Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Shortly before I started in the Senate, a friend of mine, Peter Lloyd, gave me a book to read which he told me was essential reading for any new MP. Standing here tonight I realise just how important it was and how right he was. The book, Don't Think of an Elephant!, by cognitive linguist George Lakoff, is essential reading. For those Australians bewildered by how this Liberal-National government can be so ferocious and effective in undermining good public policy, such as pricing pollution or implementing a fairer tax system for all Australians, I recommend you read this book. Lakoff explains why the conservative side of politics have been devastatingly effective in promoting their own agendas by consistent, disciplined, simple and emotive messaging designed to attack and undermine progressive politics, and not just in this country.

One focus for Lakoff is the subject of taxes, which are a good thing but are consistently painted by conservatives as an evil. Sound familiar? Lakoff goes on to explain that taxes are a critical part of any democracy. Taxes are roads, taxes are hospitals, taxes are law and order and taxes are safety nets for the poor. Taxes help build economies and create jobs. I would fall off my Senate bench if I ever heard this point publicly acknowledged across the chamber. It certainly has not rated a mention in any of the coalition's debate speeches on this subject. It does not fit their simple and glib messaging and their fundamentally dishonest spin.

In an ideal world, good tax policy would focus less on taxing effort, or what economists call 'work', and more on taxing the 'bads'—for example, through a pollution-fuel excise or an excise on tobacco. We would also focus taxation on equitable levying of the public good across common resources, such as the economic rents from our abundant mineral wealth. The 'tragedy of the commons' and the fair setting of 'property rights' on public goods is understood by most first-year economics students but seemingly not by those on the other side of the chamber.

Do not just take my word for this; this logic was inherent in recommendations made by the Henry tax review. Ken Henry is the man who was at the helm of Treasury through much of the Howard-Costello so-called glory years of economic management in this country. I was lucky enough to be in the audience for a speech Ken Henry gave at the University of Tasmania the very same night—in fact, the very same minute—his resignation came into effect and he stepped down and was a free man. At the end of his speech, when asked by a young student what he thought was the biggest challenge facing this country, he replied, 'A lack of political conviction for reform.' Today in this chamber, I see and feel this firsthand. Henry said he hoped the bright young students in the audience would go on to careers in public service and politics and help make this necessary change happen. How ironic that now the Liberal-National Party do not respect the vision or legacy of this man. How can they when they are turning their backs on many of his important recommendations for reform, including a mining superprofits tax?

Let me be clear: Ken Henry designed the superprofits tax to improve the taxation of resources. State governments currently tax resource projects through inefficient state royalties. These are generally based on a fixed amount per tonne of production or a fixed percentage of the value of production. Resource commodity prices are volatile but trends show iron ore up 700 per cent and coal up 100 per cent since 2004. Add to this record volumes of production and shipments of both coal and iron ore. The current mining taxation regime has caused fewer benefits to accrue to the community as a proportion of these increased profits. In 2001, mining companies paid approximately 40 per cent of their profits as royalties to state governments. Today they pay less than 20 per cent. And let us not forget that the mining boom, while it has no doubt been a bonanza to big foreign owned corporations, has had its downsides for the Australian economy. We need a more honest debate about this, if that is at all possible in today's politics.

Employment in mining is often cyclical and short term in nature. The mining boom has given a sugar hit to the Western Australian economy, but Western Australia needs more eggs in its basket if it wants to secure its economic future. As my colleague Senator Ludlam has so eloquently pointed out, the state must diversify its economy. At least Senator Ludlam and the Greens have a plan to do this. This government's economic plan for WA is simply to 'axe the tax' and suddenly tens of thousands of jobs will be created overnight. This is not a plan; this is a scam or a sham. Hopefully the government will have the guts to turn up to debate Senator Ludlam over the coming weeks on his vision for the WA economy.

We the Greens believe the Australian people who own the mineral wealth that is to be extracted deserve a greater share of today's profits. This is exactly what this tax was supposed to rectify. This begs the question: why is this policy being scrapped by this government? The biggest porky of all being pushed by this government is that the mining tax has contributed to sovereign risk that is impacting on mining investment and employment. Sovereign risk, also called country risk, is made up of both political risk and broader economic risks such as inflation, interest rates, volatile exchange rates et cetera. Australia ranks in the top 10 global investment destinations on a variety of independent global assessments of this risk. We are by any measure a low-risk investment destination.

