03-November-2011
Speeches
Mr ROBB (Goldstein) (12:46): I rise to speak today on the Minerals Resource Rent Tax Bill (2011) and associated bills. I think the comments by the most recent speaker, the member for Wakefield, say it all in a way. He mentioned early in his speech that 'any mug can deliver a surplus in a growing economy'. Perhaps I should remind the member for Wakefield that the government he is a part of have proudly talked about keeping the economy growing and yet at the same time have presided over the three biggest deficits in this country's history— by a country mile.
This is the level of economic incompetence that is running this country. This is what we have got to deal with. This is what industry has to deal with. This is why we have seen such enormous frustration from industry, not just the mining industry but so many other areas of industry, who are just gobsmacked by the economic illiteracy of those opposite—and it was characterised today by the member for Wakefield. He said it all and he said on behalf of all his colleagues. They do not understand business. They do not understand economics. They are all about politics and spin.
We heard recently from the CEO of the New South Wales Minerals Council, Dr Nikki Williams—and, again, I think this says it all:
"We are the darlings of the business pages, yet we painted as demons in the early general news.
"We help treasurers keep budgets healthy and give Australia the strength to stave off the threat of recession, yet our industry is a lightning rod for the most adversarial of political debates."
The report goes on:
Dr Williams said Australia was in the middle of one of the longest mining booms in the nation's history.
"Yet we face multiple policy, regulatory and legislative challenges that might collectively render our sector a less attractive destination for international investment than countries such as Indonesia, Colombia or even Mongolia," she warned.
This is at the heart of the problem that we have with this stupid tax, this dangerous tax, this tax born of envy and paraded as a subject of envy when in fact what it is doing is ensuring that Australia once again in a policy sense under this government shoots itself in the foot.
The attempted implementation of this mining tax over the last 18 months has been one of the most shambolic policy episodes this country has ever seen. This legislation comes 18 months after the Treasurer announced his half-baked so-called resources super profits tax. The first version brought down one Prime Minister who had not even seen out a term. This second version is contributing significantly to the imminent demise of another, if we are to believe the private talk of those opposite—and are they talking! And are they worried! The member for Wakefield should be in one of the safest seats around, but even he has got problems.
Mr Champion: I'm not worried about you!
Mr ROBB: This tax is yet another symbol of the gross incompetence of this government. Firstly they tried to nationalise 40 per cent of the resources sector—
Mr Champion: What are you going to do with your taxing measures?
Mr ROBB: Mr Deputy Speaker, do I have to put up with this ignorance from the other side?
The DEPUTY SPEAKER (Hon. DGH Adams): Order! I ask the honourable member for Goldstein to keep to his speech and not take any notice of interjections.
Mr ROBB: It is very difficult, Mr Deputy Speaker.
The DEPUTY SPEAKER: Order! And I ask for the interjections to cease or I will have to deal with people.
Mr ROBB: Thanks, Mr Deputy Speaker.
Firstly, they tried to nationalise 40 per cent of the resources sector. This is unprecedented and it spooked investors around the world. Now it targets the mid-tier miners. It is a highly discriminatory tax. It is still in a very dysfunctional form as a tax. It has not received any favourable treatment—except from the three big miners. It is seen as a bungled proposal and it reinforces the government's core instinct of taxing, spending and borrowing.
If you are responsible in any organisation, whether you are in business, sport or government, the first thing you do is identify your strengths. Once you have identified the two or three major strengths of your business or your country, you then seek to nurture, develop and protect those strengths, because they underpin your success. You do not see a football team send their champion player out on to the ground with a lead weight around his neck. You nurture your best players. They are the ones that give you the premiership. They are the ones that do something magical in the last half of the last quarter.
Clearly the mining and resources sector is one of our nation's great strengths. But what do we see? We see a government that has sought to introduce not just one, a carbon tax, but two, a mining tax, into the environment of a mining boom—when our mining and resources sector, perhaps our greatest strength, has contributed to the quality of life that we enjoy in Australia so importantly for well over 100 years. This government is imposing in the middle of a mining boom two new taxes. It is ignorance; it is envy; but, most importantly of all, it is dangerous. It is dangerous in terms of the lost job opportunities and the lost investment opportunities—and we are seeing sovereign risk manifest as a consequence.
