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 and other bills. Australia is naturally endowed with large, high-quality deposits of minerals and petroleum that are exhaustible and depletable. The majority of these non-renewable resources are publicly owned and the rights to use, sell and otherwise benefit from them are vested in the Crown.
It is the characteristic of non-renewability that allows exploitation of these resources to generate economic rent or above-normal profit. Economic rent is a return on a factor of production—in this context, mining investments—greater than is necessary to attract that factor into the production process. Economic rent, to the extent it can be identified, can generally be taxed without distorting the decisions of investors.
The minerals resource rent tax is a tax on the economic rents miners make from the taxable resources—iron ore, coal and some gases—after they are extracted from the ground but before they undergo any significant processing or value adding. Economic rent is the return in excess of what is needed to attract and retain factors of production in the production process.
The MRRT is a project based tax, so a liability is worked out separately for each project the miner has at the end of each MRRT year. The miner's liability for that year is the sum of those project liabilities. The tax is imposed on a miner's mining profit, less the MRRT allowances, at a rate of 22.5 per cent—that is, at a nominal rate of 30 per cent less a one-quarter extraction allowance to recognise the miner's employment of specialist skills.
A project's mining profit is its mining revenue less its mining expenditure. If expenditure exceeds revenue the project has a mining loss. Mining revenue is, in general, the part of what the miner sells its taxable resources for that is attributable to the resources in the condition and location they were in just after extraction—the valuation point. Mining revenue also includes the recouping of some amounts that have previously been allowed as mining expenditure.
Mining expenditure is the cost a miner incurs in bringing the taxable resource to the valuation point. Mining allowances reduce each project's mining profit. The most significant of the allowances is for the mining royalties which the miner pays to the states and territories. This ensures that the royalties and the MRRT do not double tax the mining profit. In the early stages of its introduction, the MRRT, together with the project's starting base, provides another important allowance. The starting base is an amount to recognise the value of investments the miner made before the introduction of the MRRT. Other allowances include those paid for losses which the project made in its early years and for losses transferred from the miner's other projects or from the projects of some associated entities.
The MRRT will ensure that all Australians, not just the very profitable mining companies, can benefit from the mining boom. It will ensure that profits are shared. We understand that many Australians do not feel the benefits of the boom. We understand that many businesses and households are doing it tough. The MRRT will lift the superannuation guarantee from nine per cent to 12 per cent so that more Australians can enjoy a comfortable retirement with the overall superannuation reforms. The MRRT will mean that a 30-year-old worker on average earnings will retire with an extra $100,000 of savings. It will also boost our pool of national savings, and this will strengthen our economy for the future and lock in the benefits of this mining boom for years into the future. Some 30,400 people in the Lyons electorate and 161,700 people across Tasmania will benefit from the superannuation guarantee increases.
The MRRT will also give a big tax boost to 2.7 million small businesses, and this will help many that are struggling. The instant asset write-off means that small businesses can immediately write off each and every asset worth up to $6,500. The Leader of the Opposition would rip out that major tax relief for the same small businesses. That is a big shame.
The MRRT will provide a business tax cut to all Australian businesses, including those which are not in mining. This will help keep unemployment low, which will mean more Australians coming home with a pay cheque to look after their families. The MRRT will invest in infrastructure in our great mining communities, which will help the sector to prosper and support jobs while ensuring that the benefits of the boom are locked in by reinvesting them in our hardworking mining communities.
We want to see profitable industries in Australia, and, like Dr Washer from Western Australia, I want to see a future for our other main industries—tourism, construction and manufacturing—which must still be viable when other parts of the economy slow down.
When I see the other side of this House not wanting to share the profits of the mining boom across the whole of Australia—and we know that we do have different levels within our economy—I know why I am in the Labor Party. We are about sharing the wealth of our nation and putting it into the future through superannuation so that people will have more superannuation on their retirement; we are about putting that wealth into investment opportunities; and we are about reinforcing opportunities for small business. They will be able to write off $6,500 worth of expenditure, and that will give them a boost, keep them going and help them increase opportunities through new technology—new computers et cetera—for their businesses.
There is a really good opportunity with these bills, and I am really pleased and honoured to be here to give them support. I certainly support the bills.