Wednesday, 20 November 2013
Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading
That is what I have, Shadow Treasurer. I have the former Labor finance minister who makes it very clear on radio that Labor's failed mining tax was directly linked back to the schoolkids bonus. But Labor comes in here and says: 'Don't worry about that. That's not what our focus is. Don't worry about what Marius Kloppers says; he's only CEO of the Big Australian, BHP. Don't worry about the fact that we predicted that our mining tax would raise $49.5 billion and it has only raised $400 million. Don't worry about the fact that by abolishing the mining tax you are actually going to save Australian taxpayers some $13 billion. They're just details. If you can get past that, it is a great tax. It is a wonderful tax.'
There has been a change in government. We are not going to follow Labor's approach. We are not going to have an approach that sees Australian tax payers borrowing money from offshore to pay to Aussie kids because, the reality is, that is intergenerational theft. While the Labor Party might be happy to support intergenerational theft, make no mistake the coalition does not support intergenerational theft. Although Labor Party members might like to trumpet themselves in question time and might like to trumpet themselves around electorates around as being defenders of Aussie families, the reality is that the Labor Party cannot look Aussie kids in the eye and say to them 'we are going to borrow billions of dollars to hand out as a cash splash because it is can make the Labor Party popular'. Shame on the Australian Labor Party for saying that they are happy to hock Aussie kids up to their eyeballs so they can run around electorates and claim that they are great defenders of Australian families.
The reality is there has been a change of government. The adults are back in charge and we are repealing this tax because it is bad for investment, because we do not support putting was into further debt despite the fact the Labor Party likes to pretend that they are about defending them. In addition to that, we support the repeal of this tax because it is a bad tax that has added compliance costs, that has not raised revenue but has some $13-plus billion of additional expenditure attached to it. That is the reason why we are going to start the long process of recovery towards getting our deficit under control and starting the long process of starting to repay the mountain of debt that has been left by the Labor Party.
I would like to thank those members who have contributed to this debate. The bill that is currently before the House does repeal the minerals resource rent tax, the mining tax, as well as discontinuing or re-phasing those expense measures that the former government linked to its failed mining tax. Together, the measures contained in this bill represent a significant step in repairing the damage wrought by the former government on the nation's finances, delivering more than $13 billion in savings over the forward estimates. The interest saving associated with this improvement in the budget's bottom line from the repeal of the mining tax package is around $1 billion over the forward estimates, a billion-dollar saving in interest alone.
This bill repeals more than $16 billion of mining tax related measures which are not covered by the proceeds of the mining tax. This takes the total improvement to the budget's bottom line across the forward estimates to more than $14 billion. I have already outlined that when Prime Minister Rudd in 2010 announced the super profits tax, it was then called, it was meant to raise $49.5 billion but has raised a net total of $400 million—what an abject failure and what a legacy from the Australian Labor Party.
The mining tax is paid by less than 20 taxpayers. Yet around 145 entities have been required to submit mining tax instalment notices while making no net payments. That is around 145 taxpayers are complying with the mining tax legislation, but are not actually paying any tax. Those would be those difficulties in implementation and design that the Shadow Treasurer talks about that they would like us to conveniently ignore. Millions of dollars are being wasted by those in the mining industry complying with a complex tax which barely raises enough revenue to justify its existence. And worse, this tax has worsened the budget's bottom line and only added to Australia's record of debt and deficit.
Schedule 1 of this bill seeks to repeal the mining tax with effect from 1 July 2014. The mining tax is a complex tax which imposes a significant regulatory and compliance burden on the iron ore and coal mining industries. With mining investment at or near its peak, a transition to new sources of economic growth is needed. The repeal of the mining tax will boost business confidence, which is critical to investment and jobs, and will reduce a significant compliance burden for the mining industry.
Schedule 2 of the bill seeks to repeal the mining tax related loss carry-back provisions which enable companies making a tax loss of up to $1 million in the 2012-13 income year, and subsequent years, to recoup taxes paid on an equivalent amount of taxable income in a recent income year. From the 2013-14 income year, companies will be able to carry their tax losses forward to use as a deduction for a future year. The repeal of this measure will save $950 million over the forward estimates.
Schedule 3 of the bill amends the instant asset write-off threshold provisions so that from 1 January 2014, small business entities will be able to immediately deduct for the value of a depreciating asset that costs less than $1,000 in the income year the asset is first used or installed ready for use. While the government does not like repealing this measure, it is left with little choice given the state of the budget. The repeal of this measure will save $2.3 billion over the forward estimates.
Schedule 4 of the bill also provides that from 1 January 2014, motor vehicle purchases made by small business entities are subject to the same tax treatment as other depreciating assets. We should note that the government has overturned the former government's $1.8 billion fringe benefits tax grab on motor vehicles which was a hit to workers who salary sacrificed their motor vehicles. Again, an unfortunate measure but one that will provide savings of $450 million to the budget over the forward estimates.
Schedule 5 of the bill seeks to repeal the expansion of the income tax exploration provisions to geothermal energy exploration. Going forward this will mean that geothermal energy exploration and prospecting expenditure is not immediately deductible. The removal of this measure will save $10 million over the forward estimates.
Schedule 6 of the bill seeks to delay further increases in the superannuation guarantee rate by two years. Businesses are contending with high operating costs and current challenging economic conditions, which are placing pressures on their viability and their ability to employ people. The pausing of this measure will contribute $1.6 billion to the budget's bottom line.
Schedule 7 seeks to abolish the low-income superannuation contribution to ensure that it is not payable in respect of concessional contributions made after 1 July 2013. The government is currently borrowing money to pay for these concessions, and repealing this measure will contribute $2.7 billion to the budget's bottom line.
Schedule 8 seeks to repeal the income support bonus. This bonus was intended to be funded from the anticipated revenue from the mining tax in the May 2012 budget. The government will be required to borrow money to pay for this commitment and the bill seeks to repeal it. Doing so will save the budget $1.1 billion over the forward estimates.
Schedule 9 seeks to repeal the schoolkids bonus. As I already outlined, the opposition claims there was never a link but the fact is that the former minister for finance made that link very clear. The result as a removal of this measure will deliver budget savings of $4.5 billion over the forward estimates period.
For these reasons, the passage of this bill is very important that it be passed by the House. This is the start of the journey of repair to undo the mountain of debt and deficit left by Labor. Guaranteed, we cannot promise to be the Santa Claus that the Labor Party wants to be, promising all sorts of things to all sorts of people but with borrowed money. The coalition is responsible, and I commend this bill to the House.