Senate debates

Tuesday, 25 March 2014


Minerals Resource Rent Tax Repeal and Other Measures Bill 2013; Second Reading

12:34 pm

Photo of Anne UrquhartAnne Urquhart (Tasmania, Australian Labor Party) Share this | | Hansard source

I rise to speak against the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013, a bill that clearly demonstrates the policy differences between this cruel government and the Labor opposition. This is a bill that gives a $3.3 billion tax cut to Australia's largest mining companies over the forward estimates, while at the same time cutting payments and tax relief to families, small businesses and low-income earners. It is tax cuts for mining companies, but tax hikes for small companies, benefit cuts for everyday families, retirement income cuts for low-income earners, cuts to capital works in regional communities and tax hikes for those participating in geothermal exploration.

At its core this bill is not about defining a taxation regime for mineral resources in this country; at its core this bill clearly defines this government's cruel agenda—an agenda to end the so-called age of entitlement, an agenda laced with disdain for working Australians. It is disdain for the families of Australia, disdain for Australians living in the regions and disdain for Australians seeking to expand the renewable energy industry. It is an agenda we see on display every day in this place, where the language of many of those opposite shows an utter contempt for Australian workers and for Australian families. This bill clearly demonstrates the cruel nature of the Abbott government. This is a bill that cuts assistance payments to families, small businesses, low-income earners and our communities, while at the same time providing a $3.3 billion tax cut to the owners of Australia's biggest mining companies over the next four years—mining companies which are well and truly majority foreign owned. Eighty per cent of the owners of Australia's biggest mining companies are in fact foreign nationals. This bill hurts Australians while providing a tax cut to foreign nationals.

Those opposite talk about economic management, but this bill demonstrates that their economic management credentials are completely in tatters. Their Assistant Treasurer has stood down. Their carbon price repeal bill has been voted down. A key minor party, PUP, a party full of disaffected former Liberal and National party members, has indicated that it will not support this bill as it currently stands in the new Senate after July this year.

The member for Fairfax, leader of PUP, stated last week that his party will not vote for this bill while it contains the provision to abolish the income support bonus for children of Australian veterans. It is clear that this bill will not pass the Senate as it currently stands. It is now becoming apparent that this arrogant Abbott government cannot assume any of its legislation will pass after the new Senate comes together in July. This arrogant Abbott government listens to no-one and barks at everyone. This arrogant Abbott government will have to learn to listen and will have to learn to compromise if it is to pass any of its non-bipartisan legislation.

The minerals resource rent tax is a fair tax. It is a fair tax on the superprofits—yes, superprofits—realised from coal and iron ore mining in this country. It is a fair tax that has and will continue to realise significant revenue for the budget, at a time when this Liberal government is starting a conversation about a tax on visits to the GP and at a time when this Liberal government wants to increase company tax on Australia's biggest companies to pay for its unfair, unaffordable Paid Parental Leave scheme. This company tax increase will lead to increases in the prices Australian families pay for groceries, fuel, power, clothes and all the goods and services supplied and provided by Australia's biggest companies. It is a tax that is applied regardless of the profitability of the company and a tax that will not even raise the required amount to pay for their overly generous, poorly targeted Paid Parental Leave scheme. They are a tax and a Paid Parental Leave scheme that are further evidence of this Liberal government's desire to hit the hip-pockets of low- and middle-income Australians and line the pockets of the wealthiest in this country.

The minerals resource rent tax is a fair tax that only impacts on mining companies when their profits, minus deductions, are more than $75 million in a year—yes, that is profits of over $75 million a year. It is a tax that is only imposed on coal and iron ore producers in times of gross profitability. When this tax was introduced in 2011, Australia was experiencing an unprecedented boom in our resources sector, specifically in iron ore and coal, which delivered record profits to mining companies year after year. During the last tenure of those opposite, royalties as a percentage of mining profits decreased from around 40 per cent to about 15 per cent, which works out at about $35 billion that could have been invested for the benefit of all Australians if captured by a superprofits tax.

These mineral resources are nonrenewable and a large share of the profit, together with the resource, is actually shipped overseas. These are resources that can only be dug up once, that can only be sold overseas once. All Australians should benefit from the sale of our resources, not just the few who are directly involved in the mining industry. It is vital that the community who own the resources 100 per cent get a fair return on these resources to strengthen our whole economy for the future. Of course, the fact that this tax did not deliver on forecast revenue in its first years does not make it a bad tax. It is a tax designed to work in perpetuity. When profits are high, the tax will pull in significant revenue. When capital works are high and therefore deductions are high, as has been the case for the past few years, the revenue is reduced. If profitability is low and mining companies make less than $75 million off a mine in a particular year then no superprofits tax is paid.

The tax actually provides an incentive to invest in iron ore and coalmining operations relative to a pure royalties taxation model. As the mining industry is extremely capital-intensive, it actually employs only around two per cent of Australian workers. While profits in the mining industry grew by over 250 per cent over the last decade, the mining industry only contributed seven per cent to Australia's jobs growth over that period. While the manufacturing industry continued the decades long trend of employment decline, it still employs over four times as many people as the mining industry.

The metals manufacturing industry, which includes smelting, refining and producing metal products, has not been a significant beneficiary of the mining boom. Increased competition from Chinese smelters and refineries, high energy prices and the appreciation of the Australian dollar saw value-adding in the metals manufacturing sector flatten through most of the last decade. The export volume of processed metals fell over the decade, with weakness across a wide range of refined metals. This trend will only continue as smelters continue to close. Despite there being no proposals from those opposite to assist manufacturing businesses deal with a high Australian dollar, which has been stuck well over 90c for the better part of four years, the former Labor government sought to assist non-mining companies through rational, interventionist government industry policy, but this government has a fanatical approach to free market economics—that is, of course, unless mining companies are coming cap in hand for an industry subsidy.

