Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

I rise to speak in opposition to repealing the mineral resources rent tax. I rise to speak in opposition to arbitrary and heartless cuts to valuable programs under the guise of this bill, because at the end of the day that is what this proposed legislation will do. It does not matter what the government says. It does not matter what language they choose to use. This is not just a bill about repealing a tax; it is also about abolishing a series of funding measures that go to the heart of a series of programs implemented by the last government. I rise to speak in opposition to a government bent on attacking low-wage workers to give cash to large mining companies and, again, that is what repealing this legislation would do.

I heard other speakers talk about how this legislation is not perfect, how there are elements of the bill that are worthy of reform or debate. If we were talking about that in the Senate it would be a debate worth having. But that is not what this proposed legislation does. This proposed legislation gets rid of the minerals resource rent tax and gets rid of the spending measures associated with it. There are two elements to this bill that Labor opposes and that I oppose. Firstly, it repeals the tax itself, the purpose of which was to ensure that the Australian community received an adequate return for its natural resources—built on the principle that these are resources that belong, in one way or another, to all Australians—and there deserves to be adequate compensation for the Australian public when they are being ripped out of the ground.

The current legislation outlines the process for taxing above-normal profits made by miners that are derived from resources in the form and place they were in when extracted.

Not only does the bill repeal the MRRT, it also abolishes a series of measures that have an important impact on the community—that help people overcome a series of cost-of-living pressures. There is a fundamental dishonesty that has been happening in this debate. The government has not been clear that this is not just about repealing tax; it is about repealing benefits. The MRRT was not implemented only to fund these programs—there was an equity argument as part of it. These programs are being abolished by a government that has been secretive and inconsistent in cutting support for low- and middle-income Australians.

The MRRT was designed to take into account profitability and to give a fair return to the Australian community for the extraction of our non-renewable resources—resources which we all know are not going to be there forever. A profits based tax regime on these industries ensures that when global commodity prices are high, as they were in previous years, so are the returns to the community. Currently, if this legislation were not in place, taxpayers would see none of the benefits of these kinds of profits. Frankly, there is an equity argument here that deserves to be legislated for.

The MRRT system meant a fairer outcome for the Australian community—for those to whom these resources belong. These resources are, and should be, owned by the Australian people. They are non-renewable. We all know that they are not going to be replaced. The community rightly expected a return from their extraction and sale. It is also better and fairer for that sector if more tax is paid during periods of high profitability and if taxes are lower when lower profits are being realised. This principle applies on a site by site basis. The MRRT is a project based tax, so a liability is worked out separately for each individual project. More profitable sites will naturally attract a tax without diminishing the investment case for less successful ventures. That fundamentally lies at the heart of this equity argument. This argument says that the Australian public deserve to be adequately compensated for these resources but that we cannot put an unfair burden on business. That is why the taxation system is geared towards a direct relationship with the level of profits.

The bill we are debating tonight gives a tax cut worth $3.3 billion to the biggest mining companies in the world but hits Australian families and small business owners with, over the forward estimates—over a longer period—$16.3 billion in higher taxes and cuts. The government has listed measures that are amongst the first to be cut, by artificially tying them all to the MRRT.

I said before that the MRRT was not implemented just to fund these programs but that they are being abolished because the government does not believe that they have value. Make no mistake: this is a deceptive attempt to reverse social policies that are benefiting low- and middle-income Australians. And who are the beneficiaries of all this? A small handful of the largest, most profitable, most powerful mining companies in this country and across the world benefit from this.

Frankly, this is a government which, on this front, has its priorities completely wrong. I just want to run through some of the measures that are going to be cut if this legislation is adopted by the Senate. The first is the schoolkids bonus. The cuts in this bill will hit low- and middle-income families by abolishing the schoolkids bonus—$410 a year for primary school students and $820 a year for high school students. For families with two children this could mean they would lose as much as $1,500 for school costs over the course of their kids' education.

While figures of $410 or $820 may not seem so large, for families on lower incomes—these families struggle when all the bills comes due at the same time and when school bags, school shoes, the school uniform and the textbooks have to be purchased—these kinds of payments make a big difference. These kinds of payments matter. Families that receive family tax benefit A, youth allowance or veterans payments may be eligible for the bonus. It was intended to replace an annual education tax refund. Abolishing this payment in its entirety would remove financial support for families with young children at the time when a lot of them need it most.

It is not just schoolchildren who will be affected by these cuts. The income support bonus assists people with unexpected costs of living. People who receive that bonus will also be victims of this bill if it is adopted in its current form by this Senate. It is an income-tax-exempt, indexed, non-means-tested payment twice a year to eligible recipients, including over-50s on the Newstart allowance. The fact that the government proposes to abolish these payments without considering options for their replacement is highly irresponsible and completely mean spirited. To hide cuts to family and income support within this bill also shows gross disrespect to the Australian people, especially to those who are the most financially vulnerable and who are most in need of government support.

What worries me perhaps more than the other measures is the cut to the low-income superannuation contribution. Workers in low-paid employment will suffer as a result of the government's proposal. Previously, low-income earners received little or no benefit from concessional super contributions, so there was no adequate incentive for them to save for retirement. The low-income super contribution made superannuation tax arrangements fairer by rebating most of the tax they otherwise would have paid on these contributions. If this contribution is abolished, millions of Australians earning up to $37,000 will have increased super taxes. Before we had these low-income super contributions measures, low-income Australians who chose to save instead of earn were penalised by paying 15c in the dollar extra tax.

