Tuesday, 18 March 2014
Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading
I am pleased to rise tonight to speak on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. Those opposite claimed they would be a no-surprise government, but what a joke, because Australian families are waking up to this government and its surprises. They are waking up to a new surprise every day. They are waking up to this government trying to abolish the schoolkids bonus in this bill, costing the average family $15,000 over the period of their children's schooling. They are waking up to the attacks by stealth, such as abolishing the low-income super contribution but keeping generous tax concessions for high-income earners. They are waking up to the fact that they will be thousands and thousands of dollars worse off as they cut the superannuation guarantee increase. Small-business owners are waking up to the fact that they will be thousands of dollars worse off as the instant asset write-off is slashed from $5,000 to $1,000. And regional communities are waking up to the fact that they will lose hundreds of millions of dollars in funding through the abolition of the Regional Infrastructure Fund and the Regional Development Australia Fund.
The Prime Minister and those who sit on the opposite side of this chamber did not explain to the Australian people that when they said 'axe the tax' they actually meant 'cut your retirement savings, hurt small business, make it harder to pay for your children's education and let rural and regional communities fall into disrepair', but that is what they actually meant. I know that is not as catchy—it is not a three-word sound bite—but it is a lot more honest. As they like the three-word sound bites, the Liberal-National government could have found some to honestly campaign on to convey their intentions to the Australian people. 'Cut the super' could be one. They could have used 'business tax increase', 'no new uniforms' or 'help rich miners'. 'Let regions rot' would have been another accurate three-word catchphrase of the government.
I am wondering why the government did not campaign on any of those. They knew that, if they actually took the time to explain that their policies deliberately targeted the Australians who are the least well off, no-one would have voted them in. Those opposite will say that they mentioned them in passing, but they certainly did not appear in the TV ads or in the flyers that appeared in people's letterboxes. No Liberal door-knocker knocked on a family's door to tell them that the schoolkids bonus would be axed and that they would not even reinstate the education tax refund which it replaced. No radio ad was targeted to the 2.7 million small businesses to tell them that the instant asset write-off would be reduced by 80 per cent, and no fridge magnets were handed out saying that the income support bonus for people over 50 on Newstart would be cut.
Perhaps the three-word slogan they should have campaigned on was 'lack of vision', because it takes an extraordinary lack of vision to not see that helping those on the lowest incomes build up their retirement savings helps the whole of Australian society. It takes an extraordinary lack of vision to not see that ensuring that parents can afford the required books, stationery, computer equipment and uniforms results in better educational outcomes for the child and higher productivity for society in general. It takes an extraordinary lack of vision to not see that regional Australia is in need of infrastructure to drive growth in the economies of rural communities and improve the quality of life of people in those communities.
The explanatory memorandum to this bill gives the financial impact of discontinuing the Regional Infrastructure Fund and the Regional Development Australia Fund. It also explains that no legislative changes are required to discontinue the Regional Infrastructure Fund and the Regional Development Australia Fund. We have already seen the axing of the Regional Development Australia Fund. The purpose of the Regional Development Australia Fund, RDAF, is to support regional areas of Australia with infrastructure needs.
I am disappointed that the Nationals are once again supporting cuts to regional Australia. You would think they would have fought harder for the communities they claim to represent. I know that they got a win over GrainCorp last year, but are they going to fight any other battles for regional Australia? It is absolutely ironic that it was the Nationals' leader and Deputy Prime Minister Warren Truss who revealed that the government will not fund projects in round 5 of regional development. These projects were worth about $3 million to my home state of Tasmania. Even when the minister responsible for regional Australia is the Leader of the Nationals they still cut investment in infrastructure in regional Australia.
Some of the projects that have been axed by the Liberals and the Nationals in Tasmania include: $112,500 for a new interactive playground on the foreshore at St Helens; $150,000 for three separate new playgrounds in the Central Coast municipality; $109,200 for a sports training venue at Geilston Bay; $89,000 for a new water slide at the Devonport Aquatic Centre; $61,500 for a new boat-launching facility at Triabunna; $96,200 for a lawn bowls development at Glenorchy; and $135,000 for a walking track between Ranelagh and Huonville. These are all projects that would have improved the quality of life for people in these and surrounding communities, created jobs and improved fitness and general welfare. These are projects supported by the local governments in these regions. So it is disappointing that those opposite are just continuing to hack away, axing projects without thought.
The former Labor government's $6 billion Regional Infrastructure Fund, RIF, was to invest in nation-building projects to build productive economic capacity so that we can sustainably grow our economy with low inflation in the years to come. The RIF would have meant more investment in rail, roads, ports and other critical economic infrastructure to support the workforce and jobs in regional and mining communities. It is disgraceful that the Nationals sit over there and will not stand up for regional communities.
I am utterly surprised that the legislation to cut the schoolkids bonus is in this bill today. What a sneaky, underhanded trick. Generally, when you put together a bill it contains only things that are relevant to the issues to hand. You do not just shove random provisions into the bill. The schoolkids bonus is not, and should not be seen to be, relevant to this bill. It was enacted in the Family Assistance and Other Legislation Amendment (Schoolkids Bonus Budget Measures) Bill 2012, not in the Mineral Resource Rent Tax Bill. It was never to be funded by the MRRT and linking it this way is a shameless way to axe it. If you want to scrap the schoolkids bonus, why not present it to this place as the Schoolkids Bonus Repeal Bill 2013? That at least would be open and honest rather than hiding it in the MRRT repeal bill.