Just last week, the Abbott government announced a $110 million loan to a BHP Billiton and Rio Tinto joint venture in Chile, a massive loan to two of Australia's largest and most profitable mining companies, a massive loan to create jobs in Chile. But where are the jobs promised in Australia? This government has turned its back on food-processing workers in the Goulburn Valley. It has turned its back on workers at Holden. It has turned its back on a pay rise for workers in the early childhood education and care sector. It is turning its back on Qantas workers. It is turning its back on Australian scientists. It is turning its back on Australian public servants. It continues to turn its back on regions hit hard by manufacturing closures such as Geelong, north-west Melbourne and North Adelaide by not releasing any details of a regional jobs package.

This is a vindictive and secretive government. It is a government that has launched a commission of audit to recommend further cuts to government services and payments. It is a government that will not release these recommendations before the Western Australia Senate by-election in two weekends time. It is a government that seeks to cut by stealth—for instance, their cut to cleaners' wages by almost a quarter, introduced into the other place last week as part of the repeal day suite of 9,500 regulations, under the guise of the Prime Minister's red tape repeal day, a repeal day that those opposite claim will grow our economy. It is regulation repeal that will cost tens of thousands of low-paid cleaners around $200 a week from their pay.

We introduced the regulation in 2011 to tackle the exploitation of vulnerable workers in the contract cleaning industry. A 2010 Fair Work Ombudsman audit of cleaning contractors found that 40 per cent of audited businesses did not comply with workplace laws as well as the regulation. The ombudsman recovered almost $500,000 for 934 underpaid workers, a clear case that there is a need for decent, fair regulation in this country. There is a need for fair taxes on profitable businesses in this country, and it is not an indecent proposal to provide fair pay and conditions for contract cleaners. These are some of the lowest paid workers in the country, and this government is taking delight in cutting their wages by including this regulation repeal in its repeal day. It is not an indecent proposal to provide transitional support for businesses and workers in industries hampered by the sustained strength of the Australian dollar. It is not an indecent proposal to impose a superprofits tax on coal and iron ore mining companies and to use that revenue to assist families, low-income earners, small businesses, regional communities and those exploring commercial geothermal energy.

Families at home would be surprised that the 'other measures' component of this bill includes a provision to repeal the schoolkids bonus, a cut that will cost the average family $15,000 over the period of their child's primary and secondary education, a cut that is not related to the mining tax, as it was not enacted by the MRRT bill. It existed as the education tax refund before the MRRT was introduced. The government now plans to scrap the schoolkids bonus and not even reinstate the education tax refund. This secret cut will impact over 32,000 Tasmanian families. Around 60,000 Tasmanian children will go without this payment.

The schoolkids bonus delivers parents some extra help to meet the large costs associated with sending their children to school. When the schoolkids bonus was introduced, those opposite opposed it because they claimed it was not specifically targeted at education. They caught it a 'cash splash', and they did not trust Australian families to spend it on educational needs. They said the education tax refund was a better way, despite the fact that millions of families were not getting their full entitlement, and promised to increase it. The mums and dads that I talk to spend the money on essentials; they spend it on uniforms, excursions, footy boots, cricket bats, guitars and on recorders. It is clear that those opposite do not care about supporting Australian families, just as they do not care about support for low-income Australians who are saving for their retirement.

Two 'other measures' components of this bill are to stall the increase in the superannuation guarantee and to scrap the low-income superannuation co-contribution, backdated to July 2013. If the Liberals get their way, people earning $37,000 or less a year will lose the tax incentive to make personal contributions to their superannuation. This measure effectively reduces the tax rate on personal superannuation contributions to zero. The Liberals do not just want to reintroduce this tax on low-income earners saving for their retirement; they actually want to backdate the measure, hitting 3.6 million Australians, which includes 2.1 million working women, with an increase in their tax this year if they have made personal contributions to their super. These people entered the 2013-14 financial year on the understanding that they would be refunded their superannuation tax. This goes against all standards of responsible economic management.

This bill would also abolish the income support bonus, a tax-free payment to people on payments—including Austudy, Newstart, the parenting payment and payments to children of veterans who were killed or injured in action—to help with unexpected living costs such as medical expenses or car repairs. If the proposed abolition is successful, around 1.1 million low-income Australians will lose the payment. 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 Australian Council of Social Service has estimated that 57 percent of parenting payment recipients and 28 percent of Newstart allowance recipients could not afford to pay utility bills on time, compared with 12 percent of all Australians.

That is what this government is about: unashamedly attacking Australians who are doing it tough in every way possible. This government is even attacking its supposed base—2.7 million small businesses—by slashing the instant asset write-off from $5,000 to $1,000. The 'other measures' component of the bill will also close the loss carry-back scheme utilised by up to 110,000 businesses to smooth their tax over the good and the bad years. Just like the other measures in this bill, this initiative has no friends outside of the coalition party room, with the Australian Industry Group and Council of Small Business speaking out against the removal. AiG has said 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'. Further, AiG warned that the Australian economy faced a 'large gap in investment, particularly outside the mining sector', and that removing 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'.

The other measures in this bill also impose 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 has observed:

If this measure is repealed geothermal exploration will not have the same incentives as any ordinary explorer looking for fossil fuels …

This 'other measure' is another knife in the side of renewable energy in this country.

