Dean Smith (WA, Liberal Party) Share this | Hansard source

Mr President, it has been remiss of me on previous occasions not to have congratulated you on your elevation to the high office of President of the Senate. So can I use this opportunity to convey to you my best wishes on your presidency.

As a Western Australian senator, I am particularly pleased to take part in the debate around this bill, the Minerals Resource Rent Tax Repeal and other Measures Bill 2013 [No. 2], to finally rid us of Labor's mining tax, which stands as a symbol of the Labor Party's betrayal of Western Australia. It will not come as news to anyone, at least no-one on this side of the chamber, that the mining and resources sector is of critical importance to my home state of Western Australia. Indeed, just last week I had the opportunity to attend the 2014 Association of Mining and Exploration Companies, AMEC, at its conference in Perth. AMEC is the peak industry body for mineral and exploration companies in Australia and its conference is one of the most significant gatherings to take place in Western Australia each year.

It was a particularly important gathering this year because, over the past 12 months, we have been hearing a lot of gloomy predictions—if the doomsday predictions of some commentators are to be believed—about the mining sector in Western Australia and about an imminent collapse of the Western Australian economy. I am pleased to report that this is very far from the case and I will come to some of the numbers in a moment. But the overarching message that emerged from last week's conference was the need for certainty. That should not come as a great surprise. We know and understand that business likes certainty. That is what this government is seeking to provide. Whether it be on the repeal of the mining tax, the repeal of the carbon tax or its commitment to put the budget back on a sustainable path to surplus, this government is determined to put Australia back on track.

I know that Senator Dastyari enjoys it when I quote Paul Keating and, indeed, despite our political differences, I think there is much wisdom in some of the former Prime Minister's words. At the time of the 1996 election, Mr Keating said:

If you change the government, you change the country.

There is probably no starker demonstration of that than the change that came over Australia in the period following the change of government in 2007. Because, in 2007, Australia was a confident, strong economy with a substantial budget surplus, low unemployment and strong jobs growth. But the Labor Party soon put end to that.

I know the typical response to that charge is 'global financial crisis' and I readily admit that the Rudd Labor government did have to deal with that enormous challenge. The fact it was able to do so is not any particular tribute to its own skills but rather the fact that it was bequeathed the financial resources to do so by its predecessor, the Howard government. Because Australia had such a large budget surplus at that time, the Labor Party was able to implement a range of measures that it felt were required to stave off a serious economic problem.

History has shown that many of those spending priorities were wrongheaded, but that is a debate for another occasion. However, I do want to make the point that none of us in this place can claim a gift of economic clairvoyance, at least not with any certainty of accuracy. We do not know what is around the corner, what economic shocks may await us in the short and medium term. What we do know, however, is that, if there were to be another global financial crisis next week, then Australia could not respond as it did in 2008, because the economic buffer that we had built, that the Howard government had established—a strong budget surplus—is gone. Despite promising for six years that they had a plan, that the surplus was coming, the former Treasurer the member for Lilley never managed to actually deliver one. He did not even come close. So, as is usually the case, it now falls to the coalition to repair the budget mess created by others and to restore some sense of certainty and confidence to the Australian economy.

One of the best ways to do that is to remove from Australian businesses and producers the burden of unnecessary and ineffective taxes such as Labor's mining tax. If you actually care about workers, if you actually care about creating job opportunities, as those opposite insist they do, then the best thing government can do is let businesses get on with it and not create additional economic uncertainty through experimental tax measures. It is not just members of the coalition who are saying this. Last week in Perth, at the AMEC conference I mentioned a few moments ago, the Treasury secretary, Dr Martin Parkinson, had this to say, as reported in The Australian newspaper last week:

Proposals which work in a textbook but fail to recognise commercial realities (particularly in business tax), will eventually be found out.

Their purported benefits may well prove illusory, the costs they impose may be greater than assumed, and they might be difficult, if not impossible, to implement.

That is an eloquent summation of everything that was wrong with Labor's mining tax, both the Rudd and Gillard iterations of it. It was designed in secret in the dying days of Kevin Rudd's first period as Prime Minister and dropped on the mining and resources community without warning. I will not tread over the well-worn ground, but we all know what happened next. Julia Gillard and Wayne Swan used the savage public and business reaction against the mining tax as a stick with which to beat Kevin Rudd and then to take his job. The new Prime Minister, the self-styled 'great negotiator', proceeded to do a deal with Australia's three largest mining companies on a new version of the mining tax, which she dubbed the minerals resource rent tax, better known as the MRRT. The ink was not dry when Julia Gillard rushed into a press conference to declare she had won a great victory, and then, almost as quickly, she rushed off to Yarralumla to call the election at which she proceeded to lose Labor's parliamentary majority.

