Senator LUDLAM (Western Australia) (16:07): It was fascinating to sit and listen to Senator Cormann lecturing the government on a tax which does not collect any money-and I suspect Senator Joyce will serve it up as well in a few minutes. This is from a party which did not want to tax the industry at all. The net result of following coalition policy would also have been no tax taken. So it is remarkable to hear the coalition trying to have it both ways. Do you want to levy fair taxes on this industry or do you not?
I am keenly aware, as a senator representing Western Australia, of the role the mining industry plays in the Western Australian and national economies. I am also keenly aware that people employed directly by the mining sector are only a very small fraction of the Western Australian workforce. For those not on a mining wage, the mining boom has actually come at a severe cost. People here on the east coast bandy around the term 'two-speed economy' without, I think, appreciating what the impacts are on the front line in Western Australia-or, more specifically, on towns in the Goldfields and the Pilbara. The high exchange rate associated with the mining boom has seen trade exposed sectors right around the country, including manufacturing, tourism and education, finding it much harder to compete. The boom has also driven up the costs of operating a business-or a farm, for that matter. In August last year ASIC reported a 17.4 per cent increase in the annual number of failed businesses in Western Australia.
The boom has driven up, as well as the costs of business, the costs of living. House prices in Western Australia have exploded over the last decade and rents continue to soar. Between May 2006 and March 2008, the RBA increased official interest rates seven times and, on each occasion, high or rising commodity prices were explicitly mentioned as a factor.
So the question we would put is: what is the best way to ensure that Australians benefit from the boom-a boom built on the liquidation of finite resources? While the company tax rate is 30 per cent, the average rate paid by the mining industry in 2008-09 was just under 14 per cent, mostly because of generous deductions available to the industry-for example, we cop their diesel bill. Taxpayers subsidise the diesel bill of mining companies. In 2009, Andrew Forrest's FMG admitted that it had not paid a cent in company tax in seven years of operations. On 7 March this year, Treasury Secretary Martin Parkinson observed that mining companies account for about a fifth of gross operating surplus yet only about a tenth of company tax receipts.
It is in this context that the federal government introduced a mining tax which failed to raise a single dollar of revenue in its first quarter of operation. The failure of the mining tax to raise any revenue at all demonstrates the folly of Labor's capitulation to the big three mining companies. The Henry tax review made the case for a 40 per cent tax on mining profits above $50 million a year. Labor allowed themselves to be bullied by the mining industry-cheered on by their ever faithful servants in the coalition-and watered the tax down to 22½ per cent on profits above $75 million and then radically reduced the number of commodities it applied to. The original Henry tax designed by Treasury would have stemmed some of the flow of mining profits out of the country. But the government blew it. Having watered down the tax in response to an entirely misleading and aggressive $22 million propaganda campaign and only applying it to these two commodities, the scale of the government's surrender is now apparent.
The coalition of course performed its usual role as the uncritical sock puppets of the big mining companies. They have demonstrated economic illiteracy of the highest order in opposing any kind of tax whatsoever on mining superprofits and making the kind of hysterical doomsday predictions that the Leader of the Opposition has turned into something of an art form-predictions which have been proved completely dishonest time and again.
A big wind turbine is 200 tonnes of steel. Solar PV cells require rare earths and silicon. Electric vehicles require high-capacity lithium batteries. It is not possible to do these things without mining, so the myth that the Greens oppose mining per se is obviously absurd. What we do object to is the idea that, because of its financial clout, the mining industry should be entitled to throw its political weight around like some kind of cartel, dodge fair taxation and punch holes in environmental protection and heritage laws built up painstakingly over a period of decades.
Government annual resource reports indicate that we have eight or nine decades more of iron ore mining at present rates of extraction-another 80 years or thereabouts. The caveat-'at present rates of extraction'-is critical. None of the proponents in the Pilbara, North West Shelf, Goldfields or anywhere else have any intention whatsoever of proceeding at present rates of extraction-and their shareholders would sack them if they did. The mining industry and the oil and gas industry intend to double rates of extraction across the board as soon as possible-and that of course halves the depletion horizon. The boom is coming to an end one way or another, but we have been hypnotised by the laws of supply and demand and the powerful magic of price signals to believe that it can last forever. The mining boom will not last forever. Geology says otherwise-and geology will win.
We must therefore make the most of the boom while it lasts. A properly constructed superprofits tax would have raised funds for hospitals, health care, public transport, affordable housing, desperately needed large-scale investment in renewable energy, training facilities and support for the nation's schools-the need for which was documented in the Gonski review. A properly constituted and levied mining tax, one which only kicks in when the industry is doing exceptionally well and harvesting superprofits, would lay the foundations for a sovereign wealth fund. Such a fund could help to lock in for future generations-as other more farsighted countries, such as Norway, have done-the once-in-a-generation benefits of a commodities boom.
Instead, the government has wasted almost 2½ years since Treasury first advocated a mining superprofits tax-longer than that now. A strong mining superprofits tax could have fostered the diversification of the Western Australian economy by funding training and R&D and start-up grants to small businesses. Instead, Western Australia's AAA credit rating is in peril because of our narrow economic base, because of our dependence on mining and because of the tunnel vision of the major political parties.
The coalition, of course, has approached the debate as though mineral resources belong to Clive Palmer and Gina Rinehart as some kind of birthright. Labor members have noted in this place that Australia's mineral resources belong to all of us by way of their being the property of the Crown. But what is almost ignored is that these minerals come from country: they come from Aboriginal land. In Canberra, thousands of kilometres from the West Pilbara, parliament debates how to share the bounty from a once-in-a-lifetime mining boom-though the coalition does not want to share the bounty of the boom at all-while traditional owners and Aboriginal people of these exploited lands live in conditions of degrading poverty in the midst of the mining boom. Every Australian, especially those in need, should be benefiting from our publicly-owned mineral resources. It has not been lost on the Greens that some of the worst and most destructive poverty in this country occurs side-by-side-within a stone's throw-of some of the most lucrative extractive industry developments in the world.
It is not too late to reconstitute the minerals resource rent tax, and the Greens stand ready to work with the government or the opposition, if-heaven forbid!-they have a change of heart, to fix the tax, to harness the boom and to make work for all Australians this once-in-a-generation opportunity. Or we can continue to let the mining industry continue to rip a fortune out of this country, liquidate within a generation the natural capital assets of this ancient continent while other industries suffer with no place in the future for what happens after the boom.
The Australian Greens stand entirely ready to work with everybody in this building or in the community to look at ways of recreating our economy post-boom. But surely resourcing the community and industries while the boom is in place with a properly constituted tax on the extraordinary profits which are still being raked out of agreement is an important place to start.