The schoolkids bonus delivers parents some extra help to meet the large costs associated with sending their children to school. It comes automatically to eligible parents just when they need it to buy uniforms, school books, laptops or tablets, stationery and other things that children need. Those opposite are including it in this bill, simply to make the financial impact of this bill look artificially better than what it actually is. It is why discontinuing the RDAF and Regional Infrastructure funding is included too. It is pretty disingenuous.
When the schoolkids bonus was introduced, those opposite opposed it because they claimed it was not specifically targeted to education. They called it a 'cash splash' and they did not trust Australian families to spend it on the educational needs of their children. They said the education tax refund was a better way despite the fact millions of families were not getting their full entitlement, mainly because receipts got misplaced throughout the year. Now the Liberal-National government are scrapping the schoolkids bonus and not even reintroducing the education tax refund. Those opposite not only supported the education tax refund, but promised to increase it if elected at the 2010 election. But now they are scrapping the measure that replaced it and, as I said, not replacing it with anything. They scream blue murder over placing a cap of $2,000 per person on work-related self-education expenses for highly paid professionals, but do not provide anything—not a cent—of education tax concessions for primary schoolchildren. They do not really care about supporting Australian families. They do not care about supporting the education of Australian children, as their recent double backflip on education showed.
It is utterly amazing that in debating this bill today they are giving billions of dollars of tax breaks for mining companies, while at the same time they are getting rid of tax breaks on super for those earning under $37,000 and getting rid of all support to meet children's education costs. Where are your standards—giving billions of dollars of tax breaks for mining companies, while at the same time getting rid of tax breaks for small businesses? This tells you something, I think, about the priorities of this government: help those that bankroll the Liberal-National party and to hell with the rest; help your mates in the mining sector, and your former mates like Mr Palmer down in the House, and tread on everyone else!
We on this side of the chamber believe that a profits-based tax on profits from the minerals sector—minerals which belong to the Australian people—is a good reform. It is about ensuring Australians get a fair return for their resources. The minerals resource rent tax applies only when miners are making extraordinary, incredible profits during those times in the cycle—and, yes, they do come and go—when prices are booming. According to your own financial impact statement in the bill's explanatory memorandum—your numbers, not ours—this bill will give big miners a $3.3 billion tax cut over the forward estimates.
A $3.3 billion cut over the forward estimates. And you want to scrap it and you want to make people on $37,000 or less pay more tax on their super? I do not understand that logic. To add insult to injury, while cutting the low-income super contribution to millions of Australians, including 2.1 million Australian women, the Liberals and Nationals are boosting the super for 16,000 people who have over $2 million in super balances. I think that says a lot.
A significant percentage of the women affected by the abolition of the low-income super contribution, the LISC, are mothers working part-time while looking after young children. This is exactly the time in a woman's career when an additional $500 a year going into superannuation would be of most benefit for building savings for her retirement. Industry Super Australia estimates that, when combined with the proposed delay in increasing the super guarantee to 12 per cent, the removal of the LISC will reduce national savings by $53 billion by 2021-22. As everyone listening would know, some of the major investors in Australian infrastructure are superannuation funds. This thoughtless attack on low-income earners is not only hurting the lowest paid Australian workers but also thoughtlessly sabotaging Australia's capacity to build infrastructure into the future. The lack of vision of those opposite is startling.
The other major concern with this bill's removal of the LISC is that it is an example of a retrospective tax measure—a fact confirmed by the Parliamentary Budget Office's checking of the coalition's election costings. Low-income earners entered the 2013-14 financial year on the understanding that they would be refunded their superannuation tax. Now we are part way through the financial year and the government wants to slug low-income earners while giving generous tax breaks to those on high incomes. There is something wrong in a system where working Australians on average wages are providing excessive support to people with millions in their superannuation account. It is utterly ridiculous and unjust. Those on the other side bemoan income being transferred in our society. In this case it is being transferred from those on low incomes to those on high incomes and, quite frankly, it stinks. Talk about wrong priorities.
The bill would also abolish the income support bonus, a tax-free payment which came into effect earlier this year to help people prepare for unexpected living costs such as medical expenses or car repairs. If the proposed abolition is successful, around 1.1 million low-income Australians, primarily people receiving Newstart or youth allowance, will lose the payment. The income support bonus is an income-tax-exempt, indexed, non-means-tested payment made twice every year to eligible social security recipients. It was introduced in early 2013 'in recognition of the fact that the current rates of income support allowance payments are manifestly inadequate'. The bonus provides $210 a year to single recipients and $350 a year to most couples where both partners are eligible. The bonus is paid in instalments in March and September each year and is vital for people receiving income support to make ends meet. ACOSS were concerned at the axing of this payment and noted in their submission to the Senate economics committee inquiry:
… 57% of Parenting Payment recipients and 28% of Newstart Allowance recipients could not afford to pay utility bills on time compared with 12% of all Australians. Over 40% of both groups could not afford dental treatment when needed.
That is what this government is about: attacking those that it thinks will not hit back.
This bill also attacks small businesses and reduces their ability to survive. This bill will increase taxes on up to 2.7 million small businesses and close the loss carry-back scheme, taking away tax breaks for up to 110,000 businesses. The coalition's plan to remove these small business investment incentives has united big and small business in opposition, with both the Australian Industry Group and the Council of Small Business of Australia speaking out against the removal. Even the coalition's friends in the Australian Industry Group do not support the provision that would reduce the small business asset write-off threshold. In evidence given to the Senate economics committee's inquiry into this bill, Dr Burn, from the Ai Group, stated that the existing arrangement provides a very important boost to a company's cash flow 'at a time when they need it most and at a time when it is going to be most critical in ensuring the survival of that business'. He also informed the committee that the Australian economy faced a 'large gap in investment, particularly outside the mining sector'. He stated that the proposal to remove the instant write-off facility for small business would have a material effect on them and 'decrease investment at the time it is needed most'. In his view, waiting for the tax review in these cases is 'poor timing' and the 'timing needed is right now'. You do not have to cut off your nose to spite your face.
