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
It is with great pleasure that I rise to offer a Western Australian perspective on these bills before us. Unlike my sensationalist colleagues on the other side, I would like to offer a view of how I believe these bills will spread the benefits of the mining boom throughout states like WA and build on the future prosperity of our WA economy and our national economy.
We have heard time and time again all manner of ridiculous claims from the other side about how the Minerals Resource Rent Tax will bring the WA economy down and is driving investment away. Nothing could be further from the truth. I think Western Australians realise just how silly Mr Abbott and the Liberal Party are when they make these claims. Western Australians know that we need to use these good economic times to plan for the bad times and to invest in the future. They know that the MRRT in this package of bills is the best way to ensure that this resource boom has more than a fleeting impact on our economy. No matter how much the state Liberal government in Western Australia keeps denying it—and they do like to deny it—there is no doubt that WA is experiencing an unprecedented mining boom. But this mining boom has meant good things for Western Australia. It has meant low unemployment, healthy wages, and opportunities for regional communities.
But the truth is that it is not all good news in WA. We are experiencing the strains of a patchwork economy just as much as other parts of Australia and in many ways we are experience it even more. Perhaps the biggest victim of WA's uneven economy has been our manufacturing industry, which is experiencing a very significant decline. It is the type of decline that could cause long-term problems for the viability of the manufacturing sector in WA. ABS data shows that we lost more than 13,000 manufacturing jobs in WA between May and August 2011. And to add to the picture, the youth unemployment rate in Kwinana, a major industrial hub in Perth's southern suburbs, has more than doubled since January 2008. The loss of these jobs, and particularly the loss of young people from the industry, means that we are losing a generation of skilled labour that our mining boom desperately needs.
We have a generation of people that are getting quite well paid for unskilled jobs in the mining industry, but they are not undertaking the training they will need to survive in the post-boom economy. It means that a generation of apprentices are out of the manufacturing industry and may never come back in. It means that, in an increasingly competitive global economy, we are about to become more uncompetitive in this crucial sector.
The WA Department of State Development paints a positive future for our state. It says that the $186 billion of projects currently committed to, or under consideration, in WA will create a massive 55,000 construction jobs and 17,000 permanent jobs. This is outstanding economic growth and I think a testament to the good work of my colleagues in the Gallop and Carpenter governments—and I was very pleased to work with them.
However, once these projects are built and in the production stages, what will the excess 38,000 workers do if we have offshored our high-end engineering and fabrication industries during the mining boom? There will no longer be a robust manufacturing industry for them to return to once the projects have moved on. So you can see here that there is a real need to make sure that we keep balance in our economy, which is exactly what these bills do.
This mining boom is also having unintended consequences on regional communities. Indeed, it is putting a major strain on community services and the cost of living in those communities, which are host to the problems of an influx of fly-in fly-out workers without the benefits of a permanent workforce. The Pilbara region in WA is at the centre of our mining boom. It is a place of great opportunity. But houses there are among the most costly on earth to live in. In their submission to the current inquiry into fly-in fly-out workforce practices in regional Australia, the Shire of Roebourne pointed to a mounting number of social issues that have resulted from the mining boom. They point out that, in 2010, the median price for a three-bedroom home in Karratha was $761,000, with average rent at $1,300. Furthermore, when surveying their residents, they found that one in five respondents listed the cost of living as a reason to leave the Pilbara.
It is paramount that government finds a way of mitigating cost of living and housing pressures, but we can only invest in things like affordable housing and other measures if we have the taxation base we need in order to do so. And that is what this Minerals Resource Rent Tax is all about. It is about spreading the benefits of the mining boom to all Australians—as opposed to the Liberals, who think only of a privileged few they would like to benefit. That is why Labor has established the Regional Infrastructure Fund to take the wealth generated by the mining boom and invest it back in resource rich states like WA. That will ensure that our state's infrastructure keeps up with future resource projects, allowing us to take full advantage of new investments, allowing our population growth to keep up and allowing us to invest in the community infrastructure that we so desperately need. Just one example is our $480 million investment in the Perth Gateway Project, which will boost productivity in an economy that is so reliant on our transient workforce as people come and go from the airport. If any of you have been to Perth Airport recently, you will know just how much our infrastructure is in need of upgrading.
On top of that, our decision to increase employer superannuation contributions from nine per cent to 12 per cent will put all workers, and especially our lowest paid workers, in a better position when they retire. Unless we invest now in our state's infrastructure, in our national infrastructure and in our people, we will be limiting our nation's potential. It will amount to a lack of investment in infrastructure and that will mean WA's future projects bottleneck and lack of infrastructure will become too much to cope with. That is why Labor's plan for the Minerals Resource Rent Tax is crucial now.
I have to say that the opposition's campaign on this topic, the campaign of major vested interests, has been a campaign of dishonesty. So I would like to finish my comments by reflecting on what has been, I think, a very dishonest campaign, the most dishonest in recent history—the fear campaign mounted by the Liberal Party and its billionaire mates against this bill. These vested interests prefer to play with their soccer teams and trust funds—and they are more than welcome to do that—but this Labor government is going to get on with the job of governing for ordinary working Australians.
We hear over and over again from the Liberal Party that the Minerals Resource Rent Tax will drive investment away from Australia. That is simply not true. Last year, Fortescue Metals Group announced an $8.4 billion pipeline of new investment which will more than triple its current output. Since July 2010, Rio Tinto has announced $6 billion worth of new investment in its Pilbara operations. The idea that the minerals resource rent tax is going to hurt mining investment in Australia is a pure fiction. Investment in our state of Western Australia has skyrocketed. We had $47 billion last financial year, to $95 billion this year, and that is expected to total $120 billion in 2012-13. We have a massive $455 billion investment pipeline. Just listen to these numbers—they are massive. The resources sector in Western Australia accounts for almost half of this investment of more than $200 billion.
To cap all of this off, we now have the Barnett government rushing through a hike in royalties. The reason for this hike is clear. It is that the Barnett government did not recognise that Western Australia had failed to appropriately tax the mining industry for the benefit of all Western Australians. It failed to manage the emergence of super profits, much of which ended up offshore or in the hands of a privileged few. It is this precise problem that spurred Labor on to institute its minerals resource rent tax to make sure that the outdated system of state royalties was replaced with a modern, profits-based tax.
It is time to return a decent dividend to the nation that owns the wealth and to Australia's people. It is time for a tax that ensures all Australians get a dividend: in tax cuts for business, in superannuation and in the infrastructure that states like Western Australia desperately need to grow. For states like Western Australia to hike royalties now, knowing that the minerals resource rent tax is on its way, is too little, too late. It is plain politics; not good policy. They are trying to close the gate after the horse has bolted. Royalties are volume based, not profits based. They punish miners that are still trying to make a go of it, miners that, under our scheme, have to be compensated under our scheme—and rightly so, because this is actually about balancing the economy in the right and proper way.
To conclude, I think that the state government have rushed to cover up failing to tax effectively for the future. They have a bandaid solution that I think will cost Western Australia in the long run. It is an irresponsible way to govern. I very much support this suite of bills. I think they go a significant way to helping address the problems of a two-speed economy—a two-speed economy that is perhaps more profound in its impact on Western Australia than anywhere else in the country. This is in large part because businesses that are not part of the fast lane in Western Australia and attached to the mining boom are competing for skills, labour, property and capital with companies that are. These companies deserve tax write-offs; they deserve tax cuts. I commend the bills to the Senate.