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Speech against the repeal of the Mineral Resources Rent Tax

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Larissa Waters 15 Jul 2014

Senator WATERS (Queensland) (12:34): I rise to continue my remarks against the Mineral Resource Rent Tax Repeal and Other Measures Bill 2013 which I began last night. As I mentioned last night, the Senate has already rejected this bill once. But because the coal lobby continues to call the shots in this place, here we are again. It continues to boggle my mind that we have a government that claims that we are in a budget crisis and yet is axing what, if fixed, could be a revenue raising measure. Only this government would bring down the harshest and most unfair budget in living memory and simultaneously give a tax break to the big mining companies.

Last night the Greens moved a second reading amendment to this bill to highlight one of the worst inequities of the planned abolition of the mining tax—that is, the abolition of the low-income super contribution, which, as I spelt out last night, would affect one in three Australian workers, one in two women and 80 per cent of women who work on a part-time or casual basis. We know that this government cares nought for the needs of the vulnerable. But why are they hiding the abolition of this low-income super contribution in the mining tax bill? Let us bring it out into the open. Let us have a debate on whether we think it is okay as a parliamentary chamber to make it harder for women to retire with financial security.

I also challenge this government to justify how they can give a tax break to the world's largest companies after they have delivered—or seek to deliver—the cruellest budget that is hurting ordinary Australians. Why would this government go down such a wrong headed path? Is it just ideology? Well, perhaps. But I actually think it is more stark than that. The priorities of this government are exemplified and summed up in an exchange that was leaked to the media concerning another cave-in to mining companies. When the federal government was earlier considering scrapping the multi-billion dollar diesel tax rebate paid to mining companies, a senior Liberal was reported to have said that it was never really on the agenda because, 'Gina and Twiggy would have been coming after us.' A more apt reminder of who calls the shots could not be wished for.

Senator Ian Macdonald: Now, you excused them from the debt levy. Where were you then?

The PRESIDENT: Order on my right!

Senator WATERS: Overseas mining companies are ripping ordinary Australians off, and this government is letting it happen. Let us be honest, that is how this tax was designed. It was designed to fail because the mining companies wrote it that way. After an advertising campaign which toppled the Prime Minister and shredded the resource super profits tax, the big mining companies actually got to write their own tax rules. If individuals got to write their own tax rules, the country would not have any money. So those lobbying efforts by the big end of town—the big miners—of course changed the rate of tax from the original proposal of 40 per cent down to an effective 22 ½ per cent. A pretty good return on investment with that one!

They of course changed the minerals to which the tax applied to just coal and iron ore, not uranium, gold and other minerals. And the royalty rebate, the rebating of future increases to state royalties, is perhaps the worst example of a total lark. This allowed the revenue to be eroded by state governments. The Greens had a bill to correct that but, sadly, we received absolutely no support.

The Henry tax review had recommended replacing royalties with a profit based tax but that was considered a second best option—crediting companies for royalties paid but only if those royalty regimes were fixed at a particular point in time to ensure, obviously, that the Australian government did not then just automatically refund royalty increases. Surprise surprise, because of that massive loophole we had Western Australia, New South Wales, Queensland, South Australia and Tasmania upping their royalties, leaving the Commonwealth rebating the mining companies for that increase. What an absolute farce.

The Parliamentary Budget Office costed the Greens proposal to limit those royalty rebates to a fixed point in time—1 July 2011—at $2.2 billion over the forward estimates. Sadly, because both of the big parties are in the pocket of the mining industry, this loophole remained on the books—and, as we know, the mining tax barely raised a dime.

The other affronting aspect to the design of this tax is depreciation, whereby the mining companies can price their assets using today's inflated market values and then claim massive annual deductions under that amount, not what they actually spent on capital investment. Under the revised version the amount expected to be raised in the last financial year was $4 billion, but only $232 million was actually collected. This is despite the fact that the profits of the big three iron ore companies to whom the tax predominantly applies—BHP, Rio Tinto and Glencore Xstrata—had risen by 81 per cent in the previous financial year and their combined half-yearly profits were $14.6 billion. With Rio's half-yearly profits at $6.4 billion and BHP's at $6.5 billion you have got to wonder: if these are not super profits, what is? And sadly, as we should all know, most of those profits are shipped offshore. Only one-fifth of the industry's huge profits accrue to Australians through dividends—and, even then, direct ownership of shares only benefits those with enough discretionary income to actually invest.

Clearly there have been some winners from the mining boom—most notably, the shareholders of the companies doing the mining. But the Reserve Bank made the correct observation that: '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.' And those big profits which flow offshore do not equate to more jobs for Australians. It is the government's job to govern in the public interest. Large profit margins are nice for mining companies, but they do not equal job creation; and if profits are not staying in the Australian economy, they are clearly not creating jobs. The mining industry does create some jobs—not as many as they like to claim—but even those jobs come at a cost to the broader economy. The Australian dollar, as we all know, has become volatile due to the mining boom and the fact that it has been sustained at high levels for many years now. It is also keeping interest rates higher than they otherwise would be and it is creating labour shortages of in particular regions and in certain skills. This has resulted in lower profits, fewer jobs and lower returns to shareholders in other industries, particularly manufacturing and tourism.