The final 'other measure' is remarkable, given the Deputy Prime Minister and Leader of the National Party is the Minister for Infrastructure and Regional Development. In amongst re-announcing Labor government infrastructure projects and the Prime Minister claiming to be the 'infrastructure Prime Minister'—despite slashing the fibre-to-the-premises NBN: the modernisation of Australia's communications infrastructure—the Deputy Prime Minister cut round 5 of the Regional Development Australia Fund and abolished the Regional Infrastructure Fund. These measures are included in 'other measures' despite no legislative changes being required. These projects were worth about $3 million to my home state of Tasmania and included projects that would have improved the quality of life for people across the state and created jobs. These projects are supported by the local governments in these regions.

Before I conclude my speech, I will respond to the member for Braddon's comments yesterday regarding the GST distribution. I know the member for Braddon is new to this place but he should really do some research on the history of this debate before making uninformed, aggressive speeches about minority parties. The member for Braddon would do well to focus his attention on members of the Liberal Party before bullying senators elect from the Palmer United Party. The WA Liberal Premier was in the media as recently as 8 March 2014 calling for an increase in the GST to WA—therefore taking it away from Tasmania. The former WA Treasurer, now member for Pearce, Mr Porter, dedicated a large section of his first speech to the House of Representatives criticising the current GST distribution principle, HFE, including the comment:

… the present system is too extreme, highly inequitable and propagates enormous inefficiency.

The Tasmanian people should be concerned that the Abbott Liberal government will do a deal with the PUPs to slash Tasmania's GST. So Mr Whiteley should clean up his own backyard and combat the anti-Tasmanian views of Mr Barnett and Mr Porter before seeking to bully a minority party.

This bill, which I am speaking against, gives a $3.3 billion tax cut to Australia's largest mining companies over the forward estimates—and that is unfair. (Time expired)

12:54 pm

Photo of Scott RyanScott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | | Hansard source

As the Daleks opposite come in and continue their series of filibustering speeches to prevent the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 being brought to a vote, I have been provoked to make a response to a number of the assertions that I have heard over the last few days.

It is interesting that Senator Urquhart turned to the issue of the horizontal fiscal equalisation approach of GST distributions, which I will turn to again later. But time after time we hear from members opposite about the things and the wealth that government programs allegedly create. We hear of program after program of tax transfer after tax transfer, as if it is the state or the government that is somehow the source of all wealth. We know the truth: it is the private sector that drives wealth creation all around the world. To say otherwise is a myth sought to be propagated by those who play the politics of patronage, targeting special groups in the community for favour and targeting groups they do not like for penalty, including through the tax system. It is only the mindset of those opposite that it is the government and the public sector that creates wealth.

What I cannot understand in the speech that I just heard—and we have heard it day after day in this place—is that it is apparently rent seeking when a series of companies come to the national parliament or go to the people of Australia to argue against the tax. They are arguing against a new tax to be imposed on you, your businesses and your investments in a retrospective fashion, which is what the RSPT proposed—and this is somehow rent seeking. Yet I heard Senator Urquhart, who spoke before me, reading out a list of business organisations that are somehow critical of various measures that the government is proposing. This government wishes to propose measures that are in the national interest. Some of those will involve sacrifice, such as those read out by Senator Urquhart—the unfunded schoolkids bonus. When Senator Urquhart talks about people not spending their entitlement under the previous education tax offset, that betrays her mentality. It was not an entitlement; it was a refund to support children's education, if you actually spent the money on their education. But the use of the word 'entitlement' betrays the agenda of the Labor Party, because they are about handing out cash to favoured groups. Yet, when Senator Urquhart quotes AiG and other business groups somehow opposing measures that this government has proposed to bring the budget into balance, we do not hear claims of rent seeking. We only hear those opposite screaming about rent seeking when corporations that have been the font of our national wealth over the last few years, particularly in an export sense, are involved. All they did was say, 'Please consult with us and don't subject us to this new retrospective tax.'

There are some other fallacies underlying the arguments put by those opposite, particularly about the ownership of resources. They say Australians own these resources and Australians must actually get the benefit from their mining and export—and they do, but it is not through the Commonwealth. The Commonwealth does not own these resources. The people of Australia, through the states, own these resources and they collect a benefit via the royalties levied by state and territory governments. The Commonwealth could, if it wished, seize the royalties from the Northern Territory—and, if there were any mining in the ACT or Jervis Bay, I am sure they could do it there too. These resources belong to the people assembled in the states of Australia, and that is where they get their benefit.

I cannot help but note the irony of those opposite—particularly their fellow travellers in the corner, the green movement—openly talking about wanting to shut down the coal industry but at the same time talking about how we have to somehow get value for these products before they are exported. The truth is that, unlike rare minerals and petroleum, these products are not rare. No-one can predict at what point in human history the earth will run out of coal or iron ore. They are all through the earth's crust, as any geologist will tell you. What is rare is the capital and the means to get them to market efficiently and reliably, year after year, that funds the investment that their users have to undertake. It is the capital which does that . It is the investment that enables those products to come to market efficiently and reliably. This is the rare commodity in mining coal and iron ore. It is about the competition for capital to bring those products to market.

Somehow those opposite have the idea that we might run out of coal or iron ore and that it is only mined once and so we need to make sure that we extract value for the Australian taxpayer. But this material will be mined for all the future. In fact, if the Greens have their way they will shut it down sooner than anyone else, and sooner than the market would allow.

Our job is to facilitate the production and export of as much of this as possible while the prices are high because we do not know what technology will come about. In future years there may not be a need for coal or iron ore in the same quantities as there is now. There may be technological change. Whale oil was once used for lighting our lamps. We do not have typewriter factories anymore. So our job is to deal with the opportunity we have now, which is to dig up and export as much of it as possible at the highest prices we can, at the lowest cost base. That is in the best interests of Australia.

