Monday, 19 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
Again there is the bleating from the other side: 'Exactly right.' This government thinks that this new tax will in fact be $11.1 billion. That is $11.1 billion of more Australian tax dollars to spend. Sadly for Australians, the spending associated with this tax is actually going to top $14 billion. You then take into account what these states and territories are going do. The agreement on the MRRT is that the raising of the royalties is an offset from the companies that are being taxed. That, again, is a major hit on the bottom line of this tax. So the tax is, in effect, going to create a $6.3 billion black hole. Even if your motivation is perverted, even if your motivation is sour, you would think that at least they would get that right. But instead of actually creating a fund of money to get us out of the perilous circumstances that this government has got us in, we are actually going to end up in a black hole. So the tax, in effect, is not going to assist the government's budget bottom line.
So what is this tax really going to achieve? I have been reading with some concern some of the reports internationally. The MRRT is clearly seen as an investment risk in Europe. Of course there is sovereign risk. We are very proud to be a country who is recognised internationally as safe. Safety is an important thing. There is security here. We are not at war. We do not have civil actions. It is a pretty good place to invest. Also, there is some consistency here. You would not expect Australia to suddenly run out and tax an industry. With regard to the live cattle trade, as a consequence of this government's abhorrent behaviour Indonesians now see Australia as a sovereign risk. Again, with the MRRT they see this nation as a sovereign risk. Again, with the carbon tax coming into play at the end of this financial year, those people who saw Australia as an investment opportunity of some credibility and security have been proved wrong.
This is a tax that is going to make it very hard for small miners to get their projects off the ground. Iron ore is something that we never associated with the Northern Territory, my own Territory. But it seems there are a number of prospects. We all love having a two-speed economy, particularly if you are in the first speed. You like the fast-speed economy. But it is often difficult to get entry into the economy. A number of young people are saying, 'I'd love to work in the mining industry. It's a terrific ask, but it's difficult to get in.' But the emerging sectors are much more likely to employ people in the exploration stages and the development stages than at any other time. Whilst not a lot of people might see the Northern Territory as a major resource for iron ore, we have out at Hodgson Downs 168.1 million tonnes at 44 per cent; 310 million tonnes at Roper Bar, with an aggregate of some 30 million tonnes at 58.3 per cent—incredible levels; Mount Peaks has 139 million tonnes. It is a place where people have invested and are looking to invest.
There has been some discussion like: 'Look, these are miners, Nige. You've got to understand. They make a lot of money. You've just got to be able to tax them.' The argument that happens around some of the pubs at the moment is, 'Well, aren't they already being taxed?' They say, 'No, no, they hardly pay any company tax, according to the government.' We know that is patently untrue. They pay royalties—they pay those to the states. They pay a company tax to the federal government and now they are going to pay a mining tax. In 2010-11 the mining sector paid $23.4 billion in company tax. They are now going to be asked to pay, with the carbon tax coming in after 1 July, an additional $4 billion. Of course, the MRRT at the end is hardly noticeable. It is an extra $3 billion burden—as if the first two were not a knife in the neck.
The notion the government put forward, that we are between 17 and 21 per cent tax and they can pay a lot more, has been completely swept aside by Deloitte Access Economics. When we look very carefully at the total tax—that is, royalties and company tax—the stable average between 2007 and 2010, so there are no spikes in there, is 41.5 per cent. It is not all the rubbish we hear about 21 per cent. It is 41.5 per cent tax. They say: 'No, no, that's obviously not enough. We're going to have to slug you a little bit more.'
Because people get a little confused around company tax, I will give you a couple of comparisons with some of the other sectors. In agriculture they pay $309 in company tax. In retail, a big sector, they pay $2 billion in company tax. The retail sector makes a huge contribution to all of us as taxpayers and we need to acknowledge that. The future of those in manufacturing is under a bit of a cloud now with this carbon tax coming in but currently they pay a $4.3 billion contribution. But the mining industry eclipses that. It pays $13.4 billion worth of company tax every year.
So there certainly seems to have been a fair bit of politics and spin and certainly we understand that the Labor Party is all about politics and spin and not about policy and delivery. We on this side cannot wait to get a crack at ensuring Australia is characterised by a government that delivers policy and outcomes, not politics and spin. Now that we understand the facts of the matter, the federal government claimed that the mining sector pays between 13 and 17 per cent corporate tax.
They have not only been contradicted by the information I have provided to you but also by official data from the Australian Taxation Office. Analysis of the Australian Taxation Office statistics 2007-08 shows that the average corporate tax rate by the mining sector is 27.81 per cent. When mining company royalty payments are added, the effective tax rate in the mining sector increases to 41.3 per cent. It has gone up slightly since then. The Labor Party has relied on a graduate research paper from South Carolina. Instead of relying on that because it suited the process at the time, you could have at least obtained—free-of-charge from your very own taxation office—accurate data.
