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
The coalition does not support the Minerals Resource Rent Tax Bill 2011. It is just another disastrous economic policy of Labor that will particularly hurt regional Australia. It will be devastating to my electorate of Calare as well as the national economy in the long run. Worse still, it will not produce enough revenue to fund the initiative promised by one of the two most fiscally incompetent governments of my lifetime, and I do not need to mention the other one.
I note that the MRRT is a project based tax on the economic rents miners make from the taxable resources, which are mainly iron ore, coal and some gases. The tax is imposed on a miner's profit at a rate of 22.5 per cent. The Gillard Labor government's tax scheme, like most things they attempt on an economic basis, is utterly flawed. It is dividing the industry. It is completely unfair. It will reduce our international competitiveness. It is fiscally irresponsible, which is hardly a surprise given the sort of legislation we have seen over the last four years. Most importantly to me, this tax will do nothing but hurt regional areas like Calare.
Mining is one thing that my electorate of Calare does. Agriculture, energy production, forestry and transport are also major industries, but mining is certainly one of the biggest employers in the electorate along with small business, which is almost always the biggest employer. We have the Northparkes mines just north of Parkes between Parkes and Peak Hill, the Cadia mine west of Orange and the extensive Centennial Coal mines across the Lithgow region. Xstrata has some mines there as well.
Mining in Lithgow has played a major role in the region's economic prosperity for basically 150 years. There is the Clarence Colliery, the Airly mine, the Angus Place Colliery, the Springvale Colliery, the Charbon Colliery, the Ivanhoe North Colliery, the Lambert's Gully mine, the Invincible Colliery and the Cullen Valley mine. Needless to say, all these towns and regions rely heavily on the mining industry for their prosperity and their jobs. These mines do not just supply jobs to the towns; they bring families to the bush, attract investment, financially support local clubs and events, and help small business do what they do.
According to the ABS, retail and construction are also two major employers in my electorate. Quite obviously you do not have to be a rocket scientist to know that that is correct. These sectors rely on people and, more importantly, on people moving to the local region, and mining brings them. But, as is expected of this government, with no concern or appreciation of the bush it wants to introduce a tax that will cut these mines and these towns down—I am not sure what kind of common denominator it is looking at but it certainly is not looking at one that will be in the interests of the regions.
The MRRT has problems associated with it. The primary issue is that it hurts the little guys. This government decided to rely on Australia's three biggest mining companies—Rio Tinto, Xstrata and BHP—to help design the tax and to speak on behalf of the industry. I do not think it takes a rocket scientist to realise that companies the size we are talking about have a somewhat different perspective and a somewhat different ability to deal with these issues. All other competitors were locked out of the process. Does this make sense? I guess this is a government that likes to deal with big companies and big unions. It does not like to deal with ordinary people. It certainly does not like dealing with small business. It certainly does not like dealing with agriculture.
The smaller and mid-tier coal companies are the focus of the tax. They are the ones that are going to suffer the most. The three big mines will not be paying the tax in the early years but the smaller mines will. These smaller companies will either pay the MRRT sooner or continue to pay royalties on production. I think Twiggy Forrest hit it on the head when he said that this tax will hit the small miners instantly. That will mean that Calare's mines will find themselves instantly less competitive against the larger mining bodies. That should not be surprising given that this whole thing was worked out by those large mines.
As I said, this tax is divisive and unfair. The mines in Calare can ill afford to be hit by this tax. The local mines in Calare are not the big guys. They are amongst the smaller mines in the Gillard-Bob Brown government firing line. This legislation also flies in the face of the government's beloved Henry tax review. It recommended a lower tax burden for smaller mining ventures. Instead, smaller and mid-tier mining ventures will pay a higher effective tax rate than the big three.
The two miners who do most of the coalmining in my part of the world are Centennial and Coalpac. With the introduction of this tax, both companies will find themselves instantly less competitive against the larger mining bodies. The smaller companies will pay the tax sooner or continue to pay royalties on production while also being subject to increased compliance burdens. Centennial Coal is an exporting orientated company. While Australia may be a significant exporter of minerals, we do not dominate any of the major markets. Due to the global nature of coalmining, this tax will severely jeopardise the Australian mining sector's ability to compete on the world stage.