There is another fallacy that somehow corporations do not pay their fair share. The mining companies pay royalties. They are large employers; they pay payroll taxes. They pay the same corporations and company taxes that every other Australian company does. In fact, their contribution has been rising in recent years, reflecting the high volumes and the high prices.

I note that Senator Whish-Wilson yesterday accused the government of thinking taxes are an evil. He had a quote from an author I was not familiar with, who was talking about how taxes are a positive. I think taxes are a necessary evil but they do impose a cost on the economy through the dead weight of taxation. There is an efficiency loss every time a government sets a tax. Taxes impose a burden in terms of taking someone's earned wealth from them and giving it to someone else. That is something that is a necessary evil but is not something that we should seek to propagate.

I want to turn to the last issue that Senator Urquhart mentioned, which is the impact of horizontal fiscal equalisation. This is really what this tax was about. At the moment, when Western Australia collects royalties on iron ore, or Queensland and New South Wales do on coal, that becomes part of what is broadly termed the pool of state revenues that are subject to horizontal fiscal equalisation. I say, as a Victorian senator, that my state has been a net contributor to that scheme since its inception just over 80 years ago. We have had recent complaints from Western Australia about their share of GST take falling. That reflects the revenue they have brought in from royalties.

If we put aside the debate about fairness or otherwise of particular levels of equalisation we will see that there is one fact that cannot be assaulted by those opposite—that is, that there is more GST revenue to distribute to Tasmania, South Australia and even to states likes Victoria, because the royalties are collected by the states. If the royalties went away and WA got more GST money because it did not have the state revenue base of the iron ore royalties and New South Wales did not have the revenue base of the coal royalties—if those were taken away and collected by the Commonwealth—every state would receive less money.

I say, particularly to those senators from Tasmania or South Australia, who are recipients: you will receive less money if the Commonwealth takes away royalties. You will receive less GST money. There will be less money for nurses, teaches, hospitals, fire stations and everything else you talk about. You do not understand the way fiscal equalisation works. Royalties are added to the state revenue pot. The GST is then distributed taking those royalty collections into account. So every Victorian, South Australian and Tasmanian benefits by WA collecting iron ore royalties and Queensland collecting coal royalties.

The first attempt at this tax was to try and get the state not to collect royalties—to hand that revenue source to the Commonwealth. That was nothing less than another Labor assault on our Federation. What it would have meant is less GST distribution and less revenue for all states in the country, because the overall pot of revenue that was being distributed to the states would have shrunk. That is the key element for everyone who is not a direct victim of this tax. This tax is nothing less than an assault on Western Australians—a state that has paid the penalty through lower tax distributions and horizontal fiscal equalisations since Sir Charles Court undertook this investment.

This is a tax on the success of businesses and the state of Western Australia in effectively driving this business when no-one thought iron ore was going to be such an important commodity. In fact, it is not that long ago that I was at university being taught that iron ore, agriculture and mining were not the future for Australia. So we need to remain a little bit humble. It was the investment of the Western Australia government, particularly under Sir Charles Court, that put Australia in a position to take full advantage of this boom to our north and rapid urbanisation and industrialisation in China in particular. That state should not be penalised because they have been a success. But that is what the modern-day Labor Party does.

I will finish on what I think was the ultimate irony of the speech of my predecessor in this debate. She was talking about the pressure people face in paying their utility bills. Given that it was less than a week ago in this place when the Labor Party voted against the repeal of the carbon tax—which they advertised as apparently only 10 per cent of electricity bills!—no-one should take their crocodile tears seriously about people struggling to pay utility bills. They voted to keep them high. The voted to make them high and now they are voting to keep them high. They refused to listen to the mandate of the Australian people. They will pay the price for not listening to the people of Australia, because there was no more central issue—

Senator Urquhart interjecting

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

Order! Senator Ryan, resume your seat. I remind senators on my left that Senator Ryan has the right to be heard in silence.

Photo of Scott RyanScott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | | Hansard source

There was no more central issue in the last election than the repeal of the carbon tax.

1:06 pm

Photo of Lin ThorpLin Thorp (Tasmania, Australian Labor Party) Share this | | Hansard source

In presenting this bill to us today the government once again shows that it is single-mindedly intent on its own particular brand of redistribution of Australian wealth. But I suspect this particular redistribution would have Robin Hood turning in his grave. Sadly, this bunch of merry men seem intent on stealing from everyday Australians in order to line the pockets of the rich, powerful and well connected—Robin Hood in reverse, if you like.

This is a government that is so far from the government they said they would be that they are almost unrecognisable. This is a government that seems to be completely uninterested in addressing disadvantage and creating a more equal, inclusive Australian society. Not only are they doing nothing to address inequality but they seem set on actively widening the gaps between the haves and the have-nots through legislation of the sort that we are dealing with today.

In this legislation the government brazenly robs from low-income earners, families and small businesses in order to line the pockets of multinationals and mining magnates. Not only that but in doing so they are forcing a multibillion-dollar revenue hit to our country's bottom line. Recently those on the other side started to go back to their tried and true mantra of the 'budget emergency' they say is facing the country. They used this confection before the election to scare the Australian public into voting for them and they continue to use it to justify harsh cuts to those who can least afford it.

Despite this, they were quite happy to provide an unrequested $9 billion to the RBA, even though experts confirmed that our national bank was suffering no problems of liquidity, and only a few weeks after gaining the keys to the ministerial wing they even had the audacity to request a 66 per cent increase to Australia's credit card bill while refusing to produce any information to back up their request. These are hardly the actions of a government concerned about cutting back on spending across the board. Strangely enough, we now see that they are so unconcerned about the state of the books that they are willing to forgo billions worth of revenue in order to give the likes of Gina Rinehart a belated Christmas present.

