Larissa Waters (Queensland, Australian Greens) Share this | Link to this | Hansard source

As I was saying in my contribution on this bill earlier, the last time I checked we did not have Rio, Xstrata or BHP in charge of this place yet. In fact, we were here to represent people. Earlier I was cataloguing the changes that those companies had succeeded in making to the original resource super profits tax, including downgrading of the tax from 40 per cent as originally proposed to an effective 22½ per cent and, of course, leaving out most of the minerals that it was originally designed to cover, shrinking it down to just coal and iron ore.

Perhaps one of the most offensive loopholes which was inbuilt into the MRRT was the royalty rebate, which, frankly, has been a total lark. It has allowed the MRRT revenue to be eroded by state governments. The Australian Greens, on advice from Ken Henry, had sought to close this loophole. Sadly, at the time we received absolutely no support. The Henry tax review had recommended replacing royalties entirely with a profits based tax but had said that as a second-best option there could be a royalty rebate, but only if those royalty regimes were fixed at a particular point in time so as to ensure that the Commonwealth did not then automatically fund future increases in royalties. Well, what do you know? That is precisely what happened when Western Australia, New South Wales, Queensland, South Australia and Tasmania upped their royalties: this left the Commonwealth responsible for rebating those mining companies that increase. What a farce! I do not think you have ever seen the design of a tax and rebate system more farcical than that.

The Greens had the Parliamentary Budget Office cost closing that loophole and estimate the revenue that would have been raised had that loophole been closed. Their estimate was that it would total $2.2 billion—a significant amount for a very small change. Because we received no support at the time for that amendment, the loophole remained on the books. History shows the mining tax has barely raised a dime. The other feature of the MRRT which made it less effective than originally envisaged was the depreciation rules, meaning that mining companies were able to price their assets using today's inflated market rates and then claim massive annual deductions under that amount—not what they had actually spent on capital investment.

The $4 billion that was expected to be raised under the MRRT this financial year was, because of those exemptions, reduced down to an actual amount of $232 million. This is an absolute tragedy considering that the profits of the three big iron ore companies to whom the tax applies have risen by 81 per cent in this financial year. Their combined half-yearly profits were $14.6 billion; the half-yearly profit for Rio was $6.4 billion and, for BHP, $6.5 billion. If they are not superprofits, then I do not know what are.

Most of those profits are shipped offshore. We know that more than 80 per cent of those profits flow to foreign shareholders, so that leaves about a fifth of the industry's enormous profits accruing to Australians through dividends—and even then only those with enough discretionary income to invest directly in shares would benefit. Clearly there have been some winners from the mining boom, notably those overseas shareholders. As the Reserve Bank has put it:

Since the mining sector in Australia is majority foreign owned, most dividends and retained earnings accrue to foreigners and therefore do not add to national income.

These enormous profits do not equal more jobs for Australians. The large profit margins are lovely for the mining companies, but they do not equate to job creation. If those profits do not stay on in the Australian economy, then clearly they are not creating jobs, as Ross Gittins pointed out a week or so ago.

The mining industry does create some jobs—about 2.4 per cent of total Australian jobs—but not as many as the industry constantly claims. Even those jobs, however, come at a cost to the broader economy. We know that the Australian dollar has become more volatile because of the boom and that sustaining it at high levels keeps interest rates higher than they otherwise would be. That of course creates labour shortages in other regions or skill areas. This has resulted in lower profits, fewer jobs and lower returns to shareholders in other industries, such as manufacturing and tourism. We have one chance to make sure that the nation gets a share of the current windfall profits being made by these 80 per cent foreign owned multinationals and that is why the Greens have moved and foreshadowed our second reading amendments to this bill.

The first amendment was moved by Senator Milne earlier today and it is to increase the tax rate back up to that original 40 per cent and to have it apply to all minerals, not just to iron ore and coal. It is to fix that royalty loophole that I referred to earlier to rebate only the royalties there were in place as at July 2011 so that the mining companies and not the federal government pay any subsequent increase in those royalties should the states hike them up further. It is to fix that depreciation treatment so that it is a book value and not an amount actually spent on mining infrastructure.

According to the PBO's post-election report, those features, should they be adopted, would raise an extra $21.8 billion in revenue which, frankly, we could all do with. I would have thought that this government, if we are in a so-called budget crisis, would welcome such a revenue avenue. The mining boom is transitioning from that capital-intensive phase, and the production phase is now beginning. This is when the super profits will occur, because the revenue from production will be rising and companies will be less able to deduct it against capital investments. So we need to get a super profits tax in place, a proper one that works, before those profits are shipped offshore to their foreign investors.

We have also foreshadowed a second second reading amendment, because axing this tax—as the government's three-word slogan would have as the description—would also axe the low-income super contribution, which we all know will have a massive and disproportionate effect on women. This reform should never have been tied to the mining tax. The low-income super contribution is about equity and removing it will simply further entrench the disparity that women face when they retire. The bill abolishes the low-income super contribution on working Australians and, as I have said, this will have a particular effect on working women. The Greens have sought for this to be dealt with separately by the parliament and not cloaked in the mining tax repeal bill, because of the significant impacts that it will have on everyday Australians—not just women but low-income earners as well—and because this issue has not had the public airing and the debate that it rightly deserves.

Frankly, the Abbott government is making a cash grab on the retirement savings of one in three workers to the value of around $27,000 each, or 15 per cent of their expected retirement savings. Under that low-income super contribution, the government pays a super contribution towards workers earning less than $37,000 a year. The repeal will therefore disproportionately affect those employed on a casual basis, which is young people, students and women with parenting duties. The fact that the bill will deplete the retirement savings of one in every two working women and 80 per cent of women working on a casual or part-time basis has sadly not received sufficient attention. Furthermore, for most young women the repeal of the low-income super contribution would completely erode the retirement income gains expected to be realised from the government's Paid Parental Leave scheme.

The low-income super contribution attempts to address the inequities in our super system, which favours high-income earners and does nothing for low-income earners. So repealing this low-income super contribution will place greater burden on future governments by increasing people's reliance on the age pension. So this legislation has basically no redeeming features, and the government is trying to sneak it in under the guise of the mining tax. In Queensland, the figures show that 744,286 people will be affected should the low-income super contribution be repealed—that is 35.7 per cent of all Queensland workers. That is an enormous number. In total, those employees in Queensland would lose $203 million. In WA, the figures are likewise very stark: 353,613 people would be affected, or 31.4 per cent of total employees. They would lose out on $93 million. These people, who can least afford to have their income and their super further restricted, are now going to be hit with the removal of a safety net for the benefit of people like Rio, Xstrata and BHP. 'The world has gone mad' is the only conclusion you can draw.

Australia's mining boom is transitioning from the capital-intensive phase to the production phase and, as I have said, this is when the profits will really start flowing, which is precisely why we need to fix this tax now rather than simply rip it up as the government is now proposing. A poll in January this year found that the majority of Australians, 54 per cent of Australians, believe that multinational mining companies do not pay enough tax. I strongly agree with the 54 per cent of Australians who hold that view, and I would urge the government to rethink its obsession with making it harder for low-income folk and making it easier for multinational mining companies. I think the 54 per cent of Australians who believe that do so because they actually value the things that a good government should provide, like keeping the low-income super contribution and keeping Medicare as a universal health entitlement that a rich country should provide its citizens, rather than an increasingly two-tiered system whereby your medical care is determined by your bank balance. What a horrific track for us to be on.

These people value things like increasing funding for all levels of education, starting at the early childhood level right through to higher education, and of course funding the fifth and sixth years of Gonski that, should we fix this tax, we would then be able to fund. They value things like properly addressing affordable housing and homelessness, which is made worse by the mining boom and the fly-in fly-out nature of employment in the mining industry. They also value things like raising Newstart and taking the single parents who were dumped onto Newstart off that inadequate payment and putting them back onto an enhanced parenting payment whereby they can actually care for their children and do not have to choose between textbooks or dinner. The 54 per cent of Australians who think that multinationals do not pay enough tax probably also value funding child care so that women actually have some decent options to return to the workplace—affordable options and quality options. They value things like decent public transport and dental health. The list of goods that the government could and should provide were it to have a revenue stream that was fixed and with these loopholes closed could go on and on and on.

Sadly, what we have seen is that instead of a government choosing to service the community that it is meant to be here to represent, it is servicing its mining masters. Once again, we will have the Xstratas, the BHPs and the Rios of the world, who originally wrote their own tax, now giving themselves a complete exemption from tax. Whoopee to them! Wouldn't it be lovely if we could all do that; but, sadly, it would bankrupt the nation. What the community does not want is a bankrupt government—a government that is morally bankrupt and that is abandoning the interests of the community and the services that it should be providing to its people. Until such time as the Abbott government abandons the parliament and decides to just put BHP, Rio and Xstrata in complete control and give up the facade that we are here to represent the people, the Greens will continue to stand for a mining tax that works, that raises the revenue that we need in order to provide the services that the people rely on, and we will do so proudly. So I again urge all senators in the chamber to support our second reading amendments to fix this tax. When something is broken, you fix it. You do not just toss it out. Let us fix this tax so that we can provide the revenue to do the good things that the community wants us to do.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

It is interesting that the Greens environment spokesperson could not even find sufficient to say to fill 20 minutes speaking about the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. She had to resort to the sort of platitudinous nonsense that we get—

Larissa Waters (Queensland, Australian Greens) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise on a point of order on relevance. When I was 10 seconds short, I think the senator is being incredibly ungenerous and demonstrating the ills of the government.

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

That is not a point of order.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

As I was saying, we ended up with a little diatribe of the platitudinous and inexperienced nonsense that we have come to expect from the Greens in relation to anything to do with business and how to go about it.

Opposition senators interjecting—

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

Order! Senator Boyce has the right to be heard in silence. I remind senators that interjections are disorderly.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. I appreciate your efforts to maintain order on the other side of the chamber. This is not a broken tax; this is a dog of a tax that should never have been introduced. Unfortunately there is nothing else to do with this tax except, reluctantly, to put it down.

It was interesting listening to the contributions of some of the earlier speakers on this topic. We had Senator Ludwig trying to keep a straight face while he discussed some of the more left-wing aspects that he was forced to talk about whilst looking at this piece of legislation. It was quite amusing. I think you would find that, left to their own devices, there would be a number of people opposite who would agree with us totally on this. The one thing that neither of the more recent speakers from the non-government side has mentioned is that repealing this legislation was an election promise of this government. We were elected on the basis of saying that we would repeal the minerals resource rent tax. That is what we will attempt to do, despite the opposition that we are receiving from Labor and the Greens in this area.

I do not suppose we should be surprised that a dog of a tax was introduced by the Labor government. Their ability to introduce coherent legislation that brought about the effects it was meant to was very, very limited, across the board. Everything you looked at was overlegislated, underlegislated or wrongly legislated. This was partly because of their inability to manage the schedule of legislation that they had and how they could go about it. So there is no surprise that we have here a dog of a tax that needs to go. But, whether it is a bad tax or not, the point is that we promised, and were elected by the Australian people, to get rid of this tax. Last time I noticed, the Greens did not exactly do very well when it came to winning in the last election, and I would hope that they would think about why that might have been the case. Despite the fact that we said very, very broadly that we would repeal the carbon tax and the minerals resource rent tax, we—not the Greens and not their Labor flunkies—were elected to govern Australia for the next three years.

