Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

The Treasurer could be forgiven for not responding to this MPI because he is indeed himself the most significant threat to the Australian economy, and that is why the Treasurer is not able to deal with the matter in any simple way. That has been perfectly revealed during the course of this week, when the Treasurer has engaged in a rather slimy and slippery defence of his own position in relation to the mining tax and the concessions and the reduction of concessions sought by the Western Australian government in relation to iron ore fines.

With the government determined to close down any sort of debate in relation to this matter, this is now an opportunity to explain what really happened. On 1 February 2010 the Grants Commission had an extensive discussion and reaffirmation about high and low royalties and differences between lump sum iron ore, which is high, and of course iron ore fines, which were regarded as low. On 10 March the Western Australian Treasurer, Troy Buswell, wrote to the Treasurer wanting confirmation on the entitlement of Western Australia's share of GST. Not long afterwards, on 2 May, the Treasurer announced, with the former Prime Minister, the second iteration of the mining tax—the first being the one in the Henry review. Then, a few days later, the Under Treasurer of Western Australia wrote, quite obviously concerned, to Dr Ken Henry, stating:

… I seek your urgent confirmation that "scheduled increases" in Western Australia would include the removal of existing iron ore royalty rate concessions, which would see both fine and lump iron ore royalty rates being levied at 7.5 % …

It is quite interesting, because the government, through the FOI process, redacted the last paragraph, which has now been revealed, and I quote: 'This issue was previously raised in correspondence between the then Western Australian Treasurer, the Hon. Troy Buswell, and the Hon. Wayne Swan ahead of the March 2010 meeting of the ministerial council, where assurances were given that the Commonwealth would direct the Grants Commission on this matter.' So, quite clearly, by 10 May last year the Treasurer was properly informed that Western Australia was going to wind back the concessions in relation to iron ore fines. That letter was never responded to as far as we are aware. So, when the Secretary of the Treasury in Western Australia wrote to the Secretary of the Treasury here in Canberra concerned about an issue directly going to the matter that has been debated this week, there was no response, and until this day we understand there has not been a response to the Western Australian government. Far be it for the Treasurer to claim that he was not informed.

On 17 May the Treasurer received his own brief from the Department of Treasury and it went on to say: 'Western Australia indicated at a recent Commonwealth Grants Commission meeting prior to the announcement of the RSPT it was considering increasing the royalty rate on iron ore fines from the current rate of 5.625 per cent to 7.5 per cent rate for lump ore.' It is not qualified, it is not talking about the Pilbara, it is not being in any way specific about a particular class of iron ore fines; it is the general concession applying to iron ore fines. The Treasurer knew this, because on the very same day that he received this advice from the Treasury he addressed the Western Australian Chamber of Commerce, where he said, 'We are prepared to talk further with state governments who might have been making their own plans to capture a fairer share of resource wealth through lifting royalties.' A fairer share. So the Treasurer now is so critical of Western Australia for removing the concessions on iron ore fines that he not only said that the states understandably have to do it but he wants to talk to them about it. On the same day at a doorstop, he was asked by a journalist:

Premier Colin Barnett has flagged that he wants to increase iron ore royalties to the global rate of 7½ per cent. He flagged that before the Henry Review. Will you say yes or no to whether that 7½ per cent royalty rate—

will apply. We know that this Treasurer never answers a yes or no question, so I am going to cut short the very long-winded answer. The Treasurer then said:

The fact that Premier Barnett is looking at very substantial increases in the royalties demonstrates the point that I was making to you before – that these royalty regimes have not kept pace with the underlying value of the resource, which all Western Australians and Australians do own.

So now, when Western Australia does exactly what he was encouraging them to do, he stands up and criticises the Western Australian government. Of course, on 2 July 2010 the government announced the deal that they had done with Xstrata, BHP and Rio. In the fact sheet associated with that deal, it says:

It goes on to say:

State royalties are assumed to be equal to 7.5 per cent of sales revenue and are credited against the MRRT liability to produce the net MRRT liability.

What does that mean? It means that there was always an assumption by this government that the state governments would remove concessions and it was prepared to rebate up to 7.5 per cent. Quite plainly the government is encouraging confusion in relation to this matter. On 20 October, and the Prime Minister herself has quoted this in this parliament, Premier Barnett says on ABC radio that they have no plan to increase royalties. That is where the Prime Minister stopped, but he actually went on to say, 'we did get rid of some concessions, and perhaps some other concessions that in time might be phased out.' That is what he said—so he is going to phase it out. On 21 October Premier Barnett is quoted in the West Australian as saying:

The state has no intention of increasing royalties but we will certainly preserve the right to do so.

In November 2010, the Western Australian Treasury said in a submission to the Commonwealth Grants Commission that the Premier had recently indicated that the state had no intention of increasing royalties, but they would certainly preserve the right to do so. On 16 November, the Western Australian Under Secretary, failing to have received a response to his first letter, writes again to the Secretary to the Treasury asking what is going to happen to the Western Australian state budget due to the treatment of royalties. In February 2011, the Treasurer writes to the chairperson of the Grants Commission—he referred to this today in question time—saying that, in regard to the removal of iron ore fines royalty rate concessions in 2010, 'the classification of iron ore fines should not move between mineral royalty rates groups in between methodology reviews'.

