Thursday, 23 August 2012
Matters of Public Importance
Mining and Taxation Policies
I add my best wishes to Misha Schubert, and I will have more to say to her privately about that later today. I do not think, for the people of South Australia and the families of South Australia, any issue could be more important than the destiny of our economy and where we are going as a nation. Today the Treasurer will attempt to trivialise the announcement yesterday by BHP in relation to Olympic Dam and its failure to commit to the $20 billion expansion of Port Hedland. The Treasurer has already trivialised the issue by saying that investment has surged with the carbon tax and the mining tax. That begs the question: why does the government not just double the tax, if it is so good for the economy?
There are $40 billion worth of new taxes. It is not a flippant remark from the chairman of BHP or the chief executive of BHP, or a flippant remark from the head of BC Iron or Glencore or anyone else, when they suggest that Australia is now emerging as a nation of considerable risk for international investors and specifically investors that create the jobs that are going to drive the economy over the next few years.
And, of course, the mining tax and the carbon tax are having an impact on investment confidence. The irony was dripping as they uttered the words that we have record investment, yet $50 billion was cancelled yesterday and somehow the government is continuing to run out the same old lines, like an old broken record, that they believe the mining boom is going to continue. Well, it was the Minister for Resources and Energy who belled the cat today when he said the resources boom is over. He is dead right. The resources boom is over. He would know. He is the minster responsible for the industry that is generating the income. He was contradicted within minutes by the Minister for Finance and Deregulation, Senator Penny Wong, who said, 'No, no, no, the mining boom is not over.' So the government could not even get their narrative right after the comments from the member for Batman, who is known for being a straight talker. This is very important.
No-one believes what the Prime Minister utters today and no-one believes what the Treasurer utters today, because they deliberately misled the Australian people before the last election about the carbon tax. But people do still have trust in the Minister for Resources and Energy, the member for Batman. So when he says the resources boom is over he is dead right. Why would he say that? We recognise that the higher Australian dollar is having an impact and that commodity prices have been coming off. We have been warning about that. In fact, in a National Press Club speech I warned about a deterioration in the terms of trade. In fact, in the last two National Press Club speeches, after the last two budgets, I warned the Australian people that this budget was a house of cards built on record terms of trade, and that should that house of cards start to come down so too will the government's budget.
But let it be known that it is part of the deliberate strategy of this government to slow down the mining boom. That was the whole intent of the mining tax, in its original form. It was intended to slow down the mining boom. But we know that when it comes to modern times the people who are running the parliamentary Labor Party, the Australian Workers Union, have a similar view. Only a few weeks ago, on 12 April 2012, Phillip Coorey reported in the Sydney Morning Herald that:
The Australian Workers Union wants the government to expand its minerals resources rent tax to slow the mining boom …
He further said:
The proposal to boost the mining tax by reverting to the original resources super profits tax 'would slow down the mining boom, take pressure off the terms of trade and boost government revenue which could be placed in a sovereign wealth fund'.
Phillip Coorey was quoting from a document the AWU prepared.
It is interesting. The minister who represents the AWU in here is the Treasurer, Wayne Swan. He is a member of the Australian Workers Union. The Minister for Financial Services and Superannuation and Minister for Employment and Workplace Relations, Bill Shorten, is a member of the Australian Workers Union. Their own union, the AWU, which they are so determined to protect in this place in relation to matters that are currently being discussed about the credibility of the Prime Minister, said: 'Let's have a higher tax to slow down the mining boom.' Well, they are getting their wish—a $50 billion mining investment, the heartbeat of the future of South Australia, was closed down yesterday and this government was so indifferent about it that there was not a single statement from the government in question time today. There was not a word of disappointment. They are totally indifferent to the lost jobs.
Instead, they are living in this false world that suggests everything will be fine. But it is not fine. The reason they are so determined to continue to talk up the mining boom is that it underpins their budget. They know, we know and the Australian people know that when the mining boom is over so too is this government's largesse—politically motivated largesse with which they are trying to get an incompetent Prime Minister and an incompetent government re-elected. They are doing it from house to house. They are trying to create envy by attacking the people who generate the money. In fact, the Premier of South Australia yesterday went so far as to blame BHP for not proceeding with Olympic Dam. He said it was all their fault. What a stupid comment.
Mr Champion interjecting—
Listen, old sunshine, why didn't you ask a question today about Olympic Dam? You are from South Australia. You do not care. Instead you just do the bidding of your mates in the union. This is a door-to-door proposition from the Labor Party—create envy, create jealousy, attack the miners, attack the people who are out there and say that we are going to redistribute it like a modern-day Lenin.
I came across a recent letter the Treasurer sent to his own constituents. He said:
I was talking to a local resident the other day who asked, 'Wayne, at a time when we are in the middle of a massive mining boom, why aren't people like me sharing more in its benefits?' It is a question being asked by many people in our area. That is why federal Labor and I have put in place laws to use some of the huge profits in mining to help the small businesses and workers.
The reality, as this minister said, is that the mining tax, together with the mining boom, is over. Even the architect of the original mining tax, Dr Ken Henry, said:
It is probably true that the original proposal was too complex …
He added that the new one
… is actually more complicated than what was originally proposed.
… … …
And the obvious question it raises is one that I dare not ask, really, which is whether it's worth bothering at all.
