Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Mr Speaker has received a letter from the honourable member for Dunkley proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The adverse impact on small business of the government’s resource super profits tax

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Link to this | Hansard source

There is a growing and ever present appreciation and awareness within the broader community that the Rudd government’s great big tax on the mining sector is not only bad news for the mining sector but also bad news for all Australians. It is bad news for Australian small businesses. It is bad news for Australian consumers. The Rudd government would have you believe this is a kind of Robin Hood tax where they are taking money off pinstripe suited investors from far away that have shares in huge mining companies, but really it is a Scrooge tax, gouging revenue out of mums and dads across Australia for day-to-day activities of everyday life and small businesses that employ right across our vast continent and also representing a threat to those that have funds invested in superannuation or rely on that investment for their income. This is not a Robin Hood tax; this is a Scrooge tax.

You just need to look at the commentary that we are now seeing start to emerge. This commentary will increase as people come to realise just how disastrous this tax is not just for the big mining industry and for the big mining companies but for everybody that uses any product that is manufactured or that is recovered from that mining operation. Those mineral extractions appear in every part of our lives. Every corner of our existence has a product that has been extracted from these mining operations. It is not just BHP and Rio that make those extractions.

This is the great lie, the falsehood, that the Rudd government is trying to put out to the Australian public—that all this is a bit of a touch-up for those huge mining companies. It is not that at all. It is a cost impediment; it is a dagger in the heart of those big industries and the mining industry that has driven prosperity in Australia. But it is going to have ramifications right throughout the community, throughout the suburbs, throughout the regional centres. It will have implications for people wanting to buy a home; it will have implications for everybody who uses energy in their day-to-day life or as an input for their business operations. Those that use particular minerals that are extracted as part of their production processes will be copping it as well. We are learning more and more about those impacts as time goes by.

It is important to understand just what is going on here. As the Prime Minister refuses to listen to anybody who contradicts his point of view, I hope he might at least listen to Winston Churchill. He has some form; he has some credibility. Back in around 1903, Churchill said something that should be resonating right across this economy and right across the community. He said:

A nation that tries to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

That is exactly what is going on here. What you are seeing is a grubby tax grab from a lazy government that does not think through its policies, not to do anything about the holes across the continent but to fill a black hole in its budget. This is a grubby grab for tax revenue that is going to have harm and hardship right across the Australian economy.

Let us look at some examples. Let us look at the housing industry. People already are struggling with housing affordability issues, the government seemingly incapable of doing anything with it. What do they do? They go and push up the price of houses. The West Australian talks about profits tax, a $20,000 slug on a new home—a $20,000 increase on the cost of a new home. There is example after example from the Slattery property group in Western Australia saying, ‘If all resources are left on the table, it will really add to construction costs. An average home cost is $200,000 to build.’ It then goes through the details of the impact and points to a $20,000 potential price increase. That is an extra $20,000 that people already struggling with housing affordability will need to find. It goes further: Midland Brick general manager Greg Smith confirming that the extra tax on the clay and other resources used to make bricks would be passed on to consumers—another example. If there is any comfort that you can take out of this article, it is Multiplex saying, ‘There is a bit of international competition; we will buy it offshore.’ What a comfort that must be for people that are involved in those industries.

Anyone who is interested can have a look through this chart that shows how minerals extracted not by big mining companies—although some are involved in this activity—but by small operations that you see right across Australia in outer metropolitan areas such as the electorates of Dunkley and Casey and in the rural and regional centres of Australia. They are involved in this industry that is now facing a tax that no-one wants to own and that Kevin Rudd and the Rudd Labor government will not even bother explaining. They have shirt fronted people with it. They are expecting them to cop it sweet, suck it up and hope that it has no adverse impact on the Australian economy.

Small businesses are too smart; they are too streetwise. They know a stooge job when they see it. They know when they have extra costs coming at them that are either going to be passed onto customers, pushing up the cost of living and the cost of their services, or going to eat into their own profits at a time when profitability is a major challenge for the small business community. So there is the housing example. Anyone who is interested in it can just think about the tiling, the steel roof frames, the brickwork, the aluminium windows, the electrical systems, the plastering, even the earthworks and foundations, the very concrete that is used to have the home built, the plumbing and even the internal plaster boards—all using minerals extracted in many cases from smaller operations that are going to be made more expensive from this poorly conceived tax.

Cement, Concrete and Aggregates Australia has pointed out that this tax is really going to hit areas that currently do not even pay royalties. So poorly designed is it that the chief executive, Ken Slattery, said that 85 to 90 per cent of quarry products do not attract royalties, but they are in for Kevin Rudd’s great big mining tax, which will land not only on huge companies that seem to be the target of the political statements made by the government, but the small companies, small family businesses and small mining and quarry operations right across Australia.

So that is what is happening, and if you want to use some energy in your house you are also going to cop it. Country Energy is one of a number of companies talking about the uncertainty that this new tax is going to create. The cost of coal will be pushed up and, in turn, household energy bills will be pushed up. As well, that cost will be pushed onto the energy bills of small businesses, who are already having to cope with enormous energy prices. We have discussed some of them and we sought to advocate on behalf of them when we had the CPRS—the other great big new tax that the Rudd Labor government wanted to introduce. So there is another example. Anyone using energy and anyone who is looking at coal and gas prices affected by this new regime will see upward pressure on the costs of those inputs flowing through to more expensive power—for every small business and for every household.

