Thursday, 21 June 2012
Matters of Public Importance
The Speaker has received a letter from the honourable member for North Sydney proposing that a definite matter of public importance be submitted to the House for discussion, namely: The adverse impact of government policy management on Australia's sovereign risk profile.
I call upon those members who approve of the proposed discussion to rise in their places.
More than the number of members required by the standing orders having risen in their places—
Madam Deputy Speaker, the Westpac consumer sentiment index was released last week and Westpac described their latest survey for June as 'another disappointing result'. The National Australia Bank had its monthly business study last week and their chief economist, Alan Oster, said:
I have never seen a result like that ever.
He added that the degree of weakening in activity over the past couple of months suggests that the economy is struggling with conditions in some of the previously strong industries—namely mining and finance. Business and property are also looking somewhat laggard at present.
We get accused of talking the economy down. We get accused of negativity. Here are the worst consumer sentiment surveys that have been seen by the surveyors, and we get blamed for it as if it is our fault. The government is the one that is in charge of overseeing the Australian economy. The government is the one who is responsible through its policies for the direction of the Australian economy and this week alone we have seen the government bury and resuscitate policies in biblical proportions that have not happened for more than 2,000 years. Policies that came out during the budget were killed and then resuscitated by the Prime Minister last week. The first was company tax cuts. The second was the passenger movement charge CPI indexation which the government increased in the budget but this week dumped. The third one truly takes on Lazarus proportions—withholding tax on management investment trusts. It was announced in the budget that the government was going to reduce it from 30 per cent to 7½ per cent. The budget said it is going to go back up to 15 per cent.
An opposition member: It bounced.
It has not quite bounced, but they put it in their bill that was before the House yesterday. Then they excised it from the bill yesterday and today they have reintroduced it. So at first the government reduced it from 30 per cent to 7½ per cent. Then in the budget they said they were increasing this tax to 15 per cent. Yesterday they said they are dumping it back to 7½ per cent and today they have introduced a bill to increase it back to 15 per cent. And they are wondering why people are confused about the direction of this government. Seriously, it is a yoyo tax policy; it goes up and it goes down, it goes up and it goes down. But this is consistent with Labor in government.
We know the almighty proposal from the Prime Minister that there would be no carbon tax under a government she leads and then a few weeks later she introduced it. At the time, the Treasurer and I were on the 7:30 Report. That is when Kerry O'Brien was still hosting it. Red Kerry was still there interviewing. He asked a question of the Treasurer. He said, 'Would you introduce a carbon tax?' The Treasurer said: 'That is a hysterical assumption, a hysterical allegation. We will not do that.' Of course, Australians took him at face value. And here the Treasurer was giving us a brief analysis of what hysterical is today. He is the man hysterical because he is in a week and a half introducing the world's biggest carbon tax.
But this is part of the litany of broken promises from Labor. I thought I would get a list. There are more than 37 election promises broken, promises made solemnly by the government to the Australian people, promises that have resulted in back flips and contortions on a grand scale. You remember community consensus on taxing carbon. That was one of the love-ins. They said they were going to cut company tax—a $500 standard deduction on tax returns is what Labor promised. They dumped that in the budget. They promised to deliver the millennium goal on foreign aid. Well, they have dumped that. They have dumped a 50 per cent discount on interest income. They were so committed to dealing with the challenge of carbon dioxide emissions that they had a grand plan to give green buildings a tax break. They have dumped that. They promised to increase defence spending. They said there were going to be cuts in the defence budget but they were going to reinvest them in defence. The Prime Minister has broken that solemn promise and broken it quite spectacularly, because Australia is now at the lowest level of defence spending as a percentage of GDP since 1938, but that is what the Prime Minister calls a defence spending increase.
Believe it or not, those opposite said they were going to spare the Public Service from budget cuts. I believed them, too, because the Public Service is 20,000 larger in number than it was when they came into government just four years ago. They are making some cuts, but in the wrong areas. Remember gambling reform? Remember the agreement with the member for Denison? He remembers it, but you guys have forgotten. There is more. We know about onshore processing. We could get Captain Emad in here again. Where is Captain Emad? He has gone out the door with Swanny! And we remember the offshore processing centre in East Timor. What the hell happened to that? The Prime Minister forgot to tell the Timorese she was going to build a processing centre for refugees in their country. That is like reopening Fort Denison in Sydney and the Prime Minister of East Timor announcing that he is going to shuffle people there.
Of course, we had cash for clunkers—they believed in that. That did not even get to legislation. They had a big review into the Building the Education Revolution program, led by Mr Orgill. They promised to implement all the recommendations and they have implemented none of them. What happened to the Solar Credits scheme? And how about the national school curriculum, which the Prime Minister said was definitely going to start on 1 January this year? We are still waiting.
The list goes on. I could spend all day here, but do you know what? The first point to make is that this is what creates sovereign risk—these changes; these flip-flops on policy. We do not write the speeches. We do not write the press releases from business leaders and employers, not just here in Australia but also around the world, expressing grave concern about the incompetence of this government. The quotes I am about to give are all from 2012—this year. So I am putting aside all the legitimate criticisms of the Rudd government in 2008, the Rudd government in 2009, the Rudd-Gillard government in 2010 and the Gillard government in 2011 and just dealing with the concerns of employers, businesspeople and workers in 2012. Ian Matheson is from the Australasian Investor Relations Association—covering the whole region. In a report on the survey of the top 200 ASX companies he said:
In the comments from corporates, obviously reflecting what is being told to them by international investors, there is absolutely no doubt there has been heightened concern about things such as the carbon tax, the MRRT (minerals resource rent tax), growing industrial dispute activity and sovereign risk generally. That has been going on for 12 months now.
… people looking outside at Australia think we're a sovereign risk because of the uncertainty created by policy fluctuation.
The key is to create a policy and investment environment sympathetic to capability building for the long run—
pointing to the need for—
a tax system that provides … certainty, stability and low sovereign risk.
Bernie Ridgeway, Managing Director of Imdex Ltd, said:
You're taking a previously blue chip jurisdiction for investment (Australia) and we're turning into something where we've got sovereign risk and uncertainty.