He is referring to the mining tax. He is the person who argued for the original mining tax. He says why bother.
Do you know who else is asking why bother? I will tell you: it is the former chairman of BHP, Don Argus. On 11 July this year he said:
We've entered an era without political leadership and the courage to address difficult issues.
Graham Bradley, the former Chair of the Business Council of Australia and current Chairman of Anglo American Australia, said:
… the substantial pipeline of new projects that has been talked about is by no means assured. I've been myself talking to international investors in recent days who have expressed the view that they are seriously underweight in Australia as a result of what they term sovereign risk, which includes the unpredictability of regulation, taxes on key industries and concerns about industrial co-operation.
So Australia does have its risk, yes. We saw the carbon tax, we saw the mineral resource tax—
and then the chief executive of Glencore said:
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.
Jacques Nesser, the Chairman of BHP-Billiton, just a few weeks ago said:
… uncertainty about Australia's tax system is generating negative investor reaction. People don't know where it's going.
And David Peever, from Rio Tinto—
I tell you what, mate: if you haven't got the guts to ask a question about Olympic Dam and South Australia, I'd button up right now, old sunshine! Mike Young, the managing director of BC Iron, neatly summed it up. He said:
When you look at the juniors—
that is, the junior mining companies—
they are suffering because there is a new sovereign risk in Australia. I know guys in New York who will not invest in Australia until this government is gone.
These are the people making the investment decisions. And the government says, 'Everything is rosy; everything is fine'.
Yesterday BHP announced that their net profit was down 34 per cent. Today Qantas announced a loss for the first time in two decades—$245 million for the 2012 financial year. But the Treasurer says everything is fine. BlueScope Steel posted a net loss of $1.04 billion this year. The Treasurer says everything is fine. Santos' profit of $262 million in the six months to 30 June was down 48 per cent. But the Treasurer says everything is fine. Westfield's half-year revenue of $1.213 billion was down 10 per cent. The Treasurer says everything is fine. Fairfax saw a net loss of $2.732 billion. But the Treasurer says, 'We're the best in the world.' Sims Metal, the world's biggest scrap metal recycler, has announced a $521 million loss. But, again, the Treasurer and the Prime Minister say, 'Everything's fine; it's all okay—our taxes are growing jobs and growing the economy.' Rio Tinto has announced a 22 per cent slump in first half profits to $5 billion. Stockland, a major property developer in Australia, says profit for the year fell by more than a third to $487 million, in what it describes as 'tough conditions'. But the Treasurer says everything is fine. Cochlear have slashed their profit by 68 per cent.
Some of these things might be being caused by company specific issues, but there is a trend. Corporate Australia is saying something very different to this government, because this government does not live in the real world. This is a government living in a bubble, a bubble that they keep fantasising about, because that bubble is the only thing that is holding up their litany of new promises—the promises that are funded by the mining boom, by a mining tax which is destroying jobs and by a carbon tax which is destroying jobs. So they go on a spending spree on small business asset write-offs of nearly $3 billion; on infrastructure of $3 billion; on superannuation at $1.8 billion; on concessional caps on super of $1.3 billion; on phasing down the withholding tax of $200 million and on a range of other things—loss carry-back, and of course their School Kids Bonus. All of this is to be paid for out of the mining tax and they do not want to admit the money is not there. Do you know why? The moment they do that, they have to admit they are going to increase taxes. And one thing we know about the Labor Party is that, when it comes to tax, you can't trust the Labor Party. They lied before the last election to the Australian people about a carbon tax—
It is no wonder that the member for North Sydney is scurrying out of the House after the nonsense he has just forced us to endure. I have to admit that I am somewhat amazed by the topic of today's MPI. Members in this place, particularly on our side, are used to nonsensical, patently false statements from those opposite. We are used to debating with those who have long ago lost touch with reality—or probably never had much contact with reality in the first place—but most of the time there are a couple of members on the other side of this House who have the good sense not to call a debate on an issue when their claims are as ridiculous and as ill-formed as those that we have just heard from the member for North Sydney.
Last night the Leader of the Opposition, a man who has made it to the top of the Liberal Party, primarily as a result of his capacity to bend the truth, had a meltdown on national TV. He had a meltdown when he was unable to explain his patently false and increasingly desperate position. I would recommend that every member of this House and indeed every Australian have a look at that interview Leigh Sales conducted with the Leader of the Opposition on ABC TV last night, because it shows something of the character of the Leader of the Opposition. It shows, in fact, why he is not prepared to regularly give long-form interviews—he has given only a couple in the last couple of months: one to Barry Cassidy on Insiders, which was a disaster, and the one last night—rather than doing his 10-second doorstop and scurrying away so he does not have to submit to questions. Last night he was so delighted at the bad news of the shelving of the Olympic Dam expansion. You could also see the delight of members opposite from South Australia, who stood behind the Leader of the Opposition during his press conference yesterday, that there was bad news for South Australia. Those members opposite should be ashamed of themselves.
Madam Deputy Speaker, on a point of order: the member speaking has just made an imputation against the South Australian members which is not true, and I ask him to withdraw.