Think about the regional impact. Warwick Chamber of Commerce President, John Randall, has given an account of what it will do in the Warwick district—a district that has some of the economic characteristics of a number of communities across Australia. He was quoted as saying:

“Warwick has several well-run quarrying businesses producing sand, gravel, deco, road base, sandstone and limestone for our region,”

“If business owners get hit by this new tax, they will have to pass it on and that means increases in a huge range of costs, including the cost of building a home in Warwick.

“This would be because of higher concrete costs and increases in the cost of landscaping supplies.

“It will hit everyone, even down to filling up the kids’ sandpit.

In question time today we talked about the talcum powder issue and the impact that will have, but even the kids’ sandpits will not be excluded from the impact of this great big new tax.

John Randall went on to talk about the impact on the farming community from the increase in costs for fertilisers like lime, gypsum and superphosphate—all of which come out of quarries and all of which are key inputs into our food production system. That goes to the very heart of the point that the coalition has been making over and over again. This great big new tax on the mining sector is not only on the huge mining companies but on everybody involved in these kinds of activities, because it is so poorly designed. It has not been thought through. It does not even follow the template that Henry outlined in his report—and I will come to that in a minute.

In my own community, Hillview Quarries is a charitable organisation and this tax will impact in double-digit figures on the cost of their supplies for construction in the Mornington Peninsula and beyond. Any profit they make is put back into the community, so even those philanthropic efforts of Hillview Quarries and other organisations will be hit by this very poorly conceived, poorly designed tax.

If you look at other examples, you can talk about the impact on investment. On Radio National we heard commentary provided by Graham Carman from Paradigm Metals Limited and also from Graham Jeffress from the Institute of Geoscientists, saying that the very design of this tax has implications for smaller companies in that ‘the risk-reward equation has been imbalanced’. He said, ‘It is going to make it that much harder for those smaller companies to raise capital.’ The whole sentiment of whether people want to invest in exploration is to be damaged.

Mr Carman and Mr Jeffress are making the point that these companies, to keep doing their business, need to be able to attract capital. If they try to attract investors, they will look at it and think, ‘Gee, over six per cent is a super tax for them to be hit with,’ how are they going to get equity? If they go to the banks and say, ‘Banks, can you lend us some money?’ the banks are going to say, ‘Even if you’re going well you’re going to get cleaned up on this resource super tax.’ This is at a time when the small business community is screaming out for relief from the difficulties it faces in accessing finance. So you are seeing adverse consequences of this tax not only in the cost of living in people’s homes and in the cost of doing business for small businesses, but even in the prospects for continuing to grow this area of the economy. Those prospects are being undermined by the very tax the government says is just what the industry needed.

But you do not have to believe me and you do not have to believe the industry experts; you do not even have to believe practical people on the ground who are living with this prospect day in and day out and who are worried about their future. You could talk to a Labor mate. You could even go and ask the South Australian Minister for Mineral Resource Development, Paul Holloway. He talked about the need to get the design features in the tax right. He said that we need to highlight possible design features in the tax that could create problems. He talked about Olympic Dam and said that the pricing point becomes particularly important. What he is asking is: where does this tax land? What if you are involved in a vertically integrated business? Does the tax land at the hole, at the gate, or at the port where the trains arrive? Do you blend your ores? Is that a value-add or is that an extractive activity? Do you have a company that passes on these resources for virtually no profit so there is no tax to be applied, just so that someone down the train can make all the money? We do not know.

The South Australian government Labor minister does not know either, and he is pointing to the impact that it will have on the lifeline for the South Australian economy: the Olympic Dam project. He says there is a high level of downstream processing as part of that project. He said:

You certainly would not want to see a super profits tax that discouraged downstream processes.

That was his point. It is not just the level of the tax; it is the way in which it is being applied and where it will be applied that will distort so much economic activity and investment opportunities. But the statement that cracked me up—I must say I found this incredible—was one that I could not agree more with. The statement went:

It is a self-evident fact and it is very difficult for any sector to develop successfully over time when the rules of the operation change in the short term. Investment decisions by manufacturers, developers and financiers all require long-term certainty that will enable them to invest scarce capital with the expectation of receiving an adequate return.

I think we could agree with that. Would you agree that that was a remarkable statement to come earlier today from the member for Braddon? A member of Labor Party made that statement, not about the mineral sector but about the renewable energy target. His advocacy was so crisp and clear and vivid as it related to the renewable energy target that he even stopped himself after he said it and thought: ‘Gee, this isn’t my best moment, is it? That is a cracking great quote, a quote that is going to come back to visit me.’ And it should visit him, because he is making the very point that the opposition and many that are concerned about this tax have been making over and over again: this messes with the very foundations about why people would invest, the rules under which they invest, and the implications for their own viability in the longer term.

So there you have the issues. You have cost increases in energy. The cost of housing is going up. Agriculture, food production, any activity—

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Mars bars!