My clear message to the Australian Government is: do not create uncertainty.
Instead provide our investors with the confidence in Australia as a stable fiscal and regulatory region—allow us to stay competitive.
This is now extending overseas. David Denison, President and CEO of the Canada Pension Plan Investment Board, said—and I am sure the member for Leichhardt can add to it; he is providing plenty of commentary here:
… Australia’s budget that was tabled last week effectively doubled the tax burden on our real estate and infrastructure holdings in that country.
If we conclude that these kinds of risks within any country become significant enough to call into question the predictability and stability of cash flows that are at the heart of the investment rationale for infrastructure, our response will be very quick and rational—we will simply stop investing there.
This is about the withholding tax on managed investment trusts, which the government said they were going to reduce from 30 per cent to 7½ per cent. In the budget they went and doubled it to 15 per cent. Yesterday, they dumped it back to 7½ per cent and today they have introduced legislation to re-increase to 15 per cent. One of the biggest investors in the world is saying: 'What are you doing? We will put our money somewhere else.' And they do not just invest in mining; they invest in basic infrastructure like electricity, water, toll roads and transport more generally—and do you know what? They are saying it is getting too hard.
Ivan Glasenberg, CEO of Glencore, one of the biggest miners in the world and about to buy Xstrata, said in London:
At least in the Congo they need you, they want you there and if they start changing the rules on you, you may not continue investing.
… … …
So Australia does have its risk, yes. We saw the carbon tax, we saw the mineral resource tax.
This is one of the biggest miners in the world saying that the Congo is proving to represent a lower sovereign risk than Australia under Labor. If you thought that was a one-off in London, Jac Nasser, who is the Chairman of BHP Billiton, is on the global board of News Limited and is a former global head of Ford, said:
I cannot overstate how the level of uncertainty about Australia's tax system is generating negative investor reaction.
I am sorry to say, now, frankly, when I meet with investors around the world they are saying, 'Tom are you worried about your over-exposure to Australia' … that’s not a good thing, that’s a damming testimony for where Australia fits. It's not something to get fretful about, but it's something that should be recognised as a problem.
The consequence of introducing that tax at that level in Australia today is very, very bad for this economy, particularly in terms of its international competitiveness … it raises costs further within Australia. It reduces our competitiveness for export of energy related commodities and it therefore renders us less competitive in the future.
Bernie Brooks, Myer chief executive, said:
I'm not sure how you are going to get a greater degree of efficiency when you have the Fair Work Act—
I have hardly mentioned industrial relations—
which is going to cause an increased cost of labour … The reality is paying 225 per cent penalty rates on a Sunday is going to have a significant impact on business
We are not writing these things. These are people that employ other Australians. Bernie Ridgeway, managing director of Imdex, said:
You're taking a previously blue chip jurisdiction for investment (Australia) and we're turning into something where we've got sovereign risk and uncertainty.
Joe Ricciardo, Managing Director of GR Engineering, said:
It's in a de facto government arrangement where the Labor Party's being controlled by Greens and Independents and none of them are aligned to what needs to be done in the country.
The Labor Party is in the hands of the Greens and Independents for every decision. The issue is we have a Government that doesn't have the ability to govern.
Fund managers who control stock markets around the world all are telling me they are not investing in Australia because of the Government.
BGC owner Len Buckeridge says:
We have become the laughing stock of South East Asia as our reputation falls into a morass
I can keep going on. The bottom line is this: Labor is creating uncertainty in Australia. Labor is creating negativity in Australia. Labor's taxation incompetence and poor governance arrangements prove it is not ready to govern the country and should step aside. (Time expired)
Listen not to what the coalition say but to what they do. Watch what they do, and that is to invest as hard and as fast as they can in mining shares in this country. This is their own money, and they are voting with their wallets, as revealed in the statements of pecuniary interest. One after another, they are falling over each other to get into mining shares. Then you have, yet again, the shadow Treasurer of this country walking in and trash-talking the Australian economy, seeking to gain the maximum political benefit while at the same time doing exactly the opposite to obtain the maximum financial benefit—that is, to invest in Australia's future by investing in our industries.
We have just had a diatribe from the shadow Treasurer, who knows nothing other than talking the Australian economy down, but I would rather look again at what businesses are doing. The Business Council of Australia has just released a report indicating that there is a pipeline of investment running towards $1 trillion. This is unsurpassed in Australia's history. The report says:
By 2013, expenditure on capital investment is likely to grow to 30 per cent of GDP and remain at that level for the rest of the decade.
How does that constitute perceptions of sovereign risk? Why would investment in this country rise to 30 per cent of GDP, compared to an average investment intensity of 20 per cent of GDP for OECD countries? So not only is Australia doing well in absolute terms and extraordinarily well in historical terms but Australia is also doing very well relative to the rest of the OECD. The Business Council of Australia is indicating that it is likely that investment as a share of GDP for the rest of this decade will be 30 per cent, compared with 20 per cent for the rest of the OECD. It goes on to say:
The size of the largest of the major projects in the pipeline is unprecedented in Australia’s history …
Of course, we have various statements from various business leaders and indeed from politicians. Just yesterday the Liberal Premier of Western Australia referred to that day's 'announcement by Rio Tinto’s board that it will fund the completion of a major expansion of Rio Tinto’s iron ore port at Cape Lambert, worth more than $2 billion'. He said:
It underlines the increasingly significant role that expanded iron ore production and a dynamic Pilbara are having in shaping the economic and social future of our State.
This is from a Liberal Premier. He is applauding the big new investments that Rio Tinto is making in Australia because he is playing it straight. He is telling it as it is, not—as the Shadow Treasurer comes in here and does—telling it as those opposite would like it to be; they would rather see Australia fail than the Labor government succeed. They will trash-talk the economy at every opportunity. We know that Shell is investing more than $30 billion in Australia over the next five years. The chief executive of Shell, Peter Voser, said:
Shell as a company is actually very much advocating that we need a price for carbon on the worldwide basis and we want that to be on a market mechanism.
So there you have Shell expressing its faith with a massive investment in this country.
