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
Today I rise to speak on the bills that comprise the minerals resource rent tax or MRRT, including the expanded petroleum resource rent tax, or PRRT. Like the carbon tax, this is a bad tax that will reduce investment and jeopardise jobs. The bills before the House are extremely technical and complex, and I note that there are in fact 11 bills, totalling 525 pages. It is disappointing that this government wishes to push through this new tax before the parliament finishes, denying the opposition and the mining and resources industry the opportunity to adequately scrutinise these bills before moving to debate. Nevertheless, I, along with my coalition colleagues, will continue to raise concerns with regard to the MRRT.
As I speak about the mining tax and these bills today I will be focusing on what this tax will actually do and how unnecessarily complex it is; how it is unfair to small and mid-tier mining companies; how it will reduce Australia's international competitiveness in attracting further investment; and the potential for this tax to detrimentally impact the future progress and prosperity of the Gold Coast as we seek to take advantage of the nation's mining boom.
In relation to the legislation before the House, there are 11 bills that essentially fall into three subsets. The first two bills seek to create a new tax, the MRRT, and extend the current PRRT to cover onshore and offshore Australian oil and gas projects. I will discuss these in further detail shortly. Secondly, the Tax Laws Amendment (Stronger, Fairer, Simpler and other Measures) and Superannuation Guarantee (Administration) Amendment bills seek to change personal income tax provisions and superannuation. Thirdly, the remaining bills deal with administrative and technical issues.
The MRRT is a project based tax on economic rents that miners make from taxable resources. The proposed tax is imposed on a miner's mining profit, minus its MRRT allowances, at a rate of 22.5 per cent. If this legislation is passed, the new tax arrangements will apply from 1 July 2012. The MRRT will apply to the mining of coal and iron ore and the PRRT will apply to various emerging projects.
The original proposal for a mining tax came from the Henry tax review, which recommended a resources rent tax on non-renewable resources that was intended to replace existing state government royalties. An initial resources super profit tax was announced by the former Prime Minister, without any consultation with industry or the state and territory governments, and was estimated to raise $12 billion over the forward estimates. This was such an unpopular move that it became one of the principal reasons that the former Prime Minister lost his job—summarily dismissed, it would appear.
Despite the history of opposition to this mining tax, the current Labor government still wishes to go ahead. In fact, to get to this latest incarnation of the mining tax and expanded PRRT, the negotiations were conducted in secret between the Prime Minister, the Treasurer and the Minister for Resources and Energy and the managing directors of the three biggest mining companies. Why did the government exclude the smaller mining companies from the negotiating process—and the state and territory governments for that matter? It was hardly an inclusive process that the Prime Minister embarked upon.
Resource royalties represent 20 per cent of the Western Australian government's revenue, nine per cent of the Queensland government's revenue and six per cent of the New South Wales government's revenue. There are therefore huge implications for these states and, as the Henry tax review recommended, the Australian government should negotiate the federal-state financial implications of such a move. However, the Gillard government has chosen not to expand the consultation process.
I spoke briefly earlier about how complex this legislation is, and I note that the Henry tax review referred to the need for the regime to be about root and branch reform so as to deliver a simpler and fairer tax system. However, the Gillard mining tax has managed to be much more complex and is less fair, particularly to the smaller mining companies. Under the Gillard mining tax these smaller mining ventures will pay a higher effective tax rate, even though the Henry tax review recommended a lower tax burden which would be aimed at assisting in start-ups so that these ventures could grow and prosper.
The University of Western Australia showed in its modelling that there would be a four per cent discrepancy in the level of effective total taxation between projects that existed prior to 2 May 2010 and those developments taking place after 1 July 2012. The ultimate reality is that new smaller miners will be paying six per cent extra tax and that larger mature miners will pay only an extra two per cent, thus contributing to an anticompetitive regime. This tax is not fair and simple as is claimed; rather, it is unfair and unnecessarily complex.
The coalition shares the concerns of industry that the implementation of this mining tax will impact Australia's international competitiveness as a destination for resources investment. Growing the size of the industry should be the main focus, not cutting the industry into smaller and smaller pieces. Australia is part of a global economy and there are many competing nations vying for investment in the mining and resources industry. Therefore, we should be implementing tax policies that provide incentives for investment, rather than introducing a tax regime like the Gillard mining tax which hinders this economic prosperity.