One of the problems with the MRRT—and there are many—is that it was a political fix, not an economic solution. It was designed to get Labor through an election campaign, not to correct our economic woes. However, as with most things the Gillard Labor government did, its mining tax did not bear up to scrutiny and it did not deliver the outcomes it promised. Remember, when the mining tax was first proposed under Kevin Rudd, it was projected to raise around $50 billion in revenue. The version of the tax that Julia Gillard cobbled together saw a significant write-down of that projection, to $26.5 billion—a notable reduction but still a significant amount of revenue. But the problem was that that was not the first downward revision of projected revenue to be raised by the mining tax. The reductions, the revisions, kept coming and coming. So, in February 2012, the member for Lilley, still Treasurer, was forced to concede that, in the first six months of its operation, Labor's mining tax had raised just $126 million—falling ridiculously short of the tens of billions originally projected. It then emerged that only around 20 mining companies had actually been required to pay the MRRT but that another 145 had been required to go through the process of compliance—that is, enduring the time and expense of employing accountants, lawyers and other various advisers and submitting reams of paperwork, all for a tax they were not actually required to pay. This, apparently, was the Labor Party's idea of good, sound sensible economic policy.

Ultimately, Labor's mining tax raised around $400 million in total over Labor's period in office. That is $26.5 billion projected and a paltry $400 million raised. You might think that a government would be chastened by such a disastrous failure and admit that it had got it wrong. But we are talking here about the Australian Labor Party. Although it is now two decades since he retired from this chamber, evidently Graham Richardson's exhortation to do 'whatever it takes' remains the Labor Party's key informing principle, because, completely ignoring the fact that its MRRT was not raising anywhere near the level of revenue it had promised, the Labor Party nonetheless ran around Australia promising people and communities projects and policies that were to be funded out of the mining tax. In fact, the former Labor government locked in around $16.7 billion in spending commitments from a tax that raised just $400 million. With this kind of irresponsible approach, it is small wonder that Australia now has a serious debt and deficit problem, though, to be fair, the Labor Party seemingly cannot see that either, or at least not yet.

As a senator with an especially keen interest in WA's regional communities, I think this is something worth noting. Labor's behaviour in the lead-up to the 2013 election, when it cynically promised the earth to regional communities by announcing a swag of projects through the Regional Development Australia Fund, knowing that there was simply no money there, is one of the most brazen political betrayals I have yet witnessed as a member of parliament. It is simply outrageous to falsely build up the hopes of regional communities, in the hope that promises of funding on the never-never will be enough to sustain you through an election campaign. During its final weeks in office, the Labor Party added almost 1,000 projects to the Regional Development Australia list. Many of these did not go through a proper assessment process and were not contracted. But that did not stop the Labor Party announcing them as funding commitments, even though it knew full well that the money to fund them—money that was supposed to be raised by the MRRT—simply did not exist. It was a cruel, calculated and cynical attempt to buy the votes of those living in regional communities, and the Labor Party should be ashamed of its own behaviour on this front, though I have not yet heard any expressions of remorse coming from senators opposite.

I said earlier that the mining and resources sector is of critical ongoing importance to Western Australia, and as a West Australian senator I am determined to do everything I can to facilitate confidence and certainty in the sector. Despite the challenges in the international economy and the falling iron ore price, the value of Western Australia's resources sector reached a record $113.8 billion in 2013. Within that, it is still iron ore and gold that remain the dominant exports, together accounting for 86 per cent of mineral sales last year. Over recent years, WA's mining and resources sector has experienced relatively high levels of capital investment, averaging around $140 billion over the three most recent financial years. But, as we all know, many mining projects in Western Australia are now transitioning from their construction phase to their operational phase.

Accordingly, the question for governments, both federal and state, is increasingly about what we can do to boost confidence levels and provide a more effective and efficient regulatory framework for operators to do business in. From a federal standpoint, the best thing we can do right now is to remove the burden of Labor's ineffective and unnecessary minerals resource rent tax. That is what this government said it would do and, after many months of posturing and delay from Labor and the Greens, it is what this Senate should do now. Because, as successful as our mining and resources sector is, there is scope for it to do better. The Fraser Institute's 2013 Annual Survey of Mining Companies was quite revealing in this respect. Each year, the survey measures how items like regulatory certainty impact upon investor confidence. While I am proud to say that WA was easily ranked as the best Australian jurisdiction, WA was ranked sixth in the world in the institute's policy perception index.