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Link to this | Hansard source

and most likely, Mars bars, sir—who knows? There is one thing that we can all agree upon: you do not know. You do not know, because the Rudd Labor government are so indifferent to the impact of these kinds of policies on the small business community that they do not even bother to check them out.

We saw this with the great big new tax, the CPRS. It was going to impact on every small business, everyone who introduced energy into their production process. Everyone was queuing up for compensation and the Rudd government had it covered. But who did they leave out? Small business. There was love being shared with compensation to soften the pain everywhere, except for the small-business community. And here we have it again. The Rudd Labor government just does not get small business. They just do not understand what it means. They do not understand the personal commitment and the sacrifice, the connections that the small-business community have with their operations and how they know that this tax—that Henry foreshadowed and then said should exclude dozens of minerals that this government has not excluded—is going to hurt communities and small businesses right across Australia.

What is clear is that this Rudd mining tax is a bad tax. It is bad for investment. It is bad for jobs. It is bad for small businesses. It is bad for consumers. It is bad for communities right across our continent. It is not just bad for big miners, it is bad for small quarries and family businesses extracting elements as a part of everyday life. There is one way to stop it—and that is to get behind the coalition. That is the only way you are going to stop this. The Rudd government has created an enormous budget black hole and it is trying desperately to fill it with a policy that it has not thought through. There are consequences it is indifferent to. All it wants is the cash to paper over its budget black hole. (Time expired)

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

I will see the shadow small business minister’s Winston Churchill quote and raise him a quote. The first quote from Winston Churchill is:

There is nothing more exhilarating than to be shot at without result.

He came in here and was going to shoot all these bullets—and he completely missed. There is the Winston Churchill quote number 1. Winston also went on to say:

Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened.

What you have just launched is another chapter in a scare campaign, a chaotic, shambolic scare campaign undermined by your own members of parliament, most particularly of course by your good close friend Senator Barnaby Joyce—and I will have plenty to say about that.

You asked about commentary. I will give you some commentary from the small-business community. This is from the Council of Small Business of Australia, which said:

The idea that the tax cuts might be cut out before they even come into effect is very concerning.

              …              …              …

The tax cuts and depreciation bonus for small businesses announced by the government is a good step forward on tax reform.

So you have got the Council of Small Business of Australia saying that they are very worried about the coalition opposing the Resource Super Profits Tax. Why? It is because the Resource Super Profits Tax would generate revenue to fund the small-business tax breaks that we are offering.

Not one word was spoken about the small-business tax break in the form of instant write-off of assets valued at up to $5,000. These are any assets valued up to $5,000, not falsely, as the coalition claims, only for companies, but for every one of Australia’s 2.4 million small businesses. This is a tax break for partnerships. It is a tax break for sole traders. It is a tax break for small business companies, and it is a tax break denied by the coalition. They say they are the party of small business. What a joke! There was not one mention of the fact that Tony Abbott, the opposition leader, and his colleagues in the coalition, would deny small business the tax break that COSBOA is saying that they really want.

It is not just COSBOA. The Australian Newsagents Federation said that it has expressed concern ‘that small businesses may lose the urgently needed tax relief that has been recently announced by the Federal Government’. They went on:

The Government’s plan to cut the small business tax rate from 30 per cent to 28 per cent and allow small businesses to instantly deduct the full costs of assets valued at up to $5000 is important to community newsagents and all small businesses.

There you have the Australian Newsagents Federation calling on the coalition, pleading with the coalition, to pass the Resource Super Profits Tax so that all newsagents can benefit from those tax reductions. We know that in terms of the head start on the company tax rate reduction for small businesses that 720,000 small businesses would receive that. That is a lot of small businesses. But all 2.4 million small businesses would receive the instant write-off.

The supreme irony of this is that in the week of ‘gaffethons’ that we have seen from the coalition, the opposition leader passed the parcel to the shadow treasurer, and the shadow treasurer passed the parcel to the shadow finance minister, who wanted to pass the parcel to his staff member, who said, ‘No, not me, pal. Just get out of here—pull out!’ In that process the coalition managed to remove the one tax cut policy that it had for small business, and that is the carry-back of losses, which was coalition policy. But it was sacrificed on the altar of expediency in that shambolic process of pass the parcel through to the staff member of the member for Goldstein. The fact is, small businesses would be great beneficiaries from the tax reform package that the Rudd government is offering, and what is standing in the way of small businesses getting much-needed tax relief is of course the coalition.

The coalition stood in the way when the Labor government wanted to provide an economy stimulus package to support our tradies and small businesses. The coalition opposed it; they voted against it. They did not believe our small businesses deserved a break during the deepest global recession since the Great Depression. No, they believed that small businesses should just go broke—let the market decide; let the market determine. They voted against that stimulus package. They voted against our tradies and our small businesses then. They voted against the greatest school modernisation program in Australia’s history, which is being built by our tradespeople, our trades men and women in this country. What have the opposition said about that? It is the end of trade training centres. Well, who builds the trade training centres? Our tradies do, and they will have plenty to say about the coalition’s plans for trade training centres in every part of Australia.

