Grievance Debate - Minerals Resource Rent Tax

Mr CROOK (O'Connor) (21:40):

I did not support the Mining Tax at the election. 

I do not support the Mining Tax now. 

And, I will be voting against the Mining Tax when it comes before the floor of this Parliament. 

I have consistently stated that I do not support a Commonwealth Mining Tax. I believe that Australia’s natural resources are owned by the States and not the Commonwealth.  As such, I believe that the current royalty regime is the appropriate tax for natural resources.  A Commonwealth Mining Tax is yet another attempt of the Commonwealth Government to erode State rights and State royalties. 

A Commonwealth Government Mining Tax will be yet another impost on the State of Western Australia – it is part of the triple assault on WA by the Federal Government: Mining Tax, Carbon Tax & and the unfair return of GST Revenue. 

As well as my opposition to a Mining Tax generally, I have issues with the negotiation, design and application of this particular Mining Tax, referred to as the Minerals Resources Rent Tax. 

a)             Firstly, it will harm Australian miners, by damaging their international competitiveness;

b)            Secondly, the Mining Tax was the result of a secret negotiations between the Prime Minister and the three biggest, multinational, multi-project mining companies; and

c)             Finally, it delivers advantages to the three big miners who negotiated the tax while delivering competitive disadvantages to smaller emerging miners who were excluded from negotiations. 

The Mining Tax as we know it must be scrapped. 

The current Mining Tax was designed behind closed doors with the Big Three mining heavyweights: BHP, RIO & Xstrata.  These three companies are multi-nationals with numerous projects which post tens of billions of dollars profit each year. 

Excluded from these negotiations were the 320 smaller mining companies, who compete in the same global market as the Big Three.  Also excluded were the State and Territory Governments, including the Governments of Western Australia and Queensland, where most of the mining industry operates. 

The secrecy that surrounded the negotiations has also extended to the assumptions, modelling and figures used by the Government to underpin their forward estimates.  Compare this to the Western Australian Government, for example, which publicly provides assumptions underpinning royalties’ forward estimates in their Budget.

I implore this Government to listen to the industry, listen to the people, and scrap this tax.  However, if the Government refuses to scrap the tax, it must at least make changes to ensure it is fairer for the mining companies excluded from the negotiations. 

I have opposed the Mining Tax passionately, because my electorate of O’Connor is home to many mining companies, and many of those companies’ employees.  These companies employ, train and up-skill many of my constituents.  Further, these mining companies, more than any other industry, continually make valuable and voluntary contributions to the community – through provision of infrastructure, funding of charitable projects and sponsorship.

For example, a natural resources company operating in the Port of Esperance recently constructed the Town of Esperance’s first overpass, a major infrastructure project which will continue to provide benefits to the town for many years to come.  More than $4 million was spent on local goods, services, and contractors during the bridges construction.

However, you do not need to live in an electorate such as O’Connor to oppose a Mining Tax.  And, you do not need to live in an electorate such as O’Connor to be outraged by the grossly unfair way this tax was negotiated and finalised. 

In fact, most Australians would feel very uncomfortable with the way this tax is set to unfairly advantage the three biggest and most profitable mining companies, at the expense of the rest of the mining industry. 

Shame on the Labor Government – a Government that holds out values of “fairness” and “equity” – shame on them for devising and imposing a tax that advantages three of the richest, largest and most powerful mining companies – at the expense of all smaller mining companies in Australia.  Shame on Prime Minister for trading off the interests of the unrepresented mining industry to help seal her own leadership deal. 

This tax should be scrapped.  If the Federal Government insists on a Mining Tax, it should start fresh negotiations in good faith for a fairer mining tax.  It is my position that, if the legislation is to be passed (and I truly hope it is not), that at least it must be fair. 

Unlike the Government, I have spent considerable time consulting industry on these issues.  Industry has serious concerns about the inequitable application of the Mining Tax to the companies that were not privy to the secret negotiations.

Modelling and studies conducted by industry, and academic institutions, have indicated that the application of this Tax will lead to the emerging or smaller miners paying the Mining Tax earlier and at a higher rate than the Big Three Miners who negotiated the Tax.  This competitive disadvantage was confirmed in a study conducted by a Professor of Economics at the University of Western Australia.

Following a Question during Question Time on the UWA study, the Treasurer offered me briefings by Treasury Officials on this report.  In these briefings, officials from Treasury confirmed that the modelling, figures and conclusions in the study were correct.  That emerging miners will be paying a higher rate of Mining Tax than the established Big Three Miners. 

We must ensure that smaller miners, perhaps with single projects, do not have cost disadvantages with the bigger miners with multiple projects; after all, they are all selling their product in the same global market. 

At the very least, we need to ensure this tax is fair. 

After lengthy consultation with industry, there is at least two ways we can make the tax fairer for industry members excluded from negotiations: 

a)             Firstly, the miners that were completely excluded from the negotiations of this tax should not be subject to the tax.  Given that the Big Three miners were the only companies who negotiated the tax; these are the companies that should pay the tax.  If some of the miners excluded from the negotiations are unfairly forced to pay, then there should be a much higher threshold before the mining tax liability kicks in. 

b)            Secondly, and additionally, the Government should commit, in legislation, that smaller miners will not pay the Mining Tax any earlier, or at a higher rate, than the Big Three Mining Companies. 

These proposals will not fix this Mining Tax.  However, these proposals would at least make the tax fairer for the smaller mining companies excluded from the negotiations. 

Finally, I would like to discuss the proposed use of the Mining Tax revenue. 

The Governments rhetoric in the Budget Papers and as recent as today’s question time is that the Mining Tax is, and I quote, “investing in our mining regions” and  “further investments in our regional communities”.

It is hard to believe these statements from the Government when over 50% of the first billion dollars spent from the Mining Tax fund will be on upgrading the roads, freeways and bridges around the Perth City Airport under the Gateway WA project.

What I would like to know from the Government and the relevant Ministers is how many of their nine Regional Development Australia committees in WA have endorsed the Gateway WA project as the number one regional development project in my home state? I think I know the answer and it will be either none or at the very best one.

I hear the Government trying to justify this project as regional development, but the reality is that it is nothing more than pandering to marginal electorates and further supporting a fly in fly out workforce which has a devastating effect on regional development in Western Australia.

I urge the regional members of this house, especially those that have a resource industry to consider the merits of the Mining Tax on regional development and regional Australia.

This Mining Tax is bad for industry, bad for Western Australia and bad for my electorate of O’Connor. 

Further, this particular Mining Tax is grossly unfair for the smaller and emerging miners, and is grossly unfair for every mining company excluded from the Labor Government’s deal with the Big Three.