Sixth in the world is not a terrible result, but the difference between those of us on this side of the chamber and those opposite can be measured in our response to that sort of result. The standard the Labor Party seem to aim for is 'better than most others'. The standard we in the coalition aim for is 'best of all'. That is the difference. That is why in debates over debt and deficit in this place, the Labor Party are constantly wanting to point out the size of budget deficits in other jurisdictions. However, the view I take, along with my coalition colleagues, is that 'better than Greece' is not the standard we should be aiming for. In public policy, we should always strive to be the best that we can be—not simply better than most others.

That is why we need to repeal the mining tax—to improve policy perception for investors and make sure that our mining and resources sector can maintain their strong levels of performance, particularly given the challenge of falling commodity prices. That issue alone is enough for our mining companies to be dealing with, without the added burden of ongoing compliance with a failed, utterly discredited MRRT—which the Greens are hand in glove with in terms of their support for the previous Labor government.

The repeal of the mining tax and its associated expenditure will improve the budget bottom line over the current forward estimates by nearly $13 billion. The repeal of the MRRT will also provide welcome relief on compliance costs, saving millions of dollars for small, medium and large enterprises. Instead of those millions of dollars being poured into paperwork, these enterprises will now be able to spend them on core activities—which will boost the prospects for job creation.

There are some in the Labor Party who actually recognise this. Mark Bishop was, until a couple of weeks ago, a colleague of ours in this chamber. It is a very sad thing for the Labor Party that he is no longer with us in this place, because he at least was able to see sense on this point. On ABC radio's AM program on 7 April this year, now former Labor Senator Mark Bishop had this to say in relation to Labor's mining tax in WA:

We hold three seats out of 15 and the simple reason is that, in this state—

in Western Australia—

we speak a language that is either not understood by voters, or, if understood, rejected.

This state is different to the east coast of Australia, we don't have any manufacturing industry of significant consequence, and whilst they are important on the east coast, other industries are important over here.

'over here' meaning Western Australia—

And the people who work in those industries, people who own those industries, the people who run those industries are wilfully and continuously ignored by the leadership of the Labor party. The result is we get 21 or 22 per cent of the primary vote in a by-election.

The mining tax, the carbon tax, have been an ongoing problem for at least five years. This mining tax was never understood, never been sold adequately, it's been a failure in practice. In practice, it has not worked. Why on God's green we defend a failed tax that doesn't raise money I will never understand.

They are not my words; they are the words of former Labor Senator Mark Bishop.

Regrettably, Mark Bishop was firmly in the minority inside the Australian Labor Party and, to their detriment, is no longer in this place. Instead, we have the sort of half-hearted, conflicted and confused views offered by people like the member for Perth, the shadow parliamentary secretary for Western Australia. Poor Ms. MacTiernan does not seem to quite know what her position is on the mining tax. On 19 March this year at the doors of this parliamentary building, she said the following:

I think it would be fair to say that the mining tax hasn't done the job that it was designed to do.

And so say all of us, at least on this side of the chamber! Yet, just four days later, on 23 March—and presumably after the Leader of the Opposition or other colleagues had put the hard word on her—Ms MacTiernan, the federal Labor member for Perth, was back in the mining tax supporters club, saying, when she appeared on ABC News 24:

Certainly I support the mining tax. I think the idea of a profits-based tax is an extremely good one and I think we've got to get this very clear. This was the position that the industry actually wanted.

This is the person the Leader of the Opposition, Mr. Shorten, tapped as his party's chief spokesperson for Western Australia—and what does she do; how does she act? She falls right in line with the preferred position of her dominant eastern states colleagues in the ALP.

It seems to me—and, I am sure, to others—that the Australian Labor Party is resolute in its determination to ignore former Labor Senator Mark Bishop's very sound advice. Labor's continuing attempts to prevent this government's efforts to repeal the mining tax are sending a very clear message to Western Australians—most particularly, to Western Australians involved in the mining and resources sector that is so crucial to job creation and economic growth in our state. There is no such equivocation inside the coalition. We understand and respect the key role that mining plays in the Western Australian economy. We understand the need for the mining sector to have ongoing certainty. That is why we, on this side of the chamber—we coalition senators—are determined to provide that certainty by repealing this failed mining tax.