Tuesday, 25 March 2014
Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading
In presenting this bill to us today the government once again shows that it is single-mindedly intent on its own particular brand of redistribution of Australian wealth. But I suspect this particular redistribution would have Robin Hood turning in his grave. Sadly, this bunch of merry men seem intent on stealing from everyday Australians in order to line the pockets of the rich, powerful and well connected—Robin Hood in reverse, if you like.
This is a government that is so far from the government they said they would be that they are almost unrecognisable. This is a government that seems to be completely uninterested in addressing disadvantage and creating a more equal, inclusive Australian society. Not only are they doing nothing to address inequality but they seem set on actively widening the gaps between the haves and the have-nots through legislation of the sort that we are dealing with today.
In this legislation the government brazenly robs from low-income earners, families and small businesses in order to line the pockets of multinationals and mining magnates. Not only that but in doing so they are forcing a multibillion-dollar revenue hit to our country's bottom line. Recently those on the other side started to go back to their tried and true mantra of the 'budget emergency' they say is facing the country. They used this confection before the election to scare the Australian public into voting for them and they continue to use it to justify harsh cuts to those who can least afford it.
Despite this, they were quite happy to provide an unrequested $9 billion to the RBA, even though experts confirmed that our national bank was suffering no problems of liquidity, and only a few weeks after gaining the keys to the ministerial wing they even had the audacity to request a 66 per cent increase to Australia's credit card bill while refusing to produce any information to back up their request. These are hardly the actions of a government concerned about cutting back on spending across the board. Strangely enough, we now see that they are so unconcerned about the state of the books that they are willing to forgo billions worth of revenue in order to give the likes of Gina Rinehart a belated Christmas present.
The minerals resource rent tax is based on the important tenet that Australia's mineral wealth belongs to Australians. It is based on the idea that, while international investment is important, Australians deserve to be compensated for the removal of mineral wealth that cannot be renewed. Labor supports the need to spread the benefits of mining activity in Australia to all Australians, not just to the rich and well connected. That is why we will not support the repeal of the minerals resource rent tax.
We have heard a lot of spin about the tax and, not surprisingly, big miners have argued that the tax could send them to the wall. The government has used this to justify a threat to Australian jobs. The position is a little hard to justify when you consider that the mining industry employs only two per cent of the Australian workforce, or 251,000 people, according to the Australian Bureau of Statistics. In contrast, manufacturing employs almost quadruple that number at just under a million jobs. If the government really cared about jobs, surely they would not have turned their backs on our car industry. Even if mining were the largest employer in the country, would the mining tax still be a threat to jobs? The answer is simply no. The truth is that the MRRT only affects those companies that are already making a significant amount of money on the back of Australia's mineral wealth. The reality is that the MRRT is not even based on revenue but, rather, profits.
In fact, when the Henry review called for submissions, the Minerals Council of Australia itself put forward a recommendation arguing in favour of a profits based tax as the most efficient means of taxing resources. This is an important point. This is a tax on superprofits, not revenue. In fact, companies are not liable to pay the tax until their profits reach $75 million. I find it hard to believe that any company that is making $75 million in profit—I reiterate: that is not revenue but profit—should not be contributing their share to our nation. A profit based system is much fairer than a royalties system because it means that if the price of resources goes up companies make more money and more money flows back to the Australian taxpayer. It is a no-brainer. In a royalties based system, when the price goes up there is no corresponding increase in wealth going back to the Australian people. So, despite the hype, no business was ever going to go bankrupt through the MRRT as it was only ever going to be levied upon businesses that were achieving lucrative superprofits.
So we have a government which is forgoing this vital revenue despite bleating excessively about a 'budget emergency' to anyone who would listen and threatening large-scale cuts to the areas of society that can least bear it. As a result, if this legislation passes, we will see families, small businesses and working Australians taking a big hit. Small businesses will bear the brunt of the removal of nearly $4 billion in tax concessions which were recommended in the widely lauded Henry review. The bill will repeal the instant write-off for assets costing less than $6,500. It also repeals the loss carry-back measures which allow companies to carry back losses up to a $1 million threshold. This measure was brought in by the previous Labor government in recognition of the fact that businesses do not run to a 12-month cycle and that profits can fluctuate significantly from year to year. Under Labor, this would have increased to two years from this financial year, giving businesses an extra fund injection in order to further invest in their businesses. Is it any wonder that the Australian Industry Group denounced these moves in its submission to the government, saying that they will permanently increase compliance costs and cut investment returns at a time when businesses can least afford it?
Small businesses will also lose the special motor vehicle reduction which allowed them to claim up to $5,000 as an immediate deduction for vehicles costing $6,500 or more. Families will suffer as a result of this bill as it rips away the schoolkids bonus which was put in place to help struggling families meet the cost of their children's education. In taking away the schoolkids bonus the government has been indulging in some serious misrepresentations of the truth by saying that it was linked to the minerals resource rent tax and, with the repeal of the bill, it must also go.
The idea that a government cannot make its own spending decisions on anything is an absolute nonsense. Those opposite, as the government of the day, will always have a choice about when and how money is spent. To suggest otherwise is completely disingenuous. This flimsy justification is based on a bald-faced lie. The schoolkids bonus was never linked to funding from the mining tax. In fact, it replaced the education bonus to make it fairer and simpler for families to access help with the cost of their children's education.
