Thursday, 13 May 2010
Questions without Notice
My question is to the Minister representing the Minister for Resources and Energy, Senator Carr. Is the government aware of comments made by the chief executive of Incitec Pivot on Mr Rudd’s great big new tax on mining that it was:
… a mistake to place the prosperity of Australia at risk by introducing a double tax regime that significantly increases the cost base of our mining industry …
Is the government also aware that Incitec Pivot has now reportedly halted exploration drilling in response to the government’s decision to introduce its great big new tax on mining?
I am not aware of the particulars that the senator has raised, but what I can say is that there have been a number of claims made about this important measure and that a number of threats have been made which, in my submission, are not well founded. They are based on a number of assumptions which are incorrect. I draw to your attention, Senator, that projects such as Gorgon in Western Australia have proceeded in the context of what has been a resources rental tax which has now been operating for many years. There are many factors at play in the decisions regarding mining. There are issues that go to questions of technical risk, there are issues that go to exchange rates and there is, of course, the fundamental issue as to whether or not there is a customer for the product that is being mined. We have seen that infrastructure bottlenecks have for years been limiting our capacity to respond to increasing demand, and that is why we are going to devote $5.6 billion from this new proposal towards permanent infrastructure funding that recognises the infrastructure needs of resources regions. We will be supporting resource explorations through a $1.1 billion resource exploration rebate. (Time expired)
Mr President, I ask a supplementary question. Has the government considered the impact of its great big new tax on mining on Australia’s farmers, including the price and availability of fertiliser products? If not, why not?
What we have considered is the detailed modelling that has been produced for the government by KPMG which highlights that, rather than being a negative for the Australian economy, this measure will be a major positive for the Australian economy. This is a measure that will enhance the international competitiveness of Australia, and we take the very strong view—as does the Australian Treasury—that this is a tax reform that will see a growth not just in the mining sector but because of the measures that this—
Mr President, I rise on a point of order. The question was directed specifically to the consideration of the impact on the agricultural sector. The modelling to which the minister has referred, the KPMG Econtech report, makes no reference to the agricultural sector whatsoever. The answer is not responsive to the supplementary question in any respect.
Mr President, on the point of order, the minister has been relevant to the question and the minister has been answering the question. It is a pity the opposition did not listen to the answer that was being provided in this respect, if they want to engage in that. There is no point of order. In respect of the KPMG modelling, the minister does not have to mention a specific word, as seems to be the demand of the opposition. The minister can provide an answer which encompasses the issues raised within the question, and that is what the minister is doing. If the opposition are going to listen for specific words to demonstrate that it is either in relevance or out of relevance then I would submit that is the wrong approach.
If you request it, Mr President, I withdraw it. What we know, of course, is that phosphates are used by most agricultural industries because Australian soil— (Time expired)
Mr President, I ask a further supplementary question. I think I have just heard a load of fertiliser of the bovine variety in Senator Carr’s answer.
I apologise for diverging, Mr President. Will the government guarantee that its great big new tax on mining will not increase the price of vital inputs, including fertilisers, for Australia’s hardworking and struggling farmers?
The phosphate industry, of course, plays a vital role in Australian agricultural industries, and most Australian property enterprises actually use ammonium phosphates, whereas pastoral enterprises use superphosphates. The sugar and horticultural industries use a combination of both.
Domestic production for these phosphates has actually accounted for some 49 per cent of the phosphate consumption in this country. What we see is that ABARE farm surveys show that as a percentage of total farm costs fertilisers make up about 15 per cent of the cash cost for grain producers, 12 per cent of the cash cost for mixed cropping and livestock producers and seven per cent for dairy farmers.
What I have indicated is that the opposition is opposed to these measures, despite the fact that they provide enormous benefit to the Australian— (Time expired)
My question is to the Assistant Treasurer, Senator Sherry. In light of the Rudd government’s disciplined budget, including a substantial fiscal consolidation, can the Assistant Treasurer detail the challenges faced by the government—
Can the Assistant Treasurer detail the challenges faced by the government in delivering this responsible document? Why is it important that future budgets be framed within the government’s strict fiscal discipline rules?
Thank you, Senator Farrell, for that very important question. The government has delivered a highly responsible budget. It delivers the right outcomes for the current economic times. The government has stuck by very, very strict fiscal rules to get the budget back in the black as soon as possible after the global financial and economic crisis—and it has worked. We are back in surplus three years ahead of schedule, three years ahead of any other advanced economy in the world.