You would get the impression, from listening to some of the nonsense that has been spoken in this chamber, that the mining companies do not pay tax. Surprise, surprise; that was one thing that apparently the Labor government could not break. The mining companies pay company tax in Australia. Certainly they receive tax deductions for development and for exploration, but they pay company tax. They are companies and they pay company tax. So they are not sneaking out from under, although those opposite would have you believe that they are and that somehow mining companies do not behave like companies.

Not only do mining companies pay company tax but they also pay royalties to state governments, because it was recognised long ago—particularly in my home state of Queensland, which I believe was the first state to undertake this—that the mineral resources of Australia belong to the states. Unfortunately, under our Constitution, they do not belong to the Australian people, as Labor and the Greens would have you believe, but rather to the states where those resources lie. That is the way our Federation continues to work. The resources in the ground belong to the states, not to the federal government, despite Labor's best efforts to change that reality. That is how our Federation is constitutionally established and that is how it should remain.

Let us get past some of the nonsense that has been spoken in this place by the opposition in regard to the fact that huge numbers of companies are required to register for this. Over 300 companies have been required to register for the minerals resource rent tax, but, as you would be aware, Mr Acting Deputy President, only 20 companies have so far been obliged to pay it. So there is a significant compliance and administrative burden imposed by legislation that was more complex than it needed to be. Unnecessary as it first was, why would we be surprised by any one of those qualities in legislation put up by the previous Labor government? It was an appalling mess, as usual.

Much has been made of the fact that it was going to raise billions. It will still raise billions one day, according to someone! It will raise billions the day that hell freezes over, because the other aspect of this legislation that has not been appreciated, I do not think, by the other side is that the Minerals Resource Rent Tax Act further damaged international investor confidence in Australia, particularly in the energy and resources sector.

Senator Sterle interjecting—

Senator Sterle has come up with a hollow laugh and joined himself to the many on the opposition benches who appear to believe that everybody who sets up a company in Australia is a cash cow that can be milked indefinitely, forever, and will just stay here no matter what is done, no matter how much is ripped out of them by a Labor government. That, of course, is not the case. We operate in a global market. There are plenty of other places to get your iron ore. South America is certainly becoming extremely competitive in this area, with better shipping than we have and lower costs than we have for our iron ore. Whilst we would certainly want to operate in a very safe and very environmentally controlled environment for our mining industry, we have to believe and we have to accept that we operate in a global market. If we do not act like we have competition in this area—well, gee, guess what? We will not be in the market. It is not the others that will go out of the market.

I must admit that I found Senator Cameron's contribution to this debate—with his crocodile tears about our lack of interest in manufacturing and his views on the car industry—particularly galling. Where do you think a lot of those companies that were downstream of the car manufacturers have gone looking for jobs, looking for work for their companies and looking to keep their well-trained and highly qualified staff in jobs? They have gone and looked at the mining sector. To suggest that there are a few multinational companies that might be gouged for an extra little bit of cash if this tax were to stay in place is a complete and utter nonsense and denies reality. One of the best and largest creators of downstream jobs, of downstream manufacturing, of downstream professional services and of many other services is the mining industry. I think we would all accept—sorry; the majority of us would accept—that, without the mining industry, the Australian economy of the past 15 years at least would have been a much, much sadder sight than it currently is. We need the mining industry, and we cannot pretend that we do not have competition. We have to keep going in that area. We cannot simply try to claim that we can do whatever we like to mining companies and that it will not affect (a) their level of investment in Australia or (b) their level of activity elsewhere in the world. There is a direct relationship, and we need to be very aware of it and to continue to support it.

I was most interested to hear Senator Waters' contribution. I think she used the term 'mules' as a way of talking about people being stubborn. But she also mentioned people behaving like stubborn, rusted window latches. Memo to Senator Waters: if it was a rusty window latch, someone mined some iron ore sometime to create it! So I think you need to think about whether we want to keep those industries in Australia or not. Even if it was an aluminium one, some mining took place. Of course, along with Labor, the Greens would rather not talk about nasty things like mining.

We have got Labor, with the WA election coming up, saying, 'Let's talk about education, let's talk about anything—but let's not talk about mining, because, goodness, we can't get our act together to have a coherent message on the topic of mining.' So desperate are Labor in WA that they are running robo-calling campaigns to talk to every elector—or half the electors, anyway—of WA about health and education because they cannot talk to them about the real issues and the real problems that are going to develop in WA because of their behaviour towards the mining industry and the economy of WA.

Senator Cormann made the point during question time that Labor's minerals resource rent tax deliberately targeted WA and the WA economy. I would suggest that it also targeted my home state of Queensland. But the damage that it has already done in WA is there for everyone to see. The industry is already slowing down because of concerns that the repeal of the carbon tax and the repeal of the minerals resource rent tax will not happen, because the non-government senators in this place cannot bear to pass the legislation because it was moved by the Liberal Party—a move that caused us to be the government. It is the repeal of those two taxes that we proudly stood up for for months and months and months before the election that was instrumental to us being elected, and here is everybody trying to thwart the government's agenda—and not just the government's agenda but that of the people of Australia.

I think it interesting to note that, if you look a little deeper at what is going on, the Labor Party are being played for fools by the Greens, who do not have an agenda for jobs in the mining or manufacturing industry. They do not want manufacturing and they do not want mining in Australia. Labor is going along with all this, without quite realising what is happening to them. The Greens have been saying that Australia's Future Fund should not be investing in coal. Do the Labor senators agree with that view? That is the agenda they are supporting, an anti-mining and anti-coal agenda. As we move to other renewable forms of energy there will continue to be an increased need for coal, with the increasing number of middle-class people in China, India and other developing countries. Even if we use a smaller percentage of coal we will actually use more coal, over the next 50 years or so, than we do now.

A chap called Ben Caldecott, from Oxford University's Stranded Assets Program, has come out here to run a campaign, to encourage superannuation and other companies to divest themselves of investments in the coal industry. They are trying to 'trigger a process of stigmatisation' of fossil fuel businesses. Why would we be surprised that the Greens would try to do this? Ruining the economy of Australia is exactly the sort of thing they would set out to do, because with a ruined economy we would not have too many exhaust emissions, anywhere. We have the anti-coal movement trying to scare investors away from the coal sector. Brendan Pearson of the Minerals Council said:

It is a campaign heavy on hyperbole and emotive rhetoric and light on facts. It is a political campaign dressed up as investment advice.

When did we last hear that from the Greens? Any time they want to, they try it on in any way they can. They even tried it on with chlorine, one of those chemicals it is almost impossible to exist without in the developed and more hygienic world. There are countries in South America that tried to drop chlorine out of their water supplies, and after a couple of plagues and epidemics they put it back again. To suggest that we can stop using chlorine and coal is the sort of thing you would expect from the inexperienced platitudinous people of the Greens party.

What is distressing about this is that they are dragging the Labor Party—which, one would think, had a proud and long tradition of caring about jobs in Australia—along with them. Senator Ludlam is so desperate to have himself noticed in WA that he makes up the most extreme and ridiculous nonsense about this government, in a smug and 'caring' way. He said to the people of Western Australia: 'We want our country back.' As was been pointed out in the Sydney Morning Herald recently, who are 'we'—the Australian people?

The Australian people know who they have given the government of their country to for the next three years and it is not Senator Ludlam and his ilk. It is the Liberal coalition government that is supposed to be in charge of our country for the next three years. But we have to put up with the uneconomic nonsense that comes from the opposition—and the Greens, who are leading Labor around by the nose, yet again, for what they perceive to be some sort of vague political advantage. It is a bit sad. I hope that Labor will come to its senses and behave like a party that cares about jobs and the economy. (Time expired)

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make a contribution in this debate opposing the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. One of the beautiful things about this Senate is the depth of research that is available to the most casual of observers or people with the slightest interest in these sorts of debates. My research indicates that a resource rent tax is quite different from a royalty. Basically, royalty is a tax on production; a resource rent tax is a contribution made after the appropriate investment is recovered for exploration and investing back into business, and it is on super profits.

The first rent tax I came across was the PRRT. Some contributions in Hansard on 23 March 1987 are:

This legislation is yet another example of this Government introducing new taxes on the few productive industries we have left in Australia, thereby inhibiting their development

We have a further contribution:

The Government should try to remember , in the whole debate about oil exploration—it seems entirely blind to this—that we have to compete with other countries …

It says:

Again, a multinational company looking to expend dollars on oil exploration is going to do so in a country with a better cost structure and therefore the potential for a better rate of return than Australia has.

It says:

I think it is an ideological proposal which is going to do very real damage to oil exploration in Australia. It is going to affect our balance of payments situation and it is going to affect the overall state of our economy. If this is to be one of the pieces of legislation which will form the general epitaph of the Government, I think it is highly appropriate. It is an anti-production, anti-development, anti-profit and anti-export tax …

That was a contribution in 1987, essentially about a rent tax. Here we are, in 2014, talking about another rent tax. What has happened over those intervening years, some 26 years, is that the Petroleum Resource Rent Tax Assessment Act 1987, effective 15 January 1988, has existed and has contributed to the Australian economy. Despite its birth in a wave of Liberal coalition castigation—that was the then member for Mayo, Alexander Downer, taking it to pieces in his original speech—it has continued to contribute to the Australian economy and to the Australian tax base. It contributed $42 million in 1989-90 and that rose to $293 million in 1990-91.

Finally, 79 companies in Australia paid the PRRT $1,584 million in 2011-12—up from $1,047 million paid by 71 companies in the previous year. This data is available from the ATO. So, in the debate in 1987, all of the things it is being alleged today are going to come to pass were alleged about the PRRT. We had a long period where the Howard government could have repealed the PRRT. They could have changed the PRRT or got rid of it if it was such a horrendous piece of legislation and if it was driving people offshore and discouraging investment.

After a quick glance around Australia you would see that there has been substantial investment despite all of the ills that were going to befall the economy and the country at the introduction of the PRRT. Those who scream the loudest on the other side are going to be on the wrong side of history in this argument. The example of the PRRT means that there is a future for the MRRT. It can work in a way that will not discourage exploration and investment—in fact, that probably is the case.

As I speak, around 105 large miners, 35 small and medium miners and five micro miners have submitted their MRRT instalment notices, whilst making no net payments. So they are in the picture. The difference between the number of companies registered for the MRRT and those lodging instalment notices is due to the Taxation Office providing an exemption for certain categories of mining—those holding only mining exploration licences. They are exempt from lodging instalment returns for the 2012-13 MRRT year. However, they still need to lodge the paperwork.

We hear the other side howling about the administrative costs and all the rest of it. By necessity, these things need to be carefully worked through. The appeal to the Australian community of a rent tax on a mineral resource which is finite is because it is sensible—rather than a tax on production, which is a royalty. I think a royalty would be more of a disincentive to getting projects off the ground, because it has no regard for profitability.