I withdraw. Those members opposite from South Australia ought to have been ashamed at standing up behind the Leader of the Opposition when he was doing his press conference yesterday and making patently false claims about the reason for the Olympic Dam expansion being shelved. You might say this is a bad MPI based on an untruth. I want to thank the member for North Sydney, who has now scurried out of the chamber, for the opportunity to have this debate, because it is a debate that is much needed. At the heart of this are some bizarre and discredited claims that those opposite have been making for many months about the mining tax and that those opposite have been making for many months about the carbon price—that these measures are somehow reducing investment.
Let us just have a look at the impact of the mining tax. The Australian quoted Gloucester Coal chairman, James MacKenzie—an eminent figure in the mining industry—as saying:
In the last 12 months I've done two overseas roadshows with investors for Gloucester Coal and I haven't heard a grizzle about the MRRT and carbon tax.
You can see from the pipeline of investment into the mining industry in our country the nonsense of these discredited claims those opposite have been making about the impact of the mining tax or the carbon price. Just go back to 10 July last year, when we announced the framework for the carbon price which we have now legislated and which, I am happy to say, came into force on 1 July this year. On 10 July the Leader of the Opposition made the same sorts of claims he has been making about the coal industry for a long time, saying that the carbon price is going to kill the coal industry. The very next day, Peabody made what was the largest ever bid for an Australian coalmining operation when it bid over $5 billion for MacArthur Coal. That is what gives the lie to the nonsense that those opposite have been going on with about the effects of the mining tax and the carbon price.
Let us just go to the other outrageous claims behind the stunt of this particular MPI that we see today. It is a desperate attempt to justify the crazy claims that were made yesterday by the Leader of the Opposition about BHP Billiton's decision to shelve the Olympic Dam expansion. It is a crazy claim to suggest that somehow—and this is the direct claim made by the Leader of the Opposition yesterday—it was a result of the mining tax or the carbon price. BHP Billiton made a statement to the exchange.
Opposition members interjecting—
I know those opposite are not particularly familiar with what the requirements are for the stock exchange or what listed companies like BHP are required by law to do. They are required by law to accurately and truthfully inform the exchange so as to inform the investment community of Australia and the world of the factors underlying their decisions. That is why, when they made their statement to the exchange and when the CEO of BHP Billiton yesterday held a press conference, BHP Billiton said absolutely clearly that the reasons for the decision were softer commodity prices and higher capital costs. The company's statement to the exchange did not mention the carbon price, and the CEO, Marius Kloppers, did not attribute the decision to the carbon price in his teleconference. In fact, what he said yesterday was:
The decision is almost wholly associated with in the first instance capital costs.
Then he said:
As you know the tax environment for this particular project has not changed at all since we started working on it six or seven years ago.
Then we read today other quotes from the CEO of BHP Billiton, Marius Kloppers, in the West Australian, which reported: 'But Mr Kloppers denied that the taxes had anything to do with the Olympic Dam decision.' There is not too much to not understand about that. I will quote directly from what he said:
The MRRT only covers coal and iron ore—not copper, not gold and not uranium—so the tax situation for this project has not changed.
And I quote again:
What has changed is the capital cost of construction. What has changed also is that post-Fukushima there is a different and still developing outlook on uranium.
So those opposite are so desperate to make false claims about the effect of the mining tax, so desperate to make false claims about the effect of the carbon price, that the Leader of the Opposition thinks he can blame any bad news—anything adverse that happens in an economic sense in Australia—on the mining tax or the carbon price. There is nothing in that statement by the CEO of BHP Billiton that leaves any room for doubt. After the Leader of the Opposition stood up and made his false claims about the real reason for the shelving of the Olympic Dam expansion, CEO Marius Kloppers has stood up and made it absolutely clear that it is not the mining tax and it is not the carbon price. But we should not be surprised by this Leader of the Opposition.
This is a Leader of the Opposition who will say and do anything to further his interests. He cannot be trusted—and we know that to be a fact. We need only recall the comments made by the member for New England in this chamber last week. The member for New England confirmed that the Leader of the Opposition 'begged' him to support the coalition to form a government after the last election. And, as the member for New England said, this Leader of the Opposition was prepared to do 'anything'—and we know that includes putting a price on carbon, including introducing a carbon tax if it came to that, or introducing an emissions trading scheme.
And why wouldn't he? This Leader of the Opposition, along with every living Liberal leader, has supported putting a price on carbon and has supported an emissions trading scheme—and, of course, that was the policy he supported when he was a member of cabinet in 2007 and that is the policy that the Liberal Party took to the 2007 election.
Another one of the Leader of the Opposition's bizarre, false claims is that the carbon price would be a wrecking ball across the economy. He is the wrecking ball, and he and his party are the source of the uncertainty in the economy that he so deplores. It is available to him to give certainty, to get back to the program, to get back to the policy that the Liberal Party supported in 2007 and indeed supported right through to almost the end of 2009—which was, of course, to introduce an emissions trading scheme in Australia.
You have to ask the Leader of the Opposition whether this statement that he has been making about the carbon price is one of his so-called core promises—is it 'the gospel truth', is it 'written in blood'? Whatever you call it, these are false statements. We have seen again that this is a Leader of the Opposition who cracks under the pressure of a serious interview—it is no wonder he avoids them like the plague. I will quote something that the Leader of the Opposition said:
I know politicians are going to be judged on everything they say but sometimes in the heat of discussion you go a little bit further than you would if it was an absolutely calm, considered, prepared, scripted remark, which is one of the reasons why the statements that need to be taken absolutely as gospel truth are those carefully prepared, scripted remarks.