The minerals resource rent tax is based on the important tenet that Australia's mineral wealth belongs to Australians. It is based on the idea that, while international investment is important, Australians deserve to be compensated for the removal of mineral wealth that cannot be renewed. Labor supports the need to spread the benefits of mining activity in Australia to all Australians, not just to the rich and well connected. That is why we will not support the repeal of the minerals resource rent tax.

We have heard a lot of spin about the tax and, not surprisingly, big miners have argued that the tax could send them to the wall. The government has used this to justify a threat to Australian jobs. The position is a little hard to justify when you consider that the mining industry employs only two per cent of the Australian workforce, or 251,000 people, according to the Australian Bureau of Statistics. In contrast, manufacturing employs almost quadruple that number at just under a million jobs. If the government really cared about jobs, surely they would not have turned their backs on our car industry. Even if mining were the largest employer in the country, would the mining tax still be a threat to jobs? The answer is simply no. The truth is that the MRRT only affects those companies that are already making a significant amount of money on the back of Australia's mineral wealth. The reality is that the MRRT is not even based on revenue but, rather, profits.

In fact, when the Henry review called for submissions, the Minerals Council of Australia itself put forward a recommendation arguing in favour of a profits based tax as the most efficient means of taxing resources. This is an important point. This is a tax on superprofits, not revenue. In fact, companies are not liable to pay the tax until their profits reach $75 million. I find it hard to believe that any company that is making $75 million in profit—I reiterate: that is not revenue but profit—should not be contributing their share to our nation. A profit based system is much fairer than a royalties system because it means that if the price of resources goes up companies make more money and more money flows back to the Australian taxpayer. It is a no-brainer. In a royalties based system, when the price goes up there is no corresponding increase in wealth going back to the Australian people. So, despite the hype, no business was ever going to go bankrupt through the MRRT as it was only ever going to be levied upon businesses that were achieving lucrative superprofits.

So we have a government which is forgoing this vital revenue despite bleating excessively about a 'budget emergency' to anyone who would listen and threatening large-scale cuts to the areas of society that can least bear it. As a result, if this legislation passes, we will see families, small businesses and working Australians taking a big hit. Small businesses will bear the brunt of the removal of nearly $4 billion in tax concessions which were recommended in the widely lauded Henry review. The bill will repeal the instant write-off for assets costing less than $6,500. It also repeals the loss carry-back measures which allow companies to carry back losses up to a $1 million threshold. This measure was brought in by the previous Labor government in recognition of the fact that businesses do not run to a 12-month cycle and that profits can fluctuate significantly from year to year. Under Labor, this would have increased to two years from this financial year, giving businesses an extra fund injection in order to further invest in their businesses. Is it any wonder that the Australian Industry Group denounced these moves in its submission to the government, saying that they will permanently increase compliance costs and cut investment returns at a time when businesses can least afford it?

Small businesses will also lose the special motor vehicle reduction which allowed them to claim up to $5,000 as an immediate deduction for vehicles costing $6,500 or more. Families will suffer as a result of this bill as it rips away the schoolkids bonus which was put in place to help struggling families meet the cost of their children's education. In taking away the schoolkids bonus the government has been indulging in some serious misrepresentations of the truth by saying that it was linked to the minerals resource rent tax and, with the repeal of the bill, it must also go.

The idea that a government cannot make its own spending decisions on anything is an absolute nonsense. Those opposite, as the government of the day, will always have a choice about when and how money is spent. To suggest otherwise is completely disingenuous. This flimsy justification is based on a bald-faced lie. The schoolkids bonus was never linked to funding from the mining tax. In fact, it replaced the education bonus to make it fairer and simpler for families to access help with the cost of their children's education.

I know very well from talking to Tasmanian families how important the schoolkids bonus has been in helping alleviate unavoidable costs of education, such as textbooks and uniforms. Many have also shared their concerns with me about how they are going to manage these costs if the government gets its way and repeals this vital support. This is a government of confused, inconsistent messages at best and brute hypocrisy at worst. In one breath they tell us that all they care about is removing the cost-of-living burden from the typical Australian family and in the next they tell us exactly how they are going to rip away thousands of dollars from those who can least afford it. Not only are the government ripping away the schoolkids bonus but they have then gone further by slugging Australia's lowest paid workers to pay for their mining tax abolition. By removing the low income superannuation contribution the government will reimpose a 15 per cent tax on workers who earn less than $37,000 a year. If this bill passes, it will mean the lowest paid workers in our country will be up to $500 a year worse off.

We in this place are lucky to have very generous compensation for the work we do, so perhaps those on the other side think $500 does not seem like much money. Maybe they would even budget this much for a special night out at a restaurant. But for those who earn less than $37,000 it could be the difference between driving an unsafe car and finding the money to have it serviced or between paying the winter heating bill and shivering through the cold months with nothing to take the edge off the cold. To put this in perspective, this callous move will impact on up to 3.6 million Australian workers. In my home state, 90,000 hardworking Tasmanians will have to find an extra $500 in already stretched budgets just to pay for basics such as food, electricity, rent and clothing.

The bill will also rip away the income support bonus, which is designed to help those who survive on the lowest wage of anyone in this country with one-off payments. This is all so that some of the most profitable companies in the world can get a reduction on their tax bill. In what world could this possibly be seen as fair? And the pain for workers does not stop there. This series of bills also stalls the important increase in superannuation from nine per cent to 12, which represents a blow to the future retirement savings of millions of Australians. It was Labor that brought in this forward-thinking reform in recognition of the fact that 12 per cent superannuation is recognised as the amount people need to put aside if they are to have enough money when retirement time arrives. By turning its back on this plan the government will not only reduce superannuation balances by thousands of dollars but also increase the burden for future governments, which will be lumbered with higher pension and welfare support costs than necessary.

