Tuesday, 25 March 2014
Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading
As the Daleks opposite come in and continue their series of filibustering speeches to prevent the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 being brought to a vote, I have been provoked to make a response to a number of the assertions that I have heard over the last few days.
It is interesting that Senator Urquhart turned to the issue of the horizontal fiscal equalisation approach of GST distributions, which I will turn to again later. But time after time we hear from members opposite about the things and the wealth that government programs allegedly create. We hear of program after program of tax transfer after tax transfer, as if it is the state or the government that is somehow the source of all wealth. We know the truth: it is the private sector that drives wealth creation all around the world. To say otherwise is a myth sought to be propagated by those who play the politics of patronage, targeting special groups in the community for favour and targeting groups they do not like for penalty, including through the tax system. It is only the mindset of those opposite that it is the government and the public sector that creates wealth.
What I cannot understand in the speech that I just heard—and we have heard it day after day in this place—is that it is apparently rent seeking when a series of companies come to the national parliament or go to the people of Australia to argue against the tax. They are arguing against a new tax to be imposed on you, your businesses and your investments in a retrospective fashion, which is what the RSPT proposed—and this is somehow rent seeking. Yet I heard Senator Urquhart, who spoke before me, reading out a list of business organisations that are somehow critical of various measures that the government is proposing. This government wishes to propose measures that are in the national interest. Some of those will involve sacrifice, such as those read out by Senator Urquhart—the unfunded schoolkids bonus. When Senator Urquhart talks about people not spending their entitlement under the previous education tax offset, that betrays her mentality. It was not an entitlement; it was a refund to support children's education, if you actually spent the money on their education. But the use of the word 'entitlement' betrays the agenda of the Labor Party, because they are about handing out cash to favoured groups. Yet, when Senator Urquhart quotes AiG and other business groups somehow opposing measures that this government has proposed to bring the budget into balance, we do not hear claims of rent seeking. We only hear those opposite screaming about rent seeking when corporations that have been the font of our national wealth over the last few years, particularly in an export sense, are involved. All they did was say, 'Please consult with us and don't subject us to this new retrospective tax.'
There are some other fallacies underlying the arguments put by those opposite, particularly about the ownership of resources. They say Australians own these resources and Australians must actually get the benefit from their mining and export—and they do, but it is not through the Commonwealth. The Commonwealth does not own these resources. The people of Australia, through the states, own these resources and they collect a benefit via the royalties levied by state and territory governments. The Commonwealth could, if it wished, seize the royalties from the Northern Territory—and, if there were any mining in the ACT or Jervis Bay, I am sure they could do it there too. These resources belong to the people assembled in the states of Australia, and that is where they get their benefit.
I cannot help but note the irony of those opposite—particularly their fellow travellers in the corner, the green movement—openly talking about wanting to shut down the coal industry but at the same time talking about how we have to somehow get value for these products before they are exported. The truth is that, unlike rare minerals and petroleum, these products are not rare. No-one can predict at what point in human history the earth will run out of coal or iron ore. They are all through the earth's crust, as any geologist will tell you. What is rare is the capital and the means to get them to market efficiently and reliably, year after year, that funds the investment that their users have to undertake. It is the capital which does that . It is the investment that enables those products to come to market efficiently and reliably. This is the rare commodity in mining coal and iron ore. It is about the competition for capital to bring those products to market.
Somehow those opposite have the idea that we might run out of coal or iron ore and that it is only mined once and so we need to make sure that we extract value for the Australian taxpayer. But this material will be mined for all the future. In fact, if the Greens have their way they will shut it down sooner than anyone else, and sooner than the market would allow.
Our job is to facilitate the production and export of as much of this as possible while the prices are high because we do not know what technology will come about. In future years there may not be a need for coal or iron ore in the same quantities as there is now. There may be technological change. Whale oil was once used for lighting our lamps. We do not have typewriter factories anymore. So our job is to deal with the opportunity we have now, which is to dig up and export as much of it as possible at the highest prices we can, at the lowest cost base. That is in the best interests of Australia.
