Thursday, 3 November 2011
Minerals Resource Rent Tax Bill 2011, Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011, Minerals Resource Rent Tax (Imposition — General) Bill 2011, Minerals Resource Rent Tax (Imposition — Customs) Bill 2011, Minerals Resource Rent Tax (Imposition — Excise) Bill 2011, Petroleum Resource Rent Tax Assessment Amendment Bill 2011, Petroleum Resource Rent Tax (Imposition — General) Bill 2011, Petroleum Resource Rent Tax (Imposition — Customs) Bill 2011, Petroleum Resource Rent Tax (Imposition — Excise) Bill 2011, Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011, Superannuation Guarantee (Administration) Amendment Bill 2011; Second Reading
Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Hansard source
I will leave the member for Hunter to contemplate on all of that. As I said, I rise to speak on a package of bills that must have the distinction of being one of the most poorly designed and economically destroying policies that this government has ever put forward. I know that is an extraordinary statement and I know we have considered a range of policy missteps, clunkers, absolute disasters and complete wastes of money by this government, whether we are talking about the school hall program, where a couple of billion dollars just disappeared into the ether in overcharging by contractors, never to be challenged by the government, or the pink batts program, where another couple of billion dollars just disappeared into the ether. As one of my constituents found out this week, she will have her insulation removed but, of course, nothing will be put in its place. What are they going to do with it? They are going to take it down to the dump and bury it—along with all the money it cost to put it in. There is complete loss of control of the Green Loans program and the photovoltaic program. If we talk about losing control, the issue of the country's borders goes to the top of the list.
I said earlier this week that the Labor government, under its current leader and under its former leader the member for Griffith—perhaps its future leader—has an appalling record on energy and resources policies, and there is no better example of that than the MRRT. It is not something we should be flippant about, given the significance of the energy and resources sector to the Australian economy. I was looking forward to hearing the Treasurer explain in here today his rationale for introducing this highly destructive and deeply flawed minerals resource rent tax. I particularly wanted to hear his justification for using the resource sector as a cash cow to cover the reckless spending that has characterised the Labor government for the entire time the member for Lilley has been in the Treasurer's seat. I also wanted to hear how the government would justify putting forward a package that is little more than a pre-election quick-fix from a government that is desperate to cling to power regardless of the consequences for small and medium sized resource miners.
Alas, circumstances intervened and the Treasurer had to pass the job to someone else because, we are told, he has lost his voice. I too would lose my voice if I were presenting this sort of rubbish as the Treasurer of Australia. In a Freudian set of circumstances if ever there was, perhaps the Treasurer just could not face the thought of coming before this place and presenting, with a straight face, such a disastrous policy. Not to worry: as we know, the Assistant Treasurer is up for any job that gets his hands dirty or his face on television, and he has been publicly proving that since the middle of last year. The MRRT is not the fine piece of fiscal policy that the government would have us believe. It is rushed, reckless, incomplete and an unworthy successor to what was easily the worst piece of policy ever put forward by this government, the resource super profits tax. In its original version—as so passionately argued by the Treasurer and the now Minister for Foreign Affairs, the member for Griffith, when he was Prime Minister—the RSPT was a truly destructive version of this tax. It would have undermined Australia's sovereign risk profile and discouraged investment even more than this tax—and that is really saying something. The biggest flaws in the MRRT are a result of the fact that it was hastily slapped together in the days after the current Prime Minister ousted the member for Griffith with the single objective of scoring a quick political fix with no consideration of the economic or sovereign risk issues associated with it. As a result, the bigger mining companies, particularly BHP Billiton, Rio and Xstrata, were able to press their advantage to get a result that suited them but did not necessarily suit the mid-cap and smaller miners who had absolutely no say in the formation of this legislation. Those junior miners have been left out altogether and, from the feedback I have received and what I have observed of the Policy Transition Group, the government has not even come close to addressing those problems. That is not to denigrate the work of the Policy Transition Group or to question their sincerity, but the fact remains that more than a year after the first resources tax was proposed the wider resource industry is still facing uncertainty and the threat of being disadvantaged relative to international competitors. That position is reaffirmed by the meetings I have had in recent days.
That is not the worst flaw—and there are so many. As I say, I feel like moving for an extension of time, but I shall not. The biggest problem with the MRRT is that it builds a structural deficit into the budget of Australia. I know that those who sit opposite are promising a surplus; I know those opposite who have never delivered a surplus are saying that they can manage the risk. The best brains in the resources industry cannot tell you what the value of the dollar and the value of iron ore will be in two years time, let alone four years time, which has to be calculated so that the government can calculate the return that it is going to get from the MRRT. If you want to know whether that is backed up by the government's own actions, you need look no further than the fact that originally the government said that this tax would return around $12 billion. The Treasurer pulled out all stops to convince us in his pre-election backflip on the MRRT that it shaved off only $1.5 billion before conceding that it was slashed by $7.5 billion. But, of course, as we all know, it later emerged that his change of position on the original super profits tax cost $100 billion. I know when I speak in this House in billions those on the other side wave it away, because a billion dollars to them is nothing. It is the sort of money they can waste in a week on one of their programs, but this is serious money. Moving closer to the here and now, we were told after the election that revenue could be less than $5 billion and then Treasury revealed in February that revenue from the MRRT would be $17 billion over a three-year period, but now we know it is estimated to be only $11.1 billion.