Let us look at net debt. Net debt will be halved. It is projected to peak at just 6.1 per cent of gross domestic product. Compare that to other advanced economies, where net debt is projected to peak at 93 per cent on average. Net debt in the rest of the advanced world is projected to peak at 15 times, on average, Australian net debt. The budget delivers the fastest fiscal consolidation since the 1960s. We have lower unemployment, higher economic growth and the lowest debt of any major advanced economy. In fact, many major advanced economies have no date at all as to when they will emerge from deficit. We brought this about by discipline. We have not allowed tax as a proportion of the total economy to go above the level we inherited from the previous government. Tax as a percentage of GDP is lower than that which we inherited from the former government. We have not allowed spending growth to go beyond a two per cent real increase until such time as the budget returns to surplus. We are not spending any of the revenue increase as a result of our stronger economy, which avoided a recession—unlike most of the other advanced economies—but we are allowing it to help drive the budget back into surplus early, and we have offset new spending by saving. We have delivered on the forward estimates aggregate savings— (Time expired)
Mr President, I ask a supplementary question. Is the Assistant Treasurer aware of any alternative fiscal policies to manage the budget during these challenging times? Are those alternatives realistic? How do they compare with the government’s fiscally disciplined and economically responsible approach?
Mr Hockey, the shadow Treasurer, said a week and a half ago that this budget should come back into surplus three or four years early. We have delivered. What we have had from those opposite are lots of claims that they will oppose various revenue measures. You have set the bar; you have got to deliver. You have got to deliver a faster surplus, having decided to oppose some of our revenue measures and having decided to oppose some of our expenditure cuts. That is your challenge: how you are going to deliver a faster surplus having laid claim to the idea that you can actually produce a better surplus when you oppose revenue measures and expenditure cuts. There are lots of glib ideas from those opposite. Let us start seeing detailed policy which delivers a lower budget deficit. (Time expired)
As I have said, this is a very responsible budget, aptly presented, I think, as a no-frills budget. It brings the budget back into surplus three years earlier. The challenge for Mr Hockey tonight and for those opposite is: you have to take up the challenge of producing an earlier budget surplus—as you claim you will do—and, at the same time, indicate those revenue measures that you do not want to support and those expenditure cuts that you do not want to support. What we have seen for the last 2½ years, particularly under the current Leader of the Opposition, Mr Abbott, is that you oppose revenue measures and oppose expenditure cuts and expect us to believe you can deliver a lower budget surplus. That will be the challenge tonight. With all those measures you have said you will oppose, how are you going to produce a lower budget deficit? (Time expired)
My question is to the Minister representing the Minister for Resources and Energy, Senator Carr. Does Labor’s great big new tax on the resources sector apply to quarries? What effect will the great big new tax have on the cost of products derived from quarries, including cement, gravel, sand, bricks and similar building products?
I thank the senator for his question. What this tax does is provide for much more efficient administration of our resources sector, because it allows us to provide assistance to the sector for exploration. It provides for a new set of arrangements. There is a royalties rebate, which the states and territories have been pursuing. The tax also provides for a quite significant expansion of infrastructure projects within the resources sector. What our modelling has shown is that the tax actually leads to significant improvement.
Mr President, I rise on a point of order on relevance. I asked the minister: does this great big new tax apply to quarries? I did not ask for some other ramble. Does this new tax apply to quarries? Could you please ask him to be relevant to the question.
Thank you, Mr President. The resources super profits tax will apply to all mining and petroleum projects, with the exception of existing PRRT projects, for which opt-in arrangements will be developed in consultation with industry.
As I was saying, this is a measure which applies to all mining and petroleum projects, with the exception of those which have existing resource rent tax provisions, for which there is an opt-in arrangement. A consultation process will of course be developed for those particular projects.
Mr President, I rise on a point of order. As you know, the minister is required to be directly relevant to the question, ‘Does the tax apply to quarries?’ He has gone nowhere near being responsive to the question. He plainly does not know the answer. You should direct him to the question and insist that, if he does not know the answer, he tell the Senate that he does not know the answer. If he does know the answer, he should give it.
Senator Brandis is desperately trying to prove his relevance in this week of sittings. This is the third time I have said that the super profits tax arrangements will apply to all mining and petroleum projects, with the exception of existing resource rent projects, to which the opt-in arrangements apply. (Time expired)
Mr President, I ask a supplementary question. Considering the tax does go on quarries, has the government conducted any modelling of the impact its great big new tax will have on building costs and, in particular, on the costs of housing construction?
I have indicated already on numerous occasions in this chamber—and I am only too happy to help Senator Williams yet again—that the government commissioned KPMG Econtech on 19 March to undertake independent modelling of the tax reform. As stated on previous occasions, KPMG’s modelling has indicated that the replacement of royalties with the super profits tax would increase resource investment by 4½ per cent, employment by seven per cent and output by 5½ per cent.
My point of order goes to relevance, Mr President. The question was whether there was modelling of housing costs. The minister has identified a report, the KPMG Econtech report, which says not a word about housing costs. The minister, if he is to be relevant to the question, should either tell us there has been modelling in relation to housing costs or tell us there has not been. He is not at liberty to refer his answer to a report that goes nowhere near the question.