This bill also has extremely negative effects on geothermal energy exploration. Under current arrangements, geothermal energy exploration and prospecting expenditure is deductible in the income year that the asset is first used or expenditure is incurred. Under the new legislation, this expenditure would not be immediately deductible. The Australia Institute observed that this measure 'seems to contradict the intention behind Direct Action'. It argued in evidence to the inquiry:
If this measure is repealed geothermal exploration will not have the same incentives as any ordinary explorer looking for fossil fuels will get. If anything the playing field should be tilted in favour of geothermal energy exploration.
The Australia Institute suggested that this decision should not go ahead or, if it does, that the measure should be replaced with measures to boost the attraction of investment in geothermal. It is utter madness to discontinue this measure without the government advancing viable alternatives to encourage geothermal energy exploration.
I would just like to remind those opposite that they do not have to try and destroy everything the previous government has done. Government does not involve just indiscriminately attacking all the changes that have come before. Those opposite got elected on three-word slogans. Now they have to realise that governing is about more than three-word slogans, glib sound bites and relentless negativity. Now they have to explain to the Australian people why a bill on repeal of the mineral resource rent tax means people are going to lose their schoolkids bonus. Now they have to explain to 2.7 million small businesses why they are getting a tax hike. The senators opposite need to explain to 2.1 million working women why there is going to be a tax hike on their superannuation. Those opposite need to explain to the people who receive the income support bonus why the Liberal-National government are taking it away, just when these people need their car fixed or their fridge replaced. These people cannot just be brushed aside, and I doubt that three-word slogans are going to cut it. The Australian people are hearing nothing but three-word slogans from this Liberal-National government, and they are hearing one in particular. It is a slogan which is evident in every act of this government, and it is this: Abbott doesn't care.
I rise to speak on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 and to oppose this bill. This is a bill designed to repeal the mining resource rent tax, or the mining tax as I will refer to it today. The mining tax should not be abolished. Instead, it should be retained and, indeed, it should be strengthened. The Australian Greens supported the Henry tax review, which recommended imposing a tax on mining. We welcomed the tax in its original inception and reluctantly supported it in the form in which it was ultimately legislated, knowing as we did then that it was a shadow of the tax it should have been.
Experts consider a mining tax to be vital for properly distributing the national gains associated with mining in Australia. At the time it was enacted, the Treasurer forecast it would raise $4 billion a year, although in its current form the mining tax is now forecast to raise $500 million this year. In fact, it has only raised $232 million so far this financial year. Despite this, the profits of the three big iron ore companies it applies to—BHP, Rio Tinto and Xstrata—rose by 81 per cent this financial year. Their combined half-year profits are $14.6 billion.
As Ross Gittins, economics writer, said in Monday's Sydney Morning Herald, 'For an industry to truly benefit Australia's economy, its income must be spent in Australia.' Currently our mining industry is about 80 per cent foreign owned, which means that almost all of the profits go to overseas shareholders. As Ross Gittins said, 'For our economy and our workers to benefit from companies extracting minerals, our government has to ensure it gets a reasonable share of the economic rents that these companies pay.' In its current form, the legislation fails this test, and it also fails to tax profits on gold, silver, diamonds, uranium, rare earths, nickel, copper, zinc and bauxite. Instead of repealing the mining tax, the government should broaden it to include all minerals.
So here we have a repeal bill which advantages a small number of big companies. They will be the winners: BHP Billiton, Rio Tinto and Xstrata, among others. On the other hand, it will hurt millions of households, up to 10 million workers and hundreds of thousands of small businesses because the government will, by repealing the tax, willingly forego revenue and it will have to take measures like cutting services to make up the shortfall. The losers from this package are workers with compulsory superannuation contributions, millions of households with children and many small businesses. Instead of cutting taxes on a small number of mainly foreign owned corporations, the government—our government, in relation to our minerals—should be enhancing those taxes to raise revenue.
The passage of the Minerals Resource Rent Tax Bill 2011 inspired a campaign of confected hysteria about sovereign risk and impoverished mining companies decamping to some other mining nirvana. Who can ever forget the images of Gina Rinehart and other exceedingly wealthy mining executives proclaiming the end of the world as we know it with the passage of the legislation? But back here on earth, the act was actually an overly modest means of distributing the vast wealth associated with our precious and our very finite mineral resources in a fairer way.
The Australian Greens supported the legislation—the MRRT—as a first step towards a fairer, more efficient tax system. An optimal tax system would ensure that Australians can have a fair share of the rich mineral wealth that we own in common. The mining tax in its current form has some serious deficiencies and, as I said, ended up being a pale shadow of its former manifestation—the resource super profits tax, which was originally conceived in response to the Henry review. The MRRT contains an effective tax rate of 22½ per cent rather than the 40 per cent that was originally proposed. And, as I said, there is the failure to tax profits on minerals such as gold, silver, diamonds, uranium, rare earths, nickel, copper, zinc, bauxite and coal. This was a major omission. The fact is our mineral resources are finite and non-renewable. They can only be dug up once. So any wealth that we derive from this one-chance mining must be invested in Australia's future. Once gone, they are gone forever. We need to invest in those longstanding public goods—education, health—and in industries that will transition us into a future that does not rely on dig it up, cut it down and ship it away.