Another short-sighted inclusion in this package of bad legislation is the scrapping of legislation which allows companies to immediately deduct expenses incurred through geothermal exploration. Labor brought in this deduction in 2011 in recognition of the importance of investing in renewable sources of energy. While there is currently no commercial geothermal energy production in Australia, Geoscience Australia predicts that just one per cent of shallow geothermal energy could supply Australia's energy needs for as much as 26,000 years. By removing this deduction the government is essentially removing incentives for investment in renewable technologies, which ensures that we will remain dependent on dirty fossil fuels for longer than we might otherwise need to. They are holding back on the necessary transition to a low-carbon economy, which will ultimately lead to Australia becoming uncompetitive as the rest of the world rushes to embrace low-cost renewable energy sources. This should not really come as much of a surprise given that this government is also trying to single-handedly dismantle the entire tool kit that Australia has to deal with climate change in favour of the Direct Action Plan.

I am currently the chair of the Direct Action Plan Senate inquiry and I can tell you that we have not heard from one witness who supports Direct Action as a viable stand-alone solution to addressing climate change. We have been told it is little more than an expensive slush fund for polluters that will ultimately be completely ineffective in addressing climate change. Interestingly the Direct Action Plan will also see millions of dollars flowing to wealthy companies while the rest of Australia picks up the tab.

I am sure it is not just me who can see parallels between Direct Action and the set of bills that is before us today. Both will cause a massive billion-dollar hit to the budget and both will provide multimillion-dollar benefits to big polluters and resource companies. Most importantly, both seem to be completely intent on acting against the national interest. Unlike my colleague Senator Ryan we need to remember that resources are finite. Once they have been dug up and sold off, there will be no more. We also need to remember that they belong to the people of Australia, and it is only fair that the people of Australia get to share in the benefits of this mineral wealth.

But it is clear that the coalition were not the only winners when they won government in September. It is clear that mining magnates also hit the jackpot on the back of the election result. We are seeing the proof of it today in this package of bills. Ironically, one of the most spouted arguments from those on the other side about this tax was that it did not raise enough revenue. So it seems strange that, rather than making the tax more expansive, in order to correct their perception of this failure they are deciding to forgo the revenue entirely. If you put this to any reasonable person, they would ask the obvious question: why would a government that is so concerned about flagging revenue make it one of their first orders of business to further slash incoming funds? Why would a government that cares about working families and businesses wantonly slash the very measures designed to give them a helping hand and make the cost pressures that little bit easier to bear?

Donation records from the Australian Electoral Commission might provide us with a clue to solving this mystery. These records tell us that since 2007, when the minerals resource rent tax was first proposed, the coalition was the happy beneficiary of more than $3 million from the mining industry. This compares to the $119,500 that was given to Labor and not a penny to the Greens. We need to recognise that, if nothing else, big businesses are pragmatic. In fact, they have a legal obligation to their shareholders to make effective spending decisions that are in the best interests of their shareholders. These are not the kinds of organisations that will throw money around willy-nilly if no financial return is to be gained. Could it be that the coalition is returning this generous favour in the form of a belated Christmas tax cut? Could it be that this government is slashing benefits for millions of Australians in order to pay its dues to its mining masters? I can only speculate about what its motivations might be. But the figures do not lie. However, if that is the case, we can see that these donations have indeed been a smart move for the mining magnates, who by spending a meagre $3 million have netted themselves a $3.7 billion windfall. Nice return if you can get it! It seems the age of entitlement may be over for struggling businesses, disabled people or those looking for work, but it is alive and well for big corporations and mining companies.

Australia voted for a government that would act in the interests of all Australians—a government that would maintain spending in important areas of health, education and support for people with disabilities. What we have got is something very different—a government which seems to govern solely for the rich, the miners and the elite, at the expense of millions of Australians who are doing it tough. This is not the government we were promised.

1:22 pm

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

I rise to speak on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 and indicate that I oppose this legislation that is being introduced by the government. I have had the opportunity of listening to both Senator Urquhart and Senator Thorp and find myself in furious agreement with them on the reasons for opposing this very bad piece of public policy.

I think it is worth starting my contribution to this debate by pointing out that the legislation which this bill seeks to repeal was one of the really terrific things that the former Gillard government was able to do in its time in government. I personally am very proud to have been part of a government that introduced that legislation and that got it through the parliament. We as a country are now seeing the financial benefits of that legislation in our tax system. It was a controversial piece of legislation at the time. It took the tremendous negotiating skills and talents of former Prime Minister Gillard to reach an outcome. She sat down with senior officials in the mining industry and negotiated an outcome. I guess it is true to say that the money that we thought was going to come from that legislation has not yet arrived—

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source


Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

in the federal Treasury. Senator Back laughs at that. Mr Acting Deputy President, as I am sure you would know, there was an opportunity at the time of a massive boom in the price of our minerals that we were exporting overseas to ensure that not just the shareholders of some of the biggest and wealthiest companies in the world but all Australians got to benefit by sharing the wealth that this mining boom had produced for Australia. That was exactly the intent and purpose of the legislation and that is exactly what the legislation has started to achieve.

Why has the tax not delivered as much revenue as people might have expected? Of course, the huge prices of some of the commodities that were taxed by this legislation have come down. It was always expected that the income from the tax would rise and fall along with the price of these minerals. So it is not unexpected that, when the price of commodities goes down, that also affects the tax. That was how the legislation was designed in the first place. I thought it was a terrific piece of legislation. I am bitterly disappointed that the then opposition, now government, is opposed to the legislation and is seeking to repeal it.