So we have a situation where those on the other side have claimed this incredible mandate to repeal, repeal, repeal. They have gone, they say, to the electorate. But there was no real debate about whether there should be a rent tax versus a royalty tax or whether the finite resources of Australian are Australian and should bring some benefit to the wider economy. It was simply the 'no-alition' saying: 'They're a bad government; we don't like them. They told a lie. We want to get out of it. We'll get rid of it.' The fact is that the Roy Hill project has come to fruition in the last few days, despite the existence of the minerals resource rent tax. That means the financiers and the miners can make very detailed decisions about tremendous investments in Australia. It does not seem to bear weight that the MRRT is pushing people away to other parts of the world.

We know there is competition in the resources industries, but in Australia we have a very efficient mining sector—which has costs of production, but there have been extremely good prices. We also know that, should those prices fall, there is still profitability in the mining sector. We know that it is estimated that 83 per cent of the shareholders in Rio Tinto are overseas and around 60-plus per cent of BHP Billiton investors are overseas. We know that foreign shareholders take about $50 billion out of the country by way of dividends. But we also know that those companies bring about $205 billion back into the country to be invested.

The government is saying that if this repeal does not happen the whole world is going to slow down and close. That does not stand up to any real, prudent scrutiny. The reality is that the minerals resource rent tax has not been a catalyst for people to stop investing in Australia. It has not been a catalyst for projects not getting off the ground. It has been an emotive, political arguing point which the government in opposition used to tremendous effect, particularly in Western Australia.

I am unashamedly pro-mining. The more mining we can get in a sensible, environmentally sustainable way in Australia the better off this country will be. I am pro-foreign investment. I am also for things like sharing the wealth of our nation around. You do not have to spend too much time in Perth to realise that there are two economies in Perth. There is one absolutely booming economy. You evidence that if you happen to lob there when there is a gas industry conference and you cannot get a motel within 20 kilometres of the city under $500 a night. Recently I had the opportunity to spend a couple of days in the city. I was astounded at the lack of advantage, where people were begging in the streets. You could not walk up and down Barrett Street without being asked for a smoke or a dollar, and there were a great number of people who to me looked to be in a very ordinary state. I accept that, like my own city, if you live in a city you very rarely spend all that much time in the centre of your city, other than going in and out during the course of your business, but, when you actually see some of the sectors that are disadvantaged in Western Australia, there is a very good case for spreading some of the wealth of the nation around.

The purpose of this bill is to basically repeal the MRRT and give effect to schedule 1. Also, we have schedule 2. There are eight other measures that this bill addresses. Some of those really go to the heart of the matter that I have raised. There are plenty of people in Western Australia, as there are throughout Australia, who are not sharing in this extraordinary wealth creation from the mining boom. You do not have to be Einstein to realise that there are lots of people in all parts of Australia who share in it by flying in and flying out.

Schedule 9 proposes to abolish the Schoolkids Bonus—a lump sum payment made twice a year to those on family assistance and other payment recipients with school aged children. That is the consequence of getting rid of the MRRT: we are going to take the Schoolkids Bonus away from families who may not be doing as well as those who are enjoying the benefits of the mining boom. There is a proposal to abolish the Income Support Bonus—a lump sum supplementary payment made twice a year to people on certain income support payments. You would not be very aware if you had not heard Senator Siewert make enormous contributions on people in the homeless sector and people on Newstart and the like who do not share in all of these economic opportunities.

Then we go to the Superannuation (Government Co-contribution for Low Income Earners) Act 2003. Low-income superannuation contributions will not be payable in relation to eligible contributions made after 1 July 2013. This is basically, you would imagine, the Hon. Tony Abbott's heartland. This is basically women who work, part-time casuals, who can get their hands on an additional sum of money through scrimping and saving, put it into their superannuation and have it met with an equal or the larger contribution. They are low-paid workers trying to make their way in the world and provide for their retirement. That will also go.

They say the MRRT is cruelling the mining sector. There is no evidence of that. Roy Hill was evidence that the exact reverse is true. We do not have any projects which have fallen over because of the MRRT. The government argues that it does not collect enough money anyway, so which way do they want to have the argument? Is it a tax that is not collecting enough money or is it an awful tax that is stopping people from investing in our country? I do not think that case is well made. Schedule 5 amends the ITAA 1997 to repeal the immediate deductibility of geothermal exploration or prospecting expenditure. If we are going to meet our targets with respect to carbon emissions, geothermal could be one of the solutions, and we are taking away the immediate tax deductibility of that.

So we have hit the schoolkids, we have looked at people on low wages trying to superannuate themselves, we have looked at people trying to find solutions for our energy sector, and then we go a bit further: we have a whack at small business. A small business entity can at present deduct the first $5,000 of the cost of a motor vehicle in the income year that it is first used or installed ready for use. This concession treatment will be withdrawn. Where are we going in this debate? They say the MRRT has stopped mining and it has cruelled the opening of new mines, when the evidence appears to be on the contrary. They say it is such a horrific thing. But the impact of all of these changes, with the schedules underneath, just go to the heart of people who do not enjoy the mineral boom.

It is true that there are two economies in Perth: those with and those without. I saw ample evidence on a weekend in Perth recently that a number of people are missing out. Their look at the world is vastly different to the one that we have had here from the government side. You would not need to be Einstein to work out that there are other people in regional Australia. There is the Regional Infrastructure Fund and the Regional Development Australia Fund. I had the opportunity of visiting a number of places in the electorate of Grey and spoke to many grateful recipients of those funds. There is the Port Lincoln Airport upgrade and any number of projects. At a recent luncheon for the regional mayors of South Australia they asked, 'Alex, what's going to happen with those projects?' I said, 'Well, you'd better speak to Dr Southcott,' who promptly said, 'You'd better speak to Minister Briggs'—pass the parcel—but there will be no money for those things. Those things will be unfunded. The things they have on the drawing board will have no stream of funds to go to. If the government eventually is successful at getting rid of the MRRT, I would like to know what they are going to put in its place, particularly for regional Australia and for those Australians who are not doing as well as they could be.

Sitting suspended from 18:30 to 19:30

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

The Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 is a shameful piece of legislation. It is one of the clearest examples that we have seen from this government of robbing the poor to give to the rich. That is how you can sum up this legislation. There are many things that this legislation could be called. Probably the politest way that you could describe what the government is doing here is to call it the 'Thank Gina Rinehart Bill'. The mining companies are really being let off the hook here to an extraordinary degree. They will not be required to even pay a small amount of their profits back into Australian society.

What also makes this bill very interesting is a development that occurred last week, when we heard that the Australian government is planning on providing a $110 million loan to the likes of Rio Tinto and BHP Billiton, two giant mining companies that certainly do not need another handout from the Australian public. I bring those two issues together because the Australian government is taking away what is really quite a minimal tax—the tax that will be repealed if this legislation goes through—while at the same time giving a huge loan to mining companies. So once again what we are seeing is that what mining companies want, mining companies are given—and it is bucketloads of dollars. They are given handouts of public money and they are allowed to keep a greater percentage of the profits than they should be allowed to.

We are seeing a government pandering to global mining interests, with the Australian community being left behind to a huge degree. If we had had a properly structured mining tax, it could be funding so many services across this country—in particular, assisting mining communities that have borne the brunt of so much of the hardship that comes with mining over decades and indeed centuries. I am referring to polluted air, damage to our water resources, and fly in fly out workforces that break up local communities. Over the decades our mining communities have been very strong, working together. In my own state of New South Wales, in the areas of Lithgow and the Hunter Valley it was mining communities that worked together to build the first hospital, to help fund the sporting teams and to look after the local schools. But once you have the workforce broken up into fly in fly out communities it does enormous damage. This is the burden the local communities have carried for a very long time. The tax that would be raised if this legislation were left in place would go a long way to assist in those communities. We also know of some specific things that will be lost if this legislation passes. Taking away the very mean $4 a week bonus for the unemployed, and the superannuation tax concessions for low-income earners, is simply wrong. Again, it reveals how cruel this government is, how it will pander to those who are greedy and so deeply self-interested.

We know that the Minerals Resource Rent Tax is a minimal tax, but even at the level it is, we should be keeping it. Companies have been successful in wielding their power over this and previous governments. It is precisely because of these industries that the tax in its current form is only raising a predicted $3.5 billion over four years. But still that money is urgently needed. The tax should be retained, and improved on. We should not be doing what we are seeing being attempted here tonight—getting rid of it. The power of the mining industry to intimidate successive governments is once again on the record, although I suspect that this government would have been opening up the door and inviting the mining companies to come in so they could spell out that they were ready and waiting and champing at the bit to get rid of this legislation.

It is again worth reminding ourselves that mining employs two per cent of the workforce. This needs to be emphasised because, in so much of the way the arguments are presented around the mining tax, you would think that the whole economy depended on the mining industry. It is actually minimal. If you look at jobs growth in the mining industry, it has largely plateaued in recent years. That two per cent of the workforce is only one-quarter of the number who work in the university and tertiary education sector, and a little more than the printing and publishing industry or even the dairy industry. Again, it is just a small part of our economy and it really has been a big lie that the jobs created in this industry are absolutely critical to the economy. That is not to take anything away from the fact that people working in the mining industry obviously have important jobs. But as they lose those jobs—and many are losing them now—a responsible government would be working on a transition so that they have other jobs to move into.

It is even worth looking at the situation in Western Australia. We have seen in that state that there are severe limitations in the mining boom. Jobs that are gained in the construction phase are lost when we move over to mining operations. The times of working in a mine for life and getting a good retirement income are well over. In the first six months of the global financial crisis the mining industry shed 15 per cent of its employees. As of July last year at least 26,000 jobs have been lost in the Australian mining industry. And the stories about job losses keep coming in. I was very concerned to hear last month that in Perth alone 1,300 workers lost their jobs when mining services company Forge Group restructured. That obviously has a huge impact on those workers and their families as it ripples out.

Again, there is no plan for transition. This is a government we should be calling the 'no-plan government' because it is just letting it rip, giving no thought to the future of these workers. Meanwhile they give more and more handouts to the mining industry, letting them get away with not paying their fair share and ensuring these very wealthy, cashed-up foreign mining companies take so much of their profits offshore.

This issue of the loss of jobs in the mining sector is very big for many of the communities I work with in New South Wales. I am often in the Hunter region and in just the last year more than 600 jobs have been lost from the mining sector. This is an area that, again, has carried a huge burden because of the mining sector there. The Hunter has made a huge contribution to Australia's economy over the decades and, in fact, the centuries because the Hunter is where coalmining in Australia started. That community has carried a health burden; there has been insecurity around the waxes and wanes and the health of the mining industry, often with high levels of unemployment; it has suffered damage to all the water resources; and it has lost farming land. Again, I say those words: the job of a responsible government should be to work with communities when economies are in transition to ensure that it is not the working people who carry the hardship and the burden. That is certainly what is happening in the Hunter.