To this end, the Australian Greens remained resolute in our position that the mining tax should be strengthened rather than abolished. And we are not alone in this. A poll in January this year showed that 54 per cent of Australians believe that multinational mining companies do not pay enough tax. The revenue from a strengthened mining tax should be invested in things like genuine needs-based education reform so that every child in Australia can be guaranteed of having a quality education no matter where they live and no matter what their background. We should be investing in having a fairer legal system. We should be investing in having a transformed framework for mental health services—there is a crying need for better mental health services throughout Australia. We should be investing in fair and caring entitlements for the veterans who go off and serve in our name overseas, who then come back to experience often significant health and mental health difficulties. These are all key priorities in my portfolio areas of education, legal affairs, mental health and veterans' affairs. The things we could do with that money!
Let us turn first to education. There is no question that education is opportunity. For some kids it will actually be the best opportunity they will ever have to be able to move beyond the difficult circumstances in which they may live and into which they may have been born. So ensuring that our education system is fair and is available to every child no matter what their background is the single best way to fix disadvantage in Australia. With a good education they can then move into employment, and we know how important jobs and employment are for people.
The Gonski Review of Funding for Schooling remains the single most relevant reform, as a pathway to ensuring this equity that will give every kid the fighting chance that they need to be able to reach their potential. We know the coalition government talked the talk on having a 'unity ticket' on Gonski funding, but events since the election have shown that they are failing to follow through on that in government. So the no-strings-attached deals with five of the eight states and territories mean that many of our school systems will not guarantee a needs based funding system—no different to what has gone before.
The Greens believe in a future where every child can have a world-class education, no matter what their social background or the degree of their family's wealth. We cannot do this without money. A society's values can actually be judged by the choices it makes. There is money for the diesel fuel rebates for wealthy miners, but, at this stage, we are told there is not enough money to guarantee that we can actually invest in education in the way that all the research indicates we need to and that the Gonski review recommended. Critically, school funding must include the extra funds for disability that the Gonski review earmarked. A needs based, sector-blind system is the only way to deliver this for all Australian students, but we need to take steps now to make our economy work for people and not the other way around.
We cannot let this government's strategic distractions in education policy dissuade us from the crucial reforms we need to make. So the political and premature review of the Australian Curriculum and Minister Pyne's rough draft on the back of an envelope of an independent public schools system are nothing more than distractions and red herrings. They will do nothing to improve outcomes for our kids.
Australian public schools in particular have been underfunded for too long, creating one of the most inequitable school systems among our peers, right here in the land of the fair go. Creating a great school for every kid will cost money. It has to cost money, because a great school for every kid involves providing the relationships within schooling that children need to be able to reach their potential. It is money that pays great teachers. It is what builds classrooms. It is what pays for special literacy and numeracy programs. It is what pays for computing equipment. We will not fall for the minister's distractions, because a school funding model that targets disadvantage will remain the most pressing issue in our schools. Better revenue from the mining tax could ensure equity in our schools system.
Let me turn to legal affairs. There is no doubt that the state of access to justice in Australia is in a crisis. The Attorney-General cites a limited funding bucket as the reason he wants community legal centres, for instance, to move away from advocacy and reform of systemic issues which affect many people, to focus only on so-called front-line services. Of course, there is an efficiency in challenging systemic issues rather than fighting matters—the myriad of injustices that these systemic issues cause—on a case-by-case basis. I believe that restricting an organisation's ability to do advocacy is always ideological. The restrictions are not just policy based, though; they also relate to resources. So while Aboriginal and Torres Strait Islander Australians are grossly overrepresented in prison populations—they are some of the most imprisoned peoples in the world—the organisations who provide their legal assistance are being defunded. And why? We are told there is not enough money.
The general legal assistance sector has been struggling to meet need for some time. This manifests as community legal centres who need to turn clients away, and legal aid commissions whose eligibility guidelines have become stricter and stricter. We also know—all the evidence shows—that, unless we properly resource justice now, we will all pay for it down the track because the costs associated with unmet legal need flow on to loss of productivity, to housing and homelessness, to mental health issues and the family support services that are needed to support families under pressure. We cannot afford to underfund legal services now, because it simply represents deferring the costs to society until later.
Let me turn now to mental health. We could invest revenue from a decent mining tax—a tax over the mining of our shared resources—in proper reform of mental health services. Decades of underinvestment in mental health have left us with an inadequate mental health system which is cracking under the pressure of increasing demand. Around 20 per cent of Australians will experience a mental health issue in any given year—one in five of us. Many of these people will not have access to suitable services. I know that this is particularly the case in rural areas, where people with mental ill health are not able to access the help they need in a timely fashion. In some cases the services are not there. In some cases people need to travel large distances. As a result, we have far more people reaching crisis than there would be if we were to provide those services in a timely way.
During my rural mental health tour in 2012, I travelled to some of Australia's faraway places to talk to people about what mental health services and support looked like in their towns and regions. Rural Australians have unique pressures affecting their mental health and are often at serious risk of becoming socially isolated if they live in remote areas and do not get the assistance they need. Wherever I went, I heard about the desperate need for community based solutions to take the pressure off crisis driven services. As one service provider told me, 'We need a mental health safety net, not an ambulance.'
