Senate debates

Tuesday, 25 March 2014


Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading

12:34 pm

Photo of Anne UrquhartAnne Urquhart (Tasmania, Australian Labor Party) Share this | Hansard source

I rise to speak against the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013, a bill that clearly demonstrates the policy differences between this cruel government and the Labor opposition. This is a bill that gives a $3.3 billion tax cut to Australia's largest mining companies over the forward estimates, while at the same time cutting payments and tax relief to families, small businesses and low-income earners. It is tax cuts for mining companies, but tax hikes for small companies, benefit cuts for everyday families, retirement income cuts for low-income earners, cuts to capital works in regional communities and tax hikes for those participating in geothermal exploration.

At its core this bill is not about defining a taxation regime for mineral resources in this country; at its core this bill clearly defines this government's cruel agenda—an agenda to end the so-called age of entitlement, an agenda laced with disdain for working Australians. It is disdain for the families of Australia, disdain for Australians living in the regions and disdain for Australians seeking to expand the renewable energy industry. It is an agenda we see on display every day in this place, where the language of many of those opposite shows an utter contempt for Australian workers and for Australian families. This bill clearly demonstrates the cruel nature of the Abbott government. This is a bill that cuts assistance payments to families, small businesses, low-income earners and our communities, while at the same time providing a $3.3 billion tax cut to the owners of Australia's biggest mining companies over the next four years—mining companies which are well and truly majority foreign owned. Eighty per cent of the owners of Australia's biggest mining companies are in fact foreign nationals. This bill hurts Australians while providing a tax cut to foreign nationals.

Those opposite talk about economic management, but this bill demonstrates that their economic management credentials are completely in tatters. Their Assistant Treasurer has stood down. Their carbon price repeal bill has been voted down. A key minor party, PUP, a party full of disaffected former Liberal and National party members, has indicated that it will not support this bill as it currently stands in the new Senate after July this year.

The member for Fairfax, leader of PUP, stated last week that his party will not vote for this bill while it contains the provision to abolish the income support bonus for children of Australian veterans. It is clear that this bill will not pass the Senate as it currently stands. It is now becoming apparent that this arrogant Abbott government cannot assume any of its legislation will pass after the new Senate comes together in July. This arrogant Abbott government listens to no-one and barks at everyone. This arrogant Abbott government will have to learn to listen and will have to learn to compromise if it is to pass any of its non-bipartisan legislation.

The minerals resource rent tax is a fair tax. It is a fair tax on the superprofits—yes, superprofits—realised from coal and iron ore mining in this country. It is a fair tax that has and will continue to realise significant revenue for the budget, at a time when this Liberal government is starting a conversation about a tax on visits to the GP and at a time when this Liberal government wants to increase company tax on Australia's biggest companies to pay for its unfair, unaffordable Paid Parental Leave scheme. This company tax increase will lead to increases in the prices Australian families pay for groceries, fuel, power, clothes and all the goods and services supplied and provided by Australia's biggest companies. It is a tax that is applied regardless of the profitability of the company and a tax that will not even raise the required amount to pay for their overly generous, poorly targeted Paid Parental Leave scheme. They are a tax and a Paid Parental Leave scheme that are further evidence of this Liberal government's desire to hit the hip-pockets of low- and middle-income Australians and line the pockets of the wealthiest in this country.

The minerals resource rent tax is a fair tax that only impacts on mining companies when their profits, minus deductions, are more than $75 million in a year—yes, that is profits of over $75 million a year. It is a tax that is only imposed on coal and iron ore producers in times of gross profitability. When this tax was introduced in 2011, Australia was experiencing an unprecedented boom in our resources sector, specifically in iron ore and coal, which delivered record profits to mining companies year after year. During the last tenure of those opposite, royalties as a percentage of mining profits decreased from around 40 per cent to about 15 per cent, which works out at about $35 billion that could have been invested for the benefit of all Australians if captured by a superprofits tax.

These mineral resources are nonrenewable and a large share of the profit, together with the resource, is actually shipped overseas. These are resources that can only be dug up once, that can only be sold overseas once. All Australians should benefit from the sale of our resources, not just the few who are directly involved in the mining industry. It is vital that the community who own the resources 100 per cent get a fair return on these resources to strengthen our whole economy for the future. Of course, the fact that this tax did not deliver on forecast revenue in its first years does not make it a bad tax. It is a tax designed to work in perpetuity. When profits are high, the tax will pull in significant revenue. When capital works are high and therefore deductions are high, as has been the case for the past few years, the revenue is reduced. If profitability is low and mining companies make less than $75 million off a mine in a particular year then no superprofits tax is paid.