We also had references to gas-producing companies in Western Australia. Here is one: Woodside. That is a very large gas-producing company and it had this to say last month. This is Peter Coleman, the CEO of Woodside. One would think he would know a bit about gas and sovereign risk, as it is a multinational corporation. He said:
Woodside and our peers benefit enormously from Australia’s low sovereign risk profile and open investment regime.
Australia is a place that major oil and gas companies want to do business.
You would not believe that if you were listening to the Leader of the Opposition or the shadow Treasurer.
The Leader of the Opposition comes in every day and says: 'That's it—on 1 July, it's all over red rover. There goes Whyalla. There goes the coalmining industry.' Only last week he talked about what would happen from 1 July—or some time thereafter, because I understand that this is now a python, not a cobra strike or a 'noa constrictor' or whatever he has up his sleeve or elsewhere. What I am saying is that this opposition leader is trying to talk down the Australian economy. He is saying that there will be no coal industry in Australia—that the coal industry of Australia will be annihilated. The problem for the Leader of the Opposition is that 1 July is now fast approaching, and he has not had the dexterity to even consider changing tack other than by changing metaphors from cobras to pythons and 'noa constrictors'. So he is still flat-footed, saying that after 1 July it will all be doom and devastation. That is why you see him today doing this tumble into a pool full of foam. But after 1 July he will crack his head on the diving board. That is what is going to happen: as he tries to do a spectacular backflip he will crack his head on the diving board and he will fall to the pool in a gigantic bellyflop, because the Australian economy will go on and the investment will increase—not because of what people say but because of what people are doing. And that is investing with confidence in the Australian economy.
You would reckon that the ratings agencies would know a little bit about sovereign risk. This is why they live and breathe; this is how they make their incomes. And this is what they said on 8 May—this is Fitch, first of all:
Australia's low general government debt-to-GDP ratio … is already a standout ratings strength, having given it a demonstrable capacity to absorb fiscal and economic shocks.
Fitch upgraded Australia to 'AAA' from 'AA+' in November last year, citing the country's strong credit fundamentals. At the time, we noted that successful implementation of the government's medium-term fiscal consolidation plans would support the ratings.
Now Moody's, also one of the three international ratings agencies, said:
The commitment to returning to surplus is important for Australia's credibility in accessing global capital markets.
And Standard and Poor's on the same day said:
Restoring the government's strong fiscal settings through a forecast return to surpluses over the cycle and maintaining low debt will provide flexibility to respond to large economic and financial shocks, and is consistent with maintaining the 'AAA' rating on Australia.
It is not just Standard and Poor's who are maintaining a AAA rating for the Australian economy; it is all three ratings agencies. This is the first time in Australia's history where all three ratings agencies have rated the Australian economy AAA. And if I were an investor and if I were considering Australia as a destination, I tell you who I would be listening to before I ever listened to the Leader of the Opposition or the shadow Treasurer, and that is the ratings agencies, because it is their job.
The coalition thinks that it is its job to trash-talk the Australian economy. Why? Because they do not want the Australian economy to succeed. They do not want people to get more and better jobs in the Australian economy. The other day—two weeks ago, when those very good figures came out—we had unemployment of 5.1 per cent, we had GDP growth at 4.3 per cent, we had a Reserve Bank cash rate of 3.5 per cent and we had an inflation rate of 2.2 per cent. And have you ever seen such a hangdog performance from the shadow Treasurer? There he was, and they said, 'Are you questioning the numbers?' and with an old hangdog look he said, 'Oh, the numbers are the numbers are the numbers.' I have never seen a more despondent shadow Treasurer in recent history, if ever. And the reason is that those opposite want to see the Australian economy fail. That is why they are 'glum and glummer'. That is why the shadow Treasurer was glummer—if possible—than the opposition leader on that day, with that performance. It was the old hangdog look: 'Oh, my God!' You can imagine what happened in the office when they read out the GDP figure of 4.3 per cent. He would have said, 'Oh no! No—it can't be right. I'm not going to do media.' And they would have said, 'Joe, you're booked in.' 'Oh, my God! Can you question the figures? I'd better not question the ABS. But, gee, I'll try to look happy.' But he could not. He could not raise a smile, because they were so despondent. They believed that that had damaged their electoral prospects, which are all they care about.
For further evidence of the fact that Australia is valued very highly around the world as an investment destination, a 2011 survey by the United Nations Conference on Trade and Development, the China Council for the Promotion of International Trade and the Asia Pacific Foundation of Canada found that Australia is seen by Chinese businesses as the second most open destination after the United States. We are not talking about a select number of countries: we are the second most favoured destination in the world as seen by Chinese investors. And this government is working very hard with China to ensure that there is the opportunity of further investment in this country.
But Mr Deputy Speaker Scott I have to say that members of your party—to whom I believe you are not very close—have been running around with anti-China rants. And I hope that you prevail, Mr Deputy Speaker, in the national interest. I am not being political here, I just think that it would be a terrible tragedy if Senator Barnaby Joyce ever made it into the House of Representatives and were to put himself forward as the alternative Deputy Prime Minister of this country. I genuinely believe that, Mr Deputy Speaker. You are a good man; you approach policy on a sensible and balanced basis and you represent your constituents properly. But this guy, because he cannot get off TV and because he cannot keep his mouth shut, runs around with his anti-China rants. These rants are, through the silence of the opposition leader, completely condoned by the opposition leader. Why? Because they come out of the same stable. They are out of the BA Santamaria stable. In fact, the opposition leader said, 'I worship the very water that BA Santamaria walks on.' He thinks that BA Santamaria was the messiah.
Senator Joyce knows that if he goes around scratching hard enough with this 'fortress Australia' mentality—this cringing mentality—he will find that there are some political votes to be harvested. He should be concentrating on supporting rural Australia harvesting grain and harvesting crops, rather than running around seeking to harvest votes in his quest to become the candidate for the Deputy Prime Minister of Australia. So I wish you every success, Mr Deputy Speaker Scott, not only because I like you but because I think this guy is a genuine danger to Australia.
