Monday, 1 September 2014
Minerals Resource Rent Tax Repeal and Other Measures Bill 2014; Second Reading
Point of order, Madam Speaker: the standing orders were suspended to allow the bill to be introduced. It has been introduced. Standing order 142(a) goes to whether it can proceed to a second reading, not whether it can be introduced.
I understand it is your ruling that the parliament will now proceed with legislation that we cannot see. That is what is about to happen. We are about to debate legislation that we cannot see.
For the purposes of the Manager of Opposition Business, I will read the motion that was just passed. That was, 'That so much of the standing orders be suspended as would prevent a bill for an act to amend the law relating to taxation, superannuation, social security and family assistance and for other purposes being presented and proceeding immediately through all stages of this sitting'. Therefore, there is no point of order. I call the Parliamentary Secretary to the Treasurer.
I would like to speak in the second reading debate we are now in for the Minerals Resource Rent Tax Repeal and Other Measures Bill 2014. We just had the most extraordinary display from the parliamentary secretary. He has just—for the first time I can think of—introduced a bill, given the second reading speech to explain what is in it and told the parliament nothing. We have a situation where he will not read to the parliament any of the words that are involved. You cannot simply table speeches—read Practice. That is not how this parliament works.
In the most arrogant fashion, the government expect the parliament to debate a bill that none of us can have a copy of for reasons that none of us can hear. What they are expecting to do now—on the mining tax, of all things—is to say to the parliament and therefore to the people of Australia, 'Just trust us. We will lock down a deal with someone in another place, but, like lemmings, everybody here can be expected to just vote for it.' Let us not forget what the first round of this legislation did. The first round of this legislation was going to abolish the schoolkids bonus—and apparently it is still there. I know that it is still there because members of the opposition frontbench are now working through details that the parliamentary secretary sought to hide from the parliament.
We have a situation where the government—I suspect for possibly the first time ever known in this parliament—has decided that we should be debating legislation that we are not allowed to see. We have a situation where the parliamentary secretary introducing the legislation does not even have the courage to put his own voice to the words that would back this bill. We have a situation now where those opposite clearly did not know what was going to be in front of the parliament—because the parliamentary secretary moving it did not even know what was going to be in front of the parliament. It is one thing for members of the backbench on the other side to be expected to wander in here like lemmings; it is another thing when the lead lemming is the parliamentary secretary. Not even a member of the cabinet was willing to introduce this bill. No-one sitting in the front row on their side was willing to introduce this bill. But, in a stroke of utter humiliation, the parliamentary secretary comes in here and gets told, 'Do not read the words out loud.' The government is that ashamed of it.
Talk about a government losing control of their own agenda! Talk about a government on something that they wanted to claim was an important election promise! Talk about a government that claimed the 'adults', of all things, were going to be in charge! What do we get instead? Instead, what we get is a parliamentary secretary who is running out right now. I would be doing the same if I were him—if I had succumbed to the same sort of humiliation that he has had to endure right now.
For the purposes of law, for the purposes of the Acts Interpretation Act, whenever there is doubt cast as to the interpretation of a bill, within the meaning of the words of the legislation themselves, the courts will go to what was said during the second reading speech. And what was said? What was said was, 'That the bill be read a second time'. That was it. That is all that was said. On tax law and the different issues that are contained within here, you are in a realm where court cases do get run. And people will now go and discover that the government did this for, apparently, no reason whatsoever; that the government did this for no reasons that had anything to do with the parliamentary debate; and that the member of the executive who introduced the legislation did not have a clue why he was introducing it and did not have a clue what the bill would contain—or worse, if he did know, he was ashamed of what he was being asked to do. If he did know, he did not want to go back to his constituents and let them know the harm he had brought them within the parliament of Australia.
We all know that there have been occasions when debate moves quickly through this House—but usually the person they gag is not the one introducing it. Normally the person who is subject to the gag resolution is not the parliamentary secretary who is legally responsible for the bill. Normally, when we are dealing with legislation in this parliament, when the government bring on gag motions the reason is to shut up members opposing. On this occasion, not only have they shut up their own member, their parliamentary secretary, but he has also gone along with it. He has gone along with it without a resolution. He has gone along with it simply because someone said to him, 'To save time, why don't you just table a few documents rather than say a word'. We have a bill with no speech attached. We have a bill where, as far as this parliament and the traditions of this House are concerned, when weighing up whether or not we should support the bill, there are absolutely no reasons given from the government as to why this should be supported.
