Senate debates

Thursday, 17 July 2014


Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 [No. 2]

5:42 pm

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

I rise this afternoon to oppose the repeal of the minerals resource rent tax and to reflect on where we have been on this issue of raising revenue from the mining industry over recent years. It is extraordinary that on the day that the Treasurer stands up and says there is a revenue crisis in Australia and then lambasts the Senate for not passing his cruel budget measures, this is the biggest giveaway of a government that you could ever have seen. In one day they want to give away more than $20 billion worth of revenue over the forward estimates: $18 billion on carbon pricing and between $2 billion and $3½ billion—so you could get it up to $21½ billion—on the mining tax. How extraordinary. It is the best example yet of cost shifting, of saying to the big end of town, the big miners, the big polluters: 'Wink, wink, nudge, nudge, you gave us the money through your donations, you backed us in opposition, we are in government and now you can maximise your profits and send it out to your shareholders'—the overwhelming majority of whom, 83 or 84 per cent, live overseas—'Send that profit to them, don't you worry about it. We will go and take the money out of the pockets of the Australian community to make up the shortfall.'

That is what is going on here, the most mega shift: robbing the pockets of the community to put it into the profits and give it to the overseas shareholders of the big polluters and the big mining companies. That is exactly what is going on here. I find it extraordinary that a Treasurer would have the temerity to say to Australians: 'We want to hit the unemployed even harder, we want to make people pay more to go to the doctor, we want to deregulate universities and make life harder for university students who have to pay more, we want to make it really bad for women in the workforce who have no superannuation—all of that because we want to give Gina and Clive and Twiggy and all the rest of them as much as we possibly can.' That is what is going on here. It is extraordinary that we get a 'budget emergency' talked up when we have the big give-away in town: 'Here're the dollars, boys. We got elected for you and we're giving them out to you.' That is what is going on here.

Let's have a look at the history of this. How did we get into a situation where, at a time when the mining companies are making mega profits, so little is being returned in this mining tax? And why has there been such a reluctance, to fix it? Let's go back. There has been a bit of looking back, today, with respect to the carbon price. People with a bit of political memory might recall that coming into 2010 the expectation was that the then Prime Minister Kevin Rudd would call a double dissolution election on the back of not getting the emissions trading scheme that he negotiated with the coalition. He had negotiated it so that it was browned down to the point of being useless, with mega dollars again going to the coal industry and mega dollars going to trade-exposed industries—mega dollars all round.

But, never mind, coming into 2010, the Greens put on the table a compromise position on carbon pricing. On 21 January 2010, a compromise position on carbon pricing was put on the table, where we asked, 'How about a fixed price period of two years, and a price of $23?' We put that on the table and we met with Senator Wong at that particular time to ask, 'What about that?' We were told that, no, there was no compromise to be brokered, at all. It was only then that we found out that Labor had decided to abandon carbon pricing, and instead go with a mining tax—the super profits tax.

That occurred in the first quarter of 2010. Kevin Rudd, the then Prime Minister, went out and launched his super-profits tax, but the big miners were not going to have a bar of it. They got together with their mega advertising campaign. They put millions of dollars into that campaign. But it was millions of dollars to save billions of dollars, so the advertising campaign was a worthwhile investment. But the focus of the miners was not only to knock off the super-profits tax but to show the Rudd government—it was a message clearly picked up by the Gillard government and relished by this one—that the mining industry will destroy you with a populist advertising campaign unless you do as you are told. And so they did. They destroyed Kevin Rudd, who was seen to be indecisive and unable to sell his super-profits tax.

Then Prime Minister Gillard took over. With the most extraordinary play-acting—if you look back you can see it for what it was—a deal was done. Prime Minister Gillard and Treasurer Wayne Swan at that time negotiated in a room with the mining industry to give them what they wanted on the tax. What was the deal? The deal was that the Gillard government would get the political win of having negotiated with the big miners to deliver a mining tax, and the miners would get the win of not having to pay the tax. It was a beautiful thing! They got the money and the Gillard government got the credit in that political deal.

