Wednesday, 20 November 2013
Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading
I continue and conclude my remarks on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. It is quite extraordinary, because it is arguable that this tax cost more to raise than it delivered to the government in revenue. One company told me that it would have cost $3 million—it could have been as high as $7 million—to actually collect this tax and send it to the government. Because we have allowed all of these companies to be foreign owned, and they are making massive profits sometimes, I think there may be a bit of a case with iron ore, coal or something like that. But the people of Kennedy will be delivering our vote and our support to abolish this tax and get rid of it. If there is some idea that comes back in another form it might be worth looking at, but we are in favour of this bill and will vote accordingly.
I rise to speak on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. I want to make a few remarks in the limited time I have available. I represent the seat of Maranoa in the state of Queensland and, of course, Queensland is a powerhouse when it comes to natural resources. We have seen so many projects stalled as a result of the previous government's introduction of not only the carbon tax but also this minerals resource rent tax which has collected nothing by has driven so much investment offshore.
In my electorate I have the Tarong power station at Stanwell near Kingaroy. There is a new mine there, the Meandu mine, which was purchased to secure the long-term coal source for the Tarong power station. There is also the Kogan Creek power station, just west of Dalby, and of course the Wilkie Creek coal mine near Dalby, which has had to lay off staff recently. I know that they are significantly worried about their future. These are people who live in the town of Dalby or who come off farms. They are farm workers or members of families who own farms and have been able to get a job at the Wilkie Creek mine. This enables them, in these difficult farming times, to keep the family and the farm together. But I know, as I talk to the people of Peabody and the local workers and the management there, that they have real problems trying to keep the mine viable. Another driving factor behind that is this minerals resource rent tax, which puts a dark cloud over the investment.
In the Galilee Basin in my electorate, way back in 1981 the Queensland department of mines at the time estimated that there were resources there of some 800 million tonnes near Alpha. In 2008, Waratah Coal announced the discovery of 4,400 million tonnes of coal still sitting there in the ground. I am sure that the investment opportunities there would not be lost in this chamber, but I make the point that here is another project that has investors worried, because if a minerals resource rent tax applies to such an investment, and there is a potential for jobs that could be created from that investment, it is sitting on hold. Companies like GVK, Hancock Coal and Waratah Coal are all there, waiting, I am sure, to see this minerals resource rent tax abolished—which gives them greater confidence to proceed with the project. There are the Glencore Xstrata leases there at Wandoan. It was going to export something like 30 million tonnes of coal a year. And now they have done all the work and it is sitting there. They have proven up and they have gone into arrangements to purchase land. They were going to build a railway line—in a standard gauge, for heaven's sake—from Wandoan to Gladstone, which would have been a terrific step forward in rail in Queensland, I have got to say, to start to see some standard gauge rail built. But it sits there on hold, and I understand that Glencore—I am advised by the member for Flynn—are rather keen to sell their port facility or access at Gladstone, because they have very real doubt as to the viability of that mine whilst ever this minerals resource rent tax hangs over the Wandoan project.
It is not just the Wandoan project there. If that railway line were built, other mines would also develop with smaller operators in the area and this would create jobs—not only for workers who would come from near and far but also for the many farmers and their children in the near area who would get jobs, which would enable them to keep the farm because there would be another income coming into the family.
The other thing that is a great irony is that the Labor Party said that this minerals resource rent tax would generate some $26.5 billion over five years—and how much has it raised? Four hundred million dollars. But they went out and started to commit the money. One of those projects was a $7 million contribution to the levy bank at Roma to protect the town of Roma from future flooding. They announced it but they did not sign the contract. But they had it in the budget. When we came to government I had to go to the Deputy Prime Minister, who said, 'We will honour that project', notwithstanding that there had not been a contract signed. I was delighted to think that, on this side of the House, we will sign these contracts. We are a mature government and we will operate in a businesslike manner.
I have not said a word and I am already getting heckled by the opposition. It shows the tone that they present in this House. I rise to provide a summary in terms of debate around the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013.
I must say, it has been very interesting and instructive to listen to the debate that has been put forward in this chamber throughout the debate surrounding this particular bill. In particular I take interest in the contribution made by the shadow Treasurer. It was quite fascinating to see the way the shadow Treasurer—and, indeed, through the shadow Treasurer, the Labor Party—continues to not appreciate in any way shape or form the serious challenges that lie before the government to repair the damage that was initiated by the Labor Party.
