Tuesday, 15 June 2010
Questions without Notice
My question is to the Minister for Employment and Workplace Relations. What advice did the minister seek from her department regarding the impact on jobs of the government’s great big new tax on mining before the gang of four’s decision to impose the tax?
I thank the member for his question. I draw to the member’s attention—and I am sure he would have noted this—that the unemployment statistic came out last Thursday at the rate of 5.2 per cent. On the question of jobs: I know that members on this side of the House are very interested in how many Australians are unemployed and to see falling unemployment—5.2 per cent—
I thank the shadow Treasurer for his interjection and remind him, in case he missed it, of the global financial crisis and the global recession. He may choose to do some reading on that at some point, particularly as he is seeking to present himself as the man who has the ability to run Australia’s macro-economy. He might want to catch up with that little bit of news, which has obviously entirely missed his attention.
On the question I have been asked: for the resource super profits tax there is Treasury modelling about the impact on the industry, including the impact on employment. The modelling shows that the industry would continue to grow and consequently job opportunities would continue to grow. I understand that the opposition are involved in a fear campaign here, because that is what the opposition do. They are long on complaint and short on solution. I say to members opposite: let us look at the entirety of the package. There is the resource super profits tax, the company tax reduction, tax breaks for small businesses, superannuation and the regional infrastructure that my colleagues have talked about today. If you take the package as a whole, we are obviously talking about a net positive benefit to the economy, including job opportunities.
If the member wants to be honest about the question of employment, step 1 is to be honest about the figures last week, step 2 is to be honest about the impact of economic stimulus on those figures—the economic stimulus that of course you opposed—and step 3 is to be honest about this package. It would be a change.
I thank the member for Kingston for that very important question, because there are a lot of very loud, well-funded voices being heard in this debate. Certainly the voices from the mining companies that are very well funded and the funders of those opposite—
It is very important in this debate to acknowledge that there are lots of people in this country, particularly on low and modest incomes, who have a very big stake in its outcome. I think that is understood fairly and squarely on this side of the House, but is certainly not understood by those on that side of the House, who somehow believe that the mining community is paying too much tax. That is what the Leader of the Opposition has said. The Leader of the Opposition is advocating a cut in tax to the mining industry whilst on the other hand wanting to increase rates of company tax. Get that? What sort of twisted priority could get the opposition to the point where they think there should be a tax cut for very profitable miners and on the other hand want to increase tax for corporate Australia? What sort of twisted economic logic could lead to that position?
You can hear and see the contempt that those opposite have for people on modest incomes who are represented by organisations that have had their say in the last 24 hours. You can understand why they stand for the implementation of Work Choices in full, because they do not understand the importance of these measures to the living standards of people in this country who are on low and modest incomes. They most particularly do not understand the importance of the support for superannuation, particularly for people on modest incomes.
These are very vital economic reforms which will lift the living standards of millions of workers in this country, and those opposite have nothing but contempt for those people and the organisations that represent them. It is good to hear from ACOSS. It is good to hear from the ACTU. It is good to hear from the Conservation Foundation. It is good to hear from the Consumers Federation. I know those opposite do not want to hear it, but let us go through what they have had to say. The Consumers Federation said:
The RSPT is good policy—a tax on resources should be part of a sound tax base—and it comes with … off-sets in other parts of the tax-base, so it has the added virtue of rebalancing a base out of kilter.
Unlike many other products, the resources aren’t mobile—they are in the ground. Australian ground. All Australians should benefit from this luck of geography, not just a well-heeled few.
Nothing could summarise the situation better than that.
We do have to face up to the need for fundamental economic reform to lift our national savings to support Australian workers on low incomes. We also have to face up to the need to invest in infrastructure, particularly in mining areas. Of course, some in the National Party, but apparently not in this parliament, understand the need to do that. We understand the need to invest in capacity in the mining regions. Those opposite do not. We also understand the needs of 3.5 million Australians who will benefit from what we are doing immediately in superannuation, the 8.4 million workers who will benefit from the 12 per cent guarantee or the 2.4 million small businesses which will benefit from the tax write-off of up to $5,000.
This is what economic reform is all about, and that is what is not understood by those opposite. We saw the shadow Treasurer say last week that the stimulus had nothing to do with keeping Australia out of recession. They simply do not understand it. They get all the big economic calls wrong and they have got this economic call wrong. We on this side of the House understand the importance of economic reform to lift living standards and to put in place a modern tax system.
My question is to the Prime Minister. I refer the Prime Minister to various public statements concerning the timing of a resolution to the mining tax issue. Last Friday, the Prime Minister said there were weeks and probably months of consultation to go. On the same day, the Treasurer said the government would soon move to the third phase of finalising the design. Yesterday, Senator Mark Bishop said that it needs to be addressed and resolved urgently. This morning, the finance minister said that you cannot put a timeslot on it, while the member for Brand said that the debate should be settled in the next few weeks, and then subsequently said it should be settled by August. My question to the Prime Minister is: when will he finally end this amateur hour experimentation with Australia’s economic future and dump this bad tax?