The impact on the budget will be devastating because not only can the government not produce a surplus budget under current circumstances but with the sort of volatility that we are seeing in the market at the moment we are going to see the budget surpluses not taken seriously. The predictions of budget surpluses by the current Treasurer are not taken seriously, but no financial house will have any confidence in their predictions. What we are seeing is Magic Pudding economics. There is no better example of that than a budget set on the iron ore price of three or four weeks ago, which was about US$180 a tonne. That price today is US$120 a tonne. No-one knows whether it is going to $150, which would be its natural balance point, or whether it will drop further. When you consider that when the price of iron ore drops from $180 to $120 the profit a company is making is cut in half—and probably more for some companies—it is impossible to use the MRRT in the calculations associated with it with any degree of certainty.
The other issue is our sovereign risk profile, and the international investment community looks in sheer wonder and amazement at what this government is doing to our country. We first had a complete reversal of a set policy position that had stood for 20 years on condensate tax, agreed to by the Labor Party, but it was so desperate for money it changed that. Then we had a decision to introduce a carbon trading scheme and then it changed its mind on that. Then we had the pledge that there would never be a carbon tax under a government led by the current Prime Minister and, of course, she changed her mind on that. We had the introduction in May last year of the RSPT, and all the reasons for that, and then it changed its mind again in July.
The end result is that the view overseas is that this government does not know what it is doing and it does not know how to position the resource industry to make sure it is internationally competitive. And guess what—we agree with them, and so does Australia. We think this government is a complete joke, an absolute shambles. It cannot put a position in place which it can actually hold for more than six months and where it can give the investment community any sort of confidence at all that it knows what it is doing. Then we get this rubbish that the member for Hunter comes up with about how this money is going to be returned to the community. Complete rubbish!
Western Australia, if the Treasurer's figures are right, will contribute about $8 billion to this tax and, if they are really lucky and they behave themselves and they do not put up their royalties and they do not do this and they do not do that, they may get back about 10 per cent of that for their infrastructure—$1 billion, maybe $2 billion, if they are really lucky. What a joke. This is a con.
This government are pretending that by introducing a new tax people are going to be better off. They are a tax-and-spend government who have never been able to manage money, who do not understand how the basic principles of commercialism work and who want to think that they can introduce a tax and pretend that they are going to return it all to the people, when we know that this money is not going to go into superannuation. The employers have to pay that. The government have to pay some superannuation for their Commonwealth employees, but it is certainly not going to be $11 billion.
What we know is that this bad tax, this tax which is going to affect so severely Australia's competitiveness in the resources sector, its place in the investment community in the world and the view that investors take in Australia is simply that—a tax. It is not a superprofits tax, because they have not applied it to all industry, and it is not just coal and iron ore that make superprofits, if that is the way they want to term making a profit in a good year. I remember when the industry did not make a cracker. What are they going to do then—call it a superloss tax? Probably.
The government do not apply it to other sectors of the economic community. They do not have the guts to try and use this rationale on a few of the other sectors. I am not going to start rabbit racing by suggesting that they are considering other areas, but we know that they are considering other commodities. They know the people who actually have control of this government, the Greens, are suggesting that there be a change in the MRRT even before it is introduced and that they expand the commodity grab. If I can be sure of one thing, it is that this government will find more ways to tax more parts of the resources sector because they need more money to plug their black holes.
In the last few days, of course, we have seen the bewildering prospect of each of the Independents—and good luck to them; they have to take their opportunities when they come—going in for their pound of flesh. It is $100 million, $200 million, $300 million and $400 million here and there. It is this research station and that concept. What do we have? No-one in the industry now knows where this is going to finish up. Are the government going to move amendments to this legislation before it passes the House? We do not know. Are they going to support amendments put forward by the Independents? We do not know. Australia does not know what is doing and, as I said earlier, this tax not only is poorly thought through but is giving Australia an international reputation of being run by a shambles of a government.
In conclusion, can I just say that the resources sector has been forced to wait too long for any degree of certainty, remembering that it is now a year since this tax was originally proposed, firstly by former Prime Minister Rudd and then amended by Prime Minister Gillard. This level of uncertainty has unacceptable impacts on Australia's sovereign risk profile and our international competitiveness. This is a bad tax. We will oppose it in opposition and we will rescind it in government.