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 to speak on the Minerals Resource Rent Tax Bill 2011. I want to touch on some of the strands of thought and some of the arguments that have been in the public debate over the past 12 to 18 months. I appreciate the various positions put by numerous parties to the debate in this time. The area of resource taxation is extremely complex, I understand, even for accountants, and I am pleased that the ATO has been involved in the Resource Tax Implementation Group to establish how this package will actually work in reality. We have also had the Minerals Council of Australia sit down and negotiate with the government—as sectional interests should, especially where their members are so directly affected.
This bill provides Australia with great opportunities. As I said, the opportunities that this bill provides cannot be ignored. We cannot afford them to be ignored. We saw incredible change throughout the 20th century, from the dominance of the British Empire, two world wars, the emergence of America and the USSR as superpowers—and the failure of the latter—and the dawning of the Chinese re-creation. Hardly a decade went by without an event of mesmerising significance.
Within Australia, we started last century as, effectively, a group of British colonies. We saw our cities and living standards improve immeasurably with the migrant fuelled economic explosion that transformed the Australian way of life, forging with sweat and brine 'the lucky country' badge we subsequently tried to remould into that of 'the clever country'. After consisting for most of our history of a mine or a farm, some 60 per cent of our economy is now in the services and education sectors. The 20th century was the making of Australia. By the mid-80s, under Hawke and Keating, we even rid ourselves of subservience to our English court of law in the Privy Council. With that act, thanks to Labor, we actually became a modern, independent nation.
Our transformation continues. The 2010 Intergenerational Report refocused our attention on the many future challenges that are now starting to become immediate reality—in particular, an ageing population. The mass of our workforce will retire in decades to come, and our tax base will battle, as it has been, to sustain the quality of life to which we have become so accustomed. We face challenges of huge proportions.
One of the most substantial transformations that Australia will work through in the first half century of this new millennium will be the reworking of our social infrastructure and systems to afford an ageing population the income it needs and the care it deserves and to keep our national books in very good order and our future bright. None of us wants to become another Greece or Italy or share in what is going on in Europe at the moment.
But how will we do this? It is already apparent. Policies have been pursued by this Labor government to make the substantive changes required of future governments to deliver good governance with prudence. We have already seen the reworking of the age pension, increasing its value in real terms while making it more targeted for those who need it most—a job well done. We have seen the reinvigoration of the private health insurance industry. The membership now is higher than it has been for 35 years. In this area, policies, including some introduced by a previous government, have clearly worked. They have done their job and run their course. And now—to avoid unintended consequences of those policies, to avoid going too far and overbalancing, to avoid falling flat on our collective face—adjustments are required to keep the package and to keep the system on track and on budget. As with most policies reaching maturity, adjustment and recalibration are required.
We have also seen the new deal between the Council of Australian Governments to reinvent healthcare funding across our nation, delivering our first performance targets to drive public satisfaction while maximising the efficiencies we can engineer and driving taxpayers' dollars further—a tremendous result of this government. We are seeing COAG also sign up to another reform, more substantial in conceptual change than both of these just mentioned—bigger than reworking the pension, bigger than reworking health funding and performance. In a sizeable shift, the Gillard government has got all states and territories to give support to the very, very popular principle of a national disability insurance scheme which will fund substantially higher care for Australians in need well into the future.
We have our health budget, our age pension outlays and our disability support pensions-cum-insurance scheme undergoing substantial reform. But there is another Labor creation that is also undergoing a substantial refit to prepare Australia, as a nation, for our future challenges—the increase of the superannuation guarantee to a level that will actually deliver the finance required for people's retirements. And, with this, I get back to the bill before us and one of the outcomes of the passing of this bill. As a result of this Labor government increasing a previous Labor government's super guarantee from 9 to 12 per cent of wages, our ageing population becomes substantially more affordable. For the first time in our national narrative, senior Australians en masse will be independently more comfortable in retirement, able to exercise their self-determination in living arrangements, home care, health care—whatever they care to afford. If we ever wanted to make good on the clever country idea, this reform will go a very, very long way to achieving it.
This government has been amazingly successful in identifying the major national priorities of this and future Australian federal governments, going forward half a century and acting now to make the inevitable changes smoother, easier and more affordable for us individually and collectively.
Re-engineering our power-generating capacity is another case in point, as is building a continental superfast communications system of great capacity for the century ahead.
The increase to the superannuation guarantee from nine to 12 per cent is just one of the intended benefits of the adjustment to the mining industry's tax regime, as contained in the bills before us today. You will all have noted various other policies. I have spent the last few minutes articulating the dominant challenge that we as a nation need to be prepared for in the decade ahead and how this government is preparing to meet that challenge. With the passing of this bill and the streaming of revenue towards meeting one of the potentially problematic areas of future government outlays, the Gillard government is well and truly leading our nation towards sustained prosperity.
On that point, I want to note a couple of points from the Minerals Council of Australia's submission to the House of Representatives Standing Committee on Economics on Wednesday, 16 November:
Export earnings from both commodities combined in 2010-11 were around $91.7 billion—more than one in every three export dollars earned by Australia, up from around one in 10 a decade ago.
The submission also said:
The minerals industry … accounts for around 7% of GDP, upwards of 20% of national investment and more than 50% of Australia’s exports of goods and services.
This is incredible growth, contributing to the tsunami in capital investment that is just starting to make itself felt and that will continue to drive capacity growth for years to come. This is really the point that the Minerals Council was making. With Brazil and other nations with very high grade ore coming online for the first time, with incredible deposits of wealth only now just starting to be tapped, Australia can only expect the competition within the minerals sector globally to increase. The last decade has seen prices for ore go through the roof. But we should not anticipate more of the same.
To keep our almost dauntingly high income streams into the future, to keep our national export income comparable to what it has become, it makes excellent sense to move from this most recent era of price growth to one best characterised by volume growth. Instead of relying on unprecedented, dizzyingly high prices for our commodities, we should look to sustain cash flow by selling greater volumes. As Labor has been saying for years—and year in, year out during the Howard government—we need to address the capacity constraints in our mineral export industry. The Minerals Council agrees with Labor, saying we need 'sustained capacity building' to 'secure prosperity for future generations of Australians'—capacity building in our ports, our transport systems, our financial markets and our workforce.
As I just said, commodity exports have reached seven per cent of GDP. The Minerals Council sees the value of commodity exports having the potential to stabilise at around 19 per cent of GDP over the next five years, not including support services—from seven per cent to 19 per cent of GDP in five years. Iron ore and coal reaped $90-odd billion in export income in 2010-11. Commodity export revenues in total are projected to potentially reach $480 billion in real terms by 2030. These numbers, these billions of dollars, may well make a person dizzy.
What is taking place to our north and our north-west and what will continue to take place over the next several decades puts human history in its entirety into a sort of preface, a preamble: the building of China, the building of India—the construction of what will become the two greatest economic powerhouses that the world has ever seen. This is no small project. It requires no small investment, no small resourcing, and Australia is in the box seat, if we play our cards well now, to be the supplier of much of the vast resources that those two powerhouses and others will require for decades to come. This is their century, and we will supply them with their iron. I commend the bills to the House.