We have got one chance to make sure the nation gets a share of the current windfall profits being made by 80 per cent foreign owned multinationals. That is why we are seeking to amend this bill to increase the rate of the mining tax back up to the original plan of 40 per cent and apply it to all minerals, not just iron ore and coal. We want to rebate those royalties that were in place at July 2011 so that the mining companies, not federal taxpayers, are required to pay any subsequent royalty hikes that the states impose and to allow depreciation on the book value of the amounts actually spent on mining infrastructure only. According to the post-election report by the Parliamentary Budget Office, those measures that I have just mentioned would raise an extra $21.8 billion in revenue. We are told we are in a budget crisis but, gee, what could we do with $21.8 billion of revenue! Well, maybe we could stop inflicting damage on the most vulnerable Australians by cutting the services and supports that they rely on.

The mining boom is transitioning from the capital-intensive phase to the production phase. This is when super profits occur because the revenue from production will be rising and they will be less able to deduct it against capital investments. So we need to get the super profits tax in place before those super profits are shipped offshore to foreign investors. A poll in January this year found that a majority of Australians, 54 per cent, believe multinational mining companies do not pay enough tax. And clearly they do not.

People value the things and the services that a good government should provide. They want to keep the low income super contribution, as per the Greens amendment to this bill. They want to keep Medicare as a universal healthcare entitlement that a wealthy nation can provide to its citizens, not a $7 tax on the sick which will increase pressure on hospitals. They want to keep, and even increase, funding for early childhood education right through to higher education and funding for those final two years of Gonski. They want to properly address affordable housing and homelessness rather than axing NRAS—both of which are made worse by the mining boom and fly in fly out work. They want to raise Newstart so that people have a chance to have the resources to get to that job interview and get back into employment. They want to put single parents back onto parenting payment rather than Newstart which leaves them up to $100 worse off per week. They want to fund child care so that there are more and more affordable childcare places for families and so that women have genuine choices. They want decent public transport and dental health. The list goes on with respect to what you could do with $21.8 billion were we to fix the loopholes in the mining tax rather than simply turf it out because the big mining companies would like you to do so. They do not like paying any tax. They like to write their own tax rules and would rather see this tax completely gone.

As countless economists have pointed out, most of the profits earned by Australia's mining industry flow to foreign shareholders. They are not spent in Australia, which means that the mining industry adds surprisingly little to the domestic jobs market. But despite the potential of a mining superprofits tax to reinvest wealth generated by mining into the Australian economy, the all-knowing, all-seeing coalition MPs remain steadfast in their opposition to it. Experts say that a mining superprofits tax would actually promote job creation.

The current government's approach is short-sighted in the extreme and economically unsustainable. Foreign-owned mining companies are damaging our natural environment, selling our resources and leaving us very little in exchange. The least we can do is get a share of their superprofits. The moguls who run the mining industry are not putting the Australian public before their own personal interests. That is our job as representatives in the federal parliament and we Greens will continue to fight for a fair share of the resources for the people of Australia, which they themselves own.

It is apposite to put the proposed repeal of the mining tax and the potential $21.8 billion in revenue that could be raised if we were to fix up the loopholes in the mining tax in the context of the budget. We know that only this government would seek to bring down the harshest budget in living memory, while trying to give a tax break to the big mining companies. We know that only this government would force young Australians to live with literally no money for six months, just for the crime of being unemployed. How on earth it thinks that will help people get jobs completely eludes me and it eludes any sense of logic. Only this government would decide to put a $7 tax on sick people, who are visiting the doctor, when actually visiting the doctor saves the system money by detecting chronic disease at an early stage. Only this government would rip billions of dollars out of higher education and leave students with a lifetime of ever-increasing debt, which is now subject to a higher interest rate that compounds.

The government want to cut the age pension. They want to cut funding for education, health and assistance for apprentices. They want to cut funding for the disability support pension. And the largest single cut in the budget was $7 billion from foreign aid over the forward estimates—money which was going to lift the world's poorest people out of poverty. There are too many cuts to remember, let alone list. But they include cuts to legal aid for the disadvantaged, cuts to services in Indigenous communities, cuts to affordable housing, cuts to the ABC and SBS, cuts to scientific research, cuts to dental care, cuts to preventative health, cuts to the arts and cuts to renewable energy. And, of course, there are cuts to the natural environment, by way of axing the Biodiversity Fund; cuts to funding for Landcare; cuts to natural resource management programs; and cuts to funding for the Great Barrier Reef Marine Park Authority.

In the very same breath as all of those cuts, the government are seeking to axe the carbon price paid by the big polluters, forgoing $18 billion over the forward estimates. They want to axe the mining tax and, again, forgo $21.8 billion from the mining tax, if those loopholes were to be closed. And they want to cut the rate of corporate tax by 1½ per cent. Ultimately, it is very clear what the priorities of the government are: deliver for the big end of town and let ordinary Australians suffer, while coalition MPs laugh all the way to the bank. If that is what you think, then I am afraid you have got another think coming. You may win the battle today, but you will not win the war.

The hearts and minds of the Australian community are firmly fixed on this harsh budget and they oppose it with every fibre of their being, just as we in this place do and just as we will with respect to the mining tax repeal bill. We stand for a fair share of the profits being raised by the big mining companies going back into the Australian community and for them to properly clean up the mess that they create.

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