The impact of the tax reform package on small business can also be said to be related to investment by the large mining companies in Australia. So let us have a look at the analysts’ consensus recommendations from the E*Trade website on 24 May. In relation to BHP, five analysts reported that they all have strong buy recommendations for BHP. For Rio, four analysts reported, three with a strong buy recommendation and one with a hold. For Fortescue, five analysts reported, three with a strong buy recommendation and two with a hold. For Woodside, four analysts reported, three with a strong buy reported and one with a hold. So there you have the analysts saying, ‘Invest in the Australian mining industry—invest in BHP, invest in Rio, invest in Fortescue, invest in Woodside.’ We know that the member for Dickson, Pig Iron Pete, absolutely agrees with investing in BHP because Pig Iron Pete did exactly that. He showed good judgment. Two days after the release of the tax policy of the Rudd government, the member for Dickson bought BHP shares.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order: I draw your attention to the comments by the Speaker yesterday when the minister used that same comment and the Speaker ordered him to withdraw. He has just repeated that comment.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Is the minister prepared to assist the House?

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

I withdraw. In question time this week, the opposition were asking questions about the impact of the PRRT, the petroleum resource rent tax, on exploration and development in this country. They were challenging the government’s assertion that the petroleum resource rent tax has been consistent with high levels of exploration and development in this country, asking what Australia has exported in PRRT areas and what projects are actually producing in PRRT areas, as if there were none. As if? The member for Corio is here. Bass Strait is just a little south of Geelong?

Richard Marles (Corio, Australian Labor Party, Parliamentary Secretary for Innovation and Industry) Share this | Link to this | Hansard source

South-east.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Does the opposition know there are big oil and gas fields there? You should go there. They produce a lot of oil and a lot gas. Under what? The PRRT, which applies to Bass Strait. And there are projects elsewhere in Victoria and off Western Australia that are producing under the PRRT. I can claim this, that the majority of the following projects are PRRT producing projects—that is, they are operating under that regime: Laminaria, Thylacine, Basker-Manta-Gummy in Bass Strait—a big place—Minerva, Patricia Baleen, Taroom, Yolla, Athena, Cliff Head, Einfield, Vincent, Griffin, John Brookes, Mutineer-Exeter, Reindeer, Stag, Wandoo and Woollybutt. There are more, but a majority of those at least are producing under the PRRT regime. And what did we get 25 years ago? The same mantra, the same scare campaign: it is going to drive exploration out; it is going to be bad for our small businesses that work with and service the major petroleum companies in this country; it is going to be bad for anyone who is servicing a small business, servicing BHP, servicing Esso; it is going to be the end of exploration in this country.

So we have heard it all before. And then the opposition comes into this parliament to create the impression that there are no currently producing projects under the PRRT regime. That is completely false. Have they ever heard of the Gorgon gas project? It was given the go-ahead under the PRRT regime. Yet this opposition says that a profits based tax will smash the mining industry. Well, why didn’t the profits based tax smash Gorgon? Why didn’t the profits based tax smash the Pluto project? Why didn’t that happen? They said 25 years ago that that was what would happen.

The member for Tangney when he was on the doors said he was misquoted, but what he actually said was that he did not accept that the Australian people own the minerals of this country. He said the state governments own them, not the Australian people. This is the sort of philosophical divide with which we must deal. Members of the coalition do not even accept the proposition that the Australian people own the minerals. They say, ‘It’s the states and the mining companies who own the minerals and there is no right for the Commonwealth to tax them at all.’

The opposition are a shambles, with a shambolic, chaotic scare campaign because they have three different views on three different days. The first view was expressed by someone who is very famous now, and has become even more famous in the last day and a half, and that is the Deputy Leader of the Opposition. When she was asked two days ago about whether mining companies are paying their fair share of tax she said, ‘I believe that they are paying a fair amount of tax.’ The next day Senator Barnaby Joyce was asked specifically about the deputy opposition leader’s comment that they are paying a fair share of tax and he said:

No, not at all—we can have a sensible negotiation … To say there is not the capacity to change the tax is not right.

Boom! There goes the case. There goes the Deputy Leader of the Opposition, blown up again by Senator Barnaby Joyce. He went on to say:

I’m prepared for people to look at the mining sector to pay more tax.

Boom! There we go again. Then he says:

Let’s go through the proper negotiation.

Boom! Another one. The old depth charges are coming in left, right and centre, blowing the deputy opposition leader out of the water. We know why, of course—because he had a very stinky nasty blue with the member for Goldstein, who had said of one of our ministers that he had ‘done a Barnaby’. Barnaby Joyce had a lot to say about that. He made rather derogatory comments of the member for Goldstein and finished by saying, ‘Bugger him!’ So unity is a myth on the coalition side.

Today, to cap it all off, we got the final word, because the opposition leader wanted to clarify the chaotic, confused scare campaign as to whether the mining industry pays a fair amount of tax or whether the mining industry could pay more tax. Do you know what he said? He said:

Any fair-minded analysis of the evidence would suggest that mining companies … are paying more than their fare share of tax.

