Tuesday, 22 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
I rise today to also speak on the mining tax bills that are before us. I do not wish to go over all the material, which previous coalition members have spoken on, but I would like to associate myself with many of the comments that the coalition speakers made today and yesterday. What I would like to do tonight is focus on two points. The first is the impact that this mining tax package will have on the structural deficit and the second is the impact of the tax package on small businesses in my electorate and, indeed, across Australia.
Let me go to the first point. What will this tax do to the budget structural deficit? We all know that one of the problems that this government has is its profligate spending. It has already created a massive structural deficit where its spending programs are growing in excess of the revenues. What does this government do when introducing a new mining tax? It concurrently proposes spending programs which are even greater than what the tax earns. What is worse is that it is highly likely that the revenues from the mining tax will decline over time, while the new expenditures are locked in to increase over the years ahead, hence exacerbating the structural deficit.
Let us look at some of the numbers. If you look at the revenue side of things, the revenues will be volatile and they will be downward trending. The Treasury predicts that the MRRT revenue to 2020 will reduce over time down to $3 billion as commodity prices decrease as international supply increases. However, on the cost side of the equation, costs of the measures introduced by these bills will continue to grow strongly. The proposed increases in the superannuation surcharge levy from nine per cent to 12 per cent, for example, is expected to rise to $3.6 billion by 2019-20. While the MRRT will help the government create the illusion of a budget surplus in 2012-13, it will leave the budget worse off from 2013-14. Indeed, the report of the Senate inquiry conservatively estimates that over the next decade the net cost to the budget of this package will be a full $20 billion. This mining tax package continues the extraordinary tax and spend manner which we have come to know of this particular government. The structural deficit it creates will simply crowd out further private investment and put upward pressure on interest rates.
Let me come to my second point, and that is the impact this package will have on small businesses. One of the measures that this package introduces is barely spoken about by the government. In fact you would be very hard pressed to even notice that this was one of the measures contained in this mining tax package. It is the abolition of the entrepreneurs tax offset. The entrepreneurs tax offset was introduced in 2005 by the Howard government as a means of providing some tax relief for very, very small businesses which were earning less than $75,000. It provides a 25 per cent tax discount for businesses earning less than $50,000 and then scales out to businesses earning less than $75,000. What does the mining tax package do? It abolishes that entrepreneurs tax offset. This means that 400,000 small businesses across Australia will be impacted by this and will have to pay higher taxes as a result of this package. A small business might be a sole proprietor working from home, or it could be a cleaner, or it could be a tradie or it could be an everyday person trying to start up their own business. They are earning $50,000 and they will now have an $837 tax hike from next year as a result of this package. On average those 400,000 businesses will have between $500 and $800 more tax to pay from next year as a result of this package.
In my electorate, alone, there almost 5,000 businesses that fall within this category. There are businesses like Jillian Ansett's JMA Marketing and Promotions, for example. This particular business is run solely by Jillian and she runs it from home. It is typical of hundreds of thousands of businesses around the country. It offers marketing and promotional services to other businesses. Her business falls within the income bracket. It is not a wealthy business; it is just a very small, everyday business. She provides a good service and does a good job. From next year her tax bill will be around $800 larger.
Everybody knows that small businesses are already doing it tough at the moment. Everybody knows that. All the members on the other side of the chamber would know that, if they were decent, hardworking local members. You only have to walk down to your shopping strips or into your retail precincts to understand that small businesses are doing it tough. You only have to speak to any of the tradies associations, or speak to some of the tradies or any small business owner and they will tell you that small businesses are doing it tough.
What does this government propose? It proposes a carbon tax so that small businesses will have to pay a 10 per cent increase in their electricity prices. There will be a 10 per cent increase in the first year alone and that increase will go up in subsequent years. That is the last thing that small businesses need. Then on top of that they are now going to have to pay a 25 per cent increase in their income tax if they are a small business earning below $75,000. These are hardworking Australians and they are not earning a lot of money, but they have the courage to get out there, start a business, be entrepreneurial and provide services which people in the community want. So, what does this government do? It wacks them. Instead of actually encouraging such businesses and instead of patting such businesses on the back and supporting them in whatever way we can, particularly through these difficult financial times, this government comes in here, puts on a carbon tax and then comes in here again and gets rid of the entrepreneurs tax offset so that they will have to pay a 25 per cent increase in their tax and have to fork out an extra $800 in cash each year in order to pay for the profligate spending of this particular government.
I think this is an outrage. I can understand why this government is not talking about it. I can understand why no single member on the other side of this chamber has mentioned the abolition of the entrepreneurs tax offset, because it is going to affect thousands of businesses in each one of their own electorates. Four hundred thousand businesses across this nation will be affected by this measure. That means on average 2,000 to 3,000 businesses in every one of our electorates will be affected. I challenge each of those members opposite, before they go ahead and pass this legislation through this parliament, to speak to these small businesses who are earning $50,000 or $60,000—these hardworking business owners—and ask them what they think of having a 25 per cent tax increase on their earnings. We should be doing everything we can to support small businesses, not penalising them as this government is doing through this mining tax package.