By investing in mental health we could make this safety net a reality. We could increase resourcing for community based mental health and wellbeing centres. We could strengthen civil society and therefore the resilience in those country areas by supporting neighbourhood houses. We could roll out a national social inclusion campaign to tackle the stigma surrounding mental health—one of the most significant barriers preventing people from getting the help they need. We could establish a national institute for mental health research to put Australian researchers at the cutting edge of innovative mental health treatments and to transform the research into practical assistance for people living with mental ill health right now. We could choose to support mental health nurses by increasing funding to the Mental Health Nurses Incentive Program. They play a pivotal role in improving access to primary mental health care and promoting mental health and wellbeing in the communities they serve. We could reintroduce the option of six extra exceptional circumstances sessions in the Better Access scheme, so that people can actually access the psychological assistance and continue with the treatment they need. More than 30,000 Australians were affected by the removal of these sessions and many are no longer receiving the care and assistance they need to help them live full and happy lives.
We could invest in a suicide prevention campaign and implement reforms to improve the accuracy of suicide statistics, as recommended by the Senate Community Affairs Committee in its 2010 report, The hidden toll. Why do we need this? Because, tragically, six Australians take their own life each day, leaving families, loved ones and entire communities bereft. This money that we could get from an adequate mining tax on our shared resources so that those profits are not solely going overseas would be an investment in life, in wellness, in potential, in restoring hope. These are lives that could be changed through proper reform of our mental health system. Imagine the difference this kind of investment could make.
Let me now turned to veterans' affairs. Revenue from an adequate mining tax could be used to introduce a fair and equitable system for veterans' pensions. As well as indexing veterans' pensions fairly, we could invest in their wellbeing, because we know that veterans and their families suffer from a range of physical and mental impacts as a result of their service. If we are willing to send these men and women away to serve on our behalf, the least we can do—the only fair, right and proper thing to do—is to adequately look after them when they return. We could use the mining tax revenue to fund a range of innovative programs to support the wellbeing of not only veterans but also their often long-suffering families, who are incredibly supportive in difficult circumstances.
A classic and topical example is payments under the Veterans' Children Education Scheme and the Military Rehabilitation and Compensation Act Education and Training Scheme. These payments, for children of defence personnel following the death or incapacity of a parent who has served overseas, amount to about $211 a year. There are about 1,200 children around Australia who are eligible for these payments. The government announced on Monday, 17 March that these payments, costing $260,000 annually, will end as soon as it repeals—yes—the mining tax. The government states that the money is not there—or it will not be anymore once the tax is repealed.
We could use the money to fight stigma associated with mental illness and mental ill health in the services, which is particularly prevalent in the military community, and to enable veterans to get the support they need and deserve. We could be investing in research into the unique needs of female veterans to ensure that we adequately care for this growing group of people.
Revenue from a strong mining tax could be used to appropriately recognise all those who have served our nation—groups such as the British Commonwealth Occupation Force, the Women's Land Army, and the nurses who served in Vietnam as part of the Southeast Asia Treaty Organisation. These are all people who served in difficult circumstances on our behalf but who are at this stage not eligible for the assistance that they need.
We could see our injured service personnel appropriately looked after, addressing the current inequity whereby ADF members are financially worse off if injured during deployment, because of the vagaries of our taxation system. As I said, we could invest in adequately supporting veterans' families.
In conclusion, the Greens' position on the mining tax has never wavered. We believe it is the only way to ensure that all Australians get a stake in the resources boom that we have seen and in the minerals that we collectively own in this nation. We believe it should apply in the form it was recommended by the Henry review. We believe that instead of repealing it at the behest of big business, this tax should be strengthened. The economic benefits of Australia's resources should be distributed more fairly than just amongst a few multinational corporations. We could invest the proceeds in our future in my portfolio areas alone—in education, in legal need, in mental health services and in veterans' wellbeing—and there are many other areas of need in Australia. That way we would ensure that the resources 'rush' of the early 21st century in relation to our finite resources does not pass us by and does not leave us with nothing but environmental impacts and stranded infrastructure.
It is a particular pleasure as a Western Australian senator to rise to speak to the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 and make a contribution to this debate about repealing the former Labor government's mining tax. I am surprised that Senator Ludlam has not rushed into the chamber to ask Senator Wright to sit down, because if Western Australians are listening to the broadcast today they would have heard Senator Wright talk about 'strengthening' the mining tax. They would have heard Senator Wright talking about the mining tax being 'a shadow of itself'. Senator Ludlam is going to pay a very heavy price for that speech on 5 April. I hope it goes viral.
There is no better symbol of the Labor Party's complete inability to understand Western Australia than its continued support of this tax. It is no coincidence that Labor's federal representation in Western Australia now stands at a historic low. Labor's primary vote in Western Australia on 7 September last year was just 28.7 per cent. Senators on the other side will not be surprised by that because I regularly refer to it in this place, but there is a very good reason for that. It is because Western Australians have formed the view—correctly, in my mind—that over the last six years of the Rudd and Gillard governments they were seen as a cash cow for Canberra. Labor was more than happy to take Western Australia's money yet reluctant to spend it on any West Australian initiatives or listen to the concerns of Western Australians across a range of issues. Together with the carbon tax, Labor's mining tax will forever serve as a prime example of the former government's complete fiscal and political ineptitude.
The mining tax has long history. It runs like a river through almost all of the previous government's time in office. Along the way, it caused division and suspicion within the government, significantly contributing to the downfall of one Prime Minister and haunted another right through to the very end of her period in office. However, of greater concern to me is the damage this tax has done to Australia's mining and resources sector, which is so vital not only to the interests of my own state of Western Australia but it also underpins the ongoing strength of our national economy. The fact at the moment is that, when Western Australia is diminished, we are all diminished.