I am surprised that the poor man’s Perry Mason thinks he can tell me what I am at liberty to say and what I am not. I have been asked a question about the modelling. The government has undertaken the modelling. It has published the modelling and if the senators opposite do not bother to read the statements that have been published perhaps I can refer them to the KPMG website itself. I suggest that might be very helpful. (Time expired)
I can indicate—and I hope Senator Williams takes note of this matter—that the modelling says that the replacement of royalties with a superprofits tax will increase the level of investment. It will increase the level of employment. It will increase the level of output. It will increase the GDP of this country by 0.75 per cent and real after-tax wages by 1.1 per cent. The modelling says that this tax means that Australia will be more competitive and will be able to produce a higher quality and a more efficient industry. This is a measure that enhances the economic opportunities for working people right across this country. It is about sharing the benefits of the resources boom so that all Australians get the benefit of what are their assets. These are the people’s assets. (Time expired)
My question is to the Minister for Defence representing the Minister for Veterans’ Affairs. While the amount of compensation allocated in the budget is clearly insufficient, the Greens join others in welcoming the long overdue recognition of severe health impacts on Australian Defence personnel who were exposed to ionising radiation from nuclear tests. Beyond the compensation measures announced in the budget, veterans are also calling for full comprehensive health care in particular at a gold card standard. Is the government considering this and is the government aware of those calls? Will you consider payment of compensation as a lump sum, as is occurring overseas in other countries’ compensation for nuclear veterans? In particular, with the evidence of genetic effects of nuclear tests on children and grandchildren—the families and children of nuclear veterans—what will the government do for the second and third generations affected by their parents’ or grandparents’ exposure to this radiation?
I thank Senator Ludlam for his question. I will try and deal with those areas of the question that I have some knowledge of. First, as Senator Ludlam mentioned, in this week’s budget there is a measure of some $24 million for veterans who suffered as a result of the British nuclear tests that occurred between 1952 and 1963 at Maralinga, Emu Field and the Montebello Islands. It is important to say that this represents the delivery of the commitment that the government made prior to the 2007 election to review the recommendations of the Clarke report which were made in 2003.
That recommendation of the Clarke report proposed that the ADF involvement in those tests should be declared non-warlike hazardous and, hence, veterans be compensated accordingly. As you point out, there has been a longstanding view that those recommendations should be acted upon. It was a public review and the outcome of the processes for the British nuclear test veterans was a decision to implement the Clarke recommendations. The government acted on and accepted the recommendations.
You made the point about lump sum compensation. It is true that some veterans are now arguing for a different form of compensation. My understanding, as a former Minister for Veterans’ Affairs, is that there is an issue in relation to the incapacity of lump sum compensation under the Veterans’ Entitlement Act, but I will check that for you. As you might be aware, the previous government undertook studies that provided white cards for healthcare support only for the treatment of cancer. There was no compensation and no wider health support beyond cancer. (Time expired)
Thank you, Minister, for that. I recognise I asked the question in a number of parts. I wonder whether I can ask you to take on notice the specific matters that I raised about the gold card standard health care, lump sum compensation for veterans and, in particular, the important issue of compensating second- and third-generation victims because ionising radiation—whether from weapons tests, uranium mining or waste dumping—can affect the children of people exposed to the initial radiation. On that issue, I particularly seek your advice on notice. Mr President, I have a supplementary question. What is the government doing and what does the government plan to do to address the current situation regarding the health effects— (Time expired)
This is an important issue. In the spirit of trying to provide some information, where I am able to advise Senator Ludlam I will respond to the issues he has raised in his supplementary question. My recollection as a former Minister for Veterans’ Affairs is, as I said, that the Veterans’ Entitlement Act does not provide for or have the capacity for any lump sum compensation. This of course was an issue when I was veterans’ affairs minister back a very long time ago in 1993. I am more than happy to put to the minister those other substantive questions in relation to the children of veterans. I have to be frank with you and say that I am not aware of any budget measure that goes to that issue. I am aware that the government has implemented the Clarke report recommendation. (Time expired)
Mr President, I ask a further supplementary question. I believe the minister is correct, that there is no budget measure in this year’s budget for the children of veterans. My supplementary question relates to the situation regarding the health effects still being endured by Aboriginal people who were also exposed to the British atomic weapons tests in Australia and who of course have received no compensation whatsoever. Has the Australian government made representations to the UK government regarding the current case before the United Kingdom High Court where the Ministry of Defence is appealing the case of the Aboriginal victims of weapons tests and the veterans affected by the British nuclear testing? Has the government made representations in this matter? (Time expired)
I will need to check with the minister about representations. I can say frankly that I am not aware of any. I am aware from, again, some 17 years ago, that £20 million was paid by the government of the United Kingdom for the clean-up of Maralinga. Some senators would be aware of that. I know veterans have said that this was for individual compensation—perhaps there was a debate about site clean-up. Beyond that, I do not have any information as to whether that specific issue that you raise has been progressed. I am very doubtful that it has. I am only saying that because I am not aware of it. What I will do in this circumstance is raise that specific issue with the Minister for Veterans’ Affairs. Also, if there is anything that he can add on the other elements, I am more than happy to provide that to you as soon as I am able.