Thursday, 15 March 2012
Minerals Resource Rent Tax Bill 2011, Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011, Minerals Resource Rent Tax (Imposition — General) Bill 2011, Minerals Resource Rent Tax (Imposition — Customs) Bill 2011, Minerals Resource Rent Tax (Imposition — Excise) Bill 2011, Petroleum Resource Rent Tax Assessment Amendment Bill 2011, Petroleum Resource Rent Tax (Imposition — General) Bill 2011, Petroleum Resource Rent Tax (Imposition — Customs) Bill 2011, Petroleum Resource Rent Tax (Imposition — Excise) Bill 2011, Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011, Superannuation Guarantee (Administration) Amendment Bill 2011; Second Reading
We will come to that. It is essential that we pass on the benefits of the mining boom to all Australians. The legislation we have before us is but a small step to achieving this. Mining companies are doing well and can afford to pay, and it is worth remembering how easy it is for them to pay. Fortescue Metals announced a $1 billion profit, its largest so far. BHP has posted a $22.5 billion profit and much of that came from the minerals boom that is occurring in Australia. The financial pages have stated that the mining giant Rio Tinto has been hit by an $8.9 billion impairment charge relating to its aluminium business. But read on and you find out their underlying earnings rose by 11 per cent to $15.5 billion. So, whatever figure you take, they also can afford to pay the mining tax and, indeed, pay the original super mining tax that died along with the future of the former Prime Minister Mr Kevin Rudd.
As a senator for New South Wales I recognise this is an issue that needs careful consideration. The people and the economy of New South Wales have been on the downside of the mining boom. The impact is seen in manufacturing, tourism and education. We need a tax system that manages the uneven consequences. For New South Wales, and I am sure for many other states, we need a tax regime that promotes manufacturing and helps to manage the high Australian dollar. New South Wales, you could say, is at the bottom of the pack when its economic growth is compared to its decade average, with growth just nine per cent higher. In Western Australia it is nearly 30 per cent higher. There are many dangers associated with such a divided economy but there is little being done to address the problem.
It is vital that we use the boom in the mining industry to sow the seeds for longer term wealth for all. Many economic indicators reflect the uncertain times New South Wales is in. Jobless rates are above longer term averages, housing finance is down, real wages are flat to negative and equipment investment has slowed. The mining tax is a vital potential source of funding for much needed infrastructure in New South Wales. It could allow us to future-proof the economy after the boom. New South Wales has been notoriously weak on planning and weak on delivering infrastructure to the places that need it. Infrastructure is needed in coastal New South Wales—especially in Sydney, where population pressures are overwhelming the state's capacity to provide services. There has been a severe underfunding of new passenger and freight rail infrastructure in New South Wales over the past two decades.
In New South Wales the uneven economy caused by the mining boom is being affected by the loss of jobs, loss of skills, loss of industry capability and loss of state-wide economic activity. With manufacturing accounting for 10 per cent of employment, this area is deserving of considerable government attention. Take one area, transport manufacturing, to illustrate the problems facing New South Wales largely due to the mixed economy. A report, Transport manufacturing at risk: NSW industry action plan, prepared by the Australian Industry Group, the AMWU and HunterNet predicts that New South Wales could lose the capacity to build trains within five years.
The increasing exchange rates mean that it is more attractive to domestic customers to import high-value foreign goods than those made locally. Over time, this decreases the demand for skilled labour as production of high-value goods moves overseas. We would hope that this higher level of taxation can help drive industry plans for Defence manufacturing and transport manufacturing, to give two examples that are crying out for management in New South Wales. A failure to spend money in this constructive way will result in a loss of skill and capacity in the area of transport manufacturing. The result that New South Wales loses the capacity to build trains is becoming a real possibility.
According to this transport manufacturing report, this could leave New South Wales dependent on overseas supply chains for critical transport infrastructure. As Senator Milne said, this tax should be part of the vision for a low-carbon economy where innovation skills and education are valued. Apprenticeships and skilled jobs would flourish if we could ensure that this vision becomes a reality. Governments should use this tax to drive such industry plans and to bring together industry, union and government representatives to review the effectiveness of government purchasing and procurement and to make recommendations to government departments about how to improve the capacity for New South Wales industry to tender competitively for government contracts.
Collaboration between decision makers would help to minimise the damaging impacts of market peaks and troughs, and we should require bidders to engage with local industry and to source components locally where possible. Used wisely, a mining tax would have a wonderful multiplier effect as jobs would be generated at a rate of about three to one throughout the industrial community for the supply of materials and specialty services when you develop transport manufacturing.
