John Williams (NSW, National Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Minister for Resources and Energy, Senator Wong. I refer to the detailed analysis of the Henry tax review, table C1-1, headed ‘Resources that may merit exemption from the resource rent tax’. It lists more than 33 resources that may merit exemption. Why will these resources—including lime, phosphates, sand and gravel—still be subject to this massive new tax grab?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

As I made clear in a previous answer, obviously the Henry tax review falls within the Treasurer’s portfolio, so if you have questions on the detail of that, Senator, I would suggest you put them to Senator Sherry, who represents the Treasurer. I can assist in relation to a number of the issues raised, however. For example, I would make the point that the move to a profits based regime will obviously, in general, be of greater assistance than a volumes based regime for more marginal operations. I make that as a general proposition.

The second point I would make is that a number of the commodities that you have discussed—not all, but some—are traded on world markets and obviously have their price set by world markets. For example, you mentioned phosphate. ABARE has advised that the price of phosphate is determined on world markets and by movements in the Australian exchange rates. I also make the point that, as I responded in response to an earlier question, the government’s modelling has indicated that the introduction of this reform, the replacement of royalties and the reduction in the company tax rate for all companies has, in fact, been independently modelled to bring down consumer prices by 1.1 per cent as well as to ensure that there is an increase in output as I have previously described. It may suit those opposite to run scare campaigns around a whole range of issues here; the fact is that this is about economic reform. It is about building a stronger economy and recognising that the benefits of the resources sector should be more fairly shared amongst all in Australia and should be utilised to make investments in other parts of our economy such as regional infrastructure, superannuation and reduction in the company tax rate. (Time expired)

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Given that the small quarries will face an effective tax rate of 57 per cent despite the Henry review advice, what modelling has the government done in relation to the effect of the obvious price increases in these infrastructure and fertiliser products?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

Again, I do not know where you are quoting your figure from. I again remind you that this is a profits based regime which obviously only applies after a certain threshold which incorporates a rate of return. In relation to some of the fertiliser and fertiliser ingredients that you reference, I have indicated to you that a number of these commodities are in fact traded commodities and would have their prices set on world markets. The low-value commodities that are used as agricultural inputs are usually lower profit—

Honourable Senators:

Honourable senators interjecting—

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Mr President, a point of order: the question was limited to whether or not modelling had been done with relation to the effect on these commodities. Nothing that the minister has said has gone anywhere near the question of whether or not modelling was done. You should bring her directly to the question.

John Hogg (President) Share this | Link to this | Hansard source

I am listening to the answer that the minister is giving. It is a little bit difficult with the interjections that are taking place across the chamber. If they were not happening, it would be much easier to hear the comments that are being made.

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

The modelling is the Econtech modelling which I have previously referred to. I was attempting to be of some assistance to the senator and to give him a specific answer in relation to the agricultural inputs he raised. The advice I have is that these are usually lower profit and, therefore, unlikely to face a higher tax burden under the RSPT, particularly given the replacement of royalties with an RSPT. I also indicate that the government is clearly consulting on this implementation. (Time expired)

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Will the government pay financial compensation to state and local governments that will face obvious increased costs in road construction and community infrastructure because of this big new tax on all quarries that supply these resources?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

What the government is doing, as the Prime Minister has announced, is implementing a $6 billion regional infrastructure fund. This demonstrates why tax reform is so critical to Australia. A fund means that we can begin to tackle our urgent infrastructure needs now and put something back into the mining communities that make our economy strong. The reality is that this is a tax that is about investment in infrastructure, investment in superannuation, investment in a reduction in the company tax rate for the other sectors of the economy, a fairer share and a stronger economy.