When they first introduced the legislation to the parliament, we had one copy in the room. No-one was able to see what was in it. Then we went immediately to full debate on the issue! As responsible members of parliament, whether in the opposition or on the crossbench, the people we represent have a right to know how we have deliberated over these issues, how we have weighed things up and how we have arrived at a conclusion. Those on the government back bench, I would have thought, would want to know what they were voting for, but I am yet to see a government backbencher rush up here and get a copy of the bill. I am yet to see anyone from the government side pay the slightest bit of interest in what we are now going to be asked to vote for. We have a situation where they could have sat here for the entire debate, where they could have been here for the entire speech from the parliamentary secretary and still be none the wiser.
In the first round of this legislation, it was only set aside a few moments ago. Up until a few moments ago, that legislation, we had been told, was a core commitment from the government. Then we get into this chamber and we discover that they have moved not that it be set aside for a later date but that it be laid aside altogether. So all those opposite voted that the mining tax bills not be proceeded with at all. Now we have the parliamentary secretary introducing legislation and none of us know what it says, none of us know what is in it. The parliamentary secretary, if he does know what is in it, does not want to let on. Instead, we have humiliation of the parliamentary secretary by not putting voice to any arguments in favour of this bill. But when you do that, when someone plays that sort of humiliation of themselves, be in no doubt that it reflects on the entire parliament.
When people come here who have an interest in what is going on in this parliament, even when we have the first conversation with school children about what parliament does, we start with saying that we talk about laws. On this occasion, the law is being kept secret. On this occasion, the parliamentary secretary is the first member of the executive in living memory to come here with a new law but not to tell us what is in it, to come here with a new law and say, 'I'd really love you to vote for it, but I've just got to keep it a secret until after the vote.'
It may well be the case that the contents of the bill are an operational matter. It may well be the case that the contents of the bill have some deep, dark secret, and there are countries that function that way. There are countries on earth, there are countries in our world which do have a system where people do not get told what the law is, where members of the executive are silenced. Those nations are not known as democracies and yet Australia's parliament today has been humiliated and abused. Australia's parliament today has been treated with absolute contempt by the parliamentary secretary and by whoever gave him the dumbest of dumb advice. I suspect whoever gave that really dumb advice is still in the room, but that is the only act of loyalty offered to the parliamentary secretary for the humiliation. Earlier, I was interjecting across the floor saying, 'Why isn't he on the front bench?' I am embarrassed now for asking why he does not sit on the front bench. We have a situation which has never, in living memory, occurred in this parliament, where in a second reading debate the first speech is given by the opposition. We have a second reading debate where we start talking about the reasons to oppose the bill before we hear the reasons to support it, and the reasons to oppose it are being given by someone who has not read!
This is a farce. This is a government in chaos. This government has lost control of any semblance of its own agenda. This government is being run by children. Anyone who thought those opposite were going to deliver a government with adults in charge should not forget the day this government decided to give not even a single reason for their own legislation but to keep it secret and expected the entire parliament to follow blindly. Those sitting behind them will follow blindly. They will find out in their party room tomorrow what they did today.
Those of us on this side of the House have a very simple view on these matters. We will not see this parliament being abused and we will not allow a circumstance where those opposite are willing to defy ever single tradition of this House, every core fundamental tenet. I do not know how you have a democratic debate without knowing the substance of the motion. I just do not know how you are meant to do that. I do not know how on earth you are meant to have a sensible discussion with, 'Oh, it’s a mystery, oh, it's a secret. We'll just deal with the debate on the vibe of the issue'—The Castle finds its way all the way to Canberra! The circumstance we have here is a complete humiliation for those opposite. We have children—
Isn't that brilliant? We do not have any material. There is no bill from those opposite that we can be told about. There is nothing in front of us other than complete humiliation and chaos and a government without an agenda.
The question is that standing order 43, which is the standing order dealing with the movement to automatic dealing with members' statements, be suspended.
A division having been called and the bells being rung—
An honourable member interjecting—
That is unparliamentary.
Honourable members interjecting—
I would be mindful that, during a division, privilege does not apply.
This bill repeals the minerals resource rent tax, which is more commonly referred to as the mining tax. The government is reintroducing this legislation in order to meet both our 2010 and 2013 federal election commitments.
This bill removes the former Labor government's failed mining tax and all expenditure linked to the non-existent proceeds of this tax. This bill discontinues or rephases expenditure measures linked to the mining tax by the former government on the expectation that their costs would be met by the proceeds of mining tax revenues. As we now know, the failure of the mining tax to return any meaningful revenue meant the former government had to borrow money to pay for these unsustainable commitments. Updated costings for the bill we are introducing today will—
Madam Speaker, I genuinely seek your guidance. The parliamentary secretary is proceeding to read into the Hansard the second reading speech which was circulated by the other parliamentary secretary. If the Parliamentary Secretary to the Treasurer read this second reading speech when he moved that the bill be read a second time, it would have, as the Manager of Opposition Business said, some status under law. But the fact is that the Parliamentary Secretary to the Minister for Finance is reading the same speech into the Hansard when he has not moved the second reading. I seek your clarification as to whether this is to be regarded as a second reading speech on behalf of the government. Are they retrospectively trying to change standing orders to allow that as well?