I know very well from talking to Tasmanian families how important the schoolkids bonus has been in helping alleviate unavoidable costs of education, such as textbooks and uniforms. Many have also shared their concerns with me about how they are going to manage these costs if the government gets its way and repeals this vital support. This is a government of confused, inconsistent messages at best and brute hypocrisy at worst. In one breath they tell us that all they care about is removing the cost-of-living burden from the typical Australian family and in the next they tell us exactly how they are going to rip away thousands of dollars from those who can least afford it. Not only are the government ripping away the schoolkids bonus but they have then gone further by slugging Australia's lowest paid workers to pay for their mining tax abolition. By removing the low income superannuation contribution the government will reimpose a 15 per cent tax on workers who earn less than $37,000 a year. If this bill passes, it will mean the lowest paid workers in our country will be up to $500 a year worse off.
We in this place are lucky to have very generous compensation for the work we do, so perhaps those on the other side think $500 does not seem like much money. Maybe they would even budget this much for a special night out at a restaurant. But for those who earn less than $37,000 it could be the difference between driving an unsafe car and finding the money to have it serviced or between paying the winter heating bill and shivering through the cold months with nothing to take the edge off the cold. To put this in perspective, this callous move will impact on up to 3.6 million Australian workers. In my home state, 90,000 hardworking Tasmanians will have to find an extra $500 in already stretched budgets just to pay for basics such as food, electricity, rent and clothing.
The bill will also rip away the income support bonus, which is designed to help those who survive on the lowest wage of anyone in this country with one-off payments. This is all so that some of the most profitable companies in the world can get a reduction on their tax bill. In what world could this possibly be seen as fair? And the pain for workers does not stop there. This series of bills also stalls the important increase in superannuation from nine per cent to 12, which represents a blow to the future retirement savings of millions of Australians. It was Labor that brought in this forward-thinking reform in recognition of the fact that 12 per cent superannuation is recognised as the amount people need to put aside if they are to have enough money when retirement time arrives. By turning its back on this plan the government will not only reduce superannuation balances by thousands of dollars but also increase the burden for future governments, which will be lumbered with higher pension and welfare support costs than necessary.
Another short-sighted inclusion in this package of bad legislation is the scrapping of legislation which allows companies to immediately deduct expenses incurred through geothermal exploration. Labor brought in this deduction in 2011 in recognition of the importance of investing in renewable sources of energy. While there is currently no commercial geothermal energy production in Australia, Geoscience Australia predicts that just one per cent of shallow geothermal energy could supply Australia's energy needs for as much as 26,000 years. By removing this deduction the government is essentially removing incentives for investment in renewable technologies, which ensures that we will remain dependent on dirty fossil fuels for longer than we might otherwise need to. They are holding back on the necessary transition to a low-carbon economy, which will ultimately lead to Australia becoming uncompetitive as the rest of the world rushes to embrace low-cost renewable energy sources. This should not really come as much of a surprise given that this government is also trying to single-handedly dismantle the entire tool kit that Australia has to deal with climate change in favour of the Direct Action Plan.
I am currently the chair of the Direct Action Plan Senate inquiry and I can tell you that we have not heard from one witness who supports Direct Action as a viable stand-alone solution to addressing climate change. We have been told it is little more than an expensive slush fund for polluters that will ultimately be completely ineffective in addressing climate change. Interestingly the Direct Action Plan will also see millions of dollars flowing to wealthy companies while the rest of Australia picks up the tab.
I am sure it is not just me who can see parallels between Direct Action and the set of bills that is before us today. Both will cause a massive billion-dollar hit to the budget and both will provide multimillion-dollar benefits to big polluters and resource companies. Most importantly, both seem to be completely intent on acting against the national interest. Unlike my colleague Senator Ryan we need to remember that resources are finite. Once they have been dug up and sold off, there will be no more. We also need to remember that they belong to the people of Australia, and it is only fair that the people of Australia get to share in the benefits of this mineral wealth.
But it is clear that the coalition were not the only winners when they won government in September. It is clear that mining magnates also hit the jackpot on the back of the election result. We are seeing the proof of it today in this package of bills. Ironically, one of the most spouted arguments from those on the other side about this tax was that it did not raise enough revenue. So it seems strange that, rather than making the tax more expansive, in order to correct their perception of this failure they are deciding to forgo the revenue entirely. If you put this to any reasonable person, they would ask the obvious question: why would a government that is so concerned about flagging revenue make it one of their first orders of business to further slash incoming funds? Why would a government that cares about working families and businesses wantonly slash the very measures designed to give them a helping hand and make the cost pressures that little bit easier to bear?
Donation records from the Australian Electoral Commission might provide us with a clue to solving this mystery. These records tell us that since 2007, when the minerals resource rent tax was first proposed, the coalition was the happy beneficiary of more than $3 million from the mining industry. This compares to the $119,500 that was given to Labor and not a penny to the Greens. We need to recognise that, if nothing else, big businesses are pragmatic. In fact, they have a legal obligation to their shareholders to make effective spending decisions that are in the best interests of their shareholders. These are not the kinds of organisations that will throw money around willy-nilly if no financial return is to be gained. Could it be that the coalition is returning this generous favour in the form of a belated Christmas tax cut? Could it be that this government is slashing benefits for millions of Australians in order to pay its dues to its mining masters? I can only speculate about what its motivations might be. But the figures do not lie. However, if that is the case, we can see that these donations have indeed been a smart move for the mining magnates, who by spending a meagre $3 million have netted themselves a $3.7 billion windfall. Nice return if you can get it! It seems the age of entitlement may be over for struggling businesses, disabled people or those looking for work, but it is alive and well for big corporations and mining companies.
Australia voted for a government that would act in the interests of all Australians—a government that would maintain spending in important areas of health, education and support for people with disabilities. What we have got is something very different—a government which seems to govern solely for the rich, the miners and the elite, at the expense of millions of Australians who are doing it tough. This is not the government we were promised.