The tax actually provides an incentive to invest in iron ore and coalmining operations relative to a pure royalties taxation model. As the mining industry is extremely capital-intensive, it actually employs only around two per cent of Australian workers. While profits in the mining industry grew by over 250 per cent over the last decade, the mining industry only contributed seven per cent to Australia's jobs growth over that period. While the manufacturing industry continued the decades long trend of employment decline, it still employs over four times as many people as the mining industry.

The metals manufacturing industry, which includes smelting, refining and producing metal products, has not been a significant beneficiary of the mining boom. Increased competition from Chinese smelters and refineries, high energy prices and the appreciation of the Australian dollar saw value-adding in the metals manufacturing sector flatten through most of the last decade. The export volume of processed metals fell over the decade, with weakness across a wide range of refined metals. This trend will only continue as smelters continue to close. Despite there being no proposals from those opposite to assist manufacturing businesses deal with a high Australian dollar, which has been stuck well over 90c for the better part of four years, the former Labor government sought to assist non-mining companies through rational, interventionist government industry policy, but this government has a fanatical approach to free market economics—that is, of course, unless mining companies are coming cap in hand for an industry subsidy.

Just last week, the Abbott government announced a $110 million loan to a BHP Billiton and Rio Tinto joint venture in Chile, a massive loan to two of Australia's largest and most profitable mining companies, a massive loan to create jobs in Chile. But where are the jobs promised in Australia? This government has turned its back on food-processing workers in the Goulburn Valley. It has turned its back on workers at Holden. It has turned its back on a pay rise for workers in the early childhood education and care sector. It is turning its back on Qantas workers. It is turning its back on Australian scientists. It is turning its back on Australian public servants. It continues to turn its back on regions hit hard by manufacturing closures such as Geelong, north-west Melbourne and North Adelaide by not releasing any details of a regional jobs package.

This is a vindictive and secretive government. It is a government that has launched a commission of audit to recommend further cuts to government services and payments. It is a government that will not release these recommendations before the Western Australia Senate by-election in two weekends time. It is a government that seeks to cut by stealth—for instance, their cut to cleaners' wages by almost a quarter, introduced into the other place last week as part of the repeal day suite of 9,500 regulations, under the guise of the Prime Minister's red tape repeal day, a repeal day that those opposite claim will grow our economy. It is regulation repeal that will cost tens of thousands of low-paid cleaners around $200 a week from their pay.

We introduced the regulation in 2011 to tackle the exploitation of vulnerable workers in the contract cleaning industry. A 2010 Fair Work Ombudsman audit of cleaning contractors found that 40 per cent of audited businesses did not comply with workplace laws as well as the regulation. The ombudsman recovered almost $500,000 for 934 underpaid workers, a clear case that there is a need for decent, fair regulation in this country. There is a need for fair taxes on profitable businesses in this country, and it is not an indecent proposal to provide fair pay and conditions for contract cleaners. These are some of the lowest paid workers in the country, and this government is taking delight in cutting their wages by including this regulation repeal in its repeal day. It is not an indecent proposal to provide transitional support for businesses and workers in industries hampered by the sustained strength of the Australian dollar. It is not an indecent proposal to impose a superprofits tax on coal and iron ore mining companies and to use that revenue to assist families, low-income earners, small businesses, regional communities and those exploring commercial geothermal energy.

Families at home would be surprised that the 'other measures' component of this bill includes a provision to repeal the schoolkids bonus, a cut that will cost the average family $15,000 over the period of their child's primary and secondary education, a cut that is not related to the mining tax, as it was not enacted by the MRRT bill. It existed as the education tax refund before the MRRT was introduced. The government now plans to scrap the schoolkids bonus and not even reinstate the education tax refund. This secret cut will impact over 32,000 Tasmanian families. Around 60,000 Tasmanian children will go without this payment.

The schoolkids bonus delivers parents some extra help to meet the large costs associated with sending their children to school. When the schoolkids bonus was introduced, those opposite opposed it because they claimed it was not specifically targeted at education. They caught it a 'cash splash', and they did not trust Australian families to spend it on educational needs. They said the education tax refund was a better way, despite the fact that millions of families were not getting their full entitlement, and promised to increase it. The mums and dads that I talk to spend the money on essentials; they spend it on uniforms, excursions, footy boots, cricket bats, guitars and on recorders. It is clear that those opposite do not care about supporting Australian families, just as they do not care about support for low-income Australians who are saving for their retirement.