I notice his question is about the detail of consultation and the detail of negotiation. If the Leader of the Opposition had any experience on questions of the economy he would understand that, when you bring about fundamental tax reform, it involves complex consultations with companies and it involves complex negotiations with companies. That is what the government is engaged in. That is what any government engaged in the business of fundamental tax reform would be doing, and that is what we are doing. He raises more broadly the question of consultation. Can I simply draw his attention to the fact that—whether or not he or his colleagues have been asleep for the last two years—this entire debate has been out there through public documents released by the Treasury on where the overall direction of tax reform was going.
First and foremost, on 2 May 2008, the government announced that we would be having the review into the tax system. On 6 August 2008, a discussion paper was released on the tax review entitled Architecture of Australia’s tax and transfer system. That document, that discussion paper, raised the inefficiencies of royalties and pointed to a profits based tax. If you go to that paper it said:
These royalties can discourage high risk investments (for example, in the case of an ad valorem royalty, revenue can be collected even when net losses are being made).
It went on to say—if the Leader of the Opposition had any interest in the tax arrangements for the resource sector of the economy at large—back in August 2008:
A resource rent tax does not apply until a firm has earned above normal profits. Once this occurs, the combined tax rate on the total return increases as the resource price increases.
Back in August 2008, the government called for further public submissions. In December 2008, the government released a further, more detailed, consultation paper which went down to the definition of what constituted supernormal profits. It also went on to make reference to calculation bases which were linked to the long-term government bond rate.
Through until May of 2009, there have been 1,300 submissions from the mining industry including from the Association of Mining and Exploration Companies and the Australasian Institute of Mining and Metallurgy, and including recommendations from the MCA on the question of adopting a profits based tax system for the future. Then between June and November of 2009, industry, professional and community groups further consulted on the question of broader tax reform including that for the industry.
So, for those opposite to infer that this is somehow some bolt from the blue on consultation concerning the future reform of tax arrangements for the mining industry and, more broadly, for the economy, this process has been under way for two years—had the Leader of the Opposition any interest in any matter concerning economic policy and tax policy. The government is now in the business of consultation with the mining industry. The government is now in the business of negotiation with the mining industry and the government is now engaged in detailed negotiations on details of implementation and generous transition arrangements. That is the normal way in which you engage in a process of tax reform.
The government believes that this reform is delivering better super for working families, better tax arrangements for the rest of the economy and is boosting our level of national saving and, critically, is investing in regional infrastructure of the type called for by the Leader of the National Party when he was in regional Queensland the other day hoping that no-one would listen to what he was saying. Frankly, these are the factors at stake in fundamental tax reform. We are engaged in consultation, we are engaged in negotiation and we will prosecute that to the extent that it is necessary to reach an appropriate settlement for the national economic interest for the future of the mining companies in this country and for a fairer share for working families across the Australian community.
My question is to the Minister for Resources and Energy and Minister for Tourism. Will the minister inform the House about the progress of consultation with the resources industry regarding the resource super profits tax?
Order! The member for Bowman, on behalf of others, will leave the chamber for one hour under the provisions of standing order 94(a), and two of his colleagues further down the bench know that they are very lucky.
The member for Bowman then left the chamber.
I thank the member for Dobell for his question. It goes to the task of putting in place what the petroleum and minerals industry has long argued for in Australia—a profits based tax system—because they think that is in their long-term best interests. I remind the House that, when we announced our response to the Henry tax review committee report on 2 May, the government established a high-level tax consultation committee. That committee delivered its first report to the Prime Minister and the Treasurer just over a week and a half ago. On the basis of that report, the Prime Minister, the Treasurer and I have been deeply involved in discussions with industry about the nature of that report.
I express the government’s appreciation to those companies, both big and small, who have seriously engaged in discussions with the tax consultation committee and with the Prime Minister, the Treasurer and me over the last week and a half. Right across my portfolio, be they in mining, petroleum, coal seam methane or oil and gas, those companies have acknowledged that this is a serious and genuine process of consultation. That was evidenced today by the meeting between the Prime Minister, the Treasurer and me and the CEO of British Gas. She acknowledged the productive nature of these discussions. Her sector, I might say, was the first in the door on 3 May after the government’s announcements of 2 May.
I understand the importance of this sector, because what we are talking about is a new industry. That Queensland project alone represents a potential investment of $12 billion to $15 billion—and the opposition dare to raise the question of employment. This is about major employment opportunities in Australia. I know how disheartened the opposition were last week when they saw the good employment results—a terrific employment result for Australia following the impact of the global financial crisis.
If you have any doubts about the importance of those discussions, I simply say that these discussions with British Gas are not new to the government. The delivery of this project started with detailed meetings with that company early in 2008. That led to an announcement on 24 March this year of the world’s first LNG contract signed between Australia, British Gas and CNOOC. As the Minister for Trade acknowledges, we are talking about a deal potentially worth 3.6 million tonnes of LNG per annum to the Chinese national oil corporation. In volume terms, this is the single biggest company-to-company LNG contract in Australia’s history, totalling 72 million tonnes over 20 years.