So who would know when this Leader of the Opposition was telling the truth? Who would know whether it was true or not when he admitted to Leigh Sales that he had not read the statement by BHP Billiton before he went out and held a press conference about the reasons for the shelving of Olympic Dam? Who would know whether what he is saying is true—because he himself is all over the place, he barely knows what he was saying and he is someone who is prepared to talk down the economy. I say again that he delights in job losses, in any closure and in any setback that business experiences—because he believes it suits his political interests.
We are not, as the member for North Sydney suggested, totally indifferent to the Olympic Dam mine expansion being shelved—far from it. We are working with BHP Billiton, just as the South Australian government is working with BHP Billiton, to see whether or not the expansion of the Olympic Dam mine can take place in some other way—because, of course, that was the starting point of the BHP Billiton announcement yesterday.
In the time that remains to me I want to talk about something other than the direct effect of the mining tax or the carbon price, and that is the state of our economy. You will not hear those opposite actually talking about the state of our economy. Under this government, the Australian economy continues to outperform other advanced economies. That is because of our investment in skills, our investment in infrastructure and our investment in education. It is because we acted to stimulate the economy when we needed to.
In the year to March—this is another fact that those opposite choke on—our economy grew by 4.3 per cent. That is more than twice as fast as the major advanced economies as a whole. So far this year, our economy has created almost 100,000 jobs. In aggregate, that is over 800,000 jobs since we came to government. Unemployment is at 5.2 per cent. This is while in parts of Europe we have mass unemployment—millions of people, regrettably, thrown out of work and stuck there. How different could Australia be over the year to March from that particular situation! Over the year to March, private business investment has grown by 20 per cent—another fact that those opposite choke on—to be now at its highest percentage of GDP in 40 years. And in the past year the advanced stage of the investment pipeline in resources has grown by nearly $90 billion to be a staggering 350 per cent larger now than when those opposite were last in government.
And these increases over the past year have come in the full knowledge that we are putting a price on carbon, that we were going to legislate last November—which we did—and that, having legislated, the price on carbon would come in. The most recent economic data—all of it, every indicator you care to look at—puts a wrecking ball not through the Australian economy but through the Leader of the Opposition's aggressive and untruthful scare campaign. We are not, as everybody in this House now knows, seeing the predicted results of the carbon price. (Time expired)
I rise today to speak on the MPI in regard to the adverse impact of the government's mining and taxation policies on industry investment and government revenue. I could have just omitted the words 'mining and taxation' and left 'government policies', because, apart from a government in complete denial about the reality of what is going on in the resources sector, the mining boom is over. I know that the Minister for Resources and Energy had a moment of honesty this morning which did not fully encapsulate what he meant to say. What he meant to say was that, under the Labor government, the mining boom is over. I heard him say as clear as a bell on the radio—I know that some of my colleagues over there wish he had not said it—that the mining boom is over.
This government are working hard towards that. They are doing everything they can to stop future investment. They talk eloquently about the investment pipeline being full, but I challenge the people on that side of the House to show me who is refilling the pipeline five years from now when the gas projects in Queensland are finished and when the construction phase is over for the investment that is already committed to, more than half of which was committed to under our government—for more than half of it, including Olympic Dam, the initial investments were made when the Howard government was in power. When that construction phase is over, where are the next projects? So bad is the situation that the Minister for Resources and Energy attacked the unions—he attacked his own. In order to divert attention away from the government's policies, he attacked the unions about the fact that there were not going to be projects in five years time if things kept going the way they were.
It is not the unions' fault solely. The fault lies here with the constant attack on the resources sector which comes from those on the government benches and which is turning investment away from Australia. They may skite about the current investment pipeline and about investments that were set up when I was the minister for resources, but the reality is that when those projects finish there is nothing. There is a black hole, because we have a Treasurer who spends his time attacking the resources sector and the people in it. We have a Premier in South Australia who wants to blame mining companies like BHP when they do not make the decisions that he wants. We have an attitude in the Labor Party that the mining industry is simply there to be taxed and when you are not taxing it you talk about taxing it more.
I heard the member for Isaacs say that these investment decisions over the last five years have been made in the full knowledge of a carbon price. Maybe he was not here when the then Prime Minister, the member for Griffith—with the encouragement of the current Prime Minister—abandoned carbon pricing. Maybe he was not here when the current Prime Minister stood up on television days before the election and said, 'There will be no carbon tax under a government I lead,' and the Treasurer said the same thing. Maybe he was not here, but let me assure him that it did happen. There is actual proof of it. May I assure the member for Isaacs that, when companies are making decisions about billions and tens of billions of dollars, they need consistency, and there has not been one moment of consistency from those who sit on the other side. One minute we are going to have a carbon price; the next minute we are not. One minute we are not going to have a carbon tax; the next minute we are. One minute we are going to have an RSPT. Remember the RSPT, the resource super profits tax, that disaster? Again it was under the stewardship of the existing Treasurer, who took a huge chunk out of the confidence of the resource industry by announcing a tax that they knew nothing about and then spent the next four months not only knifing his own Prime Minister in the back but also trying to find an easy way out. He went from an RSPT to an MRRT. We have gone from a situation where we were going to have a carbon price to one where we were not going to have a carbon price. We were not going to have a carbon tax; now we are going to have a carbon tax. There is no consistency.