We abandoned the 'fortress Australia' mentality, really, around the fifties and the 1960s. And I will give credit to the now National Party back in 1957, because it was John 'Black Jack' McEwen—with whom I would otherwise not have a lot in common—who had the foresight, the vision and the guts to go to the Japanese after the terrible toll of the Second World War and propose a commerce agreement.
That was supported by Menzies, so I am saying that they were visionaries in doing that. I think that that is the sort of leadership that is needed.
That sort of leadership was then followed up by Whitlam, with the recognition of China. He said he would do it when he became Prime Minister and he did. It was followed up by Hawke and Keating, and these are the people who have helped to put Australia in the right place at the right time in the Asian region in the Asian century. It is why we are undertaking this very big and ambitious project: the Australia in the Asian century white paper exercise. At the same time there is this rabid behaviour from Senator Barnaby Joyce, who is not some sort of erratic backbencher; he is bound by cabinet solidarity. The fact that he runs around with his anti-China rants tells me one thing—that is, his activities, his behaviour, his language are all condoned and supported by the Leader of the Opposition. If for no other reason—and I could list 25 of them—the opposition leader should never be Prime Minister of Australia. Senator Barnaby Joyce should never occupy a senior position on any frontbench in this country. I believe that from my heart because of all the work that has been put in by previous governments—Liberal, National and Labor governments—to position ourselves in the right place at the right time in the Asian region in the Asian century. So, when you talk about sovereign risk in these debates, look at the sovereign risk that is being created by Senator Barnaby Joyce and condoned by the opposition leader because, in their hearts, the opposition do want to return to a fortress Australia.
You have, on this side of the parliament, a visionary political party. The Treasurer and Deputy Prime Minister said, 'We're the progressives; we do the big changes; we do the important changes for Australia's future.' On the other side are the reactionaries. You have the shadow treasurer coming in here with a hangdog look and saying, 'Look; I've found a negative quote. Oh, this is terrible. Oh, here's another negative quote.' Well, look at what they do rather than what they say. They fall over themselves to invest in shares. Look at what the ratings agencies say: Australia is AAA rated for the first time in its history. Look at what investors are actually doing. You have got Shell; you have got Woodside. You have got major projects here. You have got an investment pipeline of more than $900 billion. Investment as a share of GDP is set to rise to 30 per cent compared with 20 per cent for the rest of the OECD, all great news for Australia, all because people know that under this government the environment is right to invest in this country. Yes, of course we take advantage of our proximity to China but that is not through good luck; it is through good management, through visionary management. We will continue that. We will continue to say yes to responsible economic policy while they continue to say no to everything. (Time expired)
I think the minister ran out of things to say several minutes ago, particularly when he started talking about how our proximity to China is apparently due to good management, not luck. I really thought it was about distance, personally. As a proud Western Australian I see what great things the innovators and the courageous have done for our state and, as we know now, this country. I talk of the industry that, for all intents and purposes, carries this country at this time: the resources sector. There was a time when it was said that Australia rode on the sheep's back, indicating the dependence on the wool industry, yet I wonder where this country would be if it were not for those who backed themselves in the exploration and development of mines and gas and oil fields. Where would we be if no-one wanted to take a risk? Where would we be if people like Lang Hancock had not risked the shirt off his own back in the belief that he could find and develop mining opportunities for the sake of this country? Where also would we be if the big and the mid-cap miners just decided, 'Well, we will sit on what we have; we won't risk anything more'? Where would we be if the guys involved in the small start-up prospecting companies did not mortgage their houses on the belief that they could succeed? It is true that many of the great resource businesses in western Australia were established and continue to be established by pioneers. Whether it was 50 years ago or whether it is right now, success in mining at some point takes someone to go out to some dusty, barren landscape to start making decisions. At the start of some ventures there are no six-figure pay cheques.
Where we would be is that this country would be less developed in every respect of economic, social and other forms of its life. We would be in recession and cities like Perth would be towns, not cities. This country is being held up by those who have taken risks in the belief that for the high risk there will be higher returns. Every one of the fly-in fly-out workers and their families and supporting businesses in Malaga, Wangara or Lansdale within the electorate of Cowan owe their existence to the fact that someone was willing to take risks and get out there, away from the cities and look for oil, gas, iron ore, gold, uranium and many other minerals.
Those who are employed as a result of these origins and as a result of the continuing decisions to invest and take a chance are the ones spending money in our retail sector in Perth and around the country. Food, equipment, vehicles and everything that keeps mines, projects and supporting businesses going are being sought in most cases from other businesses around the country and so the cycle goes on. Of course not everyone can or wants to take those risks but those who can and do in exchange for that risk should get the returns.
This government falsely believes that what comes out of the ground is the property of every Australian, but if it comes out of the ground in WA it is the Western Australian taxpayers that are due the royalties, not the Australian taxpayers. The same applies for each mine in any state or territory. This government sees the resources sector and Western Australia as cash cows. In the case of Western Australia, they fleece in excess of 40 per cent of the mining tax money out of WA and give a pittance back as they try to buy the votes they need to save their political hides.
The carbon tax is a bizarre piece of legislation that will have absolutely no effect on the world's climate, despite it being the world's biggest carbon tax. On the carbon tax, a lot is said by the government about who said what about Whyalla being wiped off a map but, as we know, it was Wayne Hanson, South Australian Secretary of the AWU—probably the preselector for half of the South Australian members on the other side—who said that Whyalla and Port Pirie would be wiped off the map by the carbon tax. So if they want to quote their own preselectors and be accurate maybe they should do so.
The definition of sovereign risk does include uncertainty about a nation's economic policies, and the idea that regulations or laws can change without warning creates a lack of trust and consequent uncertainty. Sovereign risk is about certainty and consistency, and the carbon tax is an excellent example of a policy creating uncertainty and being inconsistent. Clearly, when the voters and investors hear a Prime Minister six days before an election say, 'There will be no carbon tax under a government I lead' and the Treasurer say, 'Certainly what we have rejected is this hysterical allegation that somehow we are moving towards a carbon tax,' it is interesting to consider those pre-election statements versus the post-election reality, because this goes to more than just the outrageous deception of the Australian people. These facts about pre-election promises of no carbon tax and then post-election deals with the Greens for a carbon tax say something loud and clear to international and domestic investors. It says that if the going gets tough for the Labor Party they will ditch any key commitment in order to hold onto power. So those thinking about investing in Australia now know that a Labor promise cannot be relied upon and they have to factor that into their lack of certainty about Labor. Even the government's $23 a tonne as the carbon tax starting price represents a sovereign risk, as that is above any market price in the world and, indeed, the government predictions as seen in the Treasury documents. It seems that while economists everywhere predict the carbon cost per tonne will fall as low as $4 per tonne, Treasury says that it will rise to $29, and if it does not the whole scheme will fail. Investors are looking at the real world realities, and they can see the fallacies that surround the carbon tax.
