource sector of the economy at large—back in August 2008:

A resource rent tax does not apply until a firm has earned above normal profits. Once this occurs, the combined tax rate on the total return increases as the resource price increases.

Back in August 2008, the government called for further public submissions. In December 2008, the government released a further, more detailed, consultation paper which went down to the definition of what constituted supernormal profits. It also went on to make reference to calculation bases which were linked to the long-term government bond rate.

Through until May of 2009, there have been 1,300 submissions from the mining industry including from the Association of Mining and Exploration Companies and the Australasian Institute of Mining and Metallurgy, and including recommendations from the MCA on the question of adopting a profits based tax system for the future. Then between June and November of 2009, industry, professional and community groups further consulted on the question of broader tax reform including that for the industry.

So, for those opposite to infer that this is somehow some bolt from the blue on consultation concerning the future reform of tax arrangements for the mining industry and, more broadly, for the economy, this process has been under way for two years—had the Leader of the Opposition any interest in any matter concerning economic policy and tax policy. The government is now in the business of consultation with the mining industry. The government is now in the business of negotiation with the mining industry and the government is now engaged in detailed negotiations on details of implementation and generous transition arrangements. That is the normal way in which you engage in a process of tax reform.

The government believes that this reform is delivering better super for working families, better tax arrangements for the rest of the economy and is boosting our level of national saving and, critically, is investing in regional infrastructure of the type called for by the Leader of the National Party when he was in regional Queensland the other day hoping that no-one would listen to what he was saying. Frankly, these are the factors at stake in fundamental tax reform. We are engaged in consultation, we are engaged in negotiation and we will prosecute that to the extent that it is necessary to reach an appropriate settlement for the national economic interest for the future of the mining companies in this country and for a fairer share for working families across the Australian community.

See this speech in context