The only thing that is consistent from those who sit on the other side is their attacks on the mining industry. We have seen an attitude from this government that every time they are short of money they put their hand in the pockets of the one sector that is underpinning Australia's economy at the moment. The reality is that, when you talk to the financial brokers, the financiers and the stock exchanges overseas, they look at Australia and they say, 'What the hell is the government trying to do?
Ms Rishworth interjecting—
Calm down, Amanda.
That is far too hard. The reality is that, when you talk to the international financiers of the resources sector, they think Australia has gone crazy. They have seen a country that had it all in front of it, with a resources sector ready to supply the huge demand to the north of us, and it has just been ripped to pieces by a government that cannot manage its own money. I notice that the member for Isaacs did not mention the huge explosion in government debt when he was trying to talk to us about the economic management that we have seen. The reality is that every time this government overspends it turns to the mining sector to take money from it.
We have seen the carbon tax and we have heard the comments of Marius Kloppers on the impact that that had. For the benefit of the member for Kingston—I have remembered the name of her seat—I will read what Marius Kloppers said about the carbon tax:
But aside from that, all of the other things like increased operating cost, carbon taxes and so on have all conspired to turn this from a fairly low-cost environment and therefore competitive to a higher cost environment.
That was Marius Kloppers, the CEO of BHP Billiton, on 6 June 2012. There are other quotes here from Jac Nasser, who is an extraordinarily successful Australian CEO who headed Ford globally for a time. He just shakes his head in dismay at the way this government has taxed and treated the Australian resource sector.
In the time allocated I will not be able to explain the fact that these projects are funded by these companies themselves and they are funded out of profits, and so when you introduce extra taxes on profits you reduce the capability of those companies to fund new projects themselves. The reality is that these changes are impacting not only on the profitability of companies and therefore their ability to fund these projects but also on the investment profile in Australia.
The reality is that yesterday we saw a clear signal, accepted by the Minister for Resources and Energy and Minister for Tourism, that under a Labor government the resources boom is over, that under a Labor government resources companies simply do not want to invest. It is not just Olympic Dam and it is not just Outer Harbour. It is coalmines at Peak Downs that were already signed off. Because this government has proceeded with its carbon tax and the mining tax, it has got itself into a position where it has said to investors around the world: 'We don't want you anymore and, if you happen to come here, we have got a Treasurer who will personally abuse you, who will pick you out and abuse you for being a successful Australian. He will say to you, "We don't want you either."'
The biggest concern I have is about the pipeline that keeps being talked about—not in the next two or three years, not projects that were already locked in four or five years ago, but the ones that should come after that, the ones that guarantee jobs for people in five and 10 years time, the ones that guarantee jobs for our children. My question to this government is: what are you going to do about it? What encouraging signals are you going to send out to the investors of this globe to come to Australia and invest here? The answer is none. The minister for resources runs up the white flag and says, 'Under the Labor government the resources boom is over.' Can I assure those potential investors that, under an Abbott government, we will do everything we can to get that investment back and create jobs for Australians in the resources industry.
I remember the days when, under the former Leader of the Liberal Party, the member for Wentworth, the member for Groom was rushing around this building doing deals, talking to everybody, trying to get a carbon price in place. That was back when the Liberal Party had a rational, reasonable, sensible market based approach to dealing with climate change and carbon emissions. But those days seem long ago. Those opposite seem to have embraced the lunar Right—the Tea Party, the Birthers, the nutters on the internet. That is who they are driven by now.
What has ended up happening is that the community are demanding from all of us, from everyone in this House, a decent, reasonable debate. That is why Nigel McBride from Business SA was on Belinda Heggen's show on FIVEaa radio today calling on politicians to end the blame game. He was saying that we need to take a fact based approach to this, reminding everybody that Olympic Dam is still operating, reminding everybody that this is a deferral and that BHP is looking at a less capital-intensive way of doing things. The problem with the sensible approach from Business SA is that it collides with the political opportunism of those opposite. We all know that what the Liberal Party want to do is have a scare campaign. They had a scare campaign over carbon pricing and now they are going to have a scare campaign over mining investment.
In particular, in my state they have been trash-talking the South Australian economy. Tony Abbott went to the Liberal Party conference only a week ago and compared South Australia to Tasmania, managing to insult both states in the process. Here is a man who is going to declare war on South Australia and Tasmania through GST collections. He is going to rob a billion dollars in taxes that are coming to South Australia at the moment, forcing state governments to sack nurses, teachers and police.
We know what they are going to do with the car industry. From reading an article by Lenore Taylor on 13 January 2012 headed 'Hockey's line in the sand on cars', we know what they are going to do. They are going to shut Holden down, jeopardising 16,000 jobs. But we do not hear a word about that from those opposite.
We know what they are going to do with submarines too. The Labor government wants to build submarines in South Australia. We know what the member who submitted this matter of public importance to the House said. He said, 'We want to see what the benefit is in actually building these submarines here in Australia rather than getting cheaper versions from overseas.' That is what the member for North Sydney wants to do. He wants to get our subs from a slow boat coming from Europe or elsewhere. That is what his plan is—not to manufacture them in South Australia. It is the same with our cars. He wants to send the car industry on a slow boat to China and bring submarines in on a slow boat to Australia. It is a curious thing.