Some of the beneficiaries of this legislation are in the area that I am responsible for—that is, veterans. And, for the life of me, I cannot understand why this government is saying to the children of veterans, 'We're going to replace this tax and, as a result, we're going to take away from you the $211 per year that, under this legislation, you receive as a benefit.' I cannot work out why the government is proposing to do that. You may know, Mr Acting Deputy President, that I am seeking to permanently reverse that decision later on this afternoon. But I cannot work out why this government is being so callous and heartless to the children of our veterans by seeking to take away that benefit. It does not cost a lot—in the vicinity of a quarter of a million dollars a year. To this government, that is chickenfeed. It is a fraction of the benefit that high-paid women will receive from the federal government's paid maternity leave provisions. I cannot understand why this government wants to penalise that class of person in our country. But there are many other people who will be penalised. We heard from both Senator Urquhart and Senator Thorp about some of the other people—for example, superannuants were going to receive a benefit from this legislation. If this legislation is repealed—and I am hopeful it will not be repealed—then of course they will lose that benefit. Also, the low paid—women in particular—are vulnerable to missing out if this legislation is passed.

We have heard from Senator Thorp. She talked about developing so-called hot rocks. That was one thing the former government sought to support. I know there are hot rock projects in Western Australia, but the bulk of them, you would be interested to know, Acting Deputy President Fawcett—and I am sure you do know—are in South Australia. South Australia was going to be one of the very big beneficiaries. We know that some of the hottest places on earth are under the northern part of South Australia.

The funds that were raised by this tax were going to develop projects seeking to exploit that energy. It is clean and green energy, it is a very good source of energy, and it is an almost indefinite source of energy. If this legislation goes through, the companies that were benefiting from the contribution from the federal government will find themselves in a much more difficult situation and a potentially game-changing industry will not get the support from the government that it ought to.

It is probably not surprising when you think about it. If you listened to Senator Ryan's contribution—I am sorry he is not in the chamber—he made pretty clear the hard-line economic plan of this government. We have already seen it in his home state with the Toyota closures. We have certainly seen the consequence of this hard-line economic approach to our economy in the old seat that you used to represent in South Australia, Acting Deputy President Fawcett, in the future job losses at Holden. It was a terrible decision which was symptomatic of a government that is not interested in providing assistance the way governments ought to to solve problems in our community.

The MRRT legislation did that. It was finely balanced. It took income from a part of the community which was doing particularly well and sought to spread the benefit around the community. The more I think about it and the more I listen to Senator Ryan's contribution, that is not the approach that this government is taking, but you are wrong about it. I have already indicated some groups of people who are going to be particularly hard hit if this legislation comes through.

You want to take away this tax. I understand that; it is part of your proposal. But what I cannot understand—and this is an issue that I know you have been involved in, Acting Deputy President Fawcett—is that you have been so slow in opening up the Woomera defence area to mining. You have been involved in some of the discussions, Acting Deputy President Fawcett, and are fully aware that the former Labor government had a piece of legislation which it was ready to push through the Senate just before we rose for the election.

That legislation could have been supported by the then opposition. It had been supported in the lower house of the parliament, and no issues had ever been raised. Of course, you sided with the Greens and referred the issue to a committee, which then meant that the legislation was not passed. I was told that it was going to be one of your priority issues and that as soon as the parliament came back you were going to rush it back in and pass it before Christmas. Of course, that did not happen.

I was then forced to introduce a private member's bill to get the issue moving. We were again told that you would come forward with the legislation after Christmas, but that did not happen. We debated the bill and it is still sitting there; it has not been voted on. You have managed to talk it out. I think it is fair to say that South Australians believe that they are being punished by the new government because you are not supporting the legislation. You could have supported it in the last session of the parliament, but you punished South Australians because they did not vote the way you expected them to vote at the state election.

More than nine months have now gone by. You could have introduced that legislation. In fact, you could have supported us last year. That would have been the ideal situation. For nine months we could have been doing things in the minerals area to explore and get mining moving in South Australia. You have left it for nine months, so an opportunity has been lost in those nine months to seek, explore and get a benefit for my home state of South Australia and the country generally. We could have been out there finding minerals, exploiting them and selling them overseas. And we could have been raising taxes as a result of all of those things. For nine months this government has sat on its hands.

I hope that by introducing my private member's bill on this issue I will eventually embarrass you into introducing your own legislation on it, because we do not have a moment to lose in South Australia. I can see you are nodding, Acting Deputy President Fawcett, because I know that you know I am right on this issue. We do not have a moment to lose. You have dropped the ball on Holden; you have dropped the ball on Woomera. I desperately hope that in the very near future we are going to see your own piece of legislation that can deal with this issue.

If we do see that, we can start exploration and find minerals. As you know, there is an expectation of that in all the information from Geoscience Australia, which is a terrific organisation. Interestingly, every time somebody drills in a mine, Geoscience Australia get a sample, and you can go and have a look at all of the products of that exploration here in Canberra.

Had you done what we wanted you to do last year, people would be out there; they would be making money; they would be making discoveries—and, of course, all of the benefit of that income would be flowing into the federal Treasury right now. On the one hand, you are desperate to remove this relatively small tax, but you are so slow to go out there and exploit our minerals, particularly in South Australia, which would have resulted in some new wealth being generated for this country. I personally cannot understand your thinking on this. I just cannot understand.

You could be out there. You could leave the legislation as it is, and you could be out there generating new wealth by discoveries in the Gawler Craton in South Australia, and you would not need to do what you are doing. You would not need to punish the children of veterans. You would not need to take superannuation away from low-income earners and women. You would not need to abandon the research in the hot rocks area which has the tremendous potential to change energy delivery in this country. I just think it is a mystery that your priorities are all skewed.

