I acknowledge the First Australians on whose land we meet, and whose cultures we celebrate as among the oldest continuing cultures in human history.
It's good to be back home in Queensland.
It's good to be here at the Queensland Media Club.
And it's good to be given the opportunity to talk both about the nation's future and Queensland's future.
During the past decade, Queensland has been driving Australia's growth - with State final demand growing by an average annual rate of 4.7 per cent, compared to national average GDP growth of 3.0 per cent.
It's therefore a state where governments also have to manage the challenges of growth.
Our purpose as a government is to keep the economy strong and provide a secure future for Australian families.
As a government, we came to office with an ambitious agenda because we believe Australian families deserved better - better economic opportunities, better health and hospitals and better schools.
We've made progress.
We've cut income taxes three years in a row so that someone on $50,000 will now pay 18 per cent less tax than 3 years ago.
We've ended Work Choices so that basic conditions like penalty rates have been restored.
We've increased hospital funding by 50 per cent in just two years.
And much much more.
When we were all threatened by the global financial crisis, as a government we did what we had to do.
We acted decisively to support Australian families.
As the National Accounts showed this week, if we had not taken decisive action, the Australian economy have gone into recession like almost all other advanced economies.
But because we acted together, Australia has come through stronger than almost every other advanced economy.
Together, we've actually created almost 55,000 jobs in the economy here in Queensland, and 225,000 jobs nationally - since the global recession began in 2008, while jobs have been slashed around the world.
Nonetheless, the truth is that many working families and small businesses in Queensland and across the nation are still doing it tough, because the path to economic recovery is uneven.
For the future, we're absolutely determined to continue the job we began for working families.
That starts with maintaining a strong economy.
We're getting the budget back to surplus in three years' time - three years ahead of time - to keep the economy strong.
Our debt levels are low - peaking at less than one-tenth the average of the major advanced economies, and less than half the level projected a year ago.
And through these core financial disciplines, we are keeping spending under control.
But the purpose of keeping the economy strong is to make sure all Queenslanders, and all Australians, are getting a fair go - as well as getting a fair share of our nation's prosperity.
That's why we're implementing the most far-reaching reforms to our health and hospitals system since the introduction of Medicare almost three decades ago.
We're already funding 1,000 new nurse training places every year.
We'll have an additional 1,300 GPs qualified or in training by 2013.
And we're putting the funding of our national health and hospitals network on a sustainable long term footing, where the Australian Government for the first time in history will be the dominant funder of our public hospital system of Australia.
We're building better primary schools for our kids.
We're currently delivering Trades Training Centres for 732 secondary schools and in the next three years, for another 520.
We're delivering our commitment to provide computers for every year 9 to 12 student across the nation - the Deputy Prime Minister delivered the 300,000th computer today in western Sydney.
And despite setbacks, both in Copenhagen and in the Australian Senate, which three times blocked the Government's emissions trading scheme, we will continue to act on climate change, with major investments in renewables like solar power.
We have now passed laws to ensure that by 2020, we'll be generating enough renewable energy to meet the needs of all Australian households.
Australia's working families do deserve better, and we are determined to continue the work that we have begun.
Because much work remains to be done.
Making nation-building investments for our future, to tackle the large infrastructure backlog.
Investing in roads, railways, ports and a high-speed National Broadband Network.
But above all, investing in our people - in their education,
their health and in the strength of their communities.
So that we can build a stronger Australia.
And build an Australia with a fair go for all - and with a fair share for all.
We have focused a major share of our national investment in Queensland.
Our record of achievement is significant.
Just as our plans for Queensland's future are substantial.
We've been there to support Queensland during the global economic recession.
We supported Queensland's financial institutions during the Global Financial Crisis - guaranteeing bank deposits and wholesale term funding for banks, because we were determined that Queensland financial institutions survived the crisis when many said at the time they would not.
Queensland's economy has been supported by the Government's Nation-Building Economic Stimulus package to the tune of $10.8 billion - through payments to support working families and investment in medium and longer-term infrastructure.
The Government is also making major productivity investments to build a stronger Queensland.
In our first two years in government, we increased our investment in transport infrastructure for Queensland by 125 per cent compared to the last two years of the previous government.
That includes:
- An additional $884 million for the Ipswich Motorway.
- $488 million on the Bruce Highway.
- $365 million towards development of the Gold Coast Light Rail system, and
- $98 million for 66 rail crossing safety projects and 207 black spot projects.
We have increased our national education investment in Queensland by 138 per cent in our first four years compared to the last four years of the previous government.
This includes:
- $3.1 billion for 5,898 projects at 1725 schools under the school modernisation program;
All these projects have kept builders and tradies in work during a difficult time in the economy - supporting local economies across the state.