We heard a lot about mining. They have moved on to trash-talking the mining industry in South Australia. There are a few points that need to be acknowledged. First of all, we have gone from having four mines to 20 mines in South Australia. There has been an explosion in mining activity, in exploration in particular. There are another 30 mines in the pipeline. We are No. 2 in the country for exploration, second only to Western Australia. We are actually No. 1 in terms of greenfields sites. The independent Fraser Institute rates us as one of the most attractive mining destinations in the world. That is what is happening in South Australia. There is a boom in mineral exploration that has been promoted not only through world conditions in commodity prices and demand but also because we have the PACE exploration scheme and because there was a geological survey done way back at the time of the Bannon and Arnold governments. But people do not talk about these things. All we know is that mining investment is a very long time coming. You have to work very hard to get mining investment going. There are long lead times. They look for investment certainty and the like, and that is what they are getting in South Australia.
We have heard a lot about the carbon price and, in particular, BHP's attitude to carbon. I point out to those opposite that on 16 September 2010, in an article titled 'BHP boss Marius Kloppers: it's time for carbon tax', Marius Kloppers is quoted as saying:
We do believe that such a global initiative—
a carbon price—
will eventually come and, when it does, Australia will need to have acted ahead of it to maintain its competitiveness.
The head of BHP, in other words, is saying that it is important to have a carbon price in advance of what the world is doing. The member for North Sydney went to the National Press Club a year ago and admitted there was going to be a global carbon price, saying, 'Oh, well, it will happen eventually.' He, like the member for Groom, was in favour of pricing carbon in the previous parliament, under a previous leader, before the Liberal Party was taken over by the lunar Right and the nutcases on the internet who drive this stuff.
The reality is that the companies look for investment certainty and that carbon pricing provides it. The decision made by BHP in recent days on the Olympic Dam project was based on BHP's own commercial interests. It was based on the capital intensity of the project. We and those opposite know that the project is capital intensive because there is a lot of dirt on top of the minerals in South Australia—these are not shallow pits; these are deep pits, and that means that it is expensive to get at the minerals. The position of the Australian dollar, actual economic activity, the skills available in the economy and the company's own disposition towards making very large investments in this internationally unsettled time also played a role in BHP's decision.
If those opposite were being honest and sensible and were trying to make sure that the South Australian economy kept growing and that consumers had confidence rather than trying to scare people, they would be saying, 'We'll be a loyal opposition, and we'll work with the government to make sure the project happens.' Instead, they come in here and try to perpetrate a fraud: that the carbon tax is responsible for the halting of the project and that the mining tax applies to it, even though the mining tax does not apply to gold, copper or uranium mines. That is the one fatal and obvious flaw in their logic, but it does not stop them going out there looking like a bunch of gargoyles and talking down the South Australian economy. It pains me to say this about the member for Grey, because he is a distinguished fellow and a man of the land and I have a fair bit of affection for him, but he looked like a gargoyle standing next to the member for Sturt and others—these grim gargoyles talking down the South Australian economy. It is not good. If you think that voters are going to be impressed by your gleefully high-fiving one another about not getting an investment, you've got another think coming.
They could not wait to get out of their offices—they burned outside, Abbott's army—but the member for Warringah, although we were not meant to know this, had not at that time even read BHP's statement. He did not care a lick about that; what he really cared about was mounting another scare campaign. This is because the little scare campaign that they have had going for six months about the carbon price has fallen flat on its face, and people are saying, 'What was all the fuss about?' Now the member for Warringah has to cast around for something else to hang his hat on, but there is not much available. There is no industrial relations policy on the other side. There is no policy on how they are going to fund super. There is no policy on how they are going to fund the member for North Sydney's $70 billion black hole. There are no costings or any policies from them. They do not have a sane or rational policy on how they are going to deal with climate change, because they want to appeal to the lunar Right and the nutcases and the Tea Party people who are now populating the fringes of the Australian Right. The scare campaigns that those opposite mount are an absolute disgrace, and they will not be received well in the state of South Australia.
Yesterday was a very sad day for South Australia, and one would think that the member for Wakefield would at least come in here and show a little compassion for the people who are already losing their jobs. In the two weeks before BHP's announcement yesterday about the Olympic Dam project more than 600 jobs went in Roxby Downs, and the sackings have already started as a result of the Olympic Dam decision. All of this is an absolute catastrophe for our economy. So much had been staked on the future of the Olympic Dam project in South Australia. The South Australian government was intending to use the project to bankroll its future. It had already factored in the royalties from this mining project, which is now not going to eventuate—not, at least, in the short or medium term.
The member for Wakefield said that the project has only been deferred. That is not right, Member for Wakefield. This project is being totally reassessed because it is being deemed unviable, and it is being deemed unviable because the costs of development are too high. We know that the costs of development in Australia in the last few years have blown out exponentially—and there are a number of reasons for that. But the government is implicit in raising the costs because it has added to the difficulties. When I was interviewed earlier today, I said: 'It's like a pole vault—when you put the bar at 5½ metres, is it the first five metres that mean you miss the jump, or is it the last half-metre you put on the top? It does not really matter—if you make it higher, it's harder to get over.' In this case, the government has been complicit in making doing business in Australia that much more difficult.