We should be raising income. We should be encouraging mining. We should be out there encouraging exploration. That is the way to build our country and to build our wealth. In that way, you get the money that you need to run this country, and you do not need to take this away.

As we have heard on a number of occasions, the government has not worked out why it does not like this legislation. On the one hand it says, 'Well, it's not raising enough money,' and on the other hand it says, 'But it's an impediment to mining.' It cannot be both. You have to pick one or the other and you have to settle on it, but it cannot be both of those arguments. And yet those are the two arguments that this government has been using—but they cannot both be right.

The reality is that neither of those arguments is correct. The legislation being repealed is a piece of legislation which fairly distributes wealth in this country. It is a good piece of legislation, and we should not be here today seeking to repeal or overturn it. There are lots of other ways to deal with the issues. Obviously there have been some delays from the government side in terms of preparation for their budget. We do not know why they are keeping so much information under wraps. We thought it was because of the Tasmanian and South Australian elections, but they were two weeks ago. Perhaps it is because there is an election on in a couple of weeks in Western Australia. The government do not want to tell us what they are proposing to do in terms of dealing with the budget and raising all of those issues that are associated with the budget. They are not telling us.

But, whatever their plan to deal with the issue of the deficit is, this is the wrong way of going about it. You do not improve your bottom line in a deficit situation by removing part of your income. You just do not do it. It just does not make sense. If they are right that this is not raising as much money as people thought, then really it is not an issue to leave it as it is and to keep all of those associated benefits that Senator Thorp mentioned—she is not in the chamber now—that flow to the Australian people from the revenue that is raised in the piece of legislation.

So I oppose this legislation. I believe the government is heading in the wrong direction in this legislation. I can see Senator Fifield—

Photo of Mitch FifieldMitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | | Hansard source

Really? Really? Really?

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

Yes, I do. You have not heard all of my contribution, Senator Fifield, but I think I have very—

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

Senator Farrell, I remind you to make your remarks through the chair.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

I am very sorry about that. Senator Fifield sought to distract me, but future comments will be made through the chair, Acting Deputy President.

Senator Cameron interjecting

No, he did distract me, I am afraid to say, but I shall ensure that any future comments are made through the chair.

I oppose this legislation. I oppose it on very good public policy grounds. The repeal of the legislation is a mistake. Over time—and I am hopeful that the legislation will not be repealed, but if it is repealed—I think this government will come to understand in the future what a dreadful, dreadful mistake it has made.

1:42 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

I thank all those senators who have participated in the debate on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. Let me just conclude by observing once again that Labor's mining tax is a very bad tax. It is bad for the economy. It is bad for jobs. It is bad in particular for the great state of Western Australia. It was designed deliberately by Labor to hold Western Australia back, to make it harder for Western Australia to be successful, to make it harder for Western Australia to grow the economy more strongly and create more jobs. This, of course, in turn is bad news for our national economy and bad news for our capacity to create more jobs nationally. Furthermore, not only is this a tax which is a dog's breakfast in terms of its complexity, in terms of the distortions it creates in the economy and in terms of its inefficiency; it is a tax which is costly to administer for the Commonwealth and costly to comply with for the mining industry. It has tied an important industry for Australia up in massive, costly red tape while not raising any meaningful revenue.

Not raising any meaningful revenue has not stopped Labor—quite cruelly, I would say—from making a whole series of unfunded spending promises left, right and centre to a whole series of otherwise meritorious causes. But, when you do not have the money to pay for it, you do not have the money to pay for it. We in this government are committed to ensuring that we put Australia back on track, that we build a stronger economy where we can create more jobs, that we repair the budget mess that we have inherited from our predecessors and that then we rebuild from a stronger foundation. A stronger economy is good not only for the prosperity of the nation but also in terms of increased government revenue without the need for all these new, bad and complex additional taxes. Once you have a stronger economy and you have generated more revenue and put the budget back in the black, you are able to afford to do some of the things that are sensible.

I advise the chamber that under the Military Rehabilitation and Compensation Act Education and Training Scheme and the Veterans' Children Education Scheme, the children of veterans are entitled to non-means-tested assistance for their education. Depending on their circumstances—for example, whether they are living at home or away from home, whether they are homeless or double orphans—they will receive annual payments of up to $13,312 per annum. There are additional payments for single orphans of up to $1,036 per year. In addition they can receive special financial assistance of up to $4,000 in fares allowance, rent assistance, additional tuition assistance and guidance and counselling. Repealing the income support bonus payments across the board was a 2013 election commitment made by this government on the basis that it was an unfunded promise linked to Labor's failed mining tax.

This is a debate that has been going on for long enough. Today the people of Western Australia will have the opportunity to observe who in this Senate stands up for the best interests of the great state of Western Australia and who in this Senate continues to persist with trying to impose anti-Western Australian taxes that make it harder for the great state of Western Australia to be as successful as it can be and make it harder for our national economy to be as successful as it can be. I commend the bill to the Senate.

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

The question is that the amendment moved by Senator Milne be agreed to.

1:55 pm

Photo of Christine MilneChristine Milne (Tasmania, Australian Greens) Share this | | Hansard source

I seek leave to move the second second reading amendment which I foreshadowed in my second reading speech. The amendment has been circulated and it pertains to the low-income superannuation contribution.

Leave not granted.

Photo of John HoggJohn Hogg (President) Share this | | Hansard source

The question is that the bill be now read a second time.

The Senate divided. [14:01]

(The President—Senator Hogg)

Question negatived.