So what is the offer? It is a tax cut to the mining industry from the opposition leader. He is saying now that they are paying more than their fair share of tax.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

Mr Fletcher interjecting

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Bradfield will not interject from outside his seat. It is extremely disorderly.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

So we have three positions. First they are paying just enough. Then they are paying too much. And now the opposition leader comes in and says: ‘I’ll clear it up. The answer is that they’re paying more than their fair share of tax. They’re being treated unfairly and they shouldn’t have to pay all that tax.’ Well, of course he would say that.

Part of this scare campaign relates to prices. We heard the shadow small business minister, when I interjected asking, ‘Will it increase the price of Mars bars?’ saying, ‘Yes, it will.’ This is the Mars bar effect. We have just heard of it today—the Mars bar effect of the Resource Super Profits Tax. Get your Mars bars now, hoard your Mars bars, before the Resource Super Profits Tax because up will go the price of Mars bars! Quick—get out there and buy Picnics, Mars bars, Redskins, Cobbers, Mint Leaves—

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

Mr Neumann interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The honourable member for Blair will remain silent. He is not in his chair.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Get them now because the price of lollies is going to go up under the Resource Super Profits Tax —it is going to put up everything! The latest claim is that it is going to put up electricity prices.

The report from KPMG Econtech completely refutes that. The opposition talk about reading reports—read the one from KPMG Econtech which shows that the price effect will be that prices will go down. How is that going to help small business? Read the report. Have a look on page 36, which shows the policy impact of the whole tax package on various items: food, -0.1 per cent; clothing and footwear, 1.3 per cent down; housing, 1.1 per cent down; household contents and service, 1.1 per cent down; health, 0.6 per cent down; transportation, 1.7 per cent down; communication, 1.4 per cent down; recreation, 1.3 per cent down; education, 0.3 per cent down; and financial and insurance services, down. Prices are going down, not up, so forget about your silly Mars bar scare campaign. It is just a joke—it is just a farce. That is because you are just a joke—you are just a farce. Winston Churchill was right. I am very relieved that you came in here firing bullets and missed everyone. (Time expired)

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

We have just heard from a minister who is high on pantomime and very, very short on policy. What we have seen is a minister who can talk the talk but will never walk the walk for small business—all rhetoric and no action. The supposed minister for small business does not understand it because he has never been in it. You have never had your money on the table. You have never employed people in small business.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Dr Emerson interjecting

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! The minister will not interject from outside a seat on the front bench.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. Again, they have messed with the truth; I ran a small business.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

There is no point of order.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

They say that, when big business sneezes, small business gets the flu. What this minister and this government does not understand is that, under this great big new mining tax policy, not only will big business sneeze but small business will suffer a cardiac arrest. How can they understand business when they do not understand the impact and the effects of their business? To the government, who are now in the process of consulting, I say: it is a little bit late now, after you have put the figures into the budget showing what you expect to reap, to go down the path of consultation. One would have thought that someone who understood business and understood government policy would have had the consultation prior to putting it down on paper in the budget.

The figures are in the budget showing how much is expected to be raised—it will be raised off the back of business and in particular small business. It is not just the big mining industries that are going to feel the effect of this. The mob opposite do not seem to understand that, when big mining companies make an investment, whether it is in exploration or starting up new fields, they employ small business to get the jobs done. They employ the people with the drilling rigs, the excavators and the trucks and they employ the electricians, the hydrologists and the surveyors—and that is just on site. The list goes on and on. When they need to procure the equipment, they engage small business to supply that equipment. This government do not understand the downstream effect of expenditure by big business. They have walked into this place claiming they understand big business. They thought the only people they were going to penalise were big offshore companies. The reality is that there are many small businesses, including small mining companies, that will be affected—many so badly they may not be able to continue in business.

This is the government that thought they knew about business in their management of the insulation batts. The result of their program there was to destroy small businesses. You cannot undermine investor confidence in business and expect investment to continue. If this government will not take advice from anyone but their own people, if they will not take advice from the coalition opposition, they should at least take advice from fellow Queenslander Anna Bligh, the Premier of Queensland, who said on ABC online on 10 May:

You can’t expect international companies to make those investment decisions unless they’ve got absolute certainty about the costs of doing business.

The whole thing about being in business is having a solid, stable and secure platform by which to develop your business plan so that you can proceed with a level of confidence. What we see from this government is one position today and another position tomorrow. We saw four different positions last week. They do not understand the ramifications of their actions. This government laid out a policy, made the announcement and put it in the budget and they are now considering changing it to reduce the impact. They do not understand the impact of what they have done.

This tax will affect 500,000 Australian workers whose jobs depend directly or indirectly on the mining industry in Australia. In the Hunter Valley there are 15,000 people directly employed and 50,000 indirectly employed in the mining industry. Many of those live in my electorate. I know them. My children go to school with their children. I meet with them regularly; I understand the issues that they have—and the biggest thing that worries them at the moment is job security. We have seen a plethora of investment companies and mining companies talking about the business case no longer stacking up to start new work. Miners need security because of the risk to their investment.

If you do not want to take the word of the opposition on the impact of your policies on small business, look to independent groups such as the Hunter Business Chamber, an independent representative organisation that has over 1,000 business members on its books, many of them small businesses. Its CEO, Peter Shinnick, said about this tax:

The proposed resource super profit resource tax is wrong and requires re-thinking. The impost on the resources sector is already causing the deferral of business investment, which will flow on through the industry if retained in its present form.