What we now know, with the news that broke overnight, is that this government is really trying to cover its tracks here, because it knows that jobs matter to people. It came into government, saying, 'We'll provide jobs.' What do we now find out? The staff of one of our own senators who sit in this place, Senator Abetz, have been reported as being out there, putting pressure on, ensuring that the job figures that are about to be—

Senator Williams interjecting—

I acknowledge that interjection. Interestingly, we have the Nationals there, defending the Liberal Party, when they are distorting the true story about jobs. What has been reported is that employment minister Eric Abetz is seeking to add 160,000 jobs to the projections due this week. Interestingly, that figure would bring the jobs estimate, which the government are hoping will be announced, very close to what the Prime Minister was forecasting would be the jobs that they would be creating in the coming years. We are seeing the government misusing their position, by coming forward with a very deceptive position with regard to jobs growth in this country. It is this industry, particularly now the mining boom is over, where great attention needs to be given. The Greens have put in a great deal of work into this area, because there can be huge jobs growth both in the renewable energy sector and by moving over to clean manufacturing.

Extensive work has been undertaken in New South Wales by the Centre of Full Employment and Equity, identifying that 73,800 jobs can be created if New South Wales moves over to 100 per cent renewable energy. We should be addressing this sort of work and cooperation between governments, the workforce, the private sector and unions at this time when there is a downturn and a shift away from the mining industry.

But what we are seeing from the industry is them crying poor, claiming that job losses are because of taxes on their industry. That is one of the excuses we have heard time and time again from the likes of some of these big companies, such as Billiton, as to why this legislation has to go. But their profits tell a very different story. In the last financial year BHP Billiton made a profit of $12 billion. In one year, $12 billion! I acknowledge that is around the world and it is from the diverse mining interests that that company has. But it certainly highlights that there is no reason why they should not be paying their fair share of those profits back into Australia. They are mining Australian resources, resources that are essentially owned by the Australian people, and the bulk of those profits should stay in this country.

Rio Tinto's half yearly profits for 2013 were $1.7 billion. Glencore Xstrata's underlying profit was $2 billion. That is big money that should stay in Australia, to help build our public schools, our transport system and our hospitals. We could be taking some very wise decisions on how our society develops.

My colleagues who have come into this debate have pointed out some really excellent ideas on how this matter should be handled. Western Australia is a very interesting example here. It is worth revisiting some of the issues with regard to Western Australia, because it is often put up as the poster child of how excellent the mining industry is for the local economy in that state. But, again, we need to ask: who actually benefits?

The government of Western Australia has lost its AAA credit rating, and services across that state are being slashed. The truth is that this tax is a small amount of money to these companies. They are taking the state and federal governments for a ride. It could have been so different; this money should have been helping people in this country. That is why the Greens reject very strongly the legislation we have before us tonight.

Removing the minerals resource rent tax is a choice between the past and the future. Mining can raise a great deal of money and I certainly acknowledge the contribution at different times that it has made to our economy. But not enough of that benefit has stayed here. Right now we do have a choice between continuing with the old mining industries that we now know are polluting our waterways and our air, damaging our climate and our immediate environment, often impacting on local biodiversity, and robbing us of farming land. That is why, when there are alternatives, we should be looking at them.

What I see up close in New South Wales, where the bulk of mining is the coal industry, is that this is an industry that the world is turning its back on. We should be preparing and be ready to deliver our energy in other ways and to deliver clean manufacturing. But the evidence is in: the renewables are commercially and industrially viable. We need a government with the political will to drive that change. We highlight that we should be making a different choice here, by keeping this tax. That would help that choice be made in a very responsible way.

The Greens have set out how this tax should have been more extensive; we had that costed by the Parliamentary Budget Office. If the tax had been more extensive, it would have raised nearly $20 billion extra over the next four years. It is worth considering what that money could have done. It would not make a huge difference to the operations of the mining companies—they might cry poor, but that would still leave them with a very hefty profit. But for Australians now, and for future generations, that money is badly needed.

I return to the example of the Hunter Valley in NSW. This is a community that is struggling. Unemployment is very high, particularly amongst young people; in many areas it is over 19 per cent. The community is still struggling to deal with the encroachment of mining into farming areas. There is a real alienation of people's lives as a result of the hardship that they face. People in this area are very uncertain about their future. But, if they were able to move to a low-carbon future, they would not be locking the coming generation—the young people of the Hunter—out of a healthy future. It is integral to people's wellbeing to have the prospect of a job. And there are many young people from families where there are up to three generations who have not been in employment. That is deeply wrong. Society needs to take responsibility for that.

That is why the Greens have put so much effort into developing policies around the clean energy industry. This is absolutely vital. It could be the start of a new export industry. We have had many discussions and many meetings about this. The Hunter is an area that has given so much to the economy, not just to the economy of its local region but to the economies of New South Wales and Australia, in terms of the energy and manufacturing that has come from there, in particular from the coal industry. At a time when the world is starting to turn its back on coal, this is an area with a strong history in energy delivery and manufacturing. It is an ideal region for a transition, with the assistance of government, from coal to clean manufacturing and clean energy delivery—building wind turbines and solar panels, not just for the Hunter region but also for the export market. This is where there could be such a bright future for this region. The way a responsible government would do this is to work with the TAFEs and the University of Newcastle to develop programs, and that regional approach could be repeated in so many other areas.

It is clear that we need greater investment in so many of these communities. The repeal of this tax will, however, put money back into the pockets of the major mining companies operating in Australia. This is so deeply wrong. Again I say: it is robbing the poor to give to the rich. This money might come from the profits of the mining companies, but let us remember where those profits are sourced from—public resources, dug out of the land of Australia that is owned by the people of this country. These are issues that we feel very strongly about.

There is another issue that I want to mention, because it comes up often when I am in regional areas, and that is how tough single parents are doing it. They are facing enormous cuts to their payments. The repeal of that legislation that we saw go through is just one more form of hardship. If it were a proper mining tax, or at least if we kept the form that it is in now, that would be another thing that that money could be expended on: reducing inequality in our society. I think we particularly need to note that when we are talking about the many single parents who are doing it tough, 85 per cent of them are women.

We are left with a society that is being done over because we have a very cruel coalition government that is willing to open the doors to the mining companies. Obviously some discussions are held, they work out what they want, and then they are given what they want. What a company is on the planet to do is make profits, and this government has just made it so much easier for companies to keep the bulk of their profits. Some of that money should rightfully come back to the Australian people—and that will not occur.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I rise to make a contribution on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. I would like to comment on Senator Rhiannon's contribution to this debate just now. Several times she used the word profits—'huge profits'. Why is profit such a dirty word in the eyes of the Greens? Perhaps losses would be a more suitable word in their speeches. When Rio Tinto makes a profit, who owns Rio Tinto? What about those Australian workers who have compulsory superannuation? And what about the industry super funds, or the super funds the workers are with, which buy shares in Rio Tinto? What about the profits that have been returned to the Australian workers for their retirement? That seems to be very wrong in the eyes of Senator Rhiannon. I think it is a good thing that business makes a profit, grows, and employs more people—and raises the living standards of all Australians.

I do not think there is any argument. We all feel that the minerals in the ground belong to the people and, when wealth is created out of those minerals. the people should get a share in it. The minerals belong to the Crown—to the states and territories. As I have said on numerous occasions: if you want the people to get more, let the states raise their royalties, which some have done. Then the royalties return more money to the people for those assets in the ground, belonging to the people. This minerals resource rent tax is simply amazing. I must say I am astounded that the Greens are not over on our side of the chamber cheering us on, because their friend Mr Clive Palmer, the member for Fairfax, certainly wants the mining tax and the carbon tax repealed. Prior to the election the Prime Minister, Mr Abbott, along with many others in the coalition, made it quite clear that the carbon tax and the mining tax would go. Mr Palmer is telling Western Australians to vote for his Senate candidate to get rid of the taxes I am talking about. But then the Greens leader, Senator Milne, says: 'The Greens will not support moves to put big business and mining profits ahead of people and communities.'—that is why I am confused.

Back in 2012, Mr Palmer accused the Greens of being a tool of the US government and the Rockefeller Foundation. The Queensland Greens were putting out press releases with headlines such as 'Clive Palmer ignored solution to toxic water', 'Reef is not Clive Palmer’s dumping ground' and 'Congratulations Clive Palmer: QG Inaugural Fossilfool'. There was definitely no love lost there, but who cares about old grievances when your political future is on the line?

That is what we saw at last September's election in your state of South Australia, Mr Acting Deputy President Bernardi, when Senator Hanson-Young was in grave danger of being voted out. The only thing to do was throw their principles out the window. The Greens, who hate mining, cuddled up to mining magnate Mr Clive Palmer, who hates the Greens, and they swapped preferences. Oh, how we sell out our principles when it comes to election time! The Greens do not mind who they get into bed with when it suits them. They gleefully accepted former Prime Minister Gillard's offer to run the country, and run it they did—into the ground

In the recent Tasmanian state election, Labor and the Greens were finally given the message after destroying that state's economy. You would not have thought so, though, because deposed Premier Lara Giddings and Greens leader Nick McKim gave virtual victory speeches outlining what a great job they had done. It reminded me of the Black Knight in Monty Python and the Holy Grailhe had no arms or legs left but said, 'We'll call it a draw.'

The coalition government told the Australian people its priority would be to repeal the mining tax and the carbon tax. Not one voter in Australia at the 7 September election was not aware of that fact. This would have been done if Labor and the Greens were not still in denial about the election loss. The Australian people put their confidence in us to run the economy, to cut red tape and to provide jobs and hope for the future, but those on the other side refuse to take the umpire's decision—the umpire being the voting people of our nation.

Let's talk about mining tax mark 1 and mining tax mark 2. I well remember asking a question of then Minister Kim Carr when talk of the mining tax first surfaced. I asked the then minister—he is the shadow minister now, of course—if it would affect quarries. The then minister turned to his advisers and asked, 'Does anyone know anything about this?' It turned out it was not only Minister Carr who knew nothing about it. It subsequently turned out that Prime Minister Gillard and Treasurer Wayne Swan knew nothing about it either.

Let's look at the history of this tax. First we had the resource super profits tax. It was to be levied at 40 per cent and applied across a wide cross-section of the resources sector, but it never got off the ground. As Labor's faceless men were doing the numbers and Prime Minister Rudd was looking over his shoulder rather than looking ahead, along came Ms Julia Gillard to take him out. The new Prime Minister, Ms Gillard, did not want the former Prime Minister's legacy to remain, so she decided the minerals resource rent tax would be a better option and her mark would be all over it.

The mining tax was a joke from day one. You can imagine how the eyes of the miners lit up when Prime Minister Gillard and Treasurer Wayne Swan put that deal on the table. I saw the signed piece of paper in a Senate inquiry chaired by Senator Cormann in the previous parliament. The miners would have fallen over themselves to sign because you only get one opportunity like that in life—that is, to sign up to a tax that does not cost you anything.