What we have now come to know is the minerals resource rent tax had its genesis in the Henry tax review, which was commissioned by the first Rudd government. That review put forward the idea that became the resource super profits tax. The original forecast was that this tax would raise just under $50 billion in the five years from July 2012. This tax was lobbed, like a grenade, into the boardrooms of Australia's mining companies. It was announced by former Prime Minister Rudd and the former Treasurer, the member for Lilley, with virtually no consultation whatsoever. Needless to say, the reaction from the mining sector and much of the wider community, particularly in Western Australia, was swift and savage.
The Rudd Labor government seemed genuinely surprised by the intensity of the opposition to its plan, which goes to show you how much Labor understands the nature of business in Australia and goes to show how much Labor understands Western Australia. The mining companies, as is their right, worked together and developed an advertising campaign to alert Australians to the broader implications of this tax and the damage it would do to our economy overall. Labor's reaction was to do what it does best: launch a political advertising campaign in opposition using taxpayers' money. It is perhaps an insight into the siege mentality under which former Prime Minister Rudd operated, but what is often forgotten in discussion surrounding the mining tax was that the former Prime Minister regarded it as a matter of the utmost importance.
We all recall his pronouncement that climate change was the 'great moral challenge of our time'. Less well remembered was his strident insistence that the introduction of his mining super profits tax constituted a 'national emergency'. I refer to a report from The Age on 29 May 2010, which reads as follows:
The Rudd government has crashed through its own accountability guidelines to rush $38 million worth of tax reform advertisements to air in an effort to counter a negative blitz by the mining sector.
… … …
In order to rush the campaign to air, the government suspended its own processes for having officials check that advertisements are free from party political content.
Special Minister of State Joe Ludwig has scope to ignore the guidelines in cases of national emergency, extreme urgency or 'other compelling reason'.
That is an insight into the mindset of the Labor Party. A group of private companies choose to spend their money to highlight the dangers of government policy, and Labor responds as though it were wartime, suspending normal processes and virtually declaring a national emergency in order to use public money to suit its own ends—this from the same Labor Party that now comes into the Senate and preaches about transparency and accountability. Of course, it was wartime, but the war was happening inside the government.
For those senators who may not yet have had the chance, I commend to you an excellent series of articles in the Fairfax press last year by Peter Hartcher, which examine the collapse of the previous Labor government in lurid detail. It is a five-part series, but part 3 is particularly instructive as it sets out events surrounding the coup that removed Mr Rudd as Prime Minister in June 2010. It is worth placing on the record the key role the mining tax played in those events. The newspaper report says:
The mining tax was the policy backdrop to the political machinations. After breaking an election promise by postponing the carbon emissions trading scheme, Rudd had launched immediately into the announcement of a super-profits tax on coal and iron-ore.
Ferguson says: We announced the tax on the Sunday. By the end of the week we had lost the debate. The industry had been told that the potential revenue would not be included in the forthcoming budget. The next week, it was not only booked in the budget, it was allocated to be spent.
The article goes on:
A furious Rudd privately blamed Swan for bungling the consultations with the companies and the states. Swan denied the accusation.
Of course, we know what happened the following month. Mr Swan banded together with former Prime Minister Julia Gillard to knife Kevin Rudd. The Gillard ascendancy also meant the super profits tax was off the agenda, replaced by the minerals resource rent tax—the tax that the coalition is now determined to abolish.
When former Prime Minister Julia Gillard came to office, she set about portraying herself as the great negotiator, presumably in contrast to the autocratic approach of her predecessor. The MRRT was portrayed as exhibit A of the new Prime Minister's marvellous, conciliatory approach. So let us take a look at what Australia got as a result of this arrangement, an arrangement that she struck with Australia's three biggest mining companies. It is worth remembering that the negotiation was very, very limited. The first point was that the revenue-take from the tax was significantly revised, from the almost $50 billion projected under Kevin Rudd to around $26.5 billion under the new iteration negotiated by Prime Minister Gillard. That was the first reduction in the revenue forecasts. It was not the last.
Labor's inability to get the basics right was demonstrated again and again, as we saw write-down after write-down in the projections of what the mining tax would raise. In February last year, the then Treasurer, the member for Lilley, who was instrumental in the negotiations that delivered the MRRT, was forced to concede that in the first six months of its operation, the mining tax had raised $126 million. That was $126 million from a tax that was designed to raise tens of billions of dollars. So former Prime Minister Gillard's much vaunted negotiating skills and the member for Lilley's economic management skills succeeded in creating a tax that raised virtually none of its projected revenue yet added significantly to business compliance costs.
There are only around 20 companies in all that have actually had to pay the mining tax yet there are around 145 other mining companies that have been required to submit all the paperwork for it. So around 145 companies were required to pay accountants, lawyers and other advisers so that they could meet the compliance requirements and submit paperwork for a tax they ultimately have not been required to pay. How many millions of dollars has this wasted? How many jobs could have been created or what new projects could have been supported had this government not erred so appallingly in the design and implementation of this mining tax?
This is a real tribute to Labor's economic skill—a tax in its design that significantly increases business costs in the mining sector, harms economic growth and jobs creation in the resources industry, destroys a Prime Minister, yet at the same time raises no revenue. It is a remarkable accomplishment! Only the Australian Labor Party could have done it and, bizarrely, they are still defending it.
Senator Gallacher interjecting—
Is that a defence, Senator Gallacher?
Removing this tax will restore confidence in our mining sector. It will allow our resources companies to get on with their business instead of having to spend time complying with paperwork requirements for a tax that does not raise revenue.