The Government is also making major investments in health, housing and pensions so that all Australians get a fair go and have their fair share.
We have increased the investment in Queensland's health and hospitals system by 55 per cent compared to the previous health care agreement.
And building on this, under the recent COAG agreement on health reform, the Australian Government will provide an additional $1.05 billion in health funding for Queensland over the next four years.
By 2013-14, this will be funding an extra 4,400 elective surgery procedures and an additional 162,000 emergency department presentations - as well as new funding for 265 new sub-acute beds, training for doctors and health professionals, and new primary care and aged care services.
We are investing in social housing for Queenslanders families who most need it - with $1.1 billion for the construction of around 4,050 new houses, and more than 23,000 more undergoing repairs and maintenance.
Some 569,000 pensioners and carers in Queensland have received substantial pension increases of up to $100 per fortnight - the single biggest increase in the history of the pension, helping make a big difference for those struggling with cost of living pressures.
The Australian Government has therefore radically increased its investment in Queensland's future.
All this investment in the future strength of our economy and delivering a fair go and a fair share for working families depends on the continuing reform of our economy.
To boost productivity growth.
To create a seamless national economy.
And ensure that Australian companies remain competitive with the rest of the world.
And that includes tax reform.
The Government received the Henry Review at the start of this year.
The economic opportunity we confronted was to convert Australia's strong performance through the global recession into a lasting economic advantage.
By boosting the competiveness of our economy, lifting national savings, and boosting infrastructure investment.
I was under no illusion as to the size of the political challenge we would be taking on in this reform.
I knew that those affected by the tax would fight and fight hard.
And so they have.
But so will we.
We decided to take on this challenge which should have been taken on a decade ago as commodity prices began their record surge.
We are determined to prosecute our case that mining companies should pay a fairer share for the resources that the Australian people own.
And in doing so, we will not be intimidated by the statements or actions of any large mining company - foreign or domestic - and that includes Xstrata.
The Government believes in the importance of tax reform:
- To boost Australia's global competitiveness, by cutting the tax rate for corporate and small businesses.
- To boost Australia's saving, by lifting Australia's pool of superannuation savings by $85 billion over 10 years
- To boost retirement incomes - that is, better super for working families, adding an extra $108,000 to the retirement super of an average worker aged 30 now.
- And to boost investment in infrastructure, funding the rail, roads and ports our resources sector needs
To fund these important reforms, the Government announced plans for a Resources Super Profits Tax.
The Government took on the challenge to reform Australia's system of resource taxation with our eyes wide open as to the complexity and scale of the task.
We saw the same scare campaign the last time a 40 percent profits-based tax was introduced for offshore mining in the 1980s - although that industry went on to flourish.
The mining industry said the industry would collapse after the introduction of native title.
They were wrong.
The mining industry said the industry would go backwards if we abolished Work Choices and AWAs.
They were wrong.
The fears campaigns have been many.
But we have chosen to take on this battle for reform.
I believe the Government will prevail in the resource super profits tax debate - because it comes down to two simple arguments:
First, we should be taxing the profits not the production of our resources.
Even the mining companies accept that profits taxes are better than the current state production taxes.
Second, the mining companies can and should pay a fairer share now that they are earning huge boom-time profits from minerals - minerals owned by the Australian people.
All we are asking is for the profitable mining companies to pay a share of tax similar to the share they paid in the past.
On the first point, I believe we have got the fundamental principles of resource tax reform right.
It is right that we move towards a system of resource taxation which taxes profits not production.
The existing system of state royalties is inefficient.
Royalties tax production - unfairly disadvantaging mines with higher investment requirements and higher extraction costs.
The current system of royalties means that companies are paying tax on every tonne of ore they extract - even before they have made a profit.
The super profits tax will remove royalties - meaning that mining companies won't pay tax until they are profitable - indeed until they have earned a return on their investment.
The RSPT in fact shares risk between companies and the Government.
The Government contributes 40 per cent of the cost of the investment through tax credits.
The Government later takes 40 per cent of the supernormal profits of companies if and when they became profitable.
And critically - the Government fully refunds to companies the existing state production-based royalties.
What will this system deliver?
First, it means that less profitable mining companies will actually pay less tax - Treasury modelling indicates that for a typical project - a company earning less than 10 per cent returns will pay less tax.
Second, this system will introduce minimal distortions to the production and investment decisions of the companies developing the resource.
Third, this system will promote the development of Australian resources.
Modelling by Econtech suggests that under an RSPT scheme, mining investment will rise by 4.5 per cent, mining production by 5.5 per cent in the long run and jobs by 7 per cent.
Even the Minerals Council CEO Mitch Hooke has confirmed that they prefer a profits-based system:
"We agree with the concept .... We, in fact, put it on the table through the course of the Henry review and that was let's move from the inefficient and complex set of royalties that exist across the states .... to a profits-based system where the risk and reward is shared between the state, who owns the minerals, and the companies that develop them."