At the time, we said, 'This is wrong. There's a huge loophole in this, which will mean that the federal government will have to pay.' The loophole was that the states could increase the mining royalties, and any increase in royalties would be given back, and be made up for, by the federal government to the mining companies. So the mining companies did not have to pay; the taxpayers effectively made up the difference. That was a mega hole in the tax, and we moved an amendment, at the time that the legislation was put through this parliament, to close that loophole. Of course, it was rejected. It was rejected by the government, because they had done the deal with the miners. And it was rejected by the Liberals, who were then in opposition, because they wanted to make sure that the miners did not actually have to pay the tax.

So the flaws in this tax were there from the very beginning, and the Greens have said consistently throughout, 'We should be fixing this mining tax to get the revenue for the community in order to be able to spend on education, health, and all of the things we need for the future.' That is why we said, 'Let's fix the tax and set up a sovereign wealth fund so that we can use the benefits of something which is a one-off.' Let's face it, when the ore is gone, it is gone. The Norwegians made money from their minerals. They set up a sovereign wealth fund, and out of that sovereign wealth fund they have managed to fund the transition in their economy and new jobs.

The upshot of all of that is that there is no sovereign wealth fund. The government of the day did not do as the Greens wanted. Nor would they fix the mining tax. Ever since then we have argued for it. That is why I want to foreshadow a second reading amendment. Rather than repealing this tax we should be fixing this tax. Mr Hockey says he wants revenue. Well, I am ready to give him revenue. I was ready to keep $18 billion worth of revenue but he wanted to give it away. Let me try again: I am prepared to give him more revenue by fixing the mining tax—taking it out of the pockets of these super profitable mining companies.

I would like to fix the mining tax by applying a 40 per cent rate to all minerals. That is the first thing. If you look at the oil and gas industry you will see that they already pay 40 per cent. Why shouldn't the rest of the mining industry pay the same 40 per cent? It stands to reason that you would do that. The second thing we are saying is that we should rebate only those royalties that were in place at July 2011. We should close the loophole on the state governments. If the state governments want to raise royalties the Commonwealth is not going to rebate that after July 2011.

The third thing we have said is that we should only allow depreciation on the book value of the amounts spent on mining infrastructure. The issue here is that the mining industry has again ripped us off disgracefully, claiming everything that they possibly can in order to get their depreciation maximised. We do not want to allow the mining companies to be able to depreciate what ever they like. It is a key flaw in the existing tax

So I am foreshadowing a second reading amendment because an amendment is already before the chair.

I want to go to why it is essential we do this and how disgraceful it is that Rio Tinto, Xstrata and BHP managed to rip off and hoodwink the Australian Prime Minister and Treasurer of the day. You will recall we have had revelations since that there were the Treasury officials outside the room, no doubt absolutely appalled by what was going on inside the room—not even invited in—as the mining companies negotiated this with people around whom they ran rings. I want to indicate the extent to which they did run rings around them and I want to talk about Glencore for a minute. Australia's largest coalminer, Glencore, formerly Xstrata, paid zero tax over the past three years, as at 27 June this year. I have an article from The Sydney Morning Herald. Glencore paid zero tax over the past three years:

… despite income of $15 billion, as it radically reduced its tax exposure by taking large, unnecessarily expensive loans from its associates overseas.

…   …   …

As it was claiming tax breaks in Australia on these inflated interest payments, the secretive Swiss-based multinational actually increased its lending to other related parties interest free. This may include its executives. Nobody from Glencore, which used to be called Xstrata, was available for comment despite repeated requests.

The aggressive tax avoidance tactics of Glencore Coal International Australia Pty Ltd have been identified in an independent analysis of the company's accounts—

and so on and so forth.

At the end of the story it says:

Glencore is an extreme case: founded as it is by US tax exile Marc Rich, controlled from a tax haven, and with a colourful history as a corporate maverick.

It is chaired by Swiss-based Ivan Glasenberg, who ranks No.5 on BRW's rich list … after lifting his wealth by $1.01 billion on the back of Glencore's rising share price.

In the past two years globally, this company has presided over 53 workplace deaths, a worse safety record than BHP and Rio Tinto.

This is one of the companies who sat down with Prime Minister Gillard and Wayne Swan and negotiated a price, a carbon tax, which had within it at the start the problems of its failure.