Two 'other measures' components of this bill are to stall the increase in the superannuation guarantee and to scrap the low-income superannuation co-contribution, backdated to July 2013. If the Liberals get their way, people earning $37,000 or less a year will lose the tax incentive to make personal contributions to their superannuation. This measure effectively reduces the tax rate on personal superannuation contributions to zero. The Liberals do not just want to reintroduce this tax on low-income earners saving for their retirement; they actually want to backdate the measure, hitting 3.6 million Australians, which includes 2.1 million working women, with an increase in their tax this year if they have made personal contributions to their super. These people entered the 2013-14 financial year on the understanding that they would be refunded their superannuation tax. This goes against all standards of responsible economic management.

This bill would also abolish the income support bonus, a tax-free payment to people on payments—including Austudy, Newstart, the parenting payment and payments to children of veterans who were killed or injured in action—to help with unexpected living costs such as medical expenses or car repairs. If the proposed abolition is successful, around 1.1 million low-income Australians will lose the payment. It was introduced in early 2013 in recognition of the fact that the current rates of income support allowance payments are manifestly inadequate. The bonus provides $210 a year to single recipients and $350 a year to most couples where both partners are eligible. The Australian Council of Social Service has estimated that 57 percent of parenting payment recipients and 28 percent of Newstart allowance recipients could not afford to pay utility bills on time, compared with 12 percent of all Australians.

That is what this government is about: unashamedly attacking Australians who are doing it tough in every way possible. This government is even attacking its supposed base—2.7 million small businesses—by slashing the instant asset write-off from $5,000 to $1,000. The 'other measures' component of the bill will also close the loss carry-back scheme utilised by up to 110,000 businesses to smooth their tax over the good and the bad years. Just like the other measures in this bill, this initiative has no friends outside of the coalition party room, with the Australian Industry Group and Council of Small Business speaking out against the removal. AiG has said that the existing arrangement provides a very important boost to a company's cash flow 'at a time when they need it most and at a time when it is going to be most critical in ensuring the survival of that business'. Further, AiG warned that the Australian economy faced a 'large gap in investment, particularly outside the mining sector', and that removing the instant write-off facility for small business would have a material effect on them and 'decrease investment at the time it is needed most'.

The other measures in this bill also impose extremely negative effects on geothermal energy exploration. Under current arrangements, geothermal energy exploration and prospecting expenditure is deductible in the income year that the asset is first used or expenditure is incurred. Under the new legislation, this expenditure would not be immediately deductible. The Australia Institute has observed:

If this measure is repealed geothermal exploration will not have the same incentives as any ordinary explorer looking for fossil fuels …

This 'other measure' is another knife in the side of renewable energy in this country.

The final 'other measure' is remarkable, given the Deputy Prime Minister and Leader of the National Party is the Minister for Infrastructure and Regional Development. In amongst re-announcing Labor government infrastructure projects and the Prime Minister claiming to be the 'infrastructure Prime Minister'—despite slashing the fibre-to-the-premises NBN: the modernisation of Australia's communications infrastructure—the Deputy Prime Minister cut round 5 of the Regional Development Australia Fund and abolished the Regional Infrastructure Fund. These measures are included in 'other measures' despite no legislative changes being required. These projects were worth about $3 million to my home state of Tasmania and included projects that would have improved the quality of life for people across the state and created jobs. These projects are supported by the local governments in these regions.

Before I conclude my speech, I will respond to the member for Braddon's comments yesterday regarding the GST distribution. I know the member for Braddon is new to this place but he should really do some research on the history of this debate before making uninformed, aggressive speeches about minority parties. The member for Braddon would do well to focus his attention on members of the Liberal Party before bullying senators elect from the Palmer United Party. The WA Liberal Premier was in the media as recently as 8 March 2014 calling for an increase in the GST to WA—therefore taking it away from Tasmania. The former WA Treasurer, now member for Pearce, Mr Porter, dedicated a large section of his first speech to the House of Representatives criticising the current GST distribution principle, HFE, including the comment:

… the present system is too extreme, highly inequitable and propagates enormous inefficiency.

The Tasmanian people should be concerned that the Abbott Liberal government will do a deal with the PUPs to slash Tasmania's GST. So Mr Whiteley should clean up his own backyard and combat the anti-Tasmanian views of Mr Barnett and Mr Porter before seeking to bully a minority party.

This bill, which I am speaking against, gives a $3.3 billion tax cut to Australia's largest mining companies over the forward estimates—and that is unfair. (Time expired)


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