The second principle of our tax reform is that mining companies should pay a fair share for the resources they rent from the Australian people.
This means that we need a tax that is flexible enough to adapt to changing global commodity prices.
Royalties are based on volumes not profits - and they have not kept pace with the mining boom.
By taxing Super Profits, the RPST will adapt to changing commodity prices.
The tax take will rise through commodity booms; and fall as prices moderate.
By contrast, the Leader of the Opposition has said that mining companies are paying too much tax.
Others disagree - including, by the way, the Premier of Western Australia who wants to raise the royalty rate and indicated earlier this year that mining companies were getting away with murder.
I believe many Queenslanders and many Australians feel the same way.
And I believe they are right.
These are the two core principles of resources tax reform:
First, moving to a system based on profits rather than
production.
Second, ensuring that Australians get a fair share.
I also want to deal with a number of myths that have been given circulation in recent weeks in a debate characterised by a lot of heat and considerably less light.
Myth number one:
Andrew Forrest said on Wednesday that the Government was:
"trading the sovereign status of the country for a chance at improving an election process or plugging a hole in the budget".
With the greatest of respect to Mr Forrest, this claim is without foundation and he knows it.
Contrary to this myth, the Government's tax package has nothing to do with returning the budget to surplus, as any examination of the budget papers would reveal.
The revenues it raises will fund cuts to the company tax rate, tax breaks and tax simplification for small business, better super for working families, and a national infrastructure fund.
The Government is forecasting the Budget to go back to surplus in 2012-13.
In that year and every year preceding it, the Government's tax reform package in fact has a negative net impact on the budget bottom line.
So this claim by Mr Forrest is simply untrue and if he consulted the Budget papers, he would know that to be the case.
The second myth emerges from claims that the stock market is falling due to the RSPT.
Mr Abbott said recently:
"our share market is under pressure, at least in part, because the government has totally mismanaged its proposal for a great big new tax on mining". (25 May 2010)
The facts prove otherwise.
Australian shares have fallen by less than in other countries.
In the month after the mining tax was announced, Australian shares fell by less than in other countries.
- The Australian stock market fell by 7.4 per cent
- The London market fell by even more: 7.7 per cent.
- The US Dow Jones index fell by even more, 9.2 per cent, having recorded its worst May performance in 70 years (1940).
- The Japanese stock market fell by 10.6 per cent.
Further, Australian mining shares have fallen by less than the average of all shares.
In the month of May, Australian mining shares fell by less than the average of all shares:
- Australian mining shares fell by 6 per cent.
- But all Australian shares fell by more than that - 7.8 per cent
- The banks and financials fell by 10.4 per cent.
- In May, Australian mining shares have outperformed the market by almost 2 per cent.
Again, however, we must be mindful of misinformation in the market-place and hence the need to put the facts before the Australian people.
A third myth in the current debate is that the RSPT will increase the cost of living.
When asked about their position on the mining tax, Mr Abbott said: "it could involve very real costs for consumers.....it's a tax on consumers" (25 May 2010)
The truth is the vast majority of the minerals subject to this tax - like iron ore in the Pilbara - are shipped overseas at prices set on world markets.
Econtech modelling shows that the Government's tax reform package - including the RSPT and our cuts to company tax - will actually reduce the price of food and housing over time by making our economy more competitive.
The independent Econtech report says: "Tax reform means that the cost of living .... is lower than would otherwise be the case." (Page 27)
But I will tell you what does affect consumer prices - and that is a tax on all business with more than a $5 million turnover that Mr Abbott says he will introduce to fund $75,000 a year paid maternity leave for millionaires.
That tax on companies like Coles and Woolies will flow straight through to consumers with higher prices for bread, milk and eggs.
So much for the myth on the cost of living.
The fourth myth is the regular claim from mining companies that this tax will reduce investment.
The simple truth of the RSPT is that very profitable projects will pay more tax.
And less profitable or marginal projects will pay less tax.
So projects that would have gone ahead anyway will pay more; and projects that were in the balance will pay less tax.
Some of the numbers and claims being bandied about by some mining bosses like Clive Palmer are so ridiculous they do not bear scrutiny.
Mr Palmer claimed to be shutting down a project in South Australia.
We're still trying to locate that project.
But Mr Palmer is not alone.
On the 4th May (two days after the tax was announced) West Australian iron ore explorer Cape Lambert Resources announced it would halt its search for minerals in Australia due to the new Government super tax.
On that day, Tony Sage, who is the Executive Chairman of Cape Lambert said he would now shift the company's exploration activities to its projects outside of Australia.