I say to this government: you have got it wrong—you have got it wrong for the industry; you have got it wrong for the workers; you have got it wrong for the communities at large. In fact, on 3 May 2010 there were articles in the Newcastle Herald headed ‘40% tax on coal profits has Hunter coal companies up in arms over “blatant tax grab”‘ and ‘Effects of super tax touch “every level” of sector’. The first article said:

Hunter mines exported about $8 billion worth of coal last year, plus another $1 billion or more in domestic sales, and contributed about $900 million in state mining royalties.

On these figures, the Hunter’s contribution to the new ‘super tax’ could be as much as $3 billion a year.

That is $3 billion that will not be able to be spent on downstream businesses. This will have a massive impact.

Regarding the government’s previous great big tax, the ETS tax—the one whose name we shall never speak before the election; its name should never be mentioned—the Newcastle Herald, reporting on the Access Economics report commissioned by the New South Wales Labor government, said that 17,000 jobs in the Hunter would go from the mining, aluminium and energy sector. When you add that ETS tax and the impact of the loss of 17,000 jobs to this super tax grab from the mining industry, who knows what the figures are? This government has never come clean and talked about what the downstream job impact will be.

Who has been deadly silent on this tax? Actually, they came out and rejoiced about both the ETS and this tax. They are the Labor members in this House who are supposed to represent the mining workers—those blue-collar workers. What about their rights at work? When are these members going to stand up for those who voted for them and put them in their positions in here to represent them? They have been silent. Where is the member for Hunter? Where is the member for Newcastle? Where is the member for Charlton? They all represent very large sectors of the mining industry. Do they come out and support their miners? No. Do they come out and support the mines? Do they come out and support the small businesses? No. They tell them that this is a good tax that will grow the industry. You do not have to be Einstein to ask, if this tax were so good that it would create growth in an industry: why aren’t we putting it across every industry? If this government were fair dinkum about introducing such a supertax, why not put a tax across the unions on their profits above the long-term bond rate? Why should you be exempt with all those millions of dollars that you rake in? No, you want to penalise easy targets, or what you thought were easy targets, but you are affecting the people you are supposed to represent. (Time expired)

Richard Marles (Corio, Australian Labor Party, Parliamentary Secretary for Innovation and Industry) Share this | Link to this | Hansard source

It was once said by a great man—it may have even been the great man referred to by the member for Dunkley—‘When my arguments are weak, I always find the best strategy is to speak a little louder.’ And haven’t we heard some noise on the part of the coalition in this debate and the scare campaign that they have run against the Resource Super Profits Tax. The matter of public importance today is:

The adverse impact on small business of the Government’s Resource Super Profits Tax.

I start by saying that the only adverse impact to small business that will arise from this is if the opposition ultimately opposes and votes against the government’s Resource Super Profits Tax. In so many respects, the RSPT is actually designed as a tax program to help small business.

We can start by looking at the smallest sector of the mining industry itself and at the resource exploration rebate. This provides a tax break for mining exploration by increasing the types of activities for which a tax break can be provided in terms of exploration but, importantly, provides that tax break in circumstances where the mining company is in a situation of tax loss, which is often the situation with a new mine getting off the ground. A tax credit is provided in that circumstance. This is a plan that is going to help mining exploration and help new mines get going. Because tax credits are going to be paid in these circumstances—I think the economic lingo refers to the ‘countercyclical’ nature of this tax—the risk associated with mining exploration, which, of course, is one of the key features of that industry, will be ameliorated.

This tax plan will most certainly see more tax paid in times of resources boom but will also see the resources industry being supported when commodity prices are lower. Importantly, this is a tax plan which replaces an existing state based royalty scheme, which is a tax on production, with a tax on profit. It is a far more efficient tax which is charged at the end of the line. You are not charged on the volume of the resource being taken out of the ground; you are charged on the value of the resource being taken out of the ground. If you make less money in mining, you will pay less tax under this program.

If you cut through the scare campaign which is being run by the opposition, you will find that the way this tax program has been designed will see a greater amount of mining exploration under this program. It is designed to put in place assistance for those who are engaged in expanding the mining industry. KPMG Econtech modelling expects that investment in the mining sector will go up by 4.5 per cent under the RSPT, expects that employment in the mining sector will go up by seven per cent under the RSPT and expects that the output of the mining sector will go up by 5½ per cent under the RSPT. When we are talking about small business in a broader sense—small business across the entirety of the economy—the significance of the government’s RSPT is what it will ultimately end up funding. It funds a whole regime which is designed to support small business.

The RSPT will fund a cut in the company tax rate, down to 29 per cent from 2013-14 and down to 28 per cent in 2014-15. But small business gets a two-year head start on that, where it will provide a cut in the company tax rate down to 28 per cent from 2012-13. That is an enormous benefit to small businesses in this country. Importantly, it will also provide a $5,000 write-off exemption for assets. At the moment, small businesses can only write off assets up to $1,000 a year. This will increase to $5,000, which is a huge benefit to the cash flow of a small business. Also, the complex situation at the moment, where there are two depreciation schedules for different classes of assets—one at a rate of 30 per cent; the other at a rate of five per cent—will be collapsed into a single system of depreciation at the higher rate of 30 per cent for all assets except buildings. That is a much simpler program for small business. That is a program that will see much greater cash flow for small business.