Fast forward to 2012 and Treasurer Wayne Swan proudly proclaimed the mining tax would bring in $3 billion for the financial year. But a few months later that figure was downgraded to $2 billion. In May 2013—surprise, surprise!—the Treasurer said, 'Oh, dear. The tax will fetch only $200 million.' That was a long way from the $3 billion forecast. I can tell you that the net figure from 1 July 2012 to now is $435 million. Remember that this was going to be the pot of gold, but they ended up with loose change. But the amazing thing was that the previous Labor government, in conjunction with the Greens, then went out and spent it all and more, promising all these programs when they did not have any income. What did that do to the budget? We know what that did to the budget. Have a look at the mess the budget is in.

Evidence at the Senate inquiry revealed that mining companies and peak bodies were strongly supportive of the repeal of the minerals resource rent tax. These companies and peak bodies were broadly united in arguing that the MRRT was a poorly designed tax which imposed a significant compliance cost on the Australian mining industry and undermined the industry's competitiveness.

The Chamber of Minerals and Energy of Western Australia welcomed the proposed repeal, suggesting the MRRT:

… has been administratively onerous and costly as well as ineffective, falling significantly short of delivering the genuine tax reform needed to ensure Australia's continuing international competiveness.

The most important thing is our international competitiveness. Similarly, the Australian Chamber of Commerce and Industry indicated that it had consistently opposed the MRRT and supported its repeal on the grounds that the MRRT was a poorly designed tax that was implemented without proper consultation with the mining industry. There were just three companies consulted. The former government forgot the small guys and just had a chat with the three big guys.

Treasury also acknowledged, both at the hearing and in the explanatory memorandum, that far more companies need to comply with the MRRT than have actually had to pay the tax to date. Specifically, the explanatory memorandum confirmed that there are approximately 235 companies registered for the MRRT and 65 more are due to register should the repeal of the MRRT not proceed. However, fewer than 20 companies actually incurred an MRRT liability in 2012-13. So we have 235 companies, with another 65 to be added, that have the cost of all this paperwork when fewer than 20 are paying the tax.

A number of witnesses also indicated that the MRRT has undermined the capacity of the Australian mining industry to attract much-needed investment. We have seen that flow of investments taper off. That is concerning for the future of this industry that has delivered so much wealth to our nation, employed so many people and raised the living standards of so many Australians, along with returning taxes to government for it to deliver the services so desperately required by so many Australians.

The government is serious about getting Australia moving again. The Prime Minister has introduced legislation that will lead to the removal of 10,000 onerous regulations. Also, $1 billion worth of red tape and green tape will go so that business in Australia can get on with the job. It is time that everyone realised that we live in a free enterprise economy. Those on the other side of the chamber should learn that fact. Our nation's wealth is derived through the private sector. The more you strangle our private business sector the more you restrict our nation from growing and employing others and the more you reduce our living standards.

On this side of the chamber, we are committed to cutting the unnecessary burden of red tape. We went to the election promising a reduction of $1 billion a year in red tape costs to business, and I am glad to see that the Prime Minister is already working on that. The Prime Minister quite rightly says that cutting red tape is essential if we are to boost employment and if we are to reduce or take the pressure off the prices that families face every day. This is a very important part of our commitment to the families of Australia and to the workers of Australia.

I will not use all my time up. I would like to finish my contribution very much like I started it. I am a little bit confused about the signals coming from the other side of this chamber. Apparently the Leader of Opposition, Mr Bill Shorten, was very evasive when confronted on this question whilst campaigning in Western Australia just recently. A newspaper report said:

Mr Shorten … appeared to change his language around whether Labor would continue to support the tax.

Mr Shorten then said:

… we will engage in a dialogue with the resources sector.

This tax is a tax on Western Australia. It is a tax on our iron ore industry. Ninety-six per cent of Australia's iron ore is mined in and exported from Western Australia. When it is comes to the Senate by-election in Western Australia, people should just remember who is trying to strangle their jobs and their economy. It is the Greens and the Australian Labor Party.

I will go back to Mr Shorten. Based on a previous dialogue with the miners by Prime Minister Gillard and Treasury, my money is on the miners. But perhaps Mr Shorten had received early advice of Mr Paul Howes leaving the union movement and possibly having his eye on a spot in this place. Perhaps Mr Howes is looking at Mr Shorten's job! Who knows who will come forward from the union movement next. After all, that is the chosen path for union officials: run the union and then become a Labor Party politician.

Mr Shorten has every reason to be off his game and not know whether he supports or opposes the mining tax. He would be very nervous of Mr Howes' record of deposing Labor leaders and he is probably looking over his shoulder as we speak. I can guarantee the Nationals' Senate candidate for the Western Australian by-election, Shane Van Styn, knows exactly where he stands, as do the Liberal candidates. They stand against the carbon tax and against the mining tax, as do those on this side of the chamber. I commend the bill to the Senate.

Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Link to this | Hansard source

When the Labor government introduced the minerals resource rent tax—the MRRT, which the coalition now seeks to repeal—it was a proud moment and it was a moment when in this parliament we recognised the importance and the strength of mining to our nation. Mining is an industry that has built and sustained communities across Australia, not least in my home state of Tasmania. In fact, in Tasmania, towns have been built on foundations of metal and ore, from the rich ranges of the west to the rivers of tin in the east and from seams of coal in the south to scheelite on the wind-swept islands of Bass Strait.

Tasmania has known the benefits that mining can bring to regions, just as Western Australia and Queensland are now experiencing such a thing. Towns can boom, swelling with workers from across the state, across the country and across the world. In fact, some of Australia's most significant cultural events have occurred as a result of the beacon that mining has been able to provide.

As an interesting aside, as much as an influx of Chinese miners and prospectors caused tension in Victoria and across the goldfields, the same wave of Chinese entrepreneurship in the tin fields of north-east Tasmania aroused both curiosity and admiration. The different experience in Tasmania meant that an adoptive son of a Chinese family could be elected as early as 1913. Thomas Jerome Bakhap's involvement in public debate had begun prior to 1900, as discussions of Federation were moving towards a model of nationhood that would restrict non-white immigration. When he was elected to the Australian Senate, after a stint as the member for the state seat of Bass, he proclaimed his Chinese heritage and spoke out against the White Australia policy. Bakhap understood the contribution that Chinese miners and hard-working migrant labourers had made to their adoptive communities. He understood, as a former shop owner and tin miner, the contribution that mines and minerals made to the communities in which they were situated.

But the Tasmanian experience also shows that mines must be managed properly to build sustainable communities, communities that do not just dry up and disappear when the deposit is depleted or no longer economic to extract. Governments must be mindful of both the good fortune and the finitude of the resource in every region—and the responsibility that confers upon government as custodians of the common good.

It is with that in mind that I draw upon Senator Williams' contribution to this debate this evening, because, as he stated, he believes that minerals in the ground do belong to the people. If he believes that minerals in the ground do belong to the people, then he would not be choosing to vote for this repeal bill before us, because it is with that premise in mind that this bill came about in the first place—the fact that the minerals in the ground do belong to the people and that we all do have a share in them. We must take the profit generated by the resource that is in the ground and redirect it to where it is needed and where it will do the most good. We have to support the people who have contributed to the social and economic environment that makes profit-making and prosperity possible. We have to help invest in things that keep our communities alive.

The risk is that the benefits of mining are all too short-lived. It is the case that the markets for Australia's mining resources are often these days overseas—with some notable exceptions, such as the zinc works in my home town of Hobart and the coal fired power plants of mainland Australia. They are plants that are rapidly becoming less and less sustainable in Australia, as compared to renewable energy generation. But given that the bulk of markets are currently and are likely to remain export markets, much of our resource ends up overseas. We must therefore retain the value of the ore in our soil by extracting as much monetary value for it as we can. It is a task at which Australian businesses are adept. We must ensure that profit remains in the nation from which it was originally derived.

That is exactly what the MRRT is designed to do. Just as state and territory governments exercised their ownership of mineral deposits at the start of the 20th century by licensing out exploration and extraction rights in return for royalties, the MRRT is underpinned by the fact that Australia's mineral resources are owned by all of us—something that even Senator Williams acknowledged. All Australians deserve to share in the extraordinary and unprecedented wealth that has been generated by the mining industry over recent years. Naturally, state based royalties do attempt to cover part of this task, but the incredible profits returned by mining companies by virtue of high demand, strong prices and other factors are not adequately accounted for by volumetric royalties alone. State and territory royalties do not keep pace, and have not kept pace, with the profits of mining companies because they reflect a fundamentally different measure of activity.

The fact is that as profits increase Australians deserve a further share of the fortunes reaped from minerals they have gifted to those companies. The social share of profits can come in many forms. I have already spoken about royalties, but there are other social dividends from mining. During the construction phase of the mining project, when profits are relatively low, a dividend is delivered to communities in the form of jobs and wages and investment in the construction of infrastructure that supports towns and regions, as well as the mines themselves. But, as construction comes to an end, employment scales down and companies generate huge revenues without the corresponding social benefit.

In fact, while profits in the mining industry grew by 262 per cent over the decade to 2012, when the MRRT was introduced by the Labor government, only seven per cent of Australia's employment growth was a result of the mining industry. Unlike other industries—for example, the building industries, which often function as a proxy for the economy as a whole—there are relatively few sectors indirectly linked to mining. Profits made by these companies remain extremely concentrated in and restricted to the mining sector, leading to the phenomenon of a two-speed economy that Australians understand all too well.

It is either naive or disingenuous, therefore, for the coalition to assert that Labor ever imagined that the MRRT would be a constant and immediate source of revenue for government. Comparable initiatives, such as the PRRT, show that initial periods of profit based taxes generate relatively little government revenue. But in these periods, it is usually the case that companies are delivering different types of return to communities—as I said, the construction jobs and wages or adequate royalty payments—or simply do not have the types of revenue for which the MRRT is designed. But the MRRT was never supposed to be a scheme for the next six months; it was to account for the boom periods when mining companies are generating huge wealth and little social benefit relative to that wealth. The frequency and regularity of those periods increases when the sector is booming, when prices and volumes are high, and when deductions in the form of depreciation on market values have been run down. The notion that the MRRT has not performed as expected is not borne out by an assessment of the deliberate design of the scheme. It is, like so much of what this government says, a hollow three-word slogan. But Australians will never have the opportunity to benefit from these boom periods in the mining industry if the coalition gets its way and will never see the fruits that it would produce.

I want to take you through some of the areas in which Australians stand to lose from this bill and the repeal of the MRRT, many of which the coalition has included under the vague and obfuscating heading of 'associated measures'. The coalition will start the cuts early on in the lives of Australians, targeting the measured aims at supporting families in giving their kids educational opportunities. Labor introduced a payment of $205 for each child in primary school, and $410 each child in secondary school, last paid in July 2013 under the Labor government. This assistance would have been paid again to around 35,000 Tasmanian families in January this year if the coalition had decided that children's education was worth supporting. Instead, they decided that kids were an easy target in their phony 'budget emergency' campaign before the election.