There is another fallacy that somehow corporations do not pay their fair share. The mining companies pay royalties. They are large employers; they pay payroll taxes. They pay the same corporations and company taxes that every other Australian company does. In fact, their contribution has been rising in recent years, reflecting the high volumes and the high prices.
I note that Senator Whish-Wilson yesterday accused the government of thinking taxes are an evil. He had a quote from an author I was not familiar with, who was talking about how taxes are a positive. I think taxes are a necessary evil but they do impose a cost on the economy through the dead weight of taxation. There is an efficiency loss every time a government sets a tax. Taxes impose a burden in terms of taking someone's earned wealth from them and giving it to someone else. That is something that is a necessary evil but is not something that we should seek to propagate.
I want to turn to the last issue that Senator Urquhart mentioned, which is the impact of horizontal fiscal equalisation. This is really what this tax was about. At the moment, when Western Australia collects royalties on iron ore, or Queensland and New South Wales do on coal, that becomes part of what is broadly termed the pool of state revenues that are subject to horizontal fiscal equalisation. I say, as a Victorian senator, that my state has been a net contributor to that scheme since its inception just over 80 years ago. We have had recent complaints from Western Australia about their share of GST take falling. That reflects the revenue they have brought in from royalties.
If we put aside the debate about fairness or otherwise of particular levels of equalisation we will see that there is one fact that cannot be assaulted by those opposite—that is, that there is more GST revenue to distribute to Tasmania, South Australia and even to states likes Victoria, because the royalties are collected by the states. If the royalties went away and WA got more GST money because it did not have the state revenue base of the iron ore royalties and New South Wales did not have the revenue base of the coal royalties—if those were taken away and collected by the Commonwealth—every state would receive less money.
I say, particularly to those senators from Tasmania or South Australia, who are recipients: you will receive less money if the Commonwealth takes away royalties. You will receive less GST money. There will be less money for nurses, teaches, hospitals, fire stations and everything else you talk about. You do not understand the way fiscal equalisation works. Royalties are added to the state revenue pot. The GST is then distributed taking those royalty collections into account. So every Victorian, South Australian and Tasmanian benefits by WA collecting iron ore royalties and Queensland collecting coal royalties.
The first attempt at this tax was to try and get the state not to collect royalties—to hand that revenue source to the Commonwealth. That was nothing less than another Labor assault on our Federation. What it would have meant is less GST distribution and less revenue for all states in the country, because the overall pot of revenue that was being distributed to the states would have shrunk. That is the key element for everyone who is not a direct victim of this tax. This tax is nothing less than an assault on Western Australians—a state that has paid the penalty through lower tax distributions and horizontal fiscal equalisations since Sir Charles Court undertook this investment.
This is a tax on the success of businesses and the state of Western Australia in effectively driving this business when no-one thought iron ore was going to be such an important commodity. In fact, it is not that long ago that I was at university being taught that iron ore, agriculture and mining were not the future for Australia. So we need to remain a little bit humble. It was the investment of the Western Australia government, particularly under Sir Charles Court, that put Australia in a position to take full advantage of this boom to our north and rapid urbanisation and industrialisation in China in particular. That state should not be penalised because they have been a success. But that is what the modern-day Labor Party does.
I will finish on what I think was the ultimate irony of the speech of my predecessor in this debate. She was talking about the pressure people face in paying their utility bills. Given that it was less than a week ago in this place when the Labor Party voted against the repeal of the carbon tax—which they advertised as apparently only 10 per cent of electricity bills!—no-one should take their crocodile tears seriously about people struggling to pay utility bills. They voted to keep them high. The voted to make them high and now they are voting to keep them high. They refused to listen to the mandate of the Australian people. They will pay the price for not listening to the people of Australia, because there was no more central issue—
Senator Urquhart interjecting—