The mining sector is very, very important to the Western Australian economy and to the national economy as a whole. Almost 250,000 people were directly employed in the minerals industry in 2013, an increase of 40 per cent in the previous three years alone. Of these workers, 95 per cent are full-time employees. The average full-time salary for workers in the mining sector is close to $130,000 a year. If you extrapolate that out, that is approximately $10 billion in personal income tax that the mining companies generated through the wages of their employees. Yet the former Labor government thought it was a good idea to depress employment growth in the sector by hitting it with another new tax. It does beggar belief.
The sector contributes to the Australian society in broader ways. In 2011-12, as an example, mining companies in Australia spent $33 billion on community infrastructure and the employment of local contractors in regional areas as well as supporting Indigenous communities in regional areas. Yet, if you listen to the rhetoric of the Labor Party, it always portrays miners as greedy, selfish and unwilling to contribute to society more broadly. It is a cheap and inaccurate caricature, one that I would have hoped we had left behind long ago. Sadly, under former Prime Ministers Rudd and Gillard, faux class war was all the rage. I had thought that perhaps with the defeat of the former government and the election of its new leader Labor may have left this sort of rhetoric behind. Alas, many of the comments from Labor members and senators over the last six months have shown this hope to be forlorn.
Of course there is another aspect to this tax, one that is having implications much wider than for just the mining sector. As I outlined earlier, this tax has raised barely one-tenth of the revenue it was projected to bring in. It has brought in around $400 million in total. Yet, seemingly undeterred by reality, the former Labor government locked in $16.7 billion in expenditure, all supposed to be funded through its flawed mining tax. There were no shortage of self-serving and cynical actions undertaken by the former Labor government, but this one has to rank near the top of a long list. Who is hurt by this craven and cynical approach to public policymaking? It is those local communities, many of them smaller regional communities, who were promised the earth by the former Labor government and who now find that the money they were promised for the completion of local infrastructure projects or other activities does not exist. It never existed.
Labor ministers—and many of them remain in this parliament and on the opposition frontbench—ran around Australia before the election making a raft of promises in marginal seats, all to be funded by revenue raised by a mining tax they knew was flawed and was not bringing in anything like the revenue that had originally been forecast. That level of cynicism is still breathtaking to many of us. I can think of several instances in my own state of Western Australia where local communities in the Great Southern region were told by the then Labor government that key local projects would be funded through the Regional Development Australia Fund and the Regional Infrastructure Fund. The ministers knew there was no money in the funds; it was all supposed to be funded by a mining tax that was not raising revenue. Yet they kept making promises and misleading regional communities in an attempt to buy votes. It just goes to show how little respect the Labor Party has for regional communities around Australia, but particularly in my home state of Western Australia, that they would mislead people in this way.
Worse still, now that the coalition is in government and has to try to sort out Labor's mess, the very same Labor Party is trying to prevent it by opposing these bills and continuing to support a mining tax that everyone agrees does not work. We are hearing from the Labor Party the same tired class rhetoric about big miners and millionaires.
I think one of the more eloquent criticisms, even if it was merely an implicit one, of Labor resorting to class warfare during the Rudd and Gillard era came from within the Labor Party itself. The former Minister for Resources and Energy and now former member for Batman, Mr Martin Ferguson, was forced to resign from the ministry last year during one of Labor's regular leadership stoushes. Subsequent to that, Mr Ferguson announced on 29 May last year that he would be leaving the parliament. During his final speech in the House of Representatives on that day, he said this:
When I look back on my career, firstly at the Miscellaneous Workers Union, then as ACTU president and finally as a member of parliament, my main motivation has been to get Australians into decent, well-paying jobs. This is what the Labor Party means to me: helping those less fortunate in life by providing new jobs and opportunities to achieve a better quality of life. Creating opportunities by working with business is not the same thing as pointless class rhetoric. In essence, we need to grow the pie to share it.
That is valuable advice that Labor should heed.
By refusing to support this legislation and continuing to support the mining tax, the Labor Party is essentially thumbing its nose at the people of Australia, who with their votes on 7 September expressed their strong support for the coalition's clear and longstanding commitment to scrapping the mining tax.
Last week, the Leader of the Opposition, Mr Shorten, was in my home state of Western Australia. He was there to try and win support for the upcoming Senate election. During his visit, he gave an interview to Sky News's David Speers. It was one of the most excruciating public performances many of us would have ever seen. It is worth watching again. It is important to watch again for what he does not actually say.
The leader of the Labor Party, Mr Shorten, was recently in Western Australia. Five times, David Speers asked the Leader of the Opposition whether he and his party still support the mining tax. Five times Mr Shorten replied with waffling, equivocation and stonewalling. He refused to admit what we all know is true: Labor still want this mining tax, but are desperate to avoid saying so before 5 April.
However, in my last remaining minutes I do have to applaud one federal Labor MP from Western Australia. Her candour—wrong-headed as it might be on this policy issue—at least provides a welcome contrast with the tricky, dishonest approach of Labor's current leader. I am speaking of the newly-minted shadow parliamentary secretary for Western Australia, the member for Perth, Alannah MacTiernan.
When she was appointed to her new position with great fanfare by the Leader of the Opposition, Mr Shorten said that Ms MacTiernan's appointment would:
… make WA's voice inside Labor even stronger.
Sadly for the people of Western Australia, it was clear within 24 hours that this strong new voice was singing from a very old hymn sheet. Far from heeding the lessons of last September or using her new responsibilities to actually stand up for the people of WA, Ms MacTiernan immediately declared her strong support for Labor's flawed mining tax. She said that it was sound and that there were strong arguments in favour of keeping this failed tax. I am not sure where Ms MacTiernan and the Labor Party have been hearing these strong arguments that support their tax—perhaps it was from their allies in the Australian Greens movement—but I sincerely doubt that they have emanated from my home state of Western Australia.