This assistance follows from its predecessor, the education tax refund. Up to 7,250 Tasmanian families with legitimate claims to the education tax refund missed out on their deductions. And so, the direct method of payment, termed the schoolkids bonus, was one of the recommendations of the Henry tax review commissioned by the Labor government and designed to make the tax system simpler and fairer. Unlike the ETR, you did not need to claim the schoolkids bonus or keep receipts for education expenses, because Labor understood that there are costs in educating kids that families necessarily have to shoulder and costs for which they deserve support. Cruellest of all, this is not even a payment in any way linked to the MRRT. Despite the coalition's rhetoric, it will increase the cost-of-living pressures on Australian families at a time when they can least afford it and a time when they most need support. It is simply about targeting low- and middle-income families in an attempt at ideological purity.

It is the same rationale that the coalition applies in repealing the income support bonus, a tax-free payment of $211.60 that goes to Australians who are most in need of it. Perhaps the most discussed beneficiaries of this payment are the children of soldiers killed or seriously injured in service. Children of veterans aged under 16 years, who are homeless or living away from home, or those under 25, who are unemployed or studying full time, would have been entitled to receive this payment. But, in their infinite wisdom, the coalition have decided that these people do not deserve our country's support. Their sacrifice, it seems, means so little to the coalition that they are unwilling to support them when they need it most. As if it were a defence of this callous action, the Prime Minister insisted:

There are tens of thousands of people who will lose the income support bonus, and I do not suppose that any of them will be very happy to lose it.

He was right about that. He went on to say:

But this idea that the children of veterans are somehow being singled out for mistreatment by government is simply false. … It is an outrageous smear …

It is difficult to understand how the Prime Minister can consider a provision of his government's legislation, their own doing, as an outrageous smear, but he is correct in saying that the collateral damage of the coalition's championing of the wealthy and powerful is broader than just the children of war veterans. The victims of the coalition's cuts also include those people receiving—and the list is long—Abstudy living allowance; Austudy; exceptional circumstances relief payment; Newstart allowance; parenting payment; sickness allowance; special benefit; transitional farm family payment; and youth allowance. The repeal of the income support bonus is, as you would expect, opposed by the New South Wales Returned and Services League and by National Seniors Australia, as well as by other groups that are concerned about the welfare of vulnerable Australians.

The MRRT was also heralded as a chance to secure Australia's future by building a stronger superannuation sector. Compulsory superannuation is a Labor government achievement that guarantees not only the wellbeing and personal financial security of retirees but also the nation's financial security. Among the very many economic achievements of the Keating Labor government, superannuation stands out as one of the most important and enduring features of Labor reform. So important and so positive has superannuation been to this nation that the Prime Minister felt obliged to promise, when he was opposition leader, that there would be no adverse changes to superannuation. But those platitudes offered by the Prime Minister have, like so many of the sentiments he has expressed, failed to survive his transition to becoming Prime Minister on taking government.

Buried in the bill before the Senate is the axing of the low-income superannuation contribution—a move that will increase superannuation taxes for one in three of Australia's lowest paid workers. Indeed, within weeks, the government sought to cut the super of millions of Australians who earn up to $37,000 while boosting the super for 16,000 people who have over $2 million in their super balances. This makes it very clear which end of town this government supports. It has no support at all for low-income Australian workers who would have benefited under the previous Labor government's low-income superannuation contribution. It also speaks volumes about the coalition's priorities whereby any scheme designed to redress the inequality in support for low-income earners so that they can live with security, dignity and opportunity is scrapped in favour of one that increases the wealth of the wealthy. For high-income earners, superannuation can be concessional; for low-income earners, there are no effective incentives for them to contribute to their superannuation. This is shameful. Labor's measure addressed this issue. And disproportionate among the low-income earners who were catered for by Labor's measure were women. It is worth noting that more than 2.1 million women are affected by the proposed change. A significant percentage of these women are mothers who are working part time while looking after their children. This is exactly the time in a woman's career when an additional $500 a year going into her superannuation would be of most benefit for building savings for her retirement.

Not content with stripping these benefits from here on in, the coalition is backdating this cut; it is implementing this tax measure retrospectively—a fact confirmed by the Parliamentary Budget Office's checking of the coalition's election costings. Low-income earners entered the 2013-14 financial year on the understanding that they would be refunded their superannuation tax, but part way through this financial year the government has shifted the goalposts to make it harder for low-income earners.

When you combine this move with the delay in increasing the super guarantee to 12 per cent, far from helping out the Australian economy, national savings and economic security will be hit by $53 billion by 2021-22. This means a reduction in available capital for infrastructure investment of around $5 billion based on current industry-wide asset allocations. The coalition has complained, falsely, about a flight of investment from the mining sector because of the MRRT. But the worst thing we can do for investment security is to make capital harder to access—exactly what the 'associated measures' of this bill will do.

Labor will oppose this bill. Labor will oppose the removal of the MRRT and the 'associated measures'. The Labor Party believe in Australians. We believe in our students, our jobseekers, our families, our kids and in the descendants of women and men who sacrificed their lives for our country. We believe in them, and that is why we will oppose this bill.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to 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.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to 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.

John Madigan (Victoria, Democratic Labor Party) Share this | Link to this | Hansard source

The Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 will remove what most Australians know as the mining tax. But what most Australian do not realise is that this bill also seeks to remove low-income super contributions. This bill will pause the superannuation guarantee and it will remove income support bonuses for the children of defence veterans, among other things. I acknowledge that when they went to the election the government said they would not meddle with the super of high-income earners, but what they did not tell the people on low incomes was that they were going to have a go at theirs. I, for one, support the government's intention to bring the budget back into the black—and I do realise that you cannot spend what you have not got.

Some time ago, under the previous government, we had a raft of bills slammed through the Senate. Of course, some of these bills were booby trapped like this one has been. But what I do not support is penalising hard-working, low-paid Australians through these changes to their super. It is one thing to ask people to work for welfare but it is another thing to rip away from them what little potential retirement savings they will have. What is more, last week Senator Ronaldson signed a regulation to remove the income support bonus for the Veterans' Children Education Scheme. Such a decision by the government is both insensitive and despicable.

It is for these reasons that I am asking the chamber to support my amendments to oppose both schedule 6 and 7 of this bill, and for parliamentarians both here and in the other place not to accept a pay increase from 1 July, to offset the costs of this small allowance to these children. When you think about it our annual pay rise, relatively speaking, is not a lot of money for those in the other place and in this place. But for these young Australians this money would make a big difference to their lives. As for the nation's political elite, all we have to do is ask the Department of Finance to redirect around $1,200 of our pay each year to this scheme—problem solved. Even if the government members and senators do not think it a worthy enough cause, I would be willing to pitch in with the ALP members and senators, who have been very vocal on this issue. After all, if media reports are correct and the yearly cost of 1,240 students receiving an education allowance under the Veterans' Children Education Scheme only equates to around $260,000, then each ALP member and senator, along with me, would only need to put in less than $3,000 from their own pay. When you take that amount of money out before tax, who is really going to notice it?

In regard to the super aspects of this legislation and my amendments which I intend moving in the committee of the whole, by opposing schedule 6 we are allowing many low-income earners to save up to a further $20,000 in today's terms in their superannuation, with the average being between $5,000 and $15,000. This has been forecast by Industry Super Australia to benefit some 3.41 million low-income earners. By opposing schedule 7 the chamber we would be telling about 35 per cent of working Australians that they do not need to pay more tax on their super than they do on their income. Industry Super Australia puts it clearly:

The low income super contribution operates as a tax offset, effectively refunding the contribution tax paid by low-income earners on their superannuation guarantee and other concessional contributions up to $500 per annum, thus allowing low-income earners to accrue a tax concession on their contributions like all other income earners.

By repealing schedule 7 of the bill, the chamber would be allowing low-income earners to save up to $27,000 in today's terms when accessing their super when they retire. If schedule 7 is not repealed, one in three working Australians will be left without any tax concessions from the government, despite having their super locked away until retirement. These are the Australians who need concessions the most. I think it is important for the chamber and the government, in particular, to realise that there was no pre-election commitment by the coalition to remove the low-income tax benefit and therefore I ask the government to reconsider its motives.

Finally, the government should allow some respite for low-income earners when it comes to super. After all, increased super balances now will decrease the pressure on taxpayer funded age pensions in the future. It is for those reasons I implore all senators to support my amendments.

In closing, when we guillotine legislation, when we think we have the upper hand and the pendulum swings one way or the other in this house, it is the result of bad legislation that did not raise the amount that we would have hoped it would have raised. In effect, the comment made by Senator Dastyari that the minerals of our nation belong to all Australians is quite true. Those people who seek to exploit our minerals, our finite resources, should pay for those resources, because they belong to each and every Australian.

Sue Lines (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to oppose the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 and I do so for the following reasons. Repealing this bill shows, once again, that the Abbott government puts ideology first on its agenda, ahead of the interests of companies; small business; regional infrastructure and regional development; low-income Australians; families doing it tough; Australians who value savings; Australians with retirement incomes; and the 3.5 million low-income Australians who were promised a boost to their superannuation.

All Australians should, as a matter of right, share in the benefits of the mining boom. After all, multinational companies, digging up our precious and non-renewable materials, are delivering their profits back to shareholders. Both the Barnett Liberal government in Western Australia and the Abbott Liberal government in Canberra have no issue with the sharing of profits with shareholders. However, both governments have a very big problem with Australians, particularly Western Australians, sharing in the wealth created by digging up precious, non-renewable minerals.

The Abbott government wants to take away tax cuts from 2.7 million small businesses. However, Labor's assets write-off for small businesses was welcomed by the often struggling and forgotten part of our economy—the mums and dads and the small companies, many in Western Australia. The Abbott government will take away any opportunity these companies have of expanding and employing more staff. The Abbott government likes to say it wants to create wealth and jobs, but its actions show the Australian people that it is a government that just does not care.

The Prime Minister has made much recently of his commitment to women. Indeed, he is the minister for women. That is something I struggle with—a male as the minister for women. When asked the question by a year 9 Newtown High School student, even the Prime Minister, frankly, struggled to answer. The PM said, 'People are male or female.'

He then went on to say that he believed all that mattered was that people were represented by decent human beings. Then, on International Women's Day, the PM declared himself a male feminist. Nobody is fooled by that. The women of Australia do not believe that and, if the Prime Minister counts himself as a decent human being, he has failed to convince the women of Australia of that. Why do we not believe that? Because the PM has done nothing to demonstrate his commitment to women. In fact, he has done everything to show that he has no interest in the wellbeing of women, as this is a PM who is taking away, ripping out, the rights of women in relation to expanded superannuation concessions. He is ripping money away from the lowest paid workers—3.5 million workers. And of course the Prime Minister knows that these are mostly women workers. I can tell the Prime Minister that losing this entitlement is an issue for aged-care workers, early childhood educators, hospital workers, hospitality workers and retail workers in Western Australia. These low-paid, predominantly women workers, currently retire with very little superannuation and will continue to rely on the aged-care pension for support, at a great cost to government.

To top it all off, this bill seeks to abolish the income support bonus, a tax-free payment for the over-50s on the Newstart allowance to help meet unforeseen costs, such as medical expenses. At a time when this government is secretly considering a tax on GP visits and bulk-billing, it is taking money away, again, from people who need it the most. It is a modest payment: just $210 extra per year for singles and $350 extra per year for couples. The abolition of this payment is opposed by National Seniors Australia. By ripping away this modest assistance, the Abbott government has revealed its uncaring approach and indifference towards those it should be providing support to—a government that pays heed to shareholders but cares little about Australians doing it tough.