Fortunately, they know that we are clear in our commitments, and they at least can rely on a future Liberal-National Abbott government. The question becomes: what outcomes are we seeing as a result of uncertainty and radical reversal of policy positions from this Labor government? The impact of sovereign risk on outcomes can be seen in projects such as the Port Hedland outer harbour. Instead of a full commitment to the whole project, now it is being phased so as not to risk the entire investment. This is where the lack of policy certainty and real sovereign risk are now playing.
Fortunately, when investors look around the world at mining and exploration projects, despite increasing levels of uncertainty concerning Australia under Labor, the fundamental political instability in parts of Africa still provides a deterrent. Yet there is increasing interest in South America, and if we are going to attract every possible cent from investors that translates into real jobs and economic activity then the national government needs to stay true to its policies and have policies that encourage risks through good returns rather than uncertainty and political cowardice.
What we have seen from this Labor government is that any critical analysis of its position is described as talking down the economy. Indeed, it is increasingly being made illegal in this country to dissent from the government. If print media is critical of Labor or the Greens then there is an investigation and new regulations or rules are imposed. Yet when the national broadcaster is critical of the opposition, that is okay.
At least one side of politics believes in free speech. I note that the Treasurer is so critical of Gina Rinehart seeking a seat on the board of Fairfax Media that he is actively trying to influence board membership in Australia. Again, this is what the government do when they wish to stifle alternative views—not that I think Fairfax journalists will ever allow themselves to be told what to do. I find the government's approach Orwellian and pathetic in their contempt of free speech in Australia.
Speaking of opposition to government policies and attempts by this government to suppress it, I should also mention the new responsibility of the ACCC to act against those who dare to suggest that the world's biggest carbon tax will push up prices. As I said, there is an increasing attempt to silence and to apply pressure to any opponents of this government, its Greens backers or its policies. I also count these efforts as akin to sovereign risk, as the Labor government is attempting to protect its policies through regulation, exerting pressure on legal media ownership and influencing the activities of businesses. This constitutes circumstances of doubt and uncertainty for those wishing to invest in and conduct legal business activity in Australia.
I previously spoke about the government's claims that we are talking down the economy and demonstrated how the government hate criticism and have attempted to regulate and influence any criticism of them or their policies. The reality is that at the core of any damage to the economy are the policies of the Labor government, including their terrible backflips, their taxing, their spending and their deception along the way. They have created all of these concerns for business and investors, and it is through their own failures and outlawing of the ability to question them that they are not going to stop Australians, businesses and investors from having an increasing lack of confidence.
The shadow minister has already outlined so many quotes from people who have increasingly identified the sovereign risk in this country. A further very recent quote from Ivan Glasenberg was:
It is a first world country but is doing things that are making people cautious of investing, so Australia is becoming another country where you have got to make sure that the rules aren't going to change on you.
So, unlike what the government says, there are an increasing number of people that are not afraid to speak out and identify the government's failures.
To conclude my contribution, I say again that the increasing levels of sovereign risk that the investors are concerned about are as a result of the Labor government's own decisions. No-one is making this stuff up. The government is wholly responsible and you cannot play the blame game here. We did not make you deceive the Australian people on the carbon tax, use Western Australia as a cash cow or increase the regulations on business. None of this came from the suggestions or the efforts of the opposition. The good news is that this will be reversed with the election of a consistent and economically responsible Abbott coalition government, a government that will allow Western Australia to thrive and that will stop the carbon tax and the mining tax.
Once again we come in here to be lectured by people who had the opportunity over 12 long years of the Howard government to make change. In fairness, they did make change. These are the people who stripped over $1 billion out of public health. As a matter of fact, that was under the Leader of the Opposition himself. These are the same people who decided to cut investment in education, specifically vocational education as we were building up to a skills crisis. The coup d'etat of this mob opposite was that when they had control of both Houses they wanted to pit worker against worker and bring in the most obscene forms of industrial legislation. For the first time in this country's history they made it possible and legal for people on the minimum wage to be paid lower than award rates of pay. I think we need to be reminded of their economic position, their fiscal rectitude and the way they have gone about them when they have occupied the Treasury benches.
The truth of the matter is that we have a $1.4 trillion economy. We have a growth rate that is exceeding four per cent. We have an unemployment rate hovering around five per cent. We have a sovereign debt rate of less than 10 per cent, which is about one-tenth of most mainstream economies, and we have low interest rates. As a country we should actually be crowing about that and saying that it is not a bad achievement. Outside the halls here and certainly outside Australia, they go overseas and they do crow about it. What was Tony Abbott's quote when he visited London recently? It was something to the effect that we have serious bragging rights about our economy. He also went on to say that our economic circumstances are most enviable. They get back on the 747, come back to Australia and want to say that this is a basket case. Quite frankly, the only basket case here is people coming in and wanting to talk down our economy and our economic performance, apart from everything else. You would have to say that that is just simply un-Australian. If you cannot stick to the facts, shut up.
In 2008, not all that long ago, the opposition, which had been in government for 12 years before it was dismissed in 2007, had an opportunity. In 2008, the worst economic shock hit this country and, as a matter of fact, the rest of the world—the global financial crisis. There was no text book on how to handle this. It is was a matter of trying to work together to stimulate the economy. We came up with what I thought were pretty clever ideas, like investing in our schools. Not only did that keep our construction industry working but it also meant that those kids are going to learn and, through these advanced learning technologies, are going to become more productive members of our society as they hit the workforce later on. So we get a double benefit out of that.
