Monday, 24 May 2010
Questions without Notice
My question is to the Prime Minister. I refer the Prime Minister to the claim he made earlier in question time that the undergraduate research paper from the University of North Carolina was a paper from the reputable National Bureau of Economic Research. I ask whether it is not true, Prime Minister, that the paper was posted on the bureau’s website with the disclaimer:
The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Will the Prime Minister correct the record or allow his false claim to stand?
I thank very much the member for Goldstein for his question. If he would care to consult his press secretary, he would find that there is a statement on this matter which I think has been issued by the Treasurer today. I am sure the press secretary is busy with other matters at the moment, but he could pop it into the in-tray. The statement says the analysis is co-authored by Professor Douglas Shackelford and published by the National Bureau of Economic Research. It goes on to make a series of statements about the number of Nobel prize winners et cetera from the NBER. It goes on to say that the analysis has been commented upon by some—
On a point of order, Mr Speaker: this is a serious question because it goes to the misleading of the parliament. The Prime Minister specifically tried to leave the impression that this was a paper from the National Bureau of Economic Research and it was not.
I am further advised that the analysis is published with acknowledgements to many other leading authorities and refers to a bunch of other institutes including those who participated in the 2009 Institute for Fiscal Studies European Tax Policy Forum Conference et cetera, et cetera, et cetera.
Mr Speaker, I have a point of order on relevance. The paper from the Treasurer that the Prime Minister was referring to made absolutely no reference to the principal author, Mr Markle.
The member for Goldstein will resume his seat. The member knows that he cannot come to the dispatch box on a point of order and then start debating. The Prime Minister is responding to the question. On a point of order earlier, there was an indication of the seriousness of this matter, but those on my left have continued to interject throughout the whole answer. The Prime Minister will be heard in silence.
I very much welcome the question from the member for Goldstein because it goes to the whole debate about what constitutes a fair return for mining interests in this country. On this debate about a fair return for mining companies —
Order! The Prime Minister will resume his seat. To get a little bit of consistency back in the chamber, last week an expression was used which was preceded by the adjective ‘political’. After a little bit of argy-bargy, I agreed that that expression should be withdrawn. That does not permit that expression to be used in interjection and without the adjective without me now taking action in this particular sitting week. The member for Dickson will withdraw.
Mr Speaker, on a point of order: I would ask you to reconsider given the outrageous provocation from the Prime Minister of the member for Dickson, which he seems to be able to get away with. The member for Dickson responded and has been thrown out. I would ask you to reconsider.
Order! The Manager of Opposition Business will resume his seat. I have considered the matter and I have taken action. I remind all members on both sides of the tolerance I have shown over a number of matters. Again, I apologise to those who actually behave within the standing orders.
I would simply draw the member for Goldstein’s attention to the statement which was put out by the Treasurer this morning and commend his attention to the relevant paragraphs concerning the source of the report.
I thank the member for Isaacs for his question. As I have said on a number of occasions over the past couple of weeks, tax reform has never come easy to Australia but it is the responsibility of the Australian government to actually take on this debate, a responsibility that the previous government shirked. I say that because the only sections of the Australian community arguing at the moment that the resources and petroleum sector in Australia should not pay higher taxation are the Leader of the Opposition and the coalition. In that context, can I say that we are well positioned to have this debate. Australia has come out of the global financial crisis in a very sound position. In many ways we are the envy of the OECD world.
The real debate is about how much tax is paid, who collects it and under what system. We should also remind one another that that is not just my view, it is also the view of many in the resources and petroleum sector in Australia. Let us go to the Minerals Council of Australia. This is what they have actually said about a profits based tax debate in Australia:
There is a strong argument to reform the basis of determining royalty payments to a profits based criteria from a revenue one.
I could not agree more with the Minerals Council of Australia. But I also appreciate that the devil is in the detail. That is why the government is engaged in a very serious process of consultation at the moment. With respect to the requirement of the resources and petroleum sector to pay more taxation in Australia, I remind you of what the CEO of Woodside, Mr Voelte, said on Radio National this morning:
In talking to the big miners and the mid cap miners I have not heard that they are not willing to negotiate a different tax and a higher tax back. They want to give a fair share back to the Australian citizens. The key is how you balance the right amount of money back to the citizens versus the economic return on billions and billions of dollars of investment.
I agree with Mr Voelte of Woodside. That is where we are at in this debate at the moment—the coalition is opposed to any tax reform in Australia whilst the government seriously engages industry with a view to actually getting the balance right. I say that because shareholders are entitled to a fair return for the purposes of their investments in Australia, but perhaps more importantly we should remind the coalition that so is the Australian community. They only get one chance to develop their finite resources. Those resources are 100 per cent owned by the Australian community.
I also remind the House that a number of major resource companies in Australia are also open to this debate. Let me go to what the CEO of BHP Billiton said on 9 May when he was asked, ‘But are you opposed to the resources rent tax in principle?’ He answered no and went on to say:
… we are not opposed to reform. We’re not opposed to any particular form of how that taxation takes place.
The reason for that is that the resources and petroleum sector and the Australian community now want some certainty for the purposes of the pipeline of investments that are in place potentially for Australia. They have had a gutful of state and territory governments lifting royalty rates from time to time to suit their short-term circumstances. The Minerals Council submission to the Henry tax review argued for a profits based tax system in Australia to create that certainty. I simply say that I agree with the mining industry. We require certainty. The tax announcements of the government will change that. Yes, they will tax profits at an appropriate rate, but they will also provide certainty and flexibility because you will only pay taxes on the basis of the profits you make.