I note the salient points made in a submission by the Chamber of Minerals and Energy of Western Australia to the House of Representatives Standing Committee on Economics on the minerals resource rent tax legislation, and I quote:
Ultimately, the additional impost of the MRRT will mean less revenue will be available to fund projects, repay debt and provide a return and refund to investors and this may be a real point of difference between funding a project in Australia versus one outside Australia that is not subject to an MRRT equivalent.
The mining and resources sector is a crucial part of Australia's economy and, consequently, integral to our nation's future growth in almost all other industries and infrastructure plans.
While Australia's economy used to ride on the sheep's back, we now find ourselves riding in the back of a miner's truck but with a competitive advantage in the international market place. Almost 40 per cent of all business investment in Australia in 2010-11 came from mining, with forward estimates predicting this to grow to over 50 per cent in 2011-12. Mining consists of about half of our total exports of goods and services, whilst accounting for approximately two-thirds of the total value of exports of goods. It is an industry that directly employs 224,000 Australians, with thousands and thousands more working in industries that help support the mining sector, such as manufacturing and construction.
These figures show just how important the mining and resources sector is to Australia, and I would now like to put on the record the flow-on effects this mining tax will have on the prosperity of the Gold Coast. The Gold Coast is well positioned to benefit from the nation's mining boom and develop a fly-in, fly-out, or FIFO, terminal for the region. We are also well positioned to become an education centre of excellence, with trades and tertiary courses and qualifications that are developed and targeted to provide support to the mining and resources sector.
l have spoken in this place before about the economic challenges facing the Gold Coast and the positive effect that a FIFO workforce can have with regard to employment prospects for local residents as well as the wider economic benefits it will have for businesses and the city at large. Of course, a future FIFO terminal on the Gold Coast and its success is dependent on the prosperity of a strong mining and resources sector. The Gold Coast is well suited to become a national FIFO hub. We have excellent education facilities, with four universities, a variety of public and private schools and over 160 registered training organisations. Closer to the Gold Coast Airport itself, there are private and public hospitals as well as a variety of medical practitioners and allied health services.
As well as basic infrastructure essentials, the Gold Coast also boasts a rich variety of community groups and sporting organisations, each playing an important part in the local community. There are also many locations for workers and their families to enjoy some downtime, with beaches, national parks, theme parks and other attractions situated all over the Gold Coast.
The direct employment opportunities resulting from the Queensland mining and resources industry are set to grow from 44,944 full-time equivalents in 2010 to 121,685 in 2030. This is almost triple the full-time equivalent number for 2010. It has been predicted that there will be a 4.9 per cent per annum increase in employment growth in mining operations over the next five years.
I have recently spoken in this place about a mining expo held on the Gold Coast that I attended. It attracted about 10,000 people—almost double what was expected—with the vast majority of attendees looking for employment. The Gold Coast community in general sees the mining and resources sector as a potential employer that will help provide opportunities for them and their families and keep our local economy strong.
Further, the educational facilities already present on the Gold Coast can be used to complement the educational requirements of a FIFO workforce. This could boost the tertiary take-up rate on the Gold Coast, which is well below the national average. The establishment of an educational hub for the mining and resources sector would also further boost the local economy through the expansion of tertiary institutions and, consequently, the services that they require.
This MRRT is placing all this at risk. A Gold Coast based FIFO workforce could potentially be a highly viable solution to help solve a six per cent unemployment problem. Coupled with the government's carbon tax, the increasing cost of travel will be a further dampener on the prospect of establishing a FIFO terminal where it is desperately needed, on the Gold Coast. By placing a greater burden on the mining operators that are currently willing to hire FIFO workers, the possibility of this opportunity to increase employment participation and economic prosperity may slowly slip away. This government is in effect legislating for unemployment and economic uncertainty. It has managed, in the short space of time it has been in office, to acquire a rightfully earned reputation for indecisiveness and distrust and an insatiable need to tax.
In conclusion, I would like to reiterate the my position and that of the coalition on this issue: we oppose the Gillard government's plans to introduce this minerals resource rent tax. As I have mentioned already, the government should be seeking genuine, fairer and simpler tax reform, achievable only through an inclusive and open process, not just with a select few stakeholders to the exclusion of all others. These reforms must also maintain the integrity of our international competitiveness. They must not hinder it. Furthermore, if this tax is passed, the ability for the Gold Coast to develop a workforce to assist the mining and resources industry will be at risk, as will as our ability to develop as an education centre of excellence, with trades and tertiary education focused on this important sector.
I therefore conclude by encouraging the parliament to stop the minerals resource rent tax from going ahead and suggest that the government go back and re-evaluate what the 'national interest' truly means—because the coalition will oppose Labor's great big new mining tax to protect our national economy.