What did those opposite say about that? They just said, 'No.' It was not, 'Let's compromise; let's talk about it.' They voted no to any investment in schools. That is probably what they did when they had an opportunity in government, in any event.
We put money into social housing. The idea was to assist state governments with social housing—not only directly funding the development of new social housing but also funding maintenance so that they could get more housing stock on line. Those opposite voted no to that too.
I turn to regional and local infrastructure. This is infrastructure that is owned and operated by all our councils. Whether they were Liberal, Labor or Callithumpian it did not matter; it applied to all our councils. We voted to use that as a way to stimulate our economy by investing directly in the councils, allowing them to oversee those projects. What did the opposition do? They voted no to that.
But they did have an overlying philosophy. When they sat over there in the face of the world's worst economic crisis they did make a contribution to the debate. Their contribution was, 'We should wait and see what happens.' Some could argue that maybe Ireland, Greece and Portugal took their advice seriously and waited to see what happened in Europe and that this why they are almost economic basket cases.
For the those on the opposite side of the chamber to get up and lampoon the Prime Minister for attending the G20 conference the other day and for saying how well the Australian economy is going, is, I have to say, a bit rich, when Tony Abbott goes overseas—to London—and talks seriously about the bragging rights we have in terms of the Australian economy.
But it is not just what they say. The shadow Treasurer has come in and quoted a whole range of people, again trying to develop the theory of doom and gloom in the Australian economy. But what about the recent IMF report? It was only released earlier in the week. It stated that the starting price on carbon should be around the level set by the Australian government in the Clean Energy Act.
No, member for Shortland, they forgot to. But you are dead right: they should at least have had regard to that. The IMF went on to say that what we have done is the least costly option if we are serious about addressing carbon pollution. Their economic forecasts were included in the same document. The IMF actually released an economic forecast that showed Australian economic growth will outstrip all other advanced economies. That is not bad going. But if something came out on Monday you would not think those opposite would have forgotten it by Thursday afternoon.
The Business Council of Australia is not a mob of left-wing ideologues—I think there may be a few on the other side who are associated with it—but in their report Pipeline or pipe dream? Securing Australia's investment future they state:
By 2013, expenditure on capital investment is likely to grow to 30 per cent of GDP and remain at that level for the rest of the decade.
Thirty per cent is a huge growth. They are saying that this compares to 20 per cent for any other OECD economy. We are talking about the level of major projects in the pipeline. We are hearing that in excess of $540 billion worth of projects are lining up.
Shell have come out and said that they are going to be investing more than $30 billion in Australia over the next five years. CEO Peter Voser included a lovely statement. He said that Shell was actively advocating for a price on carbon on a worldwide basis, and that they would want it struck on a market mechanism. This is a company that is very much in the oil and hydrocarbon business coming out and saying that we do need to do that.
Woodside said something similar. I know that those opposite have been talking about Woodside earlier this week but they probably should have stopped and listened to the comments of Peter Coleman, who is the CEO. He said:
Woodside and our peers benefit enormously from Australia’s low sovereign risk profile and open investment regime.
Australia is a place that major oil and gas companies want to do business.
Where is the growth occurring in our economy? On the North West Shelf, in Queensland and the Timor Sea. And who is investing up there? Woodside. That is where the jobs are going. And here is the CEO saying that this is a place where his competitors also want to do business.
We were lampooned for the fact that we were returning to a surplus. The only concern they have on the other side of the chamber is that they had a view that we should have an aspiration to have a surplus. They can be aspirational because when they went to the last election they could not find $11 billion in their costings! They went and engaged an 'independent' set of auditors to come out and justify where this money was. Those certain independent auditors got done for breaching professional standards. That does not auger well when those opposite want to come in here and try and lecture us on financial rectitude and how to go about transparency.
While we are at it, those opposite have a little bit of a problem with their current policies. At the moment even they admit that there is about $70 billion—
It is not a black hole, member for Shortland; it is a bloody crater! You would need a mining company to fill this crater. Those opposite want to come in here and play this silly game of talking down the Australian economy in the hope that things will go badly. This is nothing short of what they have tried to do with respect to people coming on boats from overseas. You can see those opposite; they actually salivate when they hear of another boat entering our waters.
These people do not care about management of the Australian economy. They just want to whinge and bleat. They have not been able to demonstrate any serious contribution to this debate. (Time expired)
I am pleased to speak on the adverse impact of government policies and the management of Australia's sovereign risk profile. I do so because it is very important to Australia and particularly to my electorate, with so many workers in Canning being employed in the fly-in fly-out side of the mining industry and the resources industry in general, where there are also drive-in drive-out workers. In this House my electorate is second to the member for Brand's in the number of metropolitan workers that fly-in fly-out or drive-in drive-out, so this is a very important issue.
What is sovereign risk? It is when people and companies see a country as a risky place to invest because the government is making the country less stable. We have become less stable for a number of reasons. The two main reasons are this government introducing a carbon tax and a mining tax. These taxes were introduced by the Gillard Labor government and, dare I say it, the former Labor government, the Rudd government. Prime Minister Gillard had an opportunity to do something about this and she did. Before the last election she said there would be no carbon tax under the government she led. Seven days before that the Treasurer, the deputy leader, said the same thing on The7.30 Report. Within days, when they were set to form a government, they told a total mistruth about this issue and worked towards a carbon tax. Those sorts of backflips do not engender any confidence in anybody wanting to invest in a country. These are the backflips you would expect from Third World countries, not a First World country.
It is ignorant to believe that there is no evidence for this. I say at the beginning, unlike those opposite who say, 'You're preaching doom and gloom,' I do not preach doom and gloom at all. This side of the House does not preach doom and gloom about the opportunities for this country. What we are saying is we could be doing so much better. We have the opportunity to be an outstanding economy and a destination for investment capital.
We are, but the point is we could be doing so much better. The little intellectual ideologue that interjects from the other side of the House will get up shortly and read some dissertation from his academic background and want us to believe his diatribe on these issues. But I come from where the workers come from. I do not come from this hothouse called Canberra, this social experiment. I come from a place where people wear fluoro jackets, working boots and working gloves. They earn real money from real jobs. They are not from the public service capital of this world. They do not feed on others, but actually produce something. That is where I am coming from. I come from the producing capital of the world. We have the richest mining province of anywhere in the world in the Pilbara, and right across Australia the opportunities are available.