For those reasons, companies such as British Gas and others right across my portfolio have approached discussions to better inform outcomes in a productive and constructive way. And so they should, because they themselves argued long and hard that we should put this type of tax reform in place in Australia. They do not like the royalties based system because, when times are bad, they are still required to pay tax. They actually believe that, over time, this will be a far better tax system for them and a far better tax system for Australia. That is what this debate is about. In that context can I say—
The member for Groom asks whom I am speaking to. I am talking to people who have skin in the game—people who invest in Australia and who employ people in Australia. That would be a new thing for the Leader of the Opposition, because he has no practical understanding of the importance of investment and business activities in Australia—because he finds economics boring. On that note, I simply say that we as a government are making progress and we will continue to have these discussions, because it is about getting the balance right. This is the balance that is required.
Unlike the opposition, we accept that the Australian community is entitled to a fair return for the opportunity to develop its natural resources—100 per cent owned by the Australian community. We also have a strong view, as does the Australian community, that we are entitled to a fairer share from business for the opportunity of developing those natural resources. This debate is not just about the question of a profits based tax system in Australia but about fundamental change to the taxation system in Australia, including a significant reduction in company taxation. This is of major significance to me as the Minister for Tourism, because tourism is an industry principally made up of small- and medium-sized business opportunities, quite often in regional Australia.
The government will continue to engage in these constructive and productive processes. We are about putting in place an appropriate outcome. I assure the Australian community that there will be a profits based system in Australia that is accepted by industry. And so it should be, because that is what they have argued for, long and hard. When it is all over, we will end up with a system that is fairer for Australia and balanced for industry. The only people that will stand in opposition will be the Leader of the Opposition and the coalition party room—just like they opposed our activities during the global financial crisis to maintain the strength of the Australian economy and minimise the impact on families through maintaining the best possible employment opportunities for the Australian community. We will continue, despite the endeavours of the coalition to run a fear campaign, to have these constructive discussions because this is about the long-term best interests of Australia. That is what governs the Australian government, unlike the self-interest which governs the other side of the House.
My question is to the Prime Minister. I refer the Prime Minister to the recent report on Nine News of his great big new tax on mining and its impact on the Queensland towns on Wandoan and Miles. I refer specifically to Rachel Kerwick of the Miles and District Chamber of Commerce who, in reference to the Xstrata development, said:
We’ve been waiting for this for years. It’s finally here, everyone’s excited. We don’t need the mining tax to ruin it.
Prime Minister, how will these towns survive when these projects do not go ahead because of the government’s bungled big new tax on mining?
I thank the member for North Sydney for his question. I am advised that, on 3 June, Xstrata said that it would suspend exploration at Wandoan coalmine and said it would jeopardise jobs in construction and operations over the next five years. The Financial Review, I noticed, reported on 11 June that Xstrata’s executive general manager for the Wandoan coal project, Steve Bridger, said the company would continue to pursue the approval of a mining lease from the state government and would continue buying up land in the 32,000-hectare exploration area.
This brings me to the broader question of the integrity of various claims that have been made concerning the proposed impact of this taxation regime and the fear campaign which those opposite are engaged in. Let me go through some of these in sequence, having dealt with the Wandoan matter. Let us not forget the claim made on 4 May that Cape Lambert announced that the RSPT would jeopardise its future operations in Australia. That was just five days before the chief executive of Cape Lambert proceeded to buy a million dollars worth of Cape Lambert shares. That is the first one. We then had the Liberals saying that BHP was cancelling its Olympic Dam project. That is the second one. The opposition said the new tax was already threatening multibillion dollar investments, most of all the $22 billion expansion of Olympic Dam in South Australia. The shadow finance minister said that Olympic Dam would be put off for 10 to 20 years. However, we then had BHP CEO Marius Kloppers say on 26 May:
… it is not frozen. We are carrying on. We are spending money, there are 200 engineers working on it. Otherwise we would have made a statement to the contrary.
The third example goes to Xstrata, which I referred to before. Then of course we had a splash, I understand, in the Australian newspaper on 6 May, which stated:
Three hours after that and after a two percentage point fall in share prices, Rio submitted a notice to the ASX market which included the following statement:
Rio Tinto today confirmed that no decision has been made to shelve any projects in Australia …
Then we go on to various statements which have been made one after the other by other mining companies. I go also to a report in the Financial Review on 9 June which said that the Chinalco bauxite development in Aurukun would join the eight projects worth $55 billion that had been put on hold due to the government’s resources tax. At 2.18 pm that day Reuters reported that Chinalco denied dropping the Queensland project. It reported that Chinalco had said that it had no internal discussions on pulling out of its $3.04 billion Aurukun bauxite project and that it was carrying out feasibility studies and comparing proposals. Furthermore, quoting Mr Lu Youqing Chinalco:
We do not have the consideration of withdrawing
from this project. It is one example after the other of exaggeration and overclaim (a) by various companies from time to time but (b) being harnessed by those opposite to prosecute a fear campaign. What this says is that the member for North Sydney does not do his homework. It says that the member for North Sydney picks up a clipping from a newspaper and equates that with fundamental, deep research. We expect higher standards from the member for North Sydney in this debate in this chamber. I would suggest if those opposite are running fear campaigns, the first and foremost requirement is to get your facts straight.