The other thing that concerns many of us in the opposition and many Australians is: what is the real story, the modelling? We get, 'Look, some of the modelling's been done,' and 'Don't you trust Treasury?' and blah, blah. We want to know the real story. We are going to be voting on this later today. Just release the modelling. Release all the modelling. That has not been done.
When you have modelling you have to look at assumptions that the modellings are based on. Everybody understands that. It would have been very important to have a look at those assumptions—things like commodity price assumptions or production volume assumptions—but apparently it is all too hard for this government. They say, 'You can't expect us to come up with that.' Queensland and Western Australia publish those numbers every year and they are just a couple of gobbly little states. We are the Commonwealth. We are the power. We have all these resources of government.
I am quite sure that those perfectly good public servants who quite clearly have been instructed to say nothing would love to come out with the numbers, would love to come out with those assumptions and would love to come out with the complete modelling but, sadly, this government just simply has not allowed them to. It has not allowed the Australian public to benefit from those numbers and make its mind up for itself. Most of the people I speak to have said they are very distressed that they cannot have some more clarity around this. I hope they understand that it is simply because the government does not want to reveal the real story.
The other motive behind this is to pay it back. We have established that it is not going to make any money from our bottom line. It is going to cost more to create than it actually makes. But Australians need to remember that the total net revenue over three years is going to be borrowed by this government in three months. The notion that this is suddenly the great repairer—something that will stop this nasty budget, this embarrassing budgetary situation we have got ourselves into—is a complete furphy.
The story is that this will fund superannuation across the board. We stand up and say, 'We don't think this MRRT is a particularly good thing,' and those on the other side say, 'What about your employees? What about all those people who are going to get an increase in the super benefits? It's going to fund those things.' What a pack of garbage. This is about self-interest. This will only fund the Commonwealth's obligations to fund its public servants as part of a raise between nine and 12 per cent. How duplicitous does it have to get that you would try to persuade the Australian people that this is somehow trying to help out?
If that is not bad enough, they start bagging on about the fact that everyone is going to get a one per cent tax cut at a company rate and they are going to accelerate it for small business. As usual, with this mob, you have to read the fine print. The fine print is: 70 per cent of small businesses are not eligible. Terribly sorry. The fine print says you have to be incorporated. I am really not sure why they in government are not being fair dinkum, upfront and completely honest with us, because this is a significant change.
I do not know what the government are going to do next but this is an enormous tax. We are having two big taxes. The way they are going—the way they are spending—I cannot see the need for another tax any time soon; it is simply a notion over the horizon. It is tax time: we have had 19. There are bound to be more because they are not going to change their behaviour about how they spend, any time soon.
We wonder about the motivation of the Minerals Resource Rent Tax Bill 2011. It is certainly not motivated by our national interest. Probably that is not entirely correct; they are probably motivated by saying, 'We now need to save Australia from the Labor Party, so we now need to find more money to save Australia from the Labor Party.' Of course, it is the same affliction. It is like the leaders: 'I know! This is a disaster; we'll change leaders.' Look, mate, you are still driving a Volvo. You have fundamental problems with the motor vehicle. Changing leaders and mucking about with the edges is not going to change a thing. The only time that this country has to look forward to is the time when you are removed from the treasury bench. The refilling of Labor's coffers, of course, will not work because the planned $11.1 billion income is turning into a $6.3 billion black hole.
The fact is that this stabs at the heart of our sovereign integrity. Who would know what damage that would do, because it has never really been done before? Everybody trusts Australia. It is a secure place. It is a good place to do business, with fair dinkum, honest people. Now, suddenly, we will not know what the damage is because it is only recently that we have thrust a dagger in the heart of our own integrity with issues like the live cattle trade and indeed the two monster taxes that are coming up.
It places a risk on small prospectors, those who need the most help, those who are most vulnerable. They are putting out prospectuses and they say, 'In this prospectus, this is what's happening; it's all exciting,' and all those things. People say, 'I'd love to invest in that company.' And people do not invest for philanthropic reasons; people invest because they want to make money. They say, 'Yes, but perhaps I can invest somewhere else where it's safer and we're not going to have this enormous tax.'
This is a dreadful tax that is motivated by all the wrong reasons. It is not going to provide the bucket of funds that they believe it will provide. It is going to destroy our sovereign risk assessment. It is going to put at risk small prospectors. It is going to put at risk people who have made a huge investment. And it will do very little else. So this dreadful tax, on any assessment, fails the national interest test and should not be supported, not by this side. But there is a chance for those on the other side not to support it either. In just a few short moments: I know the Greens are bringing amendments to this place that say, 'This extremely bad industry-damaging tax is not hurting enough industries and it's not creating enough funds.' I understand—without verballing you, Senator Brown—that they are not hypothecated funds, so they will still be subject to the idiocy of those opposite. I will not be supporting this legislation and I commend all others to ignore it as I will.