**Check against delivery
Good afternoon ladies and gentlemen, thank you for having me.
So let’s get straight to the heart of it.
First to the question of modelling and revenue that is attracting so much attention in the media today.
As is usual practice, Treasury modelling is undertaken on the basis of the most current information available at that time.
In the case of the Government’s resource taxation reform, ABARE issued revised commodity prices between our 2 May announcement and the final package we announced last Friday.
These revised forecasts were in line with recent trends.
The fact remains, much to the Opposition’s dismay, that aside from the question of any change to forecasts for commodity prices the reform package the Government has put together still delivers on our core objectives.
As we said last Friday there was give and take on both sides. This was a tough, robust debate but we did reach a landing point that is acceptable to both sides.
Last week we had a breakthrough agreement.
It will allow us to invest $10.5 billion back into the Australian community.
Investment in infrastructure from the $6 billion Regional Infrastructure Fund will be particularly welcome in communities across Queensland – communities that have felt the pressure of the mining boom and given their all to support the growth of the industry.
It will allow us to cut the company tax rate where the Opposition seeks to raise it.
It will allow us to assist small business with an immediate write-off of assets worth less than $5000 – and for a small business that will make a big difference.
As you know I am also Minister for Tourism – another key industry in this country and particularly in this state. Those small and medium sized tourism operators who have been doing it tough over recent times will really benefit under this package.
And, it will also allow us to move forward with lifting the superannuation guarantee from 9 to 12 per cent.
I understand that Queensland is a popular destination for many retirees and this measure will ensure in years to come that those hard working Australians can retire with greater dignity than ever before.
We have an ageing population and we need to make provisions now to support it. That’s what this package will do.
Finally, this package will deliver a fairer return to the community on their non-renewable resources – on the once-off development of these resources and the profits they generate.
That is what the package delivers for the community. Let’s turn to what it delivers for the industry.
For iron ore and coal:
- a new Minerals Resource Rent Tax (MRRT) with a headline rate of 30 per cent;
- a 25 per cent extraction allowance that recognises the contribution of the miner's expertise to profits;
- no resource rent tax liability if your profits are less than $50 million a year;
- an uplift of about 13 per cent on unutilised losses, including royalties; and
- transferability between projects.
The new system is a profits-based regime, as called for by industry, which automatically adjusts to changes in commodity prices and extraction costs.
It provides a much fairer system of taxation over time – providing a better return to the community in boom times while giving companies taxation relief to help them get by when times are tough.
Since the beginning of the boom, it’s worth remembering that prices for iron ore have risen by 400 per cent.
Commodities other than iron ore, coal, oil and gas are not included in the new regimes.
Why?
Because this tax regime focuses on genuine resource rents in high value bulk commodities with low processing content.
This cuts the number of companies affected from 2,500 to 320.
For oil and gas:
- an extension of the Petroleum Resource Rent Tax (PRRT) to cover both offshore and onshore projects;
- competitive neutrality across all projects; and
- a level playing field across the country.
Taken together, these measures create a solid platform for growth across the resources sector.
In summary what we have delivered is a system of taxation that recognises the needs of industry and an understanding of its operation.
What we have achieved with this agreement on resource tax reform is generational change.
A better return for the Australian community from the once-off development of our non-renewable resources.
And a great outlook for new investment with an internationally competitive profits based tax.
Our reforms pave the way for continued prosperity not just for us but for our children and our grandchildren.
It's been a tough two months for all of us.
Now it is time for us to get on with business and move forward in a constructive way.
I believe we have reached a good compromise for the nation and the industry, but I understand that not everyone is happy about the process or indeed the outcome.
But let me make the following points.
Consultations have been going on for over two months.
In fact companies from the petroleum and coal seam gas sector were some of the first through my door and I applaud them for that.
Companies both big and small have had a seat at the table and a voice in this debate.
The Treasurer and I have listened to what you had to say.
Furthermore, in our dealings with BHP, Rio and Xstrata, the junior miners have always been an important part of the equation.
It is no secret that the big players have moved over the last year or so to centralise industry representation in the Minerals Council of Australia.
The stakes have therefore been high for them to deliver for the industry as a whole and throughout our discussions, the interests of the juniors have been effectively represented at the table.
The evidence of this is clear in the principles agreed to.
Having said that I recognise that there is still work to be done.
Ongoing consultation with industry is needed to get the implementation of this tax reform right.
That’s why we’re setting up a Policy Transition Group.
Don Argus and I will lead this group with support from the Treasury and my own Department, the Department of Resources, Energy and Tourism.
The Group will consult with industry and advise the Government on implementation issues, particularly the resolution of final starting bases, taxing points and pricing methodologies.
I invite you to be a part of this process.
We have always said that the key to this is ensuring there will be no double taxation created by State and Territory royalty regimes.
Another issue that has been put to me in recent days is the question of exploration incentives.
The initial response to the Resource Exploration Rebate was mixed at best and faced with a $1.5 billion loss in revenue over the forward estimates, the Government has decided to not proceed with this initiative.
That is not to say that exploration is not a high priority of the Government.
Taking on board recent comments from the industry, the Argus-Ferguson Group will look at the best way to provide exploration incentives to ensure a pipeline of resources projects for future generations.
Our timetable for the new resources taxation system remains the same.
Draft legislation will be available for comment by June of next year.
The legislation will be introduced to Parliament in early 2012 with a start date of 1 July 2012.
Queensland Resource Sector
Queensland is fast-becoming one of the most exciting destinations for investment on the global resources map.
The resources sector is strong.
In the past two years, we’ve seen coal seam gas emerge as a key fuel in the domestic energy mix.
And we’re seeing the development of an LNG industry based on that same resource.
The development of the LNG industry in Queensland will play an important part in that expansion bringing new business opportunities and jobs to regional Queensland.
Infrastructure and skills
Queensland Rail – including its coal operations – is another element of the infrastructure puzzle.
My views on this are clear and on the public record.
The objective must be an arrangement that best delivers timely, adequate and cost-effective services for the Queensland coal industry.
I have urged the Queensland Government to consider the alternative industry consortium bid lodged earlier this year.
New infrastructure goes hand-in-hand with new skills.
So the Australian Government established the National Resources Sector Employment Taskforce.
The aim is to improve the efficiency of the sector’s labour market and reduce its impact on other labour markets.
In the near future, a report will guide us on how best to make sure skills pressures are minimised.
Conclusion
It's been tough but we have reached a landing point that I think we can all live with – a balance that is fair to industry and fair to the community.
These reforms will enable Australia to make the most of a sustained expansion of the mining industry to meet the demands of China and India over the next decade or more.
They will give all Australians a lasting stake in our prosperity.
Now it is time for us to get on with business.
The Government with the job of governing in the national interest and industry with the business of mining and oil and gas production that is so central to the nation's ongoing prosperity.
Let’s all get to it.
Thank you.