Not only did they bungle the proposal in terms of its design—it has taken 18 months—it is now being rushed in as a symbolic attempt of achievement by a Prime Minister who is hanging by her fingernails to the leadership. That is what this is about. The way this thing has been designed and the way it is being introduced is all about politics.
Agriculture is another of our great strengths. And look at the way they handled the live cattle job. The incompetence with which they handled that has added to sovereign risk. Our international education effort is another one of our great strengths, but they introduced a visa requirement where families have to have three years of the education cost and accommodation to get a visa. Then they wonder why 20,000 Chinese students have stopped coming here. There is ignorance and incompetence. They are obsessed with taxing, spending and borrowing. That drives every piece of policy of this government. They are an old style socialist government; under pressure all they know how to do tax, spend and borrow. This mining tax is nothing but a tax grab, pure and simple, a tax that will discourage investment. It is a discriminatory tax.
Let's look at where it falls. In research released today by BDO, a major research group, the mining tax liability on Rio Tinto was calculated for the first five years and it was: zero, zero, zero, zero, zero. They calculated the mining tax liability on BHP, and the first five years, you will not be surprised is another five zeros. They have taken the real-life numbers of a small emerging miner who is making revenue in the order of $600 million to $700 million and calculated its mining tax revenue: first year, 2012, zero; second year, $49 million; third year, $107 million; fourth year, $96 million; fifth year, $68 million; and the following year, $63 million. So we are seeing a total effective tax rate of: 40.18 per cent in the first year that they pay, 45.68 per cent in the second year; 45.76 per cent in the third year, 46.12 per cent in the fourth year, and 46.20 per cent in the fifth year.
This is a scandal. We are putting a lead weight around the neck of our greatest strength in this economy. When you look at our competitors around the world—and they are significant, they are large and they are coming at us as they invest in infrastructure to move a mountain of resources that exist around the world—the highest effective rate of tax including royalties is 40 per cent in Canada. We are talking about mid-tier companies paying 46 per cent effective rate of tax with this new tax. Other countries, like Brazil and Mongolia and other major future competitors, are paying in some cases as low as 30 per cent and less. It is a lazy and short-sighted attempt by an incompetent government to prop up its budget. That is all it is.
Let's for a minute examine the myth that the minerals sector is somehow not paying its way. They paid very little in fact in 1999, but by 2002-03, when the mining boom was just taking off, they paid around $6 billion in taxes including royalties and corporate taxes. In 2010-11, that figure exceeded $23 billion, a fourfold increase. The profits based company tax was in the order of $4 billion in 2002-03. That grew to nearly $15 billion. A massive new investment as well over the next four or five years and the reduction in costs to offset against profits will mean that revenue will continue in a very strong way, depending on the price of the product. So here we have with the existing taxes, a fourfold increase which is likely to get much higher in the next three or four years. Yet the government wants to come in with a carbon tax and a mining tax which are going to add billions and billions to the tax that these companies are paying—and the effective rate of tax heading towards 50 per cent.
This is nonsense. At a time when we should be locking in all of the potential investment that this great resources sector can produce, we are inviting competitors around the world as we see a supply response coming down the line. We think we are awash with resources, and we are. Our iron ore is 13 per cent of the world's supply and our coal is 15 or 16 per cent of the world's supply. But there are mountains of it elsewhere and this government is oblivious to that. They are inviting competition, they are ensuring that we will not be competitive and they are taking great risks. They have already spent this money before they have earnt it.
Then there is the prospect of China. Global reports came from Paul Wiseman yesterday that China's comedown is being engineered by its policy makers. They want to slow expansion just enough to cool inflation. If they get down to six or seven per cent growth, which will cool inflation, it is still strong growth but it will see a 15, 25 or 30 per cent reduction in prices. This government is vulnerable, our structural deficit at the last budget was twice Germany's and was 30 per cent higher than even Italy.
Mr Champion interjecting—
Mr ROBB: The member for Wakefield smiles. He does not understand what a structural deficit is.
Mr Champion: I understand it.
Mr ROBB: It means we are highly vulnerable. The government are spending money they have not got with this mining tax and the carbon tax. This means we are being put in a highly vulnerable position with deficits potentially out for another 10 years.
This bill should never have come before this House. It is the politics of envy. It means that, as a country, we are shooting ourselves in the foot. Under this appalling government it will turn away job creating investment, it will make our economy more vulnerable, it is antigrowth and it is just another piece of stupidity. If we get the privilege of government, we will remove this tax.