This same argument was used generations ago against the introduction of a petroleum resource rent tax—that it would devastate employment and investment in the Australian energy industry. What claptrap that has turned out to be. If you want to ask about sovereign risk, go speak to the ex-CEO of Rio Tinto Tom Albanese about a real sovereign risk destination, Africa. He lost his job as CEO of Rio Tinto after a $3.4 billion write-down, a loss on their investment in Mozambique. Or ask the other employees of Rio Tinto in Mozambique, who have had to leave the country amid security concerns. Or ask the Australian companies that recently successfully received $100 million in Australian government export assistance loans to do business in Chile because the project was too risky for conventional finance. In justifying this loan in question time last week, Senator Cormann made some comments about finance markets not working efficiently overseas. So the Australian government has had to step in and provide finance on what is already a well-established project in Chile. South America, like West Africa, is a high sovereign risk destination. Australia is not. What overseas mining company has asked their government to invest taxpayer dollars to cover their risk of investing in Australia? Not one.

This debate should be called the mining the truth debate because there is so much dishonesty and selective debate surrounding it. The real reason the government is seeking to overturn this tax reform is simple: the old royalty system, which has a lower impact on their profits, suits the profit-chasing nature of big business and their drive for shareholder returns. Economists call this rent-seeking behaviour, and this is what underlies the advocacy of big business groups and their lobbyists. Our miners earn huge economic rents. They pay lower tax rates than most Australians, and they are heavily subsidised by the taxpayer. According to the Australia Institute, fuel tax credits are worth $2.35 billion a year to the mining industry. The wealthy miners also get $495 million in annual tax write-offs for capital works and an additional $550 million in deductions for exploration and prospecting. Add in other government incentives, such as generous research and development tax concessions and taxpayer funded infrastructure investments, and the annual number climbs to over $4 billion of Australian taxpayer subsidies per annum.

The mining industry effective tax rate of 13.9 per cent is also far lower than the average of other industries in this country, at around 21 per cent. The mining industry also combines its corporate tax rate with royalties in order to argue that it is highly taxed. But royalties are the cost of raw materials. It is no different from when a restaurant buys food or bricklayers buy bricks. These industries do not count these inputs as taxes. We, the Australian people, through our governments, sell resources to the big miners. Of course we should seek a better and fairer price—a bigger share of the pie. But the big end of town, pulling the strings of this puppet government, does not want to give it you. A whopping $22 million was spent by big business just on advertising against the first super profits tax, and I note that we have heard, in just about every debate, from the Liberal-National government that this led to the downfall of Mr Kevin Rudd, the Prime Minister at the time.

This debate is indeed about the profits of big business—it is about protecting them. Do not believe the mining industry or the coalition when they cry poor. The Liberal-National government are right about one thing in this debate: the MRRT is not the original super profits tax, and it has been a failure in delivering its revenue objectives. Only $126 million has been raised in the first six months since introduction, yet $4 billion was expected to be raised this financial year under the revised version negotiated by Prime Minister Gillard. It is also worth noting that only BHP paid any mining tax for the year to 31 December 2013. This is despite the profits of the three big iron ore companies to whom it applies—BHP, Rio Tinto and Xstrata—having risen by 81 per cent in this financial year. Their combined half-year profits are $14.6 billion, and 83 per cent of these profits go offshore. So any super profits tax is essentially a tax on foreign shareholders—a transfer of wealth from foreigners to Australians who own these resources. Note that, without the MRRT in place, their profits would still be a staggering $14.81 billion. The current super profits tax takes a meagre 1.5 per cent off their extravagant headline profits, and for this government that is still too much. This government would prefer to charge people to see their local doctor or to make life harder for small business.

The Greens want to fix this tax on wealthy miners and their super profits. We stand alone in this regard. We want to fix it for a more fair and equitable Australia. We have been consistent on this matter. We support the original Henry super profits tax. According to the Parliamentary Budget Office, fixing the tax would yield $26 billion over the next four years. Removing the mining depreciation allowance, additionally, would add another $2.2 billion to be spent on healthcare and looking after our vulnerable. It is important to point out that the proceeds of this megaprofit mining tax were designed to be spent on pensions and tax cuts for small business and infrastructure projects, particularly in WA and Queensland. Treasury and independent modelling forecast a $450 million per year gain to the Australian economy, due to flow on results of company tax and tax breaks for small business.