As I was saying: updated costings for the bill we are introducing today reveal that removing the failed mining tax and all related expenditure improves the budget position by nearly $17 billion over the current forward estimates. Updated estimates for protected mining tax revenue reveal that it is expected to raise just $668 million over the same period.
This bill seeks to repeal or rephase more than $17 billion of legislative expenditure. The government cannot afford to keep borrowing money to pay for this kind of unfunded spending. By repealing or rephasing the measures related to the mining tax, this bill is a necessary step in repairing the damage caused to the nation's finances and it puts the budget on a more sustainable footing going forward. The application dates of the measures in this bill will be fixed by the Treasurer's proclamation once royal assent is received.
Schedule 1—repeal of the MRRT: Australia's mining tax has had a long and tortured journey. It was, of course, borne out of the Henry tax review, which was commissioned by the first Rudd government. One of the key recommendations was for a resource super profits tax, the RSPT. The original RSPT was forecast to raise $49.5 billion over a five-year period from 1 July 2012. This was to be a big hit to one of Australia's most successful industries. Ultimately, the announcement, consultation and handling of the RSPT was a large contributing factor to the demise of former Prime Minister Rudd. In taking over the prime ministership, former Gillard government famously struck a deal with three of Australia's biggest miners—RIO, BHP Billiton and Xstrata—and from this the minerals resource rent tax was born.
The new version of the mining tax also included an extension of petroleum resource rent tax to onshore projects. Forecast revenue on the new version of the mining tax was significantly revised down when compared to the original resource super profits tax. It was forecast to raise $26.5 billion compared to $49.5 billion over the five-year period from 1 July 2012.
Following the second version of the mining tax, there were three further variations, and forecast mining tax revenue has been written down in nearly every subsequent budget and MYEFO update. The government received just $600,000, net of refunds, for the June 2014 quarterly instalment of the mining tax. As previously mentioned, the mining tax, if allowed to continue, would be expected to raise just $668 million over the forward estimates. The mining tax has many design flaws which will preclude it from raising meaningful revenue, particularly when government administrative costs are taken into consideration.
We persistently called on the former government to explain how key details of their mining tax worked, particularly in relation to the upfront tax deduction from the market valuation method which is used to calculate tax liabilities for the minerals resource rent tax. A common statement thrown about by those still clinging to the failed tax is that the mining tax was necessary to have the industry pay its way. In 2011-12 the mining companies paid more than $24 billion in company taxes and royalties.
The mining tax is a flawed tax; and what is worse is that it imposes large administrative costs on operators in the resources sector trying to comply with the complex tax. The repeal of the minerals resource rent tax will save millions of dollars in compliance expenses for small, medium and large entities. So far in the two years of its existence, less than 20 taxpayers have contributed to paying the net $340 million raised by the mining tax but more than 125 miners have been required to submit mining tax instalment notices while making no net payments. That is around 125 taxpayers who are all complying with the mining tax legislation but not actually paying any tax. Therefore not only is the MRRT a complex and unnecessary tax which has failed to raise the substantial revenue predicted by the former government; it imposes a significant regulatory and compliance burden on the iron ore and coalmining industries and damages business confidence, which is critical to future investments and jobs.
Some have been complaining that just because the mining tax has raised so little revenue it could not possibly damage investor confidence. This argument ignores the importance that foreign companies place on investment decisions, especially in high-cost countries such as Australia. Unexpected costs in imposts imposed on business with no warning and unnecessary ongoing compliance burdens are deterrents for foreign investors, and that is exactly what the mining tax is.
The repeal of the mining tax will restore confidence and promote activity in the mining industry, creating jobs and contributing to the prosperity of all Australians. It sends a clear signal that Australia is determined to remain a premier destination for mining investment, and is once again open for business—as we have heard the Prime Minister say so many times.
Mining companies in Australia will continue to pay their fair share of tax through state royalties and company tax. We need to do what is responsible and repair the budget—that is what we were elected to do—and the removal of the mining tax and its associated expenditure is another step in the right direction.
Schedule 2 deals with loss carry-back. Schedule 2 of the bill repeals the mining tax related loss carry-back provisions that enable companies making a tax loss of up to $1 million to recoup taxes paid on an equivalent amount of taxable income in a prior income year. Companies will not lose access to their tax losses; rather, consistent with arrangements prior to the MRRT related amendments, companies will carry their tax losses forward to use as a deduction for a future year. The removal of this measure will improve the budget position by $1.3 billion over the forward estimates.
