Pauline Hanson 2018 Budget Reply
I rise to pay my respects to all Australians, especially those who have fought and sacrificed their lives for our country and freedom. This is my response to the 2018-19 budget handed down by the government on Tuesday. This budget, like countless others before it, is more about securing the short-term political survival of the government of the day than about charting a serious long-term plan to reclaim the economic sovereignty of our nation and its citizens.
In delivering his speech on Tuesday night, the Treasurer told us what he wanted us to hear. The Treasurer painted a picture suggesting the nation’s finances are now in good order, when they are not. The budget papers show gross debt at $565 billion. He says we can now afford $140 billion in personal tax cuts, and deliver some surpluses each year, that will literally take a lifetime to pay back the debt on. As much as working people need these tax cuts, I worry they are unaffordable and won’t be delivered. But I will support the legislation to introduce stage 1 and stage 2 of these personal income tax cuts.
The truth is that after successive coalition-Labor governments our economy is exposed to risks, and this budget does nothing to address that. It does nothing to reduce our reliance on China and the record terms of trade that are underpinning growth projections. It does nothing to restore our hollowed out manufacturing and agriculture industries that can provide value-added exports and sustain good, well-paying jobs. It does nothing to stop the exploitation by foreign multinationals of our tax laws, which places a higher and higher tax burden on Australian businesses and workers. It does nothing to reverse the cuts and constant rule changes that have undermined the retirement incomes of older Australians, especially those that have skimped and saved—in particular, self-funded retirees.
Instead, it is a budget that relies on high record prices for our exports continuing off the back of China. It is a budget which assumes that half of our economic growth will be driven by immigration. Immigration accounted for 63 per cent of our population growth last year, and while the government recognises the revenues that come from immigration, it will not recognise the costs of immigration. Australians say they do not want this level of immigration, but neither major political party is listening. That’s because, for different reasons, each political party benefits from high immigration, but Australians do not. The Treasurer won’t publish the assumptions made in the budget concerning immigration so that everyone can see them, and I ask: why not? What is the government hiding? I acknowledge the value of immigrants to this country who have worked hard and adopted our values and our way of life, but federal government debt is proof that growth driven by immigration is a total failure.
One Nation calls on the government to progressively reduce immigration to approximately 75,000 per year until we address a host of immigration related issues, including congestion in our cities, jobs for Australians, the rising number of homeless, unaffordable housing, the cost of water and power, and problems with health and education. Ever higher population growth driven by immigration is a lazy way to grow the economy and, like any Ponzi scheme, there will come a time when there are not enough new immigrants to pay the cost of those already in Australia. It was argued today by Senator Cormann that immigration helps to support our ageing population, but immigrants get old like everyone else. Immigration takes the pressure off the government to lay out a plan to make our country smarter and richer by diversifying our industries and developing value-added products to sell to the world.
Precious little is being done to support and develop once-great industries that are being picked off by opportunistic and canny foreign investors. Bit by bit Australia is losing its economic sovereignty and, with it, the capacity to withstand economic and political events that will inevitably occur. The effects of this loss of sovereignty are far-reaching, and we need to look no further than the way our tax system is being gamed. There is a black hole in the budget: a revenue black hole worth billions of dollars, created because non-resident foreign owned multinationals do not pay their fair share of income tax. The government funds its spending through the power of taxation, and in the 2015-16 year individuals paid 75 per cent of all income tax collected and companies paid the balance of 25 per cent.
When we look a bit further, we find that Australian resident companies pay 98 per cent of that company income tax. This means non-resident companies, mostly multinationals, pay just two per cent of all company tax or less than one per cent of all income tax collected. Let me say that again: non-resident, foreign owned multinational companies pay less than one per cent of all income tax collected. That is extraordinary when we consider the dominance of multinational companies in so many sectors of the Australian economy. Guaranteed payment providers such as Visa, Mastercard and American Express pay next to no income tax on their business in Australia. In the years 2008 to 2014, American Express paid no income tax despite earning $3.6 billion in merchant fees and $2 billion in interest from cardholders who did not pay their bills by their due date. Technology giants Apple, Google, Microsoft and Amazon collectively paid $148 million in income tax on $8 billion of sales in Australia in 2015-16. Petroleum giants Chevron, ExxonMobil and Shell paid no income tax on $1.3 billion of sales in 2015-16. Non-resident, foreign owned petroleum companies paid no income tax on the profits made from our natural gas because politicians have given them generous deductions under the petroleum resource rent tax. We estimate these petroleum concessions cost us $5 to $7 billion a year, but clearly the total tax shortfall from foreign multinationals is much higher when all sectors of the economy are considered.