Yesterday Atlas Iron were in this place talking to us. They said when they go overseas to sell the virtues of their company, investors in other parts of the world say to them there are three things they are concerned about: first, how is the minerals resource rent tax going to affect you?; second, how is the carbon tax going to affect you?; and third, what tax will they introduce next? This is a government that has not seen a tax that it does not like and does not want to hike.
China is the same. China says, before it invests in any of our companies: 'What is the story not only about your investment profile but also about your industrial relations profile?' On that point, this government has, through its Fair Work Act, allowed there to be an increasing militancy in the workforce which increases sovereign risk. This is borne out by adverse press, such as an article in the Business Spectator which states that for the first time in more than a decade BHP Billiton has been forced to declare it may not be able to supply its customers due to strikes, and the strike in its Queensland operations has gone on for more than 10 months. The article goes on to say:
Days lost to strike action have risen since the introduction of the Labor government's Fair Work Act in 2010 …
The strike has already cost BHP Billiton $2 billion in revenue. Isn't that seen as a risk by someone who wants to invest in our country? The article goes on to say:
Workplace Relations Minister Bill Shorten, who yesterday said the country had an 'overheated industrial environment'—
and this is the dog in the manger, the former union boss who is now the Minister for Employment and Workplace Relations saying we have 'an overheated industrial environment'. But what is he doing about it? He said, 'We're monitoring it'. What a limp-wristed approach. We have a strike in Queensland and in the Pilbara we have the CFMEU and the Australian Workers Union fighting over members and demarcation disputes. All this goes towards the instability of doing work in our resources sector.
These issues scare countries like China which has invested in the CITIC Pacific project in the Pilbara. The company have said if they had the opportunity again they would not invest. They would not invest because they did not know there was going to be a mining tax. They would not invest because they did not know there was going to be a carbon tax. They did not know that doing business in Australia was going to be so expensive, because of so many factors hitting them now. These factors make this one of the most expensive places to do business.
The shadow small business minister, Bruce Billson, came to my electorate recently and pointed out that producing the same resources outcome in Australia is now 40 per cent dearer than doing so in the United States of America. This is not a Third World country or an African country but it costs 40 per cent more to do business here than to do business in the United States. Why is this a concern? This mining tax is concerning because the tax impost is not happening in other destinations. If you go to any junior or mid-cap miner in Western Australia you will find that they have alternative mines elsewhere in the world, whether it be in South America, Africa or Mongolia. BHP's largest mining operation in the world is Escondida in Chile. I have been to it; it is the most massive hole in the ground you have ever seen. In Chile they have a mining tax which is flexible, from half a per cent up to 14 per cent. I have been to Colombia where Cerrejon, an incredible coalmine, is owned, 33⅓ per cent each, by BHP, Anglo American and Xstrata. Where have you heard those names before? They all invest in Australia. In Colombia the tax regime is four to six per cent depending on the mineral. And here we are with a 22½ per cent mining tax. So where are people going to go invest? Are they going to go to Colombia where it is four to six per cent or are they going to come to Australia where it is 22½ per cent? They are not going to come here. It is a slow burn but they are out there looking at alternatives. Atlas Iron were telling us yesterday that they are eyeing off mines in Africa because they need an alternative. Even Mongolia is a safer place because at least they know they are not going to have retrospective, backward-glancing taxes.
Put this together with the almost racist view that the unions and union bosses came back to us with in relation to migration, that we could not have foreign workers come to our mines to help create jobs for Australians when we are talking about up to 1,700 foreign workers—I make the point it is 'up to' 1,700—coming to our mines which will eventually create 8,000 jobs for Australian workers. So those opposite are in an absolute mess in terms of their policy. This policy is confusing and they are completely hamstrung by it because it gives uncertainty for those who want to invest in great Australian companies.
Australia is a fantastic destination. It is a stable country. It is a good place to invest because it has a wealth of minerals. But this government is turning a good situation into a risky situation. It is sending out signals that Australia is a place that investors might have to beware of. However, the good news is that we have said we will reverse both the carbon tax and the mining tax. We are going to take them away.
I am a fan of the US e-zine Slate. John Dickerson had a piece in Slate a couple of weeks ago that I thought was pretty apposite to Australian politics at the moment. It was titled 'Is there any place for Jeb Bush in the GOP?' and it was about the radical shift to the Right of the US Republican Party. The author quoted Jeb Bush as saying, 'Ronald Reagan would have … a hard time in the Republican Party' today, and wrote about the fact that the modern US Republican Party has now moved from a party of small 'l' liberalism to being a party of conservatism and reaction, a party that is defined by its anti-tax rhetoric. Grover Norquist has asked for all Republican candidates to sign his anti-tax pledge. Mitt Romney, the frontrunner, has done so, and a moderate like Jeb Bush is left with no place to go.
Reading the piece I was struck by what has happened to the modern Liberal Party in Australia—a party that once stood for market values, that once stood for an open Australian economy, but that now increasingly stands against markets, whether they are markets in carbon or in water. It stands against an open economy, runs scare campaigns on foreign investment and spends its time trashing Australia's reputation in the world.
There is an old Liberal Party that valued the role of the Australian Public Service, that saw the Australian Public Service as having a proud role to play in building a better Australia. The Liberal Party of Menzies believed in the Public Service, but we have just heard from the member for Canning what the modern Liberal Party thinks of public servants. He thinks they are people who feed on others. That is what he just told the House, that Canberrans, public servants, are people who feed on others.
They don't produce anything; they feed on others. Those Canberrans who are listening to the debate today should be aware that the spokesperson for the modern Liberal Party has the view of Canberrans and public servants that they feed on others.
Mr Deputy Speaker, on a point of order on relevance: the title of this debate is the sovereign risk that this government has brought to the Australian resources industry, not the bureaucracy in Canberra.