Schedule 3 deals with the small business instant asset write-off threshold. Schedule 3 of the bill amends the instant asset write-off threshold provisions. The instant asset write-off amount was increased to $6,500 in two stages as part of the mining and carbon tax packages. The mining tax package dealt with the increase from $1,000 to $5,000 whilst the carbon tax package dealt with the increase from $5,000 to $6,500. This legislation before the House returns the write-off amount back from $6,500 to $1,000, effective from the income year in which proclamation occurs. Consistent with arrangements which existed prior to the MRRT related amendments, small business entities will still be able to deduct the value of a depreciating asset which costs $1,000 or over but over a longer time frame. the single small business pool arrangements will be preserved to maintain lower business compliance costs. Under these arrangements, assets costing $1,000 or more will be allocated to the existing general small business pool and depreciated at a rate of 15 per cent in the first year and 30 per cent in subsequent years.
If the value of the general small business pool is less than $1,000 at the end of the income year, the small business can claim a deduction for the entire value of the pool. The improvement in the budget position from reducing the instant asset write-off from $6,500 to $1,000 will be $3.2 billion over the forward estimates.
Schedule 4 deals with deductions for motor vehicles. The bill also provides that motor vehicle purchases made by small business entities will no longer be eligible for an accelerated deduction of $5,000. Motor vehicle purchases by small business entities using the simplified depreciation rules will instead be treated as normal business assets under the concessional capital arrangements available under subdivision 328-D of the Income Tax Assessment Act 1997. Under these arrangements, they will be depreciated at a rate of 15 per cent in the year in which the asset is first used or installed for use and then 30 per cent for all subsequent years. If this bill is passed without undue further delay, the taking away of this measure will improve the budget position by $550 million over the forward estimates.
Schedule 5 deals with geothermal energy. The bill will repeal the extension of the income tax exploration provisions to geothermal energy exploration so that geothermal energy exploration and prospecting expenditure is not immediately deductible. Instead, normal capital depreciation rules will apply, simplifying a company's compliance expectations and requirements. Amendments are included to provide a capital gains tax rollover in cases where a geothermal exploration right is merely exchanged for a geothermal extraction right relating to the same area. This ensures that a capital gains tax liability will not be inappropriately incurred, consistent with the treatment of other mining rights. The removal of this measure will improve the budget position by $15 million over the forward estimates.
Schedule 6 deals with the superannuation guarantee charge percentage. The rate of the superannuation guarantee will be paused at the rate which is presently legislated for the proclamation year. The Treasurer will by a non-disallowable legislative instrument have the power to amend the superannuation guarantee charge percentage, which will allow the Treasurer to pause the rate for the following three income years and then increase the rate in increments of 0.5 per cent percentage points each year until the rate reaches 12 per cent. If this bill is passed without undue further delay, this measure will result in the SG rate being paused at the 1 July 2014 rate, which is 9½ per cent, and remain at that rate until 1 July 2018 when it will increase to 10 per cent on 1 July 2018 and then by 0.5 per cent every year thereafter until the rate reaches 12 per cent on 1 July 2022. These amendments to the superannuation guarantee will improve the budget position by $2.6 billion in cash terms over the forward estimates.
Schedule 7 deals with the low-income superannuation contribution. Schedule 7 of the bill abolishes the low-income superannuation contribution. The government will revisit concessional contribution caps and incentives for lower-income earners once the budget is back in a strong surplus—and we all need that. The white paper on the reform of Australia's tax system to be prepared before the next election provides an opportunity to consider the appropriate taxation of superannuation contributions, including for low-income earners. Low- to middle-income earners may be eligible for the superannuation co-contribution to boost their retirement savings. The removal of the low-income superannuation contribution will improve the budget position by $3.6 billion in cash terms over the forward estimates.
Finally, schedule 8 deals with the repeal of income support bonus—this is not final; it is the penultimate. The coalition made very clear in the lead-up to the last election that, if elected, we were committed to getting rid of the mining tax and all of the unfunded spending promises, including the income support bonus. Participation in the workforce is the best way to ensure economic stability and the payment system is geared to promote this while ensuring that a safety net exists for those requiring help. This bill will abolish all future payments of income support bonus from a date fixed by proclamation following the passage of the bill. Removal of this measure will improve the budget position by around $1.3 billion over the forward estimates.
Finally, schedule 9 of the bill repeals the schoolkids bonus.
Ms Macklin interjecting—
The government intends to offer a more efficient targeted approach to improving education outcomes for students through effective education policies rather than through bonus payments to individuals. If this bill is passed without undue further delay, the removal of this measure will improve the budget position by almost $4.7 billion over the forward estimates.
By abolishing the failed mining tax and by repealing or rephasing the measures related to the mining tax, this bill is a necessary step to putting the budget on a more sustainable footing going forward. Full details of the measures are contained in the explanatory memorandum, and I move that the motion be put.