Cormann, Sen Mathias

Senator CORMANN (Western Australia—Minister for Finance) (21:24): I thank all senators who have contributed to this debate on the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 [No. 2]. The mining tax is a failed tax. Indeed, it is one of the most fundamental policy failures of the previous government. It is a tax which targeted a very important industry for Australia. It is a tax that targeted an important industry when it comes to our future economic prosperity and opportunities for young people and others to get jobs. The mining tax was ill thought out, badly designed, complex, distorting, inefficient, costly to administer, costly to comply with and has not raised any meaningful revenue, yet the previous government already spent all of the money they thought it would raise before it had raised a zack. On this side of the chamber we happen to think that a strong mining industry is good for Australia, for our future economic success. I heard Senator Wong say in her remarks how we cannot have it both ways by saying that it has not raised any meaningful revenue and that it has been a massive hit on the mining industry. Yes we can, because the government introduced this tax, saying it would raise $4 billion in year 1 and $6½ billion in year 2. Of course, we know that in year 1 in pre-instalments it raised just five per cent of that, 95 per cent less than forecast, and even that five per cent we are now refunding because of the dodgy deal that former Prime Minister Gillard and former Treasurer Wayne Swan did in a well-publicised way back in 2010. In the meantime it has created massive uncertainty and significant additional compliance burdens arguably at the worst possible time: a time when our terms of trade were starting to fall. We do actually have a fair system to tax our mining sector. We have a system where mining companies have to pay royalties on production. For every tonne of resources that are taken out of the ground, the mining companies have to pay for the value of that resource. The higher the value of the commodity, the more they pay. The more volume they take out of the ground, the more they pay. It is very fair. And then, of course, the more profitable the company is, the more company tax they pay. I point out to the chamber that most of the company tax revenue in Australia comes from the mining industry and the financial services sector. Not that much comes from any other sector of the economy, the truth be told, when it comes to company tax revenue. Senator Madigan just mentioned that nobody knew we were going to get rid of all the unfunded spending promises that Labor attached to the mining tax. I beg to differ. I was the shadow minister for financial services and superannuation in the lead-up to the last election and I am sure that people on the Australian Labor Party's side would well remember the amount of pressure they put us under for our promise to get rid of the carbon tax and to get rid of all the unfunded spending promises that were attached to it. Day in, day out there were press releases galore and email campaigns attacking us for making the obvious point that we cannot continue to give away money we have not got. Even the most meritorious cause cannot be funded if we have not got the money for it. And so the most important point that I will make tonight is this one: any senator voting to amend the mining tax to keep Labor's unfunded spending promises attached to it is voting to keep the mining tax. If you want to repeal the mining tax, you have to vote to repeal the unfunded spending promises that are attached to it, because we cannot afford to keep billions and billions of dollars worth of unfunded promises which Labor attached to a failed tax which has not raised any meaningful revenue. The truth is that, arguably, so far the mining tax, even without the unfunded spending promises attached to it, is actually costing the budget money. We were told it was going to raise $4 billion. The revenue, of course, came in 95 per cent below forecast, but that was based on quarterly instalments. It was based on, essentially, a guess of how much tax they would be likely to pay. Those preinstalments brought in $200 million worth of revenue but, on reflection and having reconciled all of the deductions that Wayne Swan made available to relevant taxpayers, it turned out that we had to refund all of it. And guess what? In the meantime it has cost the ATO alone more than $50 million to administer. Of course, the previous government spent $38½ million to advertise a tax which has not raised any money. Even if it had raised everything the previous government said it would raise, it was always going to be a highly volatile, downward-trending revenue source, which the previous government attached to the increasing fixed costs over time of a whole series of spending promises and other budget measures with a rising cost. That just spells disaster. It was a structurally unsound package and it turned out to be much worse than what was expected. I just conclude by, again, making the most important point tonight. The most important point that every senator in this chamber who wants to see the end of this bad tax, the mining tax, needs to reflect on is that any senator voting to amend the mining tax, to keep Labor's unfunded spending promises which they attached to it, is voting to keep the mining tax. There is no way that we can afford to keep billions and billions of dollars worth of unfunded promises which Labor attached to its failed tax. That is why we commend to the Senate the bills in the form in which they are before us, with one small amendment to, essentially, increase by one year the phase-in of increasing compulsory super to 12 per cent in recognition of the fact that so far we have not been able to get this package of bills through the Senate and we have had to make some further schoolkids bonus related payments in particular. With those few words, I commend these bills to the Senate. The PRESIDENT: The question is that the second reading amendment moved by Senator Waters be agreed to.