In that context, I refer to an earlier question by the member for Groom who, I might say, should know better. He should go away and re-examine the question given to him by the Leader of the Opposition that he asked today. Clearly that question was carefully choreographed, yet we do not know, from time to time, whether he is telling the truth or not. Let us go to the oil and gas sector tax. That has created certainty in Australia. I remind the member for Groom and the Leader of the Opposition about the introduction of that tax. It goes to the issue of certainty. Esso and BHP actually chose to transition into the petroleum resource rent tax system of Australia, under which the life of the Bass Strait oil and gas reserves was extended for decades.
Then he goes to the question of the long-term nature of these investments. Let us go to the issue of Pluto, an investment decision made in 2007. Pluto will export LNG from Australia in the financial year 2010-11. Let us go to the biggest ever LNG investment in Australia. Let us go to the biggest ever single investment in the history of Australia—Gorgon. Gorgon will export LNG from Australia in the financial year 2015-16. We had a debate 25 years ago about the need for tax certainty in Australia—an investment horizon that created attractiveness for investment in Australia whilst creating long-term opportunities for shareholders. Let us go to the nature of that tax in the Gorgon LNG investment decision. I refer to some comments made in Western Australia on the occasion of that investment. I remind the House of what the Chevron vice-chairman, George Kirkland—not known to the Leader of the Opposition because he finds economics and investment in Australia boring but at least known to the member for Groom—said:
There’s no doubt … this positions Australia very, very strongly in the gas world. It really and truly does.
He then went on to say:
The good news is Saudi Arabia is all about oil, and what we’re seeing in Australia is all about gas.
… … …
Asia has been growing, growing significantly. And where’s Australia? Great position to really deliver on a cost advantage basis, that market.
He went on to say:
… for Chevron we have four focus exploration areas of the world that we push the predominance of our exploration money. Western Australia is one of those and we feed our exploration budget here very well, and we’re going to continue to feed it very well, because we have the view that we can grow the resources here …
That is because we took on a debate 25 years ago. It was a debate which ensured we had certainty in the tax regime in Australia for the resources and petroleum industry and a debate which ensured the Australian community got a fair return for the development of their resources—100 per cent owned by the Australian community.
That is why this government, unlike the opposition, who should have done this over the previous decade, is committed to putting in place a resources rent tax that provides for the broad development of the Australian resource community and creates efficient and effective mining but also ensures a better return for the Australian community. I simply say to the resources and energy sector and the petroleum sector: there is a genuine process of consultation underway; we are interested in the issues that you are raising; and we are absolutely committed to getting it right. Unlike the opposition, we believe in investment certainty and the right of the Australian community to get a fair return on their investments. The only people arguing against higher taxation for the resources sector in Australia are Tony Abbott and the opposition, because all they are interested in are grubby donations from certain sectors of the Australian community.
On a point of order, Mr Speaker: obviously the opposition take offence at that last phrase of the minister and we ask him to withdraw it in the interests of the House.
My question is again to the Prime Minister. I refer the Prime Minister to the statements of the Treasurer and the Deputy Prime Minister yesterday, based solely on the paper of a student from the University of North Carolina, that the effective tax rate of Australian mining companies is between 13 and 17 per cent. Is the Prime Minister aware that the paper is in draft form, that the paper does not include royalties and other business taxes, that the paper is not designed as a policy tool and that the student author, Kevin Markle, who has not yet graduated, is involved in a website that claims ‘I love taxes’?
Thank you very much, Mr Speaker, and where is the member for Goldstein’s press secretary when you need him. He digs himself in on a question about which the opposition are most sensitive, which is the actual level of taxation paid by the Australian mining industry. He refers in particular to the publication from the NBER, and he says that the NBER does not publish these sorts of publications. One piece of information I have from the National Bureau of Economic Research is an NBER publication by Douglas Shackelford of June 2009 entitled, Do multinationals or domestic firms face higher effective tax and rates? written with Kevin S. Markle. That is what it says—with him. That is actually listed under NBER publications by Douglas Shackelford.
What I find stunning about the use of question time for this purpose is that it actually seeks to mask the opposition’s refusal to engage in the substance of the debate, which is the best form of taxation for the Australian mining industry. Firstly, what grows the industry over time? Our answer is a profits based tax; not a volumes based tax. Secondly, we have the example of the PRRT as to how it has worked over time. Now by their questions they are walking away from the PRRT. Thirdly, with the RSPT we bring in a new system of proposed taxation which provides an upfront assistance to industries to offset their costs involved in the initial investment in order to broaden the base of the industry. That is what we are seeking to do. This is the basis of the reforms that we are advancing and the projections contained in the papers provided by the Treasury and the Econtech modelling, which underpin that the long-term growth of the industry increases by 5.5 per cent as a result of these reforms.
Those opposite, consistent with their engagement on every matter of policy—whether it is health policy, education policy or any other form of policy including Work Choices—are negative, consistently attacking and never provide an alternative. I would just draw their attention, again, to the former head of the Liberal Party, Dr John Hewson, and his remarks, the former head of the New South Wales Liberal Party, Mr Brogden, and his remarks and also to the earlier endorsement of the PRRT by the former Treasurer of Australia, Peter Costello.