The Turnbull government are wrong for not addressing tax avoidance of multinationals by strengthening our taxation laws, the same as they were wrong for not calling a royal commission into the banking and financial sector sooner. When Labor leader Kevin Rudd became Prime Minister in 2007 our debt was approximately $58 billion, but when Labor left government the debt was around $270 billion. Both sides have been very poor managers of our economy, because the debt is now $565 billion. Australians are fed up with the blame game. It’s about time both sides pulled their heads in and took responsibility for bad management.
A debt of $565 billion is an absolute disgrace after 27 years of consecutive growth. We are lucky interest rates are low, because we paid $18 billion in interest on the federal government debt this year—otherwise, it would have been higher. Every worker paid, on average, $1,332 to service federal government debt, but it will be our children and grandchildren who will have to repay the debt. If they can’t then foreign creditors will effectively take our land and resources as payment. Australia has had 27 years of uninterrupted growth, but, despite this growth, the federal government has had to borrow to make ends meet.
Welfare equates to 41 per cent of revenue and rising. We are expected to hit $182 billion by 2019-20. Australians are very generous and caring but draw the line at people ripping off the system. Welfare, age pensions and disability pensions were introduced for people who are truly in need or need a short-term helping hand. We can no longer support those who are not prepared to work. Being on welfare has become a way of life for many, as we see third-generation claimants. Some in our society have multiple wives who go on to have multiple children, all claiming welfare. Our laws are being abused and so is our welfare system. Both the Liberals and Labor—and their mates, the Greens—are reluctant to discuss or stop this abuse. Are we mugs being taken for a ride? You bet we are. We are regarded as the treasure island of the world.
We need to introduce an Australian identity card for all Australians who access taxpayer funded services. This card would not be transferable. This card would not allow anyone, other than the holder, to access money or services. Tourists, family friends and visiting relatives, including illegals, would be stopped dead in their tracks. Medicare would not be abused by people seeking drugs. Doctors and service providers abusing the system would no longer find it as lucrative. Our public hospitals would be for Australians only. We are registered for our mobile phones, driver’s licences, voting and bank accounts. Surely it’s time that stringent tests must apply to anyone wanting to access taxpayer money and services.
Around 80 per cent of retired Australians rely on the age pension in full or in part, but there is no relief for them in this budget, and not a word from Labor on this critical issue. All we have is a plan for them to hock their homes to the government to get a top-up to their pension. By handing over home equity to the government, how will they pay for aged care, which so often they relies on the sale of a home? This is a false economy. The age pension is inadequate, which is why we want the maximum fortnightly basic couple pension payment increased by $150 per fortnight. This will automatically increase other pensions like the disability support pension and the service pension. The Parliamentary Budget Office costed my proposal, which will be made available to the public.
I also believe that self-funded retirees are taken for granted and not respected for the contribution they have made over their working lives. Many have gone without, saved their money and paid off their homes. We tend to open the purse strings to those who have contributed the least to society due to choice by way of drugs, crime or unemployment. One Nation believes self-funded retirees on reaching the pension age should receive a concessional healthcare card.
We are one of the most resource-rich countries in the world. Our gas fields off the North West Shelf of Western Australia are believed to be among of the richest. Multinational companies have been harvesting our gas for many years but successive governments, including the current crop, are reluctant to tax the petroleum industry, and the current Labor Party under the leadership of Bill Shorten is in the same boat. We hear not a word now, nor ever, because they are all looking after their mates, the multinationals. It is outrageous that we give away our natural gas for free to foreign multinationals and we give away $4 billion a year in foreign aid, including to the United Nations, while nearly 14 per cent of Australians live below the poverty line, and the number of homeless people in Australia is climbing at an alarming rate. Non-resident foreign owned petroleum giants with names like Chevron, ExxonMobil and Shell dominate the list of the top 10 foreign investors in Australia. They are here because our vast and valuable reserves of natural gas are located on the doorstep of Asia, the largest liquefied gas market in the world. We have the most concentrated foreign ownership of petroleum resources in the world, which gives these non-resident multinationals, which co-venture with each other, unprecedented power to intimidate the government of the day. The tax system is the way we get paid for our natural gas, but politicians have allowed foreign petroleum companies to design the tax system that applies to them, which means we get next to nothing for the gas taken from the seabed in Commonwealth waters. We get nothing on the profits made by foreign multinationals from the gas.