In relation to the first round of the wind-back concessions, the Treasurer, here, wrote to the Grants Commission and said 'don't penalise Western Australia'. It was the very same principle, the very same issue and was based on the very same assumption, that a royalty rate regime would be at 7.5 per cent. Premier Barnett, just a few days later, said on Perth radio that if they wanted to refund to the mining companies increases in state royalties, then they had to pay for that out of their own revenue; that was their choice. On 18 May, last week, the chief of staff of the Western Australian Premier rings up the chief of staff to the Treasurer and he says, 'We are going to lift the royalties in the budget tomorrow; we are going to remove the concession on iron ore fines tomorrow, in the budget.' Two days later, the Treasurer goes into the media and claims it came as an enormous shock—he says:

Well first of all Mr Barnett did not communicate that he was going to do this to us.

So, over the last four days, the Treasurer has stood by his words of last Friday. He claims that what he said was absolutely right—it all came as a surprise, even though there is a huge amount of information that proves that it was not a surprise. He said it came out of the blue.

All of the evidence now points to the fact that not only is the Treasurer confused, not only is the Treasurer confusing, but the Treasurer is incapable and incompetent when it comes to managing the challenges of the Australian economy. This is a pattern of behaviour from his earliest days as Treasurer, in 2008, when he said that the inflation genie was out of the bottle. He went on to introduce a budget in 2008 that was in fact inflationary. It put up the price of alcopops, it put up the price of cars and it would effectively put up the price of private health insurance. That is what he did—he introduced an inflationary budget at exactly the time that he and the then Prime Minister were declaring war on inflation.

Then came the financial crisis. The Treasurer, so lacking in belief in his own integrity, so lacking in belief in his own competence, hides behind the Secretary to the Treasury, always releasing documents and private advisory notes from the Secretary to the Treasury to himself. He is so lacking in confidence that he is hiding all the way behind Ken Henry. It took us weeks to find out that in fact in that crisis room there was no Governor of the Reserve Bank; it was all being filtered through the Secretary to the Treasury, the man who was hiding the real Treasurer of Australia. What happened? Mistakes were made. There were a number of different positions on the government guarantee on deposits. Do you remember that? There was an unlimited guarantee on deposits, and then it was limited to $1 million, and reclassified again, not only creating confusion but also muddling the protections that were necessary for the financial system.

Then we saw the stimulus package—a stimulus package that we had the courage to vote against because we could see early on that there was waste—waste in the pink batts program, waste in the school halls program and waste with the $900 cheques being sent out to people. Tens of thousands of those cheques were going not only overseas to stimulate offshore economies but also to dead people—as if there was anything that could stimulate them! Of course there is one program that I do not forget that was part of a rescue package that the Treasurer is so proud of—I can see the Special Minister of State smiling—and that is Ruddbank. What about Ruddbank? That was a cracker of an idea. The Prime Minister and the Treasurer wanted to set up their own bank to bankroll property development. The iconic infrastructure that they said they would finance at that crucial time was Vision Tower in Brisbane. The Treasurer himself said it was a great idea to fund that—the only problem was, it went bankrupt three days later. That was the leadership of the Labor Party.

But, of course, it comes down to the fundamentals—the deficit. What an unsightly brawl between the Treasurer and the Prime Minister back in 2008. It took them 21 days to work out after MYEFO that they might have to go into deficit. Then in 2009 the Treasurer could not bring himself to say what the deficit was in the budget speech. He broke new ground. Not only did he break new ground by refusing to name the deficit; he broke new ground because it was so big. Of course, we all remember the government coming in here time and time again saying they were temporary deficits. They look pretty damn permanent to me. When it comes to debt, we all remember how the Treasurer was encouraging the then Prime Minister not to mention the number—$200 billion. Do you remember that? It was too big a number for them to get their minds around. Even on this budget night, when the budget net debt went from $94 billion to $107 billion, the Treasurer said it was tiny. That is the word he used: 'tiny'—'very tiny' he said on 2UE.

When it comes to banking—this is a Treasurer that has no leadership—on 40 occasions he warned the banks, 'Do not increase interest rates beyond the Reserve Bank rate,' and then of course they did. He was going to ride in on a horse and stop them with exit fees. That was the solution he was going to come up with. And on tax: we have had 19 new tax grabs since 2007. We have had the Henry tax review, and to solve all Australia's tax problems we are going to have a summit, just like the 2020 Summit.

There are a whole lot of issues here that just keep going on and on. The Treasurer is asked a simple question about inflation and he cannot answer it—it takes him minutes. He is asked a simple question about a flood levy and he cannot answer how many people are going to have to pay it. He was asked by the member for Longman, 'When did Labor last deliver a surplus?' He could not answer it. He went on ABC radio the next day and he still could not answer it. This Treasurer is the biggest threat to the Australian economy. (Time expired)

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