We are getting into the detail here. Scare campaigns do not like detail. Scare campaigns like broad statements of rhetoric which do not actually go to the heart of the matter. This is the kind of detail which is absolutely critical to small businesses in this country. The write-offs alone are worth $1.5 billion to the collective bottom line of small business in this country. The RSPT is going to fund greater infrastructure in Australia. For the first time we are going to have a dedicated flow of money into infrastructure—$700 billion starting from 2012-13. That infrastructure will help see the expansion of mining in this country. All of that infrastructure—roads, rail and ports—will be used by the small business sector, and that will see our economy grow. KPMG Econtech estimate that the growth in GDP associated with the RSPT will be 0.7 per cent. That is growth in the Australian economy which will be enjoyed by the small businesses of this country.

Consider the suite of reforms along with other government activities aimed at small business. For companies which have revenue of less than $20 million annually, the R&D tax credit, which comes into play from 1 July this year, will see an effective doubling of the tax concession applied to the expenditure involved in research and development in those small businesses. That expenditure is absolutely critical in driving the kind of innovation which will see the productivity of small businesses in this country increase. That is a really important measure for small business in this country. The stimulus package, which was voted against by the opposition, is currently seeing a whole lot of small businesses—such as tradies around this country—building school classrooms, school halls and trades training centres around Australia. It is keeping this country working. It is keeping small business in this country going. When you combine all of that with what has been put in place through the RSPT, it is fair enough to say that in 2010 the Labor Party is now the party for small business.

By contrast, the Liberal Party has absolutely abandoned small business. The Liberal Party had one policy for small business—and I say that in the past tense—and that was the $1.7 billion small business tax loss carry-back. But in the circus of the budget reply that we saw last week, that one policy that the coalition had to support small business in this country was completely axed. That was in writing. That was not something said on the run that we do not have to believe. That was one of the gospel truths that the Leader of the Opposition told us we can rely on because it is in writing. That was axed. When you look at the opposition’s paid parental leave scheme, which sees a great big tax of 1.7 per cent on everything—which is certainly going to flow through to small business—and look at what it is doing in blocking the RSPT, it is absolutely clear that the opposition has completely let go of small business in this country. It has totally abandoned the small businesses of Australia.

What the opposition have engaged in with this RSPT debate is nothing short of a massive scare campaign. They are saying that this is going to kill the resources sector, but you only need to look at what is happening with Gorgon—the biggest resources project in this country’s history. It has been under the regime of a 40 per cent profits tax. They say that mining stocks are going to go through the floor—they say that during the day—but you only need to look at what the shadow health minister is doing at night: he is busily buying up BHP stocks.

The Minerals Council of Australia—a totally self-interested party in this debate—is showing shameless paid ads predicting doom and gloom, and on the other hand, on this very day, 20 of Australia’s leading economists, who do not have a self-interest in this debate, are saying that this is the right way to go, that this is an efficient tax and that this is what we should be doing. What we really need to see when we come into this place is people taking up the national interest in the great debates of this country, but what we have seen the opposition do is no more than simply being the puppets of the Minerals Council of Australia—not giving us the national interest but just parroting the lies that we see in those paid ads, and we ought to expect better. (Time expired)

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

Let me take this MPI debate to areas I have represented or currently represent. Let me assure the previous speaker, the honourable member for Corio, I always speak out for small business. I represented Gladstone when it was part of the electorate of Hinkler and I know how important services are to the mining industry in the fields of maintenance, engineering, componentry and electrical services. A lot of mining services are supplied by small businesses, not necessarily just in mining towns but scattered throughout regional Australia. When we reach the position where mining companies are refusing to guarantee projects or have already shelved projects you have to ask yourself whether this stream of enterprise will continue or at the very least continue in a meaningful way.

This mining tax also affects the building industry. We have already seen the state government place more and more charges on the backs of homeowners—some of which are avoidable and some of which are unavoidable. For example, the Queensland government has withdrawn its 40 per cent subsidy for sewerage and water projects, forcing councils to pass on those costs to developers and ultimately to homeowners.

But it does not stop there. Let us consider what will happen to building suppliers in the wake of the mining tax. The limestone mining operation at Bracewell, west of Gladstone, is an integral part of Cement Australia’s operations. Ultimately this tax will flow through to the companies that purchase its products, which include concrete, concrete products, pavers, besser blocks et cetera. Similarly, people providing bricks and clay products used in the building industry—and we have a brickworks in Bundaberg—will have to pass on their extra costs and this will lead to higher building costs for homes, industrial developments and commercial properties. When the big operators pass on the costs, it is ultimately the small operators and the end consumers who pay. A similar scenario applies to rock quarries, gravel and road-making screening processes. The downstream costs in this sector will impact notably on main road departments, councils, private road makers, consumers et cetera.