This legislation to abolish Labor's disastrous mining tax is a core element of the coalition's plan to restore confidence not just in the mining sector but also across the Australian economy more broadly. It shows that Australia, again, has a government that values the contribution that the mining and resources sector makes to the strength and growth of our national economy. It understands that the best thing that government can do is to get out of their way and allow them to get on with the job. This legislation will help to close the book on the long, drawn-out saga of the Rudd-Gillard leadership wrangle; the incompetence that underpinned the six years of the Labor government; and the anti WA policy agenda that Labor and their Greens allies have long pursued.
I rise to speak against the Abbott government's legislation to repeal the minerals resource rent tax. Just to start with, I would like to take up some of the comments that Senator Smith made in his contribution here tonight. As it was, the contribution was largely wrapped up, again, with slur and personal attacks, but that is something we have come to expect in this chamber from many of those on the other side. However, he did talk about a class war. If there is a class war, I think that what the contribution from Senator Smith showed—if anything—is that the coalition is, has been and always will be for the big end of town.
What I would say, and what the Labor Party has been saying, in terms of the minerals resource rent tax is that all Australians should share in the spoils of our natural resources, not just the big mining companies. The actions of those opposite fly in the face of decent, fair-minded values. Those are the values of sharing—sharing this nation's resources and the benefits that come from them with all Australians. The profits that come from extracting our natural resources should be spread throughout the Australian public. That is what Labor was doing with the minerals resource rent tax.
But, as we know, on a Friday last year and through the faceless mode of a press release, the coalition announced that they would tear down the MRRT and would take with it a variety of government payments, support bonuses and tax breaks that benefit Australians. These are Labor initiatives that were making life easier and more profitable for families, school children, retirees and businesses. But Mr Abbott wants to make sure that the biggest companies pay less tax, while small businesses and the lowest paid workers pay more tax. I will repeat that: the big companies pay less tax and the small businesses and lowest paid workers pay more tax.
Mr Abbott's government wants to axe the low-income superannuation contribution retrospectively, increasing superannuation taxes for one in three Australians by up to $500 a year. If anybody knows someone who actually accesses the low-income superannuation contribution, they will know that those people are doing it tough. They are not high earners and any help assists them greatly in making ends meet. So I would suggest to Senator Smith that he meet some of these workers that he is 'supporting' by ripping away the low-income superannuation contribution.
The bill also acts as an increase to the instant asset tax write-off, leaving 2.7 million Australian small businesses worse off through higher taxes and it will leave 110 businesses worse off by getting rid of the lost carry-back tax incentives. On top of this, the schoolkids bonus—and we have heard contributions from this side of the chamber about that—is going to be axed, even though it has nothing to do with the MRRT. It does not matter how many times the government insists it is connected; it is not. It knows it is not and it is just a con on Australian families.
The superannuation guarantee will also be stalled, by two years, as Mr Abbott dillydallies. He refuses to think of the future and only proceeds with this approach, scrapping the MRRT and lining the pockets of the big mining companies. These mining companies are profiting from the natural resources that belong to all Australians. The Labor Party is not arguing that the mining companies should not make a profit, simply that the money should benefit all Australians. All Australians own these natural resources and all Australians should benefit from the profits that they develop. To axe programs, initiatives and payments that help spread the benefit of our vast natural resources, to help the bottom line of big mining companies, is simply not good enough.
I will now touch on the schoolkids bonus in more detail. The coalition's bill, the repeal legislation that we have before us, will leave more than 1.2 million Australian families worse off when it comes to meeting the education expenses of their children. It is cruel, it is sneaky and it will hurt struggling families. Not only is this government ripping off Australian families; it is also trying to fool them about the reasons for doing so. Mr Abbott's government is claiming the schoolkids bonus was paid for by the minerals resource rent tax. It was not. We know it was not and the government knows it was not. The schoolkids bonus replaced the education tax refund. It had nothing to do with the minerals resource rent tax package, and those opposite know it.
Mr Abbott and his Treasurer, Mr Hockey, are trying to fool Australian families by repealing the schoolkids bonus as part of the repeal of the MRRT. This repeal will be a big hit to families: $410 per year for each child in primary school and $820 per year for each child in high school. This is money for books, technology, uniforms, new shoes and excursions that will now have to come from somewhere else. If it does not come from somewhere else, children will miss out. It is a kick in the guts for hardworking families putting their children through school. Scrapping the schoolkids bonus means the average Australian family with two kids will be $1,230 worse off every year and $15,000 worse off over the whole of their child's education.
And why aren't these families receiving the money? Because those opposite, under Mr Abbott and Mr Hockey, have decided it is better to give a tax break, a kickback, to big mining companies than to help out everyday Australians. That means that every one of those 1.2 million families will be worse off when it comes to the schoolkids bonus. Australian families deserve to know why Mr Hockey is making life harder for Australian families. Those opposite continue to put the myth out there that the schoolkids bonus is somehow linked to the minerals resource rent tax. Again I stress that the schoolkids bonus replaced the education tax refund. It was nothing to do with the minerals resource rent tax.
My home state is Tasmania. I am glad Senator Bushby is here to listen to my contribution. I am sure he knows that almost 32,000 Tasmanian families are set to suffer if the schoolkids bonus goes. That is 57,700 Tasmanian primary and high-school students who will go without the payment. It is just like those workers that get some benefit from low-income superannuation. Senator Bushby would know that it is not easy and it is costly for these Tasmanian families to put children through school. There are many expenses involved for children to go to school and to be able to participate fully in school activities. All children need to be able to get a full and enjoyable education.