As a Western Australian senator, I want to focus on what is happening in my state. This is particularly important as on 5 April, Western Australian voters have the unique opportunity of voting in a half-Senate election. They have an opportunity to send a strong message to the Abbott government that Western Australians will not be taken for granted—that Australians have a right to share in the wealth of our country, that that wealth does not belong to shareholders but deserves to be shared with all Australians. It seems that is a concept the Abbott government does not share. Its view is that only big business should share in the wealth of the country, and that this wealth will somehow magically trickle down to the rest of the country, particularly to the low-paid, through employment and increased pay—a failed economic theory if there ever was one. Along with this, the Abbott government is attempting to further disadvantage low-paid workers in Western Australia by an attack on penalty rates to make these workers earn even less, robbing them of superannuation and reducing their take-home pay. Western Australians will not be duped by this. They know that voting Labor on 5 April is the sensible and safe thing to do.

What is happening in the minerals resource sector in WA? If you listen to the Abbott government, it is all doom and gloom. Earlier this month, the Fraser Institute survey of mining companies found that WA's resources sector had been identified as the top-rated jurisdiction for investment attractiveness in the world, with no signs of slowing down—something that the WA senators for the Abbott government seem not to have noticed; it has passed them by. But this survey has found that Western Australia is the No. 1 investment opportunity for many companies seeking to do mining. Furthermore, during the 2012-13 period Western Australia's mineral and petroleum sectors set a new record of value of $113.8 billion. This is a new record value and yet, if you listen to the Abbott government and particularly to the Liberal senators from Western Australia, you would think that the mining industry was in deficit. You would think that no money was being made in mining in Western Australia, because the Abbott government goes on and on about the carbon tax and the MRRT—which is having no impact on investment in Western Australia. But again we see a government totally committed to just making it up, to whatever suits on the day. They do not look at facts; they just rely on fiction. Whatever it takes is what will be motivating them.

That record value was an increase of over 15 per cent on the previous period, showing significant growth both in the industry as a whole and in petroleum mining itself. Not only that, this report goes on to say that WA was rated No. 1 on a range of key indicators—something else that seems to have passed the Western Australian Liberal senators by. So what were some of those indicators? Guess what: No. 1 one for investment attractiveness. That is not what the Abbott government would have the Australian public believe, and it is not what the Abbott government would have Western Australian voters believe. Western Australia was also No. 1 on certainty concerning existing regulations—again, nothing you would ever hear from the Abbott government. The MRRT did not rate a mention—and again, the Abbott government is completely out of touch on this.

I always thought that Liberals stuck together, but apparently not. Just two weeks ago, on around 11 March, the WA Minister for Mines and Petroleum, Mr Bill Marmion, proudly announced that Western Australia ranked as the world's No. 1 investment destination. He shouted that in a media release, saying that these positive results: 'reinforce that WA has what it takes to be globally competitive, but we know our work is far from done and it is important not to be complacent.' Again, no mention by Mr Marmion of the imposition of a good neighbour policy. And again the Abbott government is completely out of touch—particularly Western Australian Liberal senators, who I assume meet with Mr Marmion and yet seem to have missed the major statement that Mr Marmion made just two weeks ago about Western Australia being the top investment destination. Mr Marmion went on to say: 'WA has a dynamic, world class resources industry which underpins the State and national economies'—this is coming from their own side, from a Liberal minister in a state government. They seem to have missed that. These statements by Mr Marmion are completely different to what we hear from the likes of Senator Cormann and from other MPs and senators from Western Australia. They are clearly out of touch. They are just running a political and ideological agenda. How can they be trusted when they are so out of step with what their own Western Australian Liberals are saying?

This is something else the Abbott government should be proud of: just last week, Gina Rinehart—one of their buddies—demonstrated her commitment to and her confidence in the future of mining when she announced a $7.9 billion debt package to bankroll the Roy Hill iron ore project. Where did the Abbott government and the Western Australian senators crow about that? They do not crow about it, because they want to paint this false picture—that somehow Western Australia is under threat from the MRRT. That is all they go on about, and they are completely wrong. The Abbott government has tried to paint a very bleak picture of our future, telling Western Australians that the MRRT is holding mining back, holding investment back and holding us all back. Yet we have seen that Western Australia is the No. 1 investment destination and we have seen the massive investment that Gina Rinehart has made through the Roy Hill project. But we have not heard about that from the Abbott government. You would think that would be something they would be proud to stand up and talk about, but it does not suit their political agenda to do so. We know the facts. The fact is that Gina Rinehart is here to stay and those who have the facts in front of them—unlike the Abbott government, who just prefer ideological political opportunities—know that Western Australia is a good place to invest in. These are facts, not ideology.

I remind the chamber, as I am sure others have done, that this so-called mining tax came about as part of the Henry tax review at a very torrid time in Australia when we were facing the financial challenges of the global financial crisis. My fellow Labor Western Australian senator Senator Sterle said at the time:

I remember travelling throughout Western Australia in 2010 for that last election. If someone were a visitor to these great shores from another country and they had the misfortune of having to listen to the unfolding Liberal campaign of what they were not going to do should they gain government—it really makes me wonder—they could walk away and think, 'How did this country ever make it into the OECD?' It really was ridiculously embarrassing, but that is history and we had to put up with it.

Yet here we are, arguing this matter again, facing the hysteria from the other side and the hysteria from the mining sector and some of their mates about what will happen should we share the spoils of Western Australian mining resources not with shareholders but with the people.

The Labor Party believes that if companies are making a decent profit, like our iron ore mines in Western Australia are, they can afford to and should be expected to put a bit more into building the rest of the nation. Yet, whether in opposition or government, the Prime Minister and the Premier of WA stood beside their mining mates and other poor billionaires and told the people of Australia—the cleaners, school teachers and retail workers—that they should vote to 'axe the tax' that these unbelievably big earners would pay to contribute back to all Australians, not just shareholders.

Senator Wong told the Senate last week that the Abbott government is hiding the truth with these repeals. What the ideologically driven Abbott government is doing with the repeal of these bills is giving a tax cut worth $3.3 billion to the biggest mining companies in the world and, at the same time, hitting Australian families and small business owners with $16.3 billion in higher taxes and cuts to benefits. That is shameful. Repealing the MRRT is retrograde policy. It seeks to enrich those who need no assistance at the expense of those who need it most.

WA needs investment from government to actually build rail, roads and energy infrastructure instead of a broken promise. We do not need an Abbott Liberal government and a Barnett Liberal government cutting jobs and services. That is what both the Abbott government and the Barnett government want to do. In WA we already know that we have lost our urban rail. We know from the Prime Minister that the schoolkids bonus is on the chopping block. The Prime Minister wants to take money away from hardworking Western Australian families.

Only a government with a truly perverse set of priorities would give billions of dollars to profitable corporations while cutting funding for families, health, education and welfare as well as raising taxes for low-income earners and older Newstart recipients. Where is their mandate to take away superannuation changes for low-income workers? Where is the mandate to keep taking and taking from families and small businesses who are the backbone of this country? There is no mandate. It is their politically driven ideology that is on show here. That is all they can hold up. Only a sneaky government full of nasty surprises would try to sneak in the repeal of the schoolkids bonus, which is not even linked to the MRRT. That is exactly what this government is doing.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I agree with Senator Lines that a government putting up a measure and then trying to throw in a few other things as part of it is a sneaky way of legislating. I do not think that is fair. There are some measures here that are unrelated to the mining tax but relate to superannuation benefits and the like that I think ought to be resisted for that reason alone. The debate on the Minerals Resource Rent Tax Repeal and Other Measures Bill is a good opportunity to review the sorry story of how a central plank of the former government's policy agenda in all likelihood is weaving its way onto the scrap heap of Australia's tax reform history and also to look more broadly at issues of tax reform and the challenges we as a nation will face in the years to come.

In 2008 the then Labor government commissioned the respected then Secretary of the Treasury Ken Henry to review Australia's tax system. About two years later, Mr Henry—who was then and is now a widely respected expert on tax and other economic matters—delivered his report, which was optimistically entitled, Australia's future tax system review. The Henry tax review made 138 recommendations. Among them was a resources rent tax, which Mr Henry said, would:

… ensure that the Australian community receives an appropriate return on its non-renewable resources.

Mr Henry said the existing taxes and royalties were unresponsive to the steep rises in profitability in the resources sector. A rent tax would replace existing charges on mining projects and better track the so-called superprofits said to be earned by some miners.

But, instead of engaging constructively with the recommendations raised by the Henry review, the then Labor government cherry picked what it thought were the so-called 'easy sells' politically. Then Treasurer Wayne Swan and then Prime Minister Kevin Rudd picked up the resources super profits tax and ran with it. But, as they soon discovered, it was not an easy sell—far from it. While the government saw the superprofits tax as a popular move for a sector which was making billions of dollars in profits each year, many believed the concept of rent taxes to be outdated and discredited.

The resources sector mounted a spirited, high-profile and very expensive campaign against the superprofits tax. While then Prime Minister Kevin Rudd tried to hang tough, the attempt to introduce the original version of this tax foundered. Labor changed leaders and the new Prime Minister, Julia Gillard, sought to fix the political problems with the resources sector caused by the tax by sitting down with three massive mining companies—Xstrata, BHP Billiton and Rio Tinto—to hammer out an agreement. I agree with some who have observed that this was akin to taking advice on competition policy in the supermarket sector just from Woolworth and Coles and leaving out IGA and the independents.

The result was the minerals resource rent tax. It was not so much a dog's breakfast but a bit of a dog's smorgasbord. The tax has not worked as intended. Concerns were raised about the movement of global capital away from Australia's mining sector. I know a lot of water has gone under the bridge since we debated this two years ago, including a fall in many commodity prices, such as iron ore. But the MRRT did and does add to the perception, at least, that Australia is a high-cost country for resources companies.

After reluctantly supporting the MRRT two years ago, I reluctantly support its repeal today. The MRRT was poorly designed and poorly implemented as a tax. There was not adequate transparency in the design of the MRRT. Its underlying revenue assumptions seem to be known only by the three big miners and the government. History has shown that, had there been some transparency over these negotiations, the MRRT may have been saved from itself; but it was not to be.

A tax which was predicted to raise $22.5 billion in its first four years only raised $126 million in its first six months. The tax was far from the massive economic impost on the resources sector that the coalition had then loudly claimed it was. Instead of a supertanker full of cash, we got a rubber dinghy with some loose change that was taking on water from the moment it was launched. Ken Henry's broad-based superprofits tax would have applied to 2,500 mining and petroleum companies. The MRRT applies to a limited number of iron ore and coal companies. Perhaps in the future a properly designed resources tax may be passed.

A January 2014 poll conducted by UMR Research found that the majority of Australians still think that multinational mining companies do not pay enough tax. Only one in 25 Australians think the minerals sector pays enough tax. That is according to the poll, which interviewed 1,000 people online. The ALP says that it is committed to the principle of a resources rent tax and opposes this repeal bill. I understand and respect that. But clearly the current leadership has backed away somewhat from associating with the original legislation imposing the tax, which had its genesis some three prime ministers ago.