The mining tax was also forecast to reduce the cost of living and increase employment, contrary to Senator Mathias Cormann's false and unsubstantiated claims made in this chamber. Small business is the backbone of our nation. Nearly two million businesses employ nearly half this nation's taxpayers. My wife and I have run two small businesses for the past decade. My wife currently employs 16 people in our home town of Launceston. We know, unlike many in this chamber, how tough it is to get out of bed and go to work because no-one else will if you don't. We know the long hours and the risks of losing it all. I am sure no-one from the Liberal Party would disagree with what I am saying here tonight, so why are they penalising Australian small business with this legislation? Why are they removing the instant asset write-off thresholds and loss carry-back provisions—effective tax breaks for struggling, hard-working small business in Australia?

This anti small business legislation reduces the flexibility and cash flows of small business right across the country. I note with pride that the Greens want to increase the instant asset threshold to $10,000, not wind it back to a paltry $1,000. We want to give small business a bigger tax cut to help grow the national economy, and we ran a policy going to the last federal election fully costed to do this to reduce the corporate tax rate for small business to 28 per cent. Previous attempts to do this had been voted down by the Liberal-National government. Why? Simply because they feel they have the small business vote of this country in their back pocket, so they can take them for granted.

I ask again: Why? Why is the Liberal-National government turning its back on small business in this country? They are doing it because they are puppets on a string to the big end of town, because they care more about maintaining the huge profits of mining companies than about Aussie battlers. The legislative agenda that we have had in this chamber for many months is all about ripping up and tearing down, but I am yet to see any vision or alternatives for employment opportunities. The mantra that suddenly we will cut taxes and everything will be okay certainly does not wash with me, and I do not think it will wash with the Australian people.

This bill is another example of the Liberal-National government legislating for special interests over public interests, as it is doing with the carbon bills, where the big end of town—the big polluters—have run a campaign against the entire clean energy package because it is a threat to their business and to their hold on the energy market. Legislating for the big polluters over the environment, community and future economy is becoming a bit like Groundhog Day in here.

This government will go to any lengths to push its short-sighted, dangerous agenda. We saw, this week and last week, the government's attempt to push through the FoFA reforms, which Senator Dastyari, in the chamber tonight, knows a lot about. It has become very clear—thanks to an article on Crikey on Friday afternoon—that the Liberal Party has been a beneficiary of donations from the big end of town, the big banks and AMP, who stand so much to gain in not seeing these reforms pushed through, these sensible reforms backed by the financial planning industry. They do not want to see conflicted remuneration, they want to see these conflicts of interest removed so that the industry can get back on an even keel. They have suffered reputational damage because the way a lot of the products have been sold has been unethical and has lost investors a lot of money. And it talked a little about the Liberal-National government's obsession with managed investment schemes. I hope we will hear a lot more about this in the coming years.

The government's agenda, if you can call it an agenda, is designed to further its own short-term political interests, at the expense of good public policy, the broader interests of the Australian people and the future of this nation. Although we do a lot of good work in this chamber, as I was putting this speech together tonight, I thought about Ken Henry's words in the lecture theatre at the University of Tasmania. The clock had struck six and he said to everyone, 'I'm officially retired.' Someone said, 'Are you going to speak your mind tonight, Ken?' He said, 'Well, I still have a lot of respect for the politicians and the people I've worked with, in the system, over the years.' He gave a very good, balanced speech.

At question time, a young lady put up her hand and said, 'What is the biggest challenge facing this country?' It was the first question. He said, 'A lack of political conviction for reform.' This is a man who had been and seen it all, and certainly has tripartism respect, from everything I have seen. I look at why he is right and why we are failing—by trying to put up this type of legislation to tear down good public policy. It needs to be fixed, there is no doubt about that. When I ask myself why, I can only see one reason: this government is governing for big business, not for what is in the interest of most Australians. I will certainly be voting against this bill, as will Senator Di Natale and all of the Greens.