Hervey Bay is a perfect example of a community which rides on the back of small business. There are 2,800 businesses in Hervey Bay and 97 per cent of those are small businesses—that is higher than the Queensland average of 95.5 per cent. At a conservative guess, there would be 10,000 locals employed in small business. Any flow-on effect from this tax could decimate job prospects on the Fraser Coast. Any business which involves building and building supplies will invariably be hit hard, and this is bad news for the area, particularly when you consider its high population growth comes down to its attractiveness to lifestyle changers and the developers who follow them.

Hervey Bay and Bundaberg also have a significant population of fly-in fly-out workers—people who live in the cities but work in the mines of Queensland or Western Australia. These people are amongst the town’s biggest spenders. Whether it be a new vehicle, discretionary spending or simple day-to-day costs associated with family life, these workers make a considerable contribution to the local economy and any impact on their employment would undoubtedly affect the region.

At a local level, businesses on the Fraser Coast are considering a prospective mining operation north of Maryborough, which proposes to create local jobs and prosperity in an area crying out for an economic injection. That may not go ahead in the light of the mining tax.

The Bundaberg region has around 6,600 small businesses. By far the largest sector would be retail. This sector is a big employer of people with non-academic skills and is very sensitive to any price rises. There are a lot of vacant shops in Bundaberg and many businesses are doing it tough. It is an absolute credit to the tenacity and hard work of these businesses that they have kept their doors open. The downstream effect of this mining tax would be the last thing they would want.

I mentioned in a speech last night that Bundaberg has amongst the highest rates of unemployment and people living on government benefits. Small business is often the stepping stone for these people to get back into employment. Any downturn in small business activity will cut off that lifeline for thousands of Australians. (Time expired)

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

I am delighted to participate in this MPI debate on small business and the RSPT because I too have a background in a successful small business. The mining sector is now enjoying the benefits of a second commodities boom in little more than a decade. These benefits include generous tax breaks available for mining investment. Most, if not all, small businesses have to depreciate their capital equipment over its expected life, but mining companies can deduct the full costs of exploration immediately. While all companies and many small businesses pay company tax, these concessions mean that the effective tax rate that the government actually receives from the resource mining companies is well below the headline rate of 30 per cent.

Then there are the fuel tax credits. While small businesses and working Australians pay around 38c per litre in fuel excise, the likes of BHP Billiton and Rio Tinto get nearly all of this back through tax credits. In fact, the mining industry is the greatest beneficiary of the fuel tax credits scheme and gets about $1.7 billion back from the taxpayer.

But paying company tax like all other companies does not entitle mining companies to extract and sell the nation’s natural resources. Entirely separate from company tax is the amount that resource companies pay the nation for the right to extract and sell its natural resources. These royalties are the price at which the nation sells its resources to the mining companies. They are the mining companies’ costs of raw materials.

The amount they are paying the nation for those raw materials has not kept pace with the soaring prices at which they are selling them to China and other developing countries. In fact, a decade ago taxpayers received about $1 for every $3 of profit that mining companies made from selling our natural resources. Today that has fallen to $1 in $7. The dishonest scare campaign being waged by the Minerals Council of Australia and the big mining sector represents the greatest con job since the Fine Cotton ring-in scandal all those years ago.

I make a few points in response to the claims of these scaremongers. The combined figures for company tax and royalties that the mining lobby and the opposition are bandying around are meaningless. All companies, including small businesses which have a company structure in Australia, are required to pay company tax and very few receive such generous treatment as our resources and mining companies. These companies get a very good deal from taxpayers. The purpose of the RSPT is to ensure that all Australians, including small business Australians, receive fair value for the non-renewable resources that miners extract from our country. No other industry would have the nerve to argue that just because it pays company tax it should get its raw materials for free. In our current tax system, an ordinary Australian who earns an extra dollar through their hard work pays higher tax, but a mining company that earns massive amounts of profit pays the same flat, low rate of company tax. So I say to these Gordon Geckos of the Pilbara: the party is over and now is the time to face the hangover and learn to be good corporate citizens.

Let us look at some of the other wildly inaccurate claims that are being made. The first is that the RSPT will reduce investment. This is rubbish. Replacing an inefficient system such as the royalties system with an efficient tax such as the RSPT will drive future investment, growth and jobs, and that has to be good for small business. Secretary-General of the OECD Angel Gurria has said that Australia would remain an attractive destination for investment because ‘what drives investors is not necessarily that they are going to pay higher or lower tax’ but ‘the availability of raw materials’. The Commonwealth Bank has also produced some interesting analysis of the RSPT. The Commonwealth Bank’s analysis shows that the RSPT actually reduces the rate of return that a mining project needs for it to be a viable investment. This means that more mines will be able to get financing under the RSPT than under the current royalties schemes and that mining output will be higher under the RSPT at any commodity price level. This should be of great benefit to both the many prospective gold mining operations and the small businesses in my electorate. The Commonwealth Bank’s economists concluded that the RSPT ‘promotes growth and more productivity in economy by more equitable and efficient taxation of resources’. There are claims that the RSPT will harm existing projects. But, as the Treasurer has stated, mining companies will receive due recognition of their past investment costs and there will be generous transitional arrangements to the new system. There is also a scare campaign that the RSPT will cause consumer prices to rise.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time for discussion has concluded.