Campaigning in Western Australia recently for the upcoming Senate by-election, the Leader of the Opposition, Bill Shorten, called for 'a dialogue' with the mining sector ahead of formulating the ALP's policy for the next federal election. I think that is pretty wise, I think there needs to be that dialogue and I think that is the way forward. That seemed to be a strong hint that the ALP is not so much committed to this tax as looking at an alternative way of genuinely dealing with superprofits.

This tax was always a concern to the mining sector. Small and emerging miners remain concerned that they have been disadvantaged by the tax in that the mining sector could no longer claim competitive neutrality, given that projects that were approved post the tax have been much less competitive for those small and medium miners. Surely clever thinking can be brought to bear on how best to support small and emerging miners using either the existing revenue of the MRRT or other funds.

Built infrastructure in the form of ports, sealed roads and electricity transmission lines must be high on the priority list, as has been made clear by the Chamber of Mines and Energy in my home state of South Australia. But further, connecting outback towns in South Australia—such as Coober Pedy and Oodnadatta—to the electricity grid is a long-overdue measure that would further support the new mining ventures that are emerging in the far north of South Australia. That these towns remain reliant on high-cost diesel generators and must pay much higher prices for electricity is a sad but little-known fact. There is a real potential of geothermal energy being a real source of competitive and reliable energy in the far north of South Australia.

When we were debating the MRRT, I said many times that we had to be very careful not to kill the goose that lays the golden egg. However, in the two years since the flawed MRRT was passed, commodity prices have taken the shine off that so-called gold. The mining boom is over, we are told. This surely adds weight to the concerns raised by the mining sector about this tax, especially for small and emerging miners. They are the miners we should be encouraging to grow. They are the miners that really are the future of this industry. We should not just be looking at the big three. Many small and emerging miners are active in my home state. At a time when BHP Billiton has placed Olympic Dam and its multi-billion dollar investment in job creation on the backburner, South Australia's small and emerging miners are crucial to the future of the sector.

In 2011, there were eight new mineral exploration licence applications; in 2012, there were 14; in 2013, there were 84; and so far this year there have been 23, according to figures compiled by the state government. Clearly, the future of my state's mineral sector is at an important stage and should not be put at risk. I will also be strongly supporting the amendments of Senator Madigan to retain the introduction of the superannuation guarantee charge's increase to 12 per cent from July 2019 and the low-income superannuation contribution of a maximum of $500 for people earning less than $37,000. These were sensible amendments. They were initiatives of the former government that were very worthy amendments in increasing the pool of superannuation contributions by employers. They were gradual and sensible. For low-income earners we need to provide whatever incentives we can to ensure they boost their superannuation. I do not like the fact that those amendments were rolled up in this bill. Senator Lines made reference to other amendments as well.

I also said at the time the MRRT was passed that a debate on Australia establishing a sovereign wealth fund was necessary. Today it is long overdue. The Member for Wentworth, Malcolm Turnbull, acknowledged in a speech in 2011 that:

Many countries, particularly those dependent upon single finite resource commodities, already have such funds—globally they are estimated to hold up to $4 trillion in assets.

The global nest egg of commodity based sovereign wealth has grown since I quoted Mr Turnbull some two years ago. Unfortunately, so has Australia's opportunity cost in not establishing one. More broadly, the failure of the MRRT is emblematic of the lost opportunity of tax reform, and I am not singling out the former government on this. That would be unfair.

As Ken Henry commented last week on ABC TV's 7.30 program, there is an 'emerging crisis' in tax policy in Australia that has made it impossible for the federal government to fund new social policies with the current tax base. Mr Henry said the budgets of the states and the federal government were probably not sustainable. I also note that the current Treasury secretary, Martin Parkinson, is reported just a few days ago as calling for 'a reality check' in an article in TheAustralian on 21 March. He warned there was a widening gap between what the community expects governments to deliver and what can sustainably be provided. As the outgoing Treasury secretary, Mr Parkinson needs to be congratulated for those remarks.

States have relied on highly volatile sources of taxation and a dwindling GST take. In a sense, that is reflected in the comments of both Ken Henry and Martin Parkinson. Federal taxes, as a percentage of national income—of GDP—have fallen three per cent since 2001. That is something that Mr Henry said recently on the 7.30 program. Mr Henry, as the Prime Minister has helpfully pointed out, is now a private citizen; as such, he went on to make a veiled criticism of politicians and the media. He said the public had not been properly informed of the challenges in tax policy or the repercussions of not addressing them. Ken Henry had the intellect and the stature to come up with 138 recommendations across nine broad themes. Instead of taking 138 steps to tax reform, the then government took a couple of steps forward and then lost its balance. Yet the review that bears his name sits largely untouched, as much by this government as the previous government. I will support this bill because of the inherent flaws in the design and execution of the tax, but the challenge for this and future governments is to heed the recent warnings of Ken Henry and Martin Parkinson.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I rise this evening to speak on the Minerals Resource Rent Tax Repeal and Other Measures Bill. It gives me pause to mention the original mining tax, the resources super profits tax, which was expected to raise $49.5 billion over five years. In July 2010 the resources super profits tax proposal was replaced with the MRRT and an extension of the PRRT to onshore projects. Whilst the MRRT was forecast at that time to raise $26.5 billion over five years, the minerals resource rent tax revenue estimates have since been progressively revised down. It is a great pity that the $26.5 billion, or the earlier $49.5 billion, has not been available to previous federal governments or indeed our own government in order to address this severe issue of structural deficit.

The minerals resource rent tax damaged international investor confidence in Australia, and in particular the energy and resource sector. The repeal of this tax will provide a boost to the mining industry and is a strong step towards repairing perceptions that international investors have formed on Australia over recent years. We know that foreign investment is important to our future economic prosperity. Since it started, the minerals resource rent tax has only raised $400 million in net terms, yet the former government has locked in more than $16.7 billion of expenditure on an underlying cash basis over the current forward estimates or $18.4 billion of expenditure on a fiscal basis over current forward estimates. Only Labor can do their maths and their budgeting like that, and only Labor can leave us with such a diabolical mess. The repeal of the MRRT's associated expenditure will improve the budget's bottom line over the current forward estimates by $13.4 billion on an underlying cash basis and $15.1 billion on a fiscal basis.

The repeal of the MRRT will save millions of dollars in compliance expenses for small, medium and large entities. Fewer than 20 taxpayers have contributed to the net $400 million raised by the MRRT to date, but around 145 other miners have been required to submit MRRT instalment notices while making no net payment. That is, around 145 tax payers are compliant with the MRRT legislation but are not actually paying any tax. That is what happens when you to sign a tax without understanding the sector for which you are legislating. So well designed by Swannie, the Treasurer of the world, was this tax—

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

Order! I remind you to address members by their correct title.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

Mr Swan designed a tax that does not collect any revenue and then proceeds to attach funding promises against said lack of revenue. This tax has been very poorly executed and has been criticised for favouring big multinational mining companies. Australian owned and operated mining companies which are trying to expand their businesses are being stifled by this tax. These young companies provide Western Australia and the nation with thousands of job opportunities and billions of dollars in royalties and export revenue. Senator Back, I am sure, has already made mention in this place of the young geologists who have been laid off as a result of the impact of this tax on the mining sector in WA. Given the large scale of mining operations in Western Australia, mining companies need to make large profits to pay off significant debts accrued when investing in their business.

The Labor Party—the supposed party of the fair go—has stifled the ability of ordinary Australians to develop viable businesses, effectively turning their back on the workers as a result. This is an anti Western Australian tax that has not worked, has scared off investment into Australia through the Labor Party's political posturing and has done more harm than good. It is time this tax was abolished so that we can get on with the business of fixing the mess the former government left us in. Australians voted to get rid of this tax. Western Australians voted to get rid of this tax, and they will have the opportunity come 5 April to once again vote for a party, for a coalition and for senators who will actually stand up for their right to have a strong economic base within their own state boundaries.

As a National Party senator, I am dealing with the mess left over from former Minister King's playing around in regional development. So many of those projects relied on the supposed funding from this failed tax. For many communities, Labor's Regional Development Australia Fund and Regional Infrastructure Fund have been another cruel con. Up to election day, Labor was announcing projects using money it knew did not exist. Hundreds of projects were announced that had not even received cursory departmental assessments, yet Labor was promising anyone who would listen that these were somehow a done deal.

The government will of course honour signed contracts undertaken by the previous government. However, non-contracted announcements made by the Labor government have the status of election promises and do not bind an alternative government. Some projects to miss out on funding include the Bendigo tennis centre, which was going to develop the current infrastructure in Bendigo to ensure that we could host international-level games in the fabulous regional centre of Bendigo. Another example is the Wangaratta saleyards. They were funded under RDAF round 5 and 5B. Similar projects in Wodonga to revitalise its streetscape and in Bendigo to upgrade its botanical gardens were similarly going to miss out on funding thanks to failed Labor budgeting processes.

Unlike the previous government's phantom funding based on a flawed and failed mining tax, the government's $1 billion National Stronger Regions Fund is fully funded and accounted for as part of our budget. That funding is guaranteed, and projects that will be announced under that program will proceed, unlike the phantom promises that Labor made throughout the election campaign.

On the coalition side, we note the rhetoric of the Greens and Labor that the coalition somehow does not believe that the non-renewable resources within Australia belong to the people—but we do; we had that argument. We had that argument about 113 years ago when we formed our federation. We had the argument, and, guess what—the states won. So they get to collect the royalties and spend them on things for their state and their citizens. We forget sometimes—and we should not in the Senate, but some senators do forget—that the states are sovereign entities and completely have the right to retain their state royalty rights. I think that WA has used those royalties for the very best purpose—that is, to send them right back to the regions from whence they came.

In our own mining boom in Victoria, we did not give WA a bean; we kept it all for ourselves. We have beautiful cities in Bendigo and Ballarat. I would love you to all come and have a look at the wonderful and magnificent infrastructure built two centuries ago on the back of our mining boom.

Senator Urquhart interjecting—

We were not giving Tasmania a cent, Senator Urquhart, and we were definitely not giving it to WA. I do not think WA should have to share that with the nation. It is their resource. They are choosing to mine it now and they are sharing it with their citizens, as is their constitutional right—and indeed responsibility. As I was saying, the Western Australian government's Royalties for Regions program is a great example of well-developed policy that is doing an excellent job of spreading the wealth of the resource boom to the wider population of Western Australia.

As the National's Western Australian Senate candidate Shane Van Styn says, 'This program is about ensuring some of the profits from mining go back to the communities where that wealth was created.' You cannot rent out something you do not own. The Commonwealth government does not own those minerals. Section 114 of our Constitution prevents that. Conceived by former Western Australian National's leader, Brendon Grylls, and continued now by Terry Redman and the partnership between the Liberal and National parties in Western Australia, the Royalties for Region program quarantined 25 per cent of all mining and petroleum royalties to be spent in the bush. This has been—

Debate interrupted.