In particular I was fascinated that the shadow Treasurer, in his contribution here at the dispatch box, made comments—a number of which were quite erroneous—with respect to the operation of the MRRT. I was quite fascinated to hear the contribution—
Mr Bowen interjecting—
I take the interjection from the shadow Treasurer about the contribution that I made on The Nation. The Labor Party has the view that their minerals resource rent tax had no impact in terms of the mining sector. I have an interesting article from The Sydney Morning Herald, from 24 August 2012. The headline is: 'Taxes a drag on coal, Kloppers warns investors'. I just want to highlight that Marius Kloppers was of course a CEO of the Big Australian, as BHP is known. The lead paragraph says:
BHP Billiton head Marius Kloppers has told European investors that Australia's carbon and mining taxes have helped to render the nation's coal industry unworthy of further investment at this time.
For the benefit of the member opposite, I will table that article. It is quite extraordinary. You see, the head of the Big Australian makes it crystal clear that Labor's minerals resource rent tax was an impediment to investment in this country. But Labor continues to deny it. What's more, they even made comment—and I quote the shadow Treasurer—who said:
On this side of the House—
That is of course the opposition side—
we believe that a profits based tax on profits from the minerals sector—minerals which belong to the Australian people—is a good reform. That is not to say that it does not have its challenges in implementation, it does not have its challenges in design.
There is an understatement if ever I heard one. If there is an understatement today, the prize has to go to the shadow Treasurer.
The shadow Treasurer talks about the minerals resource rent tax that the Labor Party introduced. When it was first introduced, it was meant to raise $49.5 billion. Then Labor said, 'Well, we anticipate that it will actually be a little less than that, and we anticipate that it will raise somewhere around $24 billion'. But then, what do we actually know? What did Labor do? Labor, after announcing their minerals resource rent tax, hitched a whole amount of expenditure in relation to it, some $16 billion worth of expenditure.
The extraordinary thing about Labor's contribution and the so-called challenges in design and challenges in terms of implementation—the understatement that came from the shadow Treasurer—is that as a consequence of the poor implementation and the poor design of Labor's minerals resource rent tax we actually have a situation where, by abolishing this act, this tax, we will be saving Australian taxpayers $13.4 billion. That is a net saving of $13.4 billion. So it is a tax that was initially meant to raise $49.5 billion but in net terms has actually only raised $400 million; and by abolishing it we save Australians some $13 billion. The shadow Treasurer say, 'Look there's a couple of challenges around design and implementation, but they are just little challenges'—
We have another interjection from the shadow Treasurer. Let's talk about the schoolkids bonus. I notice that the shadow Treasurer made further comments in his contribution. Again, let me quote:
The minerals resource rent tax was never designed to pay for the schoolkids bonus. If you look at the announcements at the time, the minerals resource rent tax was never introduced to pay for the schoolkids bonus.
He is nodding in agreement. How fascinating. Perhaps the shadow Treasurer should have had a chat to the former finance minister, because Penny Wong made this comment on 891 ABC Adelaide, Drive with Michael Smith, on 6 June 2012. Let me read back to you, Shadow Treasurer, what your finance minister at the time said: 'I think it is about making sure we use the benefits of the boom wisely,' and 'I think the government's approach with the mining tax and making sure the benefits of that flow through to families, particularly low- and middle-income families through the schoolkids bonus—where people get assistance for kids' education costs—does that.' That is what the former finance minister said and—
That is what I have, Shadow Treasurer. I have the former Labor finance minister who makes it very clear on radio that Labor's failed mining tax was directly linked back to the schoolkids bonus. But Labor comes in here and says: 'Don't worry about that. That's not what our focus is. Don't worry about what Marius Kloppers says; he's only CEO of the Big Australian, BHP. Don't worry about the fact that we predicted that our mining tax would raise $49.5 billion and it has only raised $400 million. Don't worry about the fact that by abolishing the mining tax you are actually going to save Australian taxpayers some $13 billion. They're just details. If you can get past that, it is a great tax. It is a wonderful tax.'
There has been a change in government. We are not going to follow Labor's approach. We are not going to have an approach that sees Australian tax payers borrowing money from offshore to pay to Aussie kids because, the reality is, that is intergenerational theft. While the Labor Party might be happy to support intergenerational theft, make no mistake the coalition does not support intergenerational theft. Although Labor Party members might like to trumpet themselves in question time and might like to trumpet themselves around electorates around as being defenders of Aussie families, the reality is that the Labor Party cannot look Aussie kids in the eye and say to them 'we are going to borrow billions of dollars to hand out as a cash splash because it is can make the Labor Party popular'. Shame on the Australian Labor Party for saying that they are happy to hock Aussie kids up to their eyeballs so they can run around electorates and claim that they are great defenders of Australian families.
The reality is there has been a change of government. The adults are back in charge and we are repealing this tax because it is bad for investment, because we do not support putting was into further debt despite the fact the Labor Party likes to pretend that they are about defending them. In addition to that, we support the repeal of this tax because it is a bad tax that has added compliance costs, that has not raised revenue but has some $13-plus billion of additional expenditure attached to it. That is the reason why we are going to start the long process of recovery towards getting our deficit under control and starting the long process of starting to repay the mountain of debt that has been left by the Labor Party.