Women in particular are reflected on a grand scale—2.1 million female workers will suffer as a result of this bill. Many of these people are working part time and many are balancing work/life challenges. Industry Super Australia gave evidence to the Senate that abolishing the low income super contribution could reduce a low-wage earner's total retirement savings by about 15 per cent. This short-term cut will have a financially significant impact on Australians for years to come. In the short term, these working single mothers will lose support for their kids' school costs. In the long term, they will have fewer savings to retire on. There is the idea of delaying the increase in the superannuation guarantee. By winding back increases in the superannuation guarantee, the government will be undermining the ability of many Australians to save for their retirement.

Senator Singh spoke earlier about the Labor legacy of creating a savings space for all Australians with superannuation. What worries me is that what is initially a measure for delay becomes further delay and further delay, and in the end it is never implemented. I do not—and I know a lot of other senators in this place do not—have the confidence that those on the other side of the chamber have the same commitment to superannuation that some of us on the Labor side have demonstrated. The superannuation guarantee was to be increased from the current nine per cent to 12 per cent by 2019. This bill pushes those percentage increases back. My fear is that, once you start with these kinds of delays, you end up with never actually implementing it. This will mean lower retirement savings and increased pressure on the budget as retirees remain dependent on the aged pension. Again, it is a short-term measure which has a long-term impact on the future finances of many Australians.

On top of that, there are some tax increases for small business. Taxes will increase for 2.7 million small businesses. Earlier, Senator Whish-Wilson outlined some of this in detail, with some personal experiences. The idea of removing the instant asset write-off for small business is a particular concern. Small businesses will face increased red tape as a result of changes to this instant asset write-off. Increasing the threshold for claiming a deduction to $6½ thousand was intended to reduce the red tape compliance burden on small business. This proposal will reduce the threshold back to the 2007 level of $1,000. The government has been out there boasting that we will see some kind of bonfire tomorrow about cutting red tape. You have here a direct measure designed to make it easier to run a small business and easier to be part of a small business, and yet the government is proposing legislation in this place at this time that would make it all harder.

Special rules for motor vehicles would also not apply if this legislation is adopted. The government should be supporting small businesses. If they were genuine about cutting red tape, we would not see a measure like this in the Senate that is designed to do nothing more than increase the burden on small business. What we see here is all talk; when it comes to action, there is nothing.

I am also concerned about discontinuing the Regional Infrastructure Fund and the Regional Development Australia Fund. Additional to all the cuts contained in this bill, funds for regional development will be discontinued. No legislative change is required to defund the Regional Infrastructure Fund and the Regional Development Australia Fund, and that is a concern. It will be interesting to see the impact of this on regional infrastructure. How can the government justify hiding all this in a bill that is supposedly about nothing more than repealing the MRRT? They hope that no-one will notice; they hope no-one is watching. Well, we have noticed and we will hold the government to account for this shameful attempt at cutting support for those who need it most by opposing this legislation.

While the government proposes to cut all these measures that we have outlined this evening under this bill, we know there is a lot more to come. The Commission of Audit has handed the Abbott government a 900-page report that at this point we can only determine is sitting on the desks of the Prime Minister, the Prime Minister's chief of staff and the Minister for Finance and now also Acting Treasurer Senator Mathias Cormann. We are told it contains a recommendation for a comprehensive review of government spending. If the Commission of Audit is an honest and holistic review of government, why did the government cut these measures instead of considering them in the totality of all government programs? Why have these measures designed to help those on low and middle incomes been separated from a whole-of-government review of spending?

There are two explanations. Firstly, this is nothing more than an ideological attempt to undo everything the former Labor government implemented—that this has more to do with politics than it has to do with policy—in a show of spite and focused squarely at removing any of Labor's signature policies, regardless of their merits. As irresponsible and small-minded as this approach would be, I hope this is the reason, because the alternative reason is, frankly, much worse. The alternative reason is that they are deliberately hurting low- and middle-income earners to benefit a small handful of the richest, the most powerful and the wealthiest mining companies across the world. All of these companies gains will come at the expense of the Australian people, who own the resources the companies are extracting a profit from. When these big, powerful mining companies are making their largest profits, there should be an obligation upon them to give the greatest return to the Australian public, who own these resources and fundamentally deserve to have their share of remuneration for the resources that belong to this great land.

The government has its priorities wrong if it thinks it can cut programs aimed at helping single mothers and school children; those that are about supporting small business and giving small business the resources that it needs; and those that are about creating a superannuation system so that those who work for a living and contribute to the Australian economy for a lifetime are able to retire without being dependent on the government. If the government's priorities are that cutting those programs is okay, that cutting all those programs is the right thing to do—simply to give a tax break to highly profitable companies that exploit our natural mineral wealth—then, frankly, it has all of its priorities wrong. If that is the path of this government, then it would be undermining Australia's national interest by removing a measure that would ensure the broader Australian community gets a fair share of value from a finite amount of natural resources. Fundamentally, that is what the MRRT is about.

We are not saying that the MRRT is perfect. We are not saying that legislation of this kind does not from time to time deserve and warrant appropriate review. But that is not what this legislation does. What this legislation does is in two parts. It removes a tax that is about creating equity, about making sure that the largest and most successful companies pay their fair share when they are making the most money, but it also aims to tear at the heart of a series of social programs designed to build the social fabric and help address the cost-of-living pressures that so many families across this country face. I will be opposing this legislation.