The member for Canning will resume his seat. This has been a very wide-ranging debate on both sides, I can assure you—I have been listening to the majority of it. The member for Fraser will be aware of the title of the matter of public importance, but he has the call.
Thank you, Deputy Speaker. In understanding Australia's current context it is critical that we understand the role that public servants play in good policy. When the global financial crisis hit, it was the work of public servants in FaHCSIA, in Treasury, in Finance and in PM&C that put together the rescue package that saved 200,000 jobs and tens of thousands of small businesses. When Queensland was hit by natural disasters, it was public servants who went up there and made sure that people got payments. It was public servants that made sure that rebuilding work was done. But the coalition intends to cut 12,000 public servants. In fact, the shadow Treasurer has said that 12,000 public servants cut out of Canberra is the 'starting point', so it may well be a bigger cut than that.
I mentioned before that the Australian Liberal Party has taken a leaf from the Republican Party's playbook. It is libertarian Ron Paul who wants to cut 10 per cent of US public servants. The coalition say their starting point is seven per cent of Australian public servants. It was US presidential candidate Rick Perry who said he would get rid of three departments. The problem was he could not name them. Those opposite intend to get rid of three departments and at least they can name them—defence materiel, climate change and health—but of course they are just the start.
Those opposite are often called 'deer in headlights', but I think describing them as 'deer in headlights' when they are faced with economic questions is really unfair to deer. I think they are much more like fish out of water. You know that thing you do when the fish comes out of water—you drop it in the bottom of the tinny and it flips and flops and flips and flops around. We had the 2010 budget reply. Remember, that was a great budget reply, when the Leader of the Opposition was going to set out the savings that the coalition would achieve. He passed the buck over to the member for North Sydney who in turn said, 'Oh, no, I am not going to set out the savings. I am passing that to the member for Goldstein,' who then turned up to the National Press Club with a performance so embarrassing that even his own adviser was left at the back of the room shaking his head as the member flipped and flopped around. On the $70 billion black hole, some of those opposite will say: 'We do not know anything about that figure. It is the first we have heard of it.' Others will say, 'Yes, that is our savings target and what a big one to meet'—again, flipping and flopping everywhere.
When the member for North Sydney said that Australian entitlements should be cut, that we should have a Hong Kong-style welfare state, the Leader of the Opposition was again flipping and flopping, saying: 'No, no, no, we do not believe in cutting benefits at all. I worship at the feet of BA Santamaria. I do not believe in cutting benefits—'
Order! The member for Fraser is aware of the matter before the chair, but I remind both sides of the House that this has been an extremely wide-ranging debate and latitude has been exercised on both sides. I call the member for Fraser and remind him of the debate before the chair.
Thank you, Deputy Speaker. If there is a sovereign risk to Australia it is those opposite talking down the Australian economy. It is those opposite who are willing to say anything and do anything to find their way into power. It is those opposite who are not willing to speak the truth about the Australian economy. There is something economists have called a 'misery index'. It is inflation plus unemployment. I find it hard to think of a time when the misery index has been as low as it is today—five per cent unemployment, less than two per cent inflation rate—and at the same time we have got a cash rate lower than at any other time when those opposite were in office.
There is only one member of those opposite who on economic questions does not look like a flopping fish out of water and that is the member for Wentworth. The problem is that when he sticks his head up to say things, as he did on the carbon price, for example, to make the point, his colleagues got a little uncomfortable. You will not find an economist anywhere that will tell you anything other than that the most efficient and effective way to cut emissions is by putting a price on carbon. When the member for Wentworth pops his head up to say things like that, of course, his colleagues get a little uncomfortable. 'Malcolm, come back down to the cool waters of populism,' they say, 'Come back down here. You do not look like a fish out of water up there, but really we would prefer that you came down here with the rest of the bottom feeders.'
Occasionally, young people will come to me and say that they are thinking about joining the Liberal-National Party. I say to them: that is fine, but let me tell you a bit of your legacy; let me tell you what it means to be a conservative. When Australia was threatened in World War II, it was a Labor government that brought our troops home to defend our shores, and conservatives who thought we should defend the Empire. When gender discrimination reared its ugly head it was a Labor government that proposed the Sex Discrimination Act; it was the conservatives who said no. In a nation built on Indigenous lands, it was a Labor government who brought about historic native title—
Order! The member for Fraser has had a lot of latitude and I will refer him to the matter before the House. He can confine his remarks to the matter before the House. He has had a lot of latitude, I can assure you. The matter is about sovereign risk.
Thank you, Deputy Speaker. The sovereign risk that Australia faces is the sovereign risk of threats to economic confidence that come from those opposite running scare campaigns across the country. Barnaby Joyce says that a carbon price will raise the cost of a leg of lamb to $100. I say: pull the other leg of lamb, Barnaby!
Let me start with words 'sovereign risk'. For the last 10 minutes we did not hear those words very often from the member for Fraser and they are the words inherent in today's MPI. Let me add to them the words 'Labor government'—so 'sovereign risk, Labor government'—because they go together. They are words that we are getting very used to hearing, and it is very sad that because of the Labor government Australia is in very dire circumstances, circumstances that it does not need to be in, that it should not be in. Sovereign risk in Australia is now here courtesy of an incompetent Labor government, one that should be removed.
There is a very long list of bad decisions by this Labor government and it is headlined by the world's biggest carbon tax, a toxic tax on working families and on household budgets. This government should be ashamed that it has failed to support our working families. It has further increased the cost of living here in Australia and put significantly more pressure on our working families and, particularly, on our businesses.
Labor is trying to convince Australians that the carbon tax will be a great initiative for our country. In fact it was only earlier today that the Acting Prime Minister said that the government was proud to introduce a price on carbon. Is the government also proud to say to the Australian people that they are proud of reneging on the promise that they made before the last election not to introduce a carbon tax? Does that make the government proud? Does that make every Labor member in the House of Representatives who was elected on the promise not to introduce a carbon tax feel proud? Will each member feel proud when they face their constituents at the next election knowing that they did not honour their commitments the last time they were elected? Will they feel proud then? I doubt it. They should not.
The government keeps reiterating that this carbon tax will only apply to the top 500 polluters, but it has not been able to identify who they are.