For the last five years, my community, the electorate of Grey, has been through the community consultation, the debate over the desalination plant and the debate on the unloading platforms in the Spencer Gulf. We have talked about the increased strain and what we will do with the Port Augusta Bridge. We have talked about energy supplies and electricity for Roxby Downs. We have talked about expenditure to accommodate the freight task. All the towns in my electorate have been preparing so that they can participate in the supply of fly-in fly-out workers for Roxby Downs. Business has been positioning itself to take advantage of the opportunities. Moreover, BHP and the South Australian government have been out there spruiking, urging businesses on and telling them to get ready for the boom that is coming—and now it is not coming. They have been encouraging businesses to invest their hard-earned dollars so that they do not miss out when the boom starts starts—but, of course, now the boom is not starting. We are going to have to pick ourselves up off the floor and see what this means for the electorate of Grey and the economy of South Australia as a whole. In the short term, at least, all the talk has come to nought and we are all suffering. The member for Wakefield accuses me of being gleeful, but I can tell you that to me this is like losing a member of the family; the member for Wakefield has no understanding.
He says he cares for the 16,000 workers at GMH, and so he should, but we lost 20,000 jobs yesterday, and there are more to come.
The South Australia government have been out there huffing and puffing—Tom Koutsantonis has been out there—saying: 'We'll stand up to BHP. We won't extend their indenture bill.' Give me a break! For a start, who else has got $30 billion? And, incidentally, there is just a little problem: BHP already own the leases. There has been this hairy-chested thumping and blaming of BHP instead of actually having a look at some of the root causes of this increase in the degree of difficulty of doing business in Australia.
I think it is time that the Prime Minister took a little bit of responsibility. She will never admit that the carbon tax, for instance, might have just added a little bit of difficulty to this—not even one iota. In fact, if you listened, once again, to the member for Wakefield, you would think everything is rosy: the South Australian economy is just rolling along fine! He talks about all the new mines we have had. There have been some new mines in South Australia, but a lot of them are not all that big. There are a couple of beauties. There is one at Prominent Hill, in my electorate, and there is Arafura Resources out in the west, but there are a whole string of others that we were hoping to get off the ground.
There is Rex Minerals, down on York Peninsula, and the Arafura refinery in Whyalla. I cannot tell you how important that refinery is to Whyalla, because we need to diversify. A lot has been said about Whyalla, mainly by the government in this place, and mainly by that clown of a minister who sang to us with his beat box out in the yard. A lot has been said about Whyalla, but we need to diversify. The investment platform that this government has supplied in Australia is actually putting those projects under more strain. We are looking to develop the iron ore resources of the Eyre Peninsula, and yet in all this time, when we talk about the mining boom, not one new port has been constructed in South Australia—but, boy, we need them—and not one new railway line. And now the Minister for Resources and Energy says the boom is over. The boom is over, so we have missed the boat.
I come to the comments of BHP. BHP say that this project, Olympic Dam, is not going ahead because of two reasons. Let us look first at commodity prices. Yes, commodity prices have come off, but remember this mine was not to produce any ore for another five years, so, if they are talking about commodity prices, they can only be talking about profits today that are underwriting the investments of today. So, if their profit has come off, you know that is one of the reasons. Another reason that their profit has come off is that they have been hit with two new taxes, and they have announced a 35 per cent write-down in profits, so they are nervous. Their profits are slipping away. They do not have the money to invest. The government cannot claim that they have not put their hand into that pile of money, saying, 'Yes, we want a bit more for us, because we promised all this stuff to the Australian electorate and we don't know how to pay for it.'
And then of course the BHP executive says it is capital costs. Well, it is capital costs, and we know what makes up capital. It is not just a piece of steel. It is not just a roof on a donga. It is not just a backhoe or a truck. It is all those things that go into making it. It is the transport costs. It is the labour costs. It is the cost of building anything in Australia. It all incorporates. It is inclusive of the taxes, because they become incorporated in the capital costs, and it is capital costs that have blown out substantially, excessively, in Australia in the last few years—and pretty much in the time frame that coincides with this government.
BHP are not fools. The government has been making much about the fact that they have not implicitly named either the carbon tax or the mining tax in this particular decision. I understand. I know quite well that Roxby Downs is not going to be subject to the mining tax, at least in the government's current form, but that mining tax has been affecting their other profits. But they are not fools. They know that they have to go on and deal with the government tomorrow and the day after and the day after—for a little less than 12 months, I hope—so they are not likely to go out there and be so critical and so honest with the government in public as to say, 'Your taxes have helped kill off this project.' They are careful with their language. They are diplomats. What would we expect them to do? None of us would do any different.
That is the case. It is the case that business are worried about the repercussions if they stand up publicly and criticise this government, and that is a terrible condemnation.
The government talks of this pipeline, this $170 billion worth of investment in the pipeline, but yesterday we lost $50 billion, and that pipeline is not filling up. There are concerns in Western Australia about the Oakajee port. There are concerns about a number of projects which I am aware of, about whether or not they can now be delivered on. I am hopeful that this does not send a signal to the rest of Australia that there is no confidence left. I am hopeful that we can get some of these projects over the line. But if we look to why, if the people of Roxby Downs in South Australia want to know why this project has not gone ahead, they should look no further than the Prime Minister, because the government has added to that extra burden and she was, after all, the architect of Fair Work, she was the negotiator of the mining tax and she was the Prime Minister who promised us that we would never have a carbon tax, but that is just what she delivered.
