Joe Ludwig (Queensland, Australian Labor Party) Share this | Hansard source

I rise to speak on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. We on this side—Labor—have a fundamental view that Australians deserve to share in the benefits of minerals that we all own. The MRRT enables the benefits from mining to be shared across the Australian community, while minimising market distortions. It is, fundamentally, good public policy and good economics. The repeal of the associated measures contained in this bill will hit Australians right across the board, especially those who can least afford to be hit, and it will attack all corners of Australian society. That is what this government is proposing to do with this repeal bill.

It will remove the Schoolkids Bonus—this will hit families when they need help most of all, and will not help them in their fight against the pressures of rising costs of living. This bill, if passed, will hit low-income earners; and women will suffer disproportionately from the removal of the low-income superannuation contribution. Children, including children who have been orphaned, of ADF veterans who have been killed or injured will have their payments cut. Small businesses will suffer from increased taxes and increased compliance costs. And over-50s on the Newstart Allowance who require income support to deal with unexpected living costs will also have their assistance cut.

This legislation—and the approach this government has adopted since taking office—says a lot about the values the government holds. It confirms that the government wants a retrospective tax grab on millions of low-paid Australian workers—to give, mind you, a tax refund to large mining companies. The MRRT and the associated measures are not the results of short-term thinking. They were put in place for now and for future generations.

The MRRT is a tax which is noted for its economic orthodoxy. Tax theory is simple on this point: it is desirable to avoid taxes which distort the market and which prevent efficient utilisation of resources. The MRRT is non-distorting and encourages the efficient utilisation of Australia's shared resources, especially by smaller mining companies which invest and explore in Australia. Remember, it is a tax for the big, entrenched miners—it is those with profits above $75 million who pay this tax.

I would like to suggest, boldly, that the government are hypocritical in their refrain with regard to the view that they have taken of the MRRT. The government makes two claims. First, they claim that the MRRT is not working because it is making no revenue. We have heard that. Second, at the same time they are saying it is a cost burden and killing the mining sector. Both of these claims cannot be correct. In fact, neither are correct. The MRRT will gather $3.3 billion by the government's own estimates and even more for future generations. Taxing rent profits means that when mining companies are investing, exploring and taking risks they do not pay. The MRRT does not tax the entrepreneurial spirit of mining companies at all. When profits are lower—for example, when mining is in the construction phase of the boom or feeling the heat of the high Australian dollar or fluctuations in commodity prices—of course the MRRT revenue will be lower. That is how the tax works.

The mining industry, as we know, has been going through a transition. The investment and construction phases are coming to completion. The longer term extraction phase is beginning. Taxing the inputs to mining will not result in the revenues the government has gathered during the construction phase. The MRRT is an almost textbook example of the best practice for raising government revenue in a way that minimises the distortion to the market and encourages the best utilisation of Australian resources.

The MRRT should be uncontroversial, quite frankly. But, to this government, sensible economic reform is an anathema. The repeal of the MRRT has taken us to a new chapter in economics. This chapter is about rent seekers and their distortions to sound government. Special interests and rent seekers came out of the woodwork after the election to get their pound of flesh not from the government but from the Australian community. The MRRT was not put in place for the short term. It was not for the next six months. It was put in place for the next generation. The government is determined to be more short-sighted than Mr Magoo when it comes to tax reform. Even in this government's deeply political MYEFO they could not hide the fact that the MRRT was raising revenue. The MRRT has little effect on mining investment and it is forecast to gather $3.3 billion by the government's own numbers.

The repeal of the MRRT and associated measures, however, if it is successful, will have a large and damaging impact. Consider who pays this tax. A person with a family does not pay this tax. A pensioner does not pay this tax. A truck driver does not pay this tax. A farmer does not pay this tax. So who pays? Who is the government going in to bat for? Which deserving group benefits from this repeal? The only group that pays this tax are mining companies with a profit over $75 million. The tax only kicks in on profits above $75 million.

It is worth contrasting those who will benefit from the repeal of the MRRT with those who will suffer. Those who will benefit from the MRRT repeal are a small number of mining companies with projects whose profits are above the threshold of $75 million—fewer than 20 companies in 2012-13. The ones who will suffer from the MRRT repeal are a more diverse bunch—small businesses, parents, school children, people saving for their retirement, those on low incomes, those exploring geothermal energy and the children of war veterans. The Australia Institute stated that their view is that:

… this package as a whole transfers income from something like 10 million Australians, including the poorest … The main beneficiaries … are a handful of foreign owned corporations that are collectively worth $200 billion.

This is the coalition's form of class warfare—taking from small businesses, retirees, parents and school children an increase in the rent extracted from our shared resources by a select few companies earning profits over $75 million.

The fundamental disregard for those negatively affected by the repeal of the MRRT is illustrated by the MYEFO itself. This government acknowledges that the reduction in revenue which will result from the repeal of the MRRT is $3.3 billion. But in MYEFO the government balances that against a $10 million reduction in MRRT compliance costs. But what of the losses to the government? We effectively have a circumstance where this government literally and simply wants to rob Peter to pay Gina, a friend of this government. The 20 big miners are going to get a gift of $3.3 billion. What are ordinary Australian taxpayers and businesses going to lose? These are the measures the government is going to implement: discontinuing the very good initiative of company loss carry-back; reducing the instant asset write-off thresholds from $5,000 to $1,000; discontinuing vehicle accelerated depreciation; amending geothermal exploration treatment; rephasing the superannuation guarantee increase; abolishing the low-income super contribution; abolishing the income support bonus; abolishing the schoolkids bonus; and cutting payments to children of ADF veterans. That is what this government is going to do with the repeal of this legislation. Quite frankly, this frames this government for what it is. This is the frame for what it is supporting and what it is arguing for. The repeal of these measures underpin and highlight how bad a government it really is.

The company loss carry-back provisions have the rare distinction of being supported by both businesses and unions. The Australian Industry Group said that the loss carry-back provides a very important boost to their company's cash flow at a time when they need it most and at a time when it is going to be most critical in ensuring the survival of the business.

Under this repeal, this helpful measure is being wiped away. Prior to the election, the coalition spoke about the cost of living and bringing down prices. It was almost a chant. In government, the story changes. A short walk and they completely backflipped with a piece of legislation that looks to hit families early next year. Right when they need to buy clothing, shoes, text books and study supplies for their children, they are going to remove the schoolkids bonus.

This bill will rip payments of $410 per primary school student and $820 per high school student from 1.3 million Australian families, starting from January next year, through the abolition of the schoolkids bonus. It is telling that the government is not debating this measure on its merits, because they are not. How could they? There is no merit in this repeal bill whatsoever. How could they justify cutting the schoolkids bonus, increasing cost-of-living pressures, at a time when families can least afford it?