There is a very real situation in central western New South Wales revolving around Lithgow and Bathurst. The combined introduction of the carbon tax and the MRRT will significantly increase the risk of investing in Australia's resources sector. The combination of the carbon tax and this new mining tax could not come at a worse time. With faltering world economies, our government should be doing everything they can to support our strongest performing sector and get behind it, not to get on top of it and not to penalise it.
The mining industry has supported Australia through the tough times—yes, and done well out of it. During the global financial crisis the mining sector played a large role in keeping us afloat. We are like Brazil and the mid-west states of America: we are productive. We did not need to rush into borrowing a couple of hundred billion dollars just so the government could hand out $1,000 to people. We did not need to do that. We were always going to get through that because we are a resource economy. This tax is essentially about the government pilfering our nation's most successful industry to pay for their own waste, their own mismanagement and the fact that, in less than two years, they ran up a debt higher than Hawke and Keating were able to do in 14 years. Unfortunately, no amount of money can put an end to this mismanagement.
As was said earlier this afternoon, how often does a government look to introduce a tax and go more into debt and pay more money because of it? That is what they are going to do with this one. The Treasury modelling suggests that revenue from the MRRT will total $38.5 billion but the cost of promises made by Labor and the Gillard government as a result of the mining tax total $57.6 billion. If it were not so serious, it would almost be a thing of mirth. But it is not; it is real life and it is going to hurt my part of the world and it is going to hurt a very large part of Australia. Countries like Brazil and even Indonesia, which has considerable coal deposits—though people seem to forget that—must think this is the greatest thing and has given those countries the greatest competitive advantage on top of the carbon tax.
I have grave concerns about the government's so-called promise to prop up the Regional Develop Australia Fund from the tax. Future rounds of this program will only continue if this tax goes through. I guess that is a blatant example of blackmail, but it is so very typical of a Labor government with no understanding and no realisation of what makes the bush tick. The people of regional Australia deserve better from a government that promised to deliver for the regions. It is very much taking from both sides of Paul to give to Peter. The chance that the revenue from this tax will go back to the regions is pretty slim. You only have to look at the track record of this government, and the Regional Infrastructure Fund is a prime example. There was $400 million allocated from a regional fund of $1 billion to go where? To go to Alice Springs, Broken Hill, Condobolin or Karratha? Which region? No, it went to Perth Airport. If anything should warn regional Australia how important they are, 40 per cent of the only seriously allocated money to the Regional Infrastructure Fund went to Perth Airport. The last time I looked Perth was a metropolitan capital and it was not part of the regions. I guess if anything told us how important we are in the regions and how this government's word cannot be taken at face value, that is the greatest example of it.
The coalition has a far better solution to a disastrous, crippling tax. As the shadow finance minister said earlier today, everything the government has worked out is on the best prices that ever existed for iron ore and coal, and only a small reversal in what these things are being exported for will bring this whole scenario tumbling down twice as fast as could possibly happen. We believe this MRRT should be stopped now and that the government should start again. It needs to get its spending under control and stop formulating toxic taxes to pay for its waste and mismanagement. We believe serious, genuine, sustainable tax reform can only be achieved through an open, transparent and inclusive process involving all the relevant stakeholders, not just the three big ones. The government loves big business and big unions because it only has to talk to a few and does not have to take account of people. Unfortunately for this government, regional Australia is about people and small business and the people who work for it.
Only then should the government focus on lower, simpler, fairer taxes and genuine reform.
It is the people living in regional Australia who are going to be hardest hit. Of the almost quarter of a million Australians that are directly employed by the mining sector, most of them are from our regions. That is not to mention the tens of thousands of small businesses, service entry and so on who indirectly rely on the mining sector. The towns and cities of Calare, in particular, rely heavily on the sector. Many of our towns certainly would not exist in the state they are. While the central west of New South Wales is big on agriculture, forestry and various other industries, including tourism, mining is central to its existence. I fear for the businesses that rely on the mines. I fear for the schools, the hospitals, the shops, the cafes, the sporting clubs and the youth groups. I fear for the shareholders who will desert foreign investment, and communities will be left wondering what happened.
This is a tax on regional Australia. It is a tax on small communities that rely on mines. It is a tax on electricity and anyone who uses it. It is a tax on the productivity of an industry that has helped to build our region. It is a tax on heating our homes in winter and cooling them in summer. It is a tax on our community's way of life in country Australia. It is a tax that starts on 1 July next year which, combined with the most toxic tax of all, the carbon tax, will see us all suffer. I cannot stand idly by and watch this government do over regional Australia again.