I have given emphasis to the manufacturing sector not only because it is important for New South Wales but also because it is a way to bring some balance to our mixed economy. The ongoing focus given to the mining industry continues the process of growing our investment in other sectors of the economy. This occurs as investors take note of the government's continued support and reliance on mining profits. This means that capital continues to flow to this sector to the detriment of others. Allowing this to go unchecked without a mining tax is likely to increase the vulnerability of other Australian exports by increasing inflationary pressure on Australia, leading to rising interest rates.
The mining boom is pushing up the Australian dollar and putting pressure on our major export industries. The energy minister states that last year earnings from energy and mineral exports reached a new level of $175 billion—an increase of 27 per cent on the previous year. Much of that resource wealth comes from New South Wales, and a share of those excess profits should flow back to New South Wales not just to the shareholders of overseas mining companies.
The mining boom threatens blue-collar jobs and the future of many sectors. For many years the Greens have called for a government-led transition away from coal. Coal-fired power has driven the New South Wales economy for more than a century, and on many occasions I have paid tribute to the mine workers who have made such a huge contribution in the mining industry, delivering for the energy systems of our state and, indeed, our country. But these mining jobs are now flatlining or in decline, and we now have the possibility of generating jobs growth at a much greater rate than has been achieved in the mining industry by switching to renewables.
This is the plan that New South Wales desperately needs. Public investment in renewable energy offers so many potential opportunities for manufacturing jobs in New South Wales, but we need serious public investment to realise that potential. This is where there is a real responsibility for governments to drive the transition to clean energy and to the innovation that, again, Senator Christine Milne spoke so eloquently about.
The Labor-Greens climate package under the clean energy future package includes a contracts for closure section that will ensure 2,000 megawatts of coal-fired power generation will be shut down by 2020. The shift away from the coal industry is already starting in New South Wales. It is vital that the government plays a key role in driving this transition. Again, I cannot give enough emphasis to how important it is at this critical stage that the government is very hands-on so that we can ensure that the jobs growth—jobs that will last well into the future—is delivered.
Opportunities from developing alternative energy sources must include local and sustainable manufacturing jobs, not just jobs in technology and research. Tragically, in New South Wales at the moment so many of the contracts have gone overseas—particularly to China, where their manufacturing has meant that their industries in wind turbines and photovoltaic cells are going ahead in leaps and bounds and have left us in the shade.
The mining boom can also push up the cost of receiving a higher education and threaten the quality of that education. As universities experience a decrease in income from the fees of overseas students they need to find ways to cut costs, and too often this results in staff losing their jobs and costs being passed on to domestic students. This is no way to run a world-class education system. Government documents revealed in the Senate last year show that $2.5 billion per annum could fund free tertiary education. The lost revenue from cuts to the government's original planned mining tax would have allowed the government to offer free tertiary education to all Australian university students. There are so many opportunities here—opportunities that this house should be able to debate if the government had been willing to stick with the original fully extended mining tax.
It is essential that we pass on the benefits of the mining boom to all Australians in some way, whether that be education, infrastructure or sustainable new jobs. The expansion of mining across Australia and the massive exporting of our mineral assets is a one-off transfer of our nation's natural wealth. Unless the Australian people are properly compensated in this exchange, we will be short-changing future generations of Australians who are entitled to a stake in the nation's resources. We need to make sure that future generations share in the benefits of the current mining boom. That is the responsibility of government and it is a lead that we should be giving.
I think we should acknowledge that the original premise of the mining tax was advanced by former Treasury secretary Ken Henry and was a clear recommendation from the Henry tax review. I congratulate him for the work that he put in, and I think it is unfortunate that it has not been implemented in its entirety. I think we also need to acknowledge the massive misinformation that has come from the Minerals Council, from Mitch Hooke, from Gina Rinehart and from Andrew Forrest—all out there rabble-rousing for their own self-interest. The name 'Axe the Tax' has become notorious and symbolic for people who put self-interest before the interests and needs not just of the people of our country presently but also of future generations. The mining industry has been a huge donor to the conservative political parties. We see this at a state level and at a national level. That influence is becoming increasingly unhealthy, particularly as some of these mine owners now move into attempts to buy media companies. That is not what a democracy is about. It will just fracture the way our society should be able to operate. What is critical at the moment is that we are on the point of achieving a mining tax. Yes, it could have been stronger, but it is still an important step forward. I support the legislation.