I would like to thank those members who have contributed to this debate. The bill that is currently before the House does repeal the minerals resource rent tax, the mining tax, as well as discontinuing or re-phasing those expense measures that the former government linked to its failed mining tax. Together, the measures contained in this bill represent a significant step in repairing the damage wrought by the former government on the nation's finances, delivering more than $13 billion in savings over the forward estimates. The interest saving associated with this improvement in the budget's bottom line from the repeal of the mining tax package is around $1 billion over the forward estimates, a billion-dollar saving in interest alone.
This bill repeals more than $16 billion of mining tax related measures which are not covered by the proceeds of the mining tax. This takes the total improvement to the budget's bottom line across the forward estimates to more than $14 billion. I have already outlined that when Prime Minister Rudd in 2010 announced the super profits tax, it was then called, it was meant to raise $49.5 billion but has raised a net total of $400 million—what an abject failure and what a legacy from the Australian Labor Party.
The mining tax is paid by less than 20 taxpayers. Yet around 145 entities have been required to submit mining tax instalment notices while making no net payments. That is around 145 taxpayers are complying with the mining tax legislation, but are not actually paying any tax. Those would be those difficulties in implementation and design that the Shadow Treasurer talks about that they would like us to conveniently ignore. Millions of dollars are being wasted by those in the mining industry complying with a complex tax which barely raises enough revenue to justify its existence. And worse, this tax has worsened the budget's bottom line and only added to Australia's record of debt and deficit.
Schedule 1 of this bill seeks to repeal the mining tax with effect from 1 July 2014. The mining tax is a complex tax which imposes a significant regulatory and compliance burden on the iron ore and coal mining industries. With mining investment at or near its peak, a transition to new sources of economic growth is needed. The repeal of the mining tax will boost business confidence, which is critical to investment and jobs, and will reduce a significant compliance burden for the mining industry.
Schedule 2 of the bill seeks to repeal the mining tax related loss carry-back provisions which enable companies making a tax loss of up to $1 million in the 2012-13 income year, and subsequent years, to recoup taxes paid on an equivalent amount of taxable income in a recent income year. From the 2013-14 income year, companies will be able to carry their tax losses forward to use as a deduction for a future year. The repeal of this measure will save $950 million over the forward estimates.
Schedule 3 of the bill amends the instant asset write-off threshold provisions so that from 1 January 2014, small business entities will be able to immediately deduct for the value of a depreciating asset that costs less than $1,000 in the income year the asset is first used or installed ready for use. While the government does not like repealing this measure, it is left with little choice given the state of the budget. The repeal of this measure will save $2.3 billion over the forward estimates.
Schedule 4 of the bill also provides that from 1 January 2014, motor vehicle purchases made by small business entities are subject to the same tax treatment as other depreciating assets. We should note that the government has overturned the former government's $1.8 billion fringe benefits tax grab on motor vehicles which was a hit to workers who salary sacrificed their motor vehicles. Again, an unfortunate measure but one that will provide savings of $450 million to the budget over the forward estimates.
Schedule 5 of the bill seeks to repeal the expansion of the income tax exploration provisions to geothermal energy exploration. Going forward this will mean that geothermal energy exploration and prospecting expenditure is not immediately deductible. The removal of this measure will save $10 million over the forward estimates.
Schedule 6 of the bill seeks to delay further increases in the superannuation guarantee rate by two years. Businesses are contending with high operating costs and current challenging economic conditions, which are placing pressures on their viability and their ability to employ people. The pausing of this measure will contribute $1.6 billion to the budget's bottom line.
Schedule 7 seeks to abolish the low-income superannuation contribution to ensure that it is not payable in respect of concessional contributions made after 1 July 2013. The government is currently borrowing money to pay for these concessions, and repealing this measure will contribute $2.7 billion to the budget's bottom line.
Schedule 8 seeks to repeal the income support bonus. This bonus was intended to be funded from the anticipated revenue from the mining tax in the May 2012 budget. The government will be required to borrow money to pay for this commitment and the bill seeks to repeal it. Doing so will save the budget $1.1 billion over the forward estimates.
Schedule 9 seeks to repeal the schoolkids bonus. As I already outlined, the opposition claims there was never a link but the fact is that the former minister for finance made that link very clear. The result as a removal of this measure will deliver budget savings of $4.5 billion over the forward estimates period.
For these reasons, the passage of this bill is very important that it be passed by the House. This is the start of the journey of repair to undo the mountain of debt and deficit left by Labor. Guaranteed, we cannot promise to be the Santa Claus that the Labor Party wants to be, promising all sorts of things to all sorts of people but with borrowed money. The coalition is responsible, and I commend this bill to the House.