Foreign companies are exporting so much Australian natural gas that Australia will become the largest exporter of liquefied gas in the world next year, but none of the economic benefits of exporting our gas will come to Australia. We are the owners of the gas and we will receive less than one cent in the dollar of the export sales. Foreign multinationals take the other 99c in the dollar, less any claimed expenses. Experts say we get the lowest share of economic benefits of any country in the world in respect of the extraction of our gas, yet we cannot have a sensible conversation with Labor, and the government will not consider any significant reform.
We wrote to the Reserve Bank because we saw that the value of exported liquefied gas was used to increase the gross domestic product, when in fact none of the economic benefit from these export sales will trickle into the Australian economy. The Reserve Bank said that after the construction phase there were few benefits for Australia, but, ironically, they suggested Australians could benefit from the export of our gas by buying shares in companies like Chevron, ExxonMobil and Shell.
We say that the inclusion of export sales of liquefied gas renders the GDP figure in the budget inflated and renders any indicator which uses GDP in the ratio misleading. That includes debt to GDP and the government’s promise to restrict taxation to 23.9 per cent of GDP. We say that if the Japanese government makes $2 billion a year by imposing an import duty on our gas and if Japanese households buy our gas cheaper than we do then the government needs to reform the gas tax laws. The government could impose a common royalty regime and reform the petroleum resource rent tax, because one cent in the dollar is not exactly a fair share.
How do non-resident, foreign owned multinationals avoid paying tax? Firstly, they understate income and overstate expenses. But, in a belt-and-brace strategy, they also invest heavily to shape the tax system. The petroleum resource rent tax has been changed a number of times since it was introduced by Labor in 1988, and every change has favoured the companies. Years ago, petroleum multinationals told the government they needed certain concessions or else they would not invest in Australia. Governments, both Liberal and Labor, obliged them with generous tax concessions. By the time the government realised they were outwitted by these foreign petroleum companies, the multinationals were ready with the caution that any change to the law would create sovereign risk. This is a reputational risk to Australia that would then endanger further investment. If these arguments fail then foreign multinationals are prepared to fund negative advertising campaigns which would destabilise the government. This approach worked a treat when mining companies killed off the mining resource rent tax in 2010. The ghost of that event still walks the parliamentary corridors.
The mischief with the petroleum resource rent tax is that it allows claimed expenses to compound at rates set annually. A handful of companies, including Chevron, ExxonMobil and Shell, have more than $240 billion in tax credits created by concessions in the petroleum resource rent tax. These concessions mean that claimed expenses double every four years. This snowball effect means foreign multinationals will not pay tax during the life of these integrated gas export projects. The government could have made a regulatory change to the method of valuing gas but has not done so, with the result that $20 billion will stay with a few petroleum companies instead of the people of Australia.
Dr Kraal, an academic at Monash with an interest in petroleum taxation, notes that four of the largest integrated gas projects in Australia, producing 44 per cent of Australia’s natural gas, will raise no petroleum resource rent tax and scant income in the foreseeable future. We say that this is possibly for the 40-year life of these projects. We say that there never was a need to provide the generous concessions in the petroleum resource rent tax, because massive investments were made in Papua New Guinea without them. The PNG government got an equity share, a royalty, income tax and a super-profits tax arising from the establishment of the Hides gas-processing plant in the remote Southern Highlands of PNG, while we do not get any equity shares or royalties.
You’re probably wondering how PNG got a better deal than we did. Well, the PNG government listened to the Australian government Treasury officials who advised them, while our government ignored them. One Nation has been speaking to government about reducing the overly-generous concessions in the petroleum resource rent tax law and the need for a common royalty regime. The government, however, are unwilling to entertain a royalty regime, saying that it’s a sovereign risk, even though they know it is a cashflow issue.
Most petroleum-producing countries in the world receive royalties in exchange for extraction of their oil and gas. Qatar receives more than $10 billion a year on sales of gas. We get less than $400 million a year. State governments get royalties for their gas, but not the Commonwealth of Australia. Royalties are the price of taking the gas. They represent an expense for goods sold. The benefit of royalties is that they would give us the income earlier and allow us to increase the age pension and other pensions almost immediately.
Who do you think got rid of the Commonwealth royalties for our gas? Well, of course, it was Labor—good old Wayne Swan, from the political party that spruiks that it will look after the battlers and age pensioners. No, they don’t; they look after their multinational mates—and so do the coalition. Multinationals must stop ripping the guts out of our country by taking our resources and making billions of dollars while we are left paupers.