On the 6th May, Mr Sage notified the ASX that he would acquire a further 1 million shares in Cape Lambert.
Facts can be troublesome things in a debate such as this.
That brings me to the current case of Xstrata.
In the last few days Xstrata has announced the suspension of two projects.
Xstrata claimed that the suspensions were directly related to the Resources Super Profits Tax.
First, I find it perplexing that any company is making a decision about the future of major projects at this point:
The new proposed system was announced just 1 month ago.
We are 12 months away from the draft legislation.
We are 24 months away from the start of the new system.
The second point to make about the suspended projects is that they were always challenging for Xstrata.
It is instructive to reflect on what analysts have said about the Ernst Henry mine's future in recent years.
Here is what RBC Capital said about the Ernest Henry mine back in 2007:
"we believe that production at the Ernest Henry mine will reduce significantly from 2011 onwards as the operation switches from an open pit to underground operation."
Let me also quote from ABARE's publication "Australian Commodities", Volume 14, March 2007:
"Xstrata's Ernest Henry mine is scheduled to cease mining in January 2010, but stockpiled ore will continue to be processed, which will enable the production of copper concentrates (at a lower rate) until 2012."
Various industry analysts have expressed the view that the Ernest Henry copper mine is a mature mine with rising costs and declining ore quality.
The third point to note in relation to yesterday's announcement is that Xstrata's tactics are not new.
Xstrata was one of a number of companies that directly lobbied the government and ran a well coordinated media campaign claiming that getting rid of Work Choices and Work Choices style AWA's would destroy their business.
The fourth point to make about the Xstrata announcement is that commentators today are questioning the accuracy of Xstrata's claims on employment.
Elizabeth Knight wrote in the Sydney Morning Herald today wrote on the employment impact claims of the company:
"It was a stupid idea by Xstrata to exaggerate and gloss over the detail in order to push its point. It detracts from the merits of its debate."
I should note that Elizabeth Knight is an opponent of the RSPT.
Fifth, the fact is that the RSPT scheme will reduce the tax burden on marginal mines.
David Buckingham - ex CEO of the Minerals Council has said:
"...what that's going to do is lighten the tax burden on the less profitable projects. It will actually spread the base around which effective investment can take place. This is actually an incentive to the sector, not a detriment.
The final point to make is that while Xstrata has made some interesting points very recently about the possible impact of the RSPT.
On May 26, the Queensland Coal Industry Rail Group (which comprises 13 companies including Xstrata) bid $4.85 billion to buy the QR Central Queensland coal track network.
The media statement from the consortium said: "QCIRG assumes that the proposed tax, if implemented, would not apply to infrastructure or the operations of QCIRG and that a sensible outcome can be achieved with the Commonwealth Government on any tax on resources such that the industry's growth ambitions can still be realised." (QCIRG - Media Statement - 26 May 2010).
A year is a long time in politics.
It seems to be an eternity when it comes to commerce.
Last week - confident that in fact a sensible landing point could be achieved in relation to the RSPT.
One week later - not the case at all.
But we know that Xstrata doesn't want an RSPT that would mean they pay more tax on their most profitable operations.
Indeed Xstrata says it should pay less tax.
I would simply say this to Xstrata:
Many companies are negotiating with the Government in good faith.
They are engaged with the Treasury Panel and I thank them for their constructive cooperation.
Other mining companies are less constructive.
And I would repeat what I said yesterday in Parliament:
This Government will not be intimidated by the statements or actions of any mining company - foreign or domestic.
This Government will not be stood over by any mining company - foreign or domestic.
This Government will stand up for the national interest - and that means getting a fairer share for the resource that is owned by all Australians.
For better super for all Australians.
For tax cuts for all Australian small businesses.
For tax cuts for all Australian big businesses.
For better infrastructure for Australia's regions and the resource states that support them.
The Government has delivered strong and responsible economic management through the Global Recession.
And we will continue to deliver strong and responsible economic management into the future.
Tax reform is a challenge this government took on because we believe it is critical for Australia's future prosperity - not because it would be popular, and not because it would fill a hole in the budget.
We took on the challenge because we believe it is essential to strong economic management.
Responsible economic management is not an abstract concept.
It is the vehicle through which the Government can deliver on the aspirations of the Australian people.
It is because of our economic strength through the global recession that:
- We have been able to deliver historic reforms to our health and hospital system.
- We have been able to deliver three consecutive tax cuts for working Australians.
- We were able to deliver on pension reform.
- We have been able to significantly boost investment in infrastructure.
- We have been able to invest in skills.
These are the dividends of strong economic management.
I am determined to get on with delivering for Australian families.
Delivering tax reform that gives all Queenslanders, and all Australians, their fair share.
Delivering better schools, better health and better hospitals.
Delivering a strong economy, with a secure future for Australian families.