Twenty-four hours from the concerning announcement by BHP, we still have the opposition peddling mistruths about the Olympic Dam announcement. We still see them making up things, shooting from the hip and not actually listening to what BHP had to say. Some would think, if they listened to this debate, that opposition members actually knew more about BHP operations than BHP itself—that in fact the opposition knows more about what is going on within BHP than Marius Kloppers himself. Unfortunately we have a situation where the opposition either have not read the statement, which is what the Leader of the Opposition had not done yesterday, or they have not understood it, and they have not caught up with what is actually happening in South Australia—and when it comes to a Olympic Dam in particular.
Two mistruths have been spoken in this debate. The first was that it is the mining tax that stopped Olympic Dam. I am glad the member for Grey acknowledged it, because he is the only member on that side to actually acknowledge that the mining tax does not apply to copper, gold or uranium, and they are the things being mined at Olympic Dam. It is a pity the Leader of the Opposition has not bothered to acknowledge that.
The second mistruth was that somehow the carbon tax stopped Olympic Dam from going ahead. The opposition used to think a price on carbon was going to go ahead. They advocated for it and were negotiating for it and then, unfortunately, the Leader of the Opposition squashed that on its head when many members wished it would still go ahead. Mr Kloppers also made it very clear that he believes there will be a price on carbon and that if Australia does not act we will be left behind. Mr Kloppers said Australia will need to 'look beyond coal' powered electricity and 'towards other energy solutions'. He said:
Failure to do so will place us at a competitive disadvantage in the future where carbon is priced globally.
He has also said:
…we do believe that such a global initiative will eventually come. And we do believe that when it does come Australia will have needed to act ahead of it coming in order to maintain its competitiveness.
For the opposition to suggest that carbon pricing was not something BHP had considered and that suddenly, when it came in, it stopped Olympic Dam is misleading this parliament. You do not have to take it from me. You could take it from the words of Marius Kloppers who said:
The decision is almost wholly associated with, in the first instance, capital costs, which is not only an Australian issue - if we look at Chile and Colombia and so on, where you've had similar exchange rate issues and cost increases …
Unlike what the opposition would have us believe, this is not an Australian government conspiracy that has shut down Olympic Dam. In fact, BHP looked at the project and found that exchange rates and capital costs made it difficult.
BHP Billiton also made it very clear that 'the tax environment for this particular project'—meaning Olympic Dam—'has not changed at all since we started working on it six or seven years ago'. For the opposition to come in and say that the issue is the putting of a price on carbon or that it is the minerals resource rent tax is completely at odds with what the company itself said. Quite frankly, I am not sure where the opposition's logic is. They obviously have not read BHP's statement. I am happy to provide it to the members of the opposition. I think the Leader of the House did provide it to members today. I would encourage them strongly to actually have a look at the facts.
It is not surprising that we hear the Leader of the Opposition talk down South Australia and the South Australian economy. He regularly supports policies that are not in South Australia's interest. We have seen a number of announcements which will hurt the South Australian economy if that side of the House ever sits on the government benches. In particular, we have already heard the Leader of the Opposition, when he runs over to Western Australia, say, 'I am seriously going to think about changing the GST distribution. I am going to look at that. I think I will cut it from South Australia. I think I will cut it from Tasmania and give a bit more to you'. That is effectively what he said. That would have a disastrous effect on a small state like South Australia and shows that the Leader of the Opposition has no regard for South Australians and no regard for ensuring that we have adequate services like the bigger states do.
It does not stop there. The car industry is of particular importance to South Australia. The government's Automotive Transformation Scheme has been really important in ensuring that the car industry has a long-term exciting future in South Australia. What do we get from the Leader of the Opposition? 'We will scrap it.' That is what he said. He is not interested in long-term investment in jobs in South Australia. I heard the member for Grey say 'It is only a few jobs; it is only a few thousand jobs'. It is not, Member for Grey, it is a lot of jobs, not just the direct jobs at Holden but the indirect jobs that come to my electorate, to your electorate and to every electorate. There are 200,000 jobs in this country that are supported by the car industry and what would those on that side do? They would scrap it.
Let us get onto the submarines. The defence industry is, once again, a very important industry to the South Australian economy. Labor, this side of the House, are committed to jobs in Australia. We are committed to ensuring that there are jobs in Australia and we will assemble the submarines in South Australia. What does the opposition say? They say we do not think we will give it to South Australia. We will look at buying it off-the-shelf overseas. We will go overseas and do our shopping for our submarines. We will not invest in the jobs in South Australia. This equals an indifference to South Australia and its people by the Leader of the Opposition. I could get onto water, where the Leader of the Opposition said, 'We will not buy back water.' It is a shame that they would treat South Australians like that. But South Australia does have a bright future. There is a lot of mineral exploration going on.
I am responding directly to what other speakers in this debate have been saying.
In his speech, the member for Grey condemned the Prime Minister for the Fair Work Act—the Fair Work Act that restored wages and conditions to many people who lost them under the coalition government. I have to say he has belled the cat on this one. He said, 'Blame the Prime Minister for the Fair Work Act.' I do not. I commend the Prime Minister for the Fair Work Act. She has restored wages and conditions in this country for many who had them ripped away by the previous government.