Monday, 24 March 2014
Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading
In rising to speak on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013, I pose the question: whom does the mining tax serve? We really need to get to the bottom of the nonsense that we have heard from the coalition that getting rid of the mining tax is somehow going to create jobs and is somehow going to help Western Australia. In fact, when you look at it you see that mining is a massively capital-intensive exercise and it is not the major jobs creator that the coalition pretends it is. In fact, we have had very clear evidence that, as the mining boom continues, the problems that it creates are intense, particularly in a place like Western Australia, where you see that those people who are not part of the mining industry are suffering as a result of very high rents and homelessness.
We are seeing already that this boom has not been used to advance the interests of the whole nation or to build towards a society post the mining boom. The profits have been taken by the companies concerned and have been funnelled overwhelmingly to overseas shareholders. The money has not circulated in the Australian economy to create jobs. Indeed, as Ross Gittins warned recently, mining is 'hugely capital-intensive' and accounts for 10 per cent of GDP but only 'a mere 2.4 per cent of total employment'. He went on to say that, for all the mining industry and government say about this tax being bad for jobs, it is important to remember:
For the income earned by an industry to generate jobs in Australia, it has to be spent in Australia. And our mining industry is about 80 per cent foreign-owned.
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For our economy and our workers to benefit adequately from the exploitation of our natural endowment by mainly foreign companies, our government has to ensure it gets a fair whack of the economic rents those foreigners generate.
This, of course, is the justification for the minerals resource rent tax. And the fact that, so far, the tax has raised tiny amounts of revenue doesn't mean mining is no longer highly profitable, nor that the tax isn't worth bothering with.
Because Labor so foolishly allowed the big three foreign miners to redesign the tax, they chose to get all their deductions up-front. Once those deductions are used up, the tax will become a big earner. Long before then, however, Tony Abbott will have rewarded the Liberal Party's foreign donors by abolishing the tax.
This will be an act of major fiscal vandalism, of little or no benefit to the economy and at great cost to job creation.
That is the fact of it. This is fiscal vandalism at a time when we have not an economic crisis or a debt crisis but, if anything, a revenue crisis. We need to be raising money in Australia so that we can spend it on the things that we need that will set up the community and the economy for the future. We need to be spending it on education at every level, from universities right down to schools and early childhood education. Here we have a scenario where the government wants to abolish the mining tax and, at the same time, is not honouring the fifth and sixth years of funding for the implementation of the Gonski reforms in education, which would allow those who are most disadvantaged in Australia to get equal access to education. That is just one area. Another area is the National Partnership Agreement on Homelessness. Why haven't we got money to be able to support the people who are providing crisis accommodation for people when they need it? The plea is always, 'We don't have enough money.' We apparently have no money to support single parents either, and now we hear that the government intends to cut the wages of the lowest paid people in the community—in particular cleaners. We hear all of this, and the reason is that we do not have the money. And suddenly we are prepared to repeal a tax which should be raising money from the miners.
I want to come to that point, because Ross Gittins is right when he says that the fact that the mining tax is not returning much revenue does not mean that mining is no longer highly profitable. Let us go and have a look at the profits of the mining industry just to make the point on the extent to which they are profitable. I will read the figures that have been released recently:
The miners made combined half-year profits of $US14.58bn, compared with $US8.04bn a year earlier, a period in which the iron ore price crashed to as low as $US87 a tonne.
I just want to repeat those figures: after a half-year profit in the previous year of US$8.04 billion, the miners made a combined half-year profit of US$14.58 billion. If that is not a superprofits tax candidate, I do not know what is. They are making megaprofits, and the way they have framed this debate is, 'Oh, the iron ore price is down; therefore we should not have to pay the superprofits tax.' With the iron ore price down, they have almost doubled their profits, and that is in a half-year, not a full year, so goodness only knows what they are going to end up with in terms of that assessment. So never let it be said that somehow they are not making superprofits. They are most definitely making the superprofits which should require them to pay some of that back to the community.
So why aren't they? Originally the tax was meant to be a 40 per cent tax on superprofits above $50 million and applied to all minerals. The tragedy is that it was watered down to an effective rate of 22.5 per cent on profits above $75 million and restricted to only a few minerals. That is where it went horribly wrong, and that is where the mining industry absolutely pulled the wool over the eyes of former Prime Minister Gillard and Treasurer Wayne Swan. There is no doubt about that. They came out of those negotiations with a political fix. They needed a win leading into the 2010 election, and the mining industry needed to get out of paying the superprofits tax, so they went for a deal which said, 'We'll give you a political win in the short term, and we get the long-term win of not paying the superprofits tax.' That is what happened in those negotiations, and Australians have been sold out absolutely by that.
But that does not mean to say that you would get rid of the mining tax just because it is not raising much revenue. What you would do is fix the mining tax so that it is, and the Greens have pushed that all along. We said that in the very first place. When the legislation went through the parliament in the first place, we tried to amend it to make sure that the states could not get away with continuing on the loophole that allowed them to raise the royalties and the Commonwealth to pay it back to them. That was always a stupid move. We tried to get it amended at the time and did not succeed. So we called a Senate inquiry. Everyone who came before the Senate inquiry made it clear that, if you redesigned the tax, you could make more money from it. Going into last year's federal election, we got the assessment of what the mining tax would raise if it were fixed in the ways that we suggested, and of course we got the answer back that we could have raised $21 billion from the mining tax if we had fixed it.
In the light of where we are now, surely we have reached the point where there is an acceptance that we need to raise more money. Everyone from Ken Henry to the former Treasurer and every economist is out there saying: 'If we want to pay for the big reforms that will set up this country post the mining boom, that is massive investment in education, absolutely in our universities, and research and innovation. If we want to drive the low-carbon economy, absolutely make sure that we are competitive in a low-carbon future. If we want to make sure that we have appropriate health care for people to be able to live in a way that gives them a good quality of life into the future, if we are going to adequately look after people as we always have in this country—and that means the poorest and the people most in need of housing and income support at times when they are under pressure—then you have to raise money.' And that is not to mention national disability insurance. Everyone agrees that this is a good social reform for the nation, but it has to be paid for. So let's raise the money.
That is why I am moving a second reading amendment—and this has been circulated—specifically in relation to this:
At the end of the motion, add:
"but the Senate calls on the Government to recognise that the benefits of the mining boom should be enjoyed by all Australian society by:
(a) applying a 40% tax rate to all minerals,
(b) rebating only those royalties that were in place at July 2011, and
(c) allowing depreciation on the book value of the amounts actually spent on mining infrastructure only."
With this second reading amendment, the Senate calls on the government to withdraw the bill and redraft it to ensure that the benefits of the mining boom can be spread throughout Australian society by (a) applying a 40 per cent rate, as applied under the petroleum resource rent tax, and extending the MRRT to all minerals; (b) only rebating royalties that were in place at July 2011, rather than letting state governments raise royalties that are paid by federal taxpayers, not the mining companies; and (c) only allowing depreciation on the book value of the amounts actually spent on mining infrastructure, because that was another one of the absolute rorts in this mining tax.
But also I will be moving another second reading amendment, because one of the things hidden in this package is what it is taking away. Some publicity has been given to the schoolkids bonus, but not a lot has been given to the impact of taking away the low-income superannuation contributions. That again is another attack on the lowest paid people in Australia. We all talk about the gap that there is, particularly the gender gap, in superannuation entitlements and how Australia is going to pay in the future in terms of pensions. One of the ways is to help people make up that gap, and that is what the low-income superannuation contribution was all about. So I am moving another second reading amendment. Again, it has been circulated.