Despite being included in a list of resources that may merit exemption in the Henry
Tax Review, lime, phosphates, sand and gravel will be subject to the Rudd Labor
government’s proposed Resources Super Profits Tax (RSPT). Senator Wong
couldn’t explain why the government chose to include these resources in the
proposed tax on mining in yesterday's session of Question Time in the Senate.
Senator WILLIAMS (New South Wales) (2:28 PM) —My question is to the Minister
representing the Minister for Resources and Energy, Senator Wong. I refer to the
detailed analysis of the Henry tax review, table C1-1, headed ‘Resources that
may merit exemption from the resource rent tax’. It lists more than 33 resources
that may merit exemption. Why will these resources—including lime, phosphates, sand
and gravel—still be subject to this massive new tax grab?
Senator WONG (South Australia) (Minister for Climate Change, Energy Efficiency
and Water) —As I made clear in a previous answer, obviously the Henry tax review
falls within the Treasurer’s portfolio, so if you have questions on the detail
of that, Senator, I would suggest you put them to Senator Sherry, who represents
the Treasurer. I can assist in relation to a number of the issues raised, however.
For example, I would make the point that the move to a profits based regime will
obviously, in general, be of greater assistance than a volumes based regime for
more marginal operations. I make that as a general proposition.
The second point I would make is that a number of the commodities that you have
discussed—not all, but some—are traded on world markets and obviously have their
price set by world markets. For example, you mentioned phosphate. ABARE has advised
that the price of phosphate is determined on world markets and by movements in the
Australian exchange rates. I also make the point that, as I responded in response
to an earlier question, the government’s modelling has indicated that the
introduction of this reform, the replacement of royalties and the reduction in the
company tax rate for all companies has, in fact, been independently modelled to
bring down consumer prices by 1.1 per cent as well as to ensure that there is an
increase in output as I have previously described. It may suit those opposite to
run scare campaigns around a whole range of issues here; the fact is that this is
about economic reform. It is about building a stronger economy and recognising that
the benefits of the resources sector should be more fairly shared amongst all in
Australia and should be utilised to make investments in other parts of our economy
such as regional infrastructure, superannuation and reduction in the company tax
rate. (Time expired)
Senator WILLIAMS (New South Wales) —Mr President, I ask a supplementary question.
Given that the small quarries will face an effective tax rate of 57 per cent despite
the Henry review advice, what modelling has the government done in relation to the
effect of the obvious price increases in these infrastructure and fertiliser products?
Senator WONG (South Australia) (Minister for Climate Change, Energy Efficiency
and Water) —Again, I do not know where you are quoting your figure from. I again
remind you that this is a profits based regime which obviously only applies after
a certain threshold which incorporates a rate of return. In relation to some of
the fertiliser and fertiliser ingredients that you reference, I have indicated to
you that a number of these commodities are in fact traded commodities and would
have their prices set on world markets. The low-value commodities that are used
as agricultural inputs are usually lower profit—
Honourable senators interjecting—
Senator Brandis —Mr President, a point of order: the question was limited
to whether or not modelling had been done with relation to the effect on these commodities.
Nothing that the minister has said has gone anywhere near the question of whether
or not modelling was done. You should bring her directly to the question.
The PRESIDENT —I am listening to the answer that the minister is giving.
It is a little bit difficult with the interjections that are taking place across
the chamber. If they were not happening, it would be much easier to hear the comments
that are being made.
Senator WONG —The modelling is the Econtech modelling which I have previously
referred to. I was attempting to be of some assistance to the senator and to give
him a specific answer in relation to the agricultural inputs he raised. The advice
I have is that these are usually lower profit and, therefore, unlikely to face a
higher tax burden under the RSPT, particularly given the replacement of royalties
with an RSPT. I also indicate that the government is clearly consulting on this
implementation. (Time expired)
Senator WILLIAMS (New South Wales) —Mr President, I ask a further supplementary
question. Will the government pay financial compensation to state and local governments
that will face obvious increased costs in road construction and community infrastructure
because of this big new tax on all quarries that supply these resources?
Senator WONG (South Australia) (Minister for Climate Change, Energy Efficiency
and Water) —What the government is doing, as the Prime Minister has announced, is
implementing a $6 billion regional infrastructure fund. This demonstrates why tax
reform is so critical to Australia. A fund means that we can begin to tackle our
urgent infrastructure needs now and put something back into the mining communities
that make our economy strong. The reality is that this is a tax that is about investment
in infrastructure, investment in superannuation, investment in a reduction in the
company tax rate for the other sectors of the economy, a fairer share and a stronger
economy.