One Nation has been negotiating working with the government on these issues for more than a year. We want to repair the budget with the proceeds from a uniform regime of royalties on the extraction of gas and reduce the generous concession; introduce a reporting and disclosure regime so we can hold government accountable for its management of these precious publicly owned petroleum resources; set aside gas for domestic use so we can get cheaper electricity on the one day in four when gas is used to generate electricity; introduce a ‘use it or lose it’ policy for retention leases and licences that do not go into production; and build a gas pipeline from WA to the eastern states, with a guaranteed 15 per cent domestic gas supply from all production sites. It is ridiculous that we are about to become the largest exporter of gas in the world and, at the same time, we have the highest gas prices in the world.
The government plans to spend money in this budget to attract investment in coal-seam gas fracking, which farming communities do not want. What is the point of wasting money on developing coal seam gas when we already have plentiful gas in Commonwealth waters? It is just plain wrong to subsidise coal seam gas, which is ultimately more expensive for consumers, just so a few National Party members can get elected. Gas could come from Western Australia to the eastern states. The government is costing that project but, without a plentiful supply of gas, there is no point. Every Western Australian should make note of the fact that this government has undermined the domestic gas policy in Western Australia, which requires that 15 per cent of all gas coming from Commonwealth water be set aside for domestic use.
The Commonwealth’s failure to place conditions on Shell’s floating storage and processing ship means that none of that gas will come into the domestic market. The Commonwealth’s failure to place conditions on the Ichthys project means none of that gas will come into the domestic market. We note that the Ichthys pipeline took a 900-kilometre detour to avoid giving gas to Western Australia. Both of these failures by the federal government endanger not only the gas supply for Western Australia but also the viability of the proposed pipeline which would take gas to the east coast.
The gas story is not only about forgone tax revenue; it is about our loss of globally competitive gas and electricity prices and rising living costs that hurt most Australians. The government’s signature policy, the National Energy Guarantee, does not guarantee the price of electricity. But One Nation’s gas reform proposals will deliver much lower electricity prices because gas is used to generate electricity in Australia one day in four. Lower gas prices mean lower electricity prices. One Nation does not believe it is government’s role to pick winners for the supply of electricity. For that reason, we do not support government subsidies for renewables, which will cost us $2.5 billion this year and billions over the forward estimates—which largely goes to foreign owned multinational companies.
The fact that we do not support subsidies for renewable energy is not the same as saying we do not see a role for renewable sources of energy—because we certainly do, even though foreign owned multinationals dominate wind farms and other parts of the renewable industry. If renewable energy is as good as it is supposed to be, then let these multinational companies stand on their own two feet. Why is competition encouraged in other sectors but not in the energy market? We need globally competitive electricity prices to have more jobs and better jobs. New gas- and coal-fired power stations can provide what we need to keep manufacturing here and bring manufacturing back to Australia. It is time our $2.7 trillion pool of superannuation savings started to be invested in Australian businesses with the unique products and knowhow to sell to the world—including one of our great industries, agriculture. It simply isn’t good enough for foreign pension funds to be swooping to buy and invest in our agriculture and upstream processing industries while Australian funds sit on their hands. There are clearly good investments and returns available. It’s time Australian super funds, and our Future Fund, step up.
Payroll tax remains a barrier for employment and, while I understand payroll taxes are a matter for the states, I want to see payroll taxes reduced and eventually phased out. But that can only happen when the federal government works with the states. This will create employment and investment.
In 2018-19, SBS will cost the taxpayer $272.4 million, but SBS has lost much of its relevance because Australians can access international news and programs on their computers. We should merge SBS with the ABC and make savings in the millions of dollars each year. If there is no merger then the ABC budget should be cut to $750 million a year.
Our youth must be given the opportunity of apprenticeships. We must stop the influx of skilled migrants taking the jobs of Australians. The government must introduce an apprenticeship scheme that supports businesses.
One Nation does not accept donations from petroleum giants, but both major parties do so. They feel no shame in accepting donations from foreign petroleum companies which pay no income tax in Australia. Surveys show the public’s opinion of politicians has never been lower, but citizens will get spineless politicians until they make it clear at election time that politicians have more to fear from voters than from foreign multinational companies. One Nation believes foreign multinationals should be removed from the current tax system and pay tax on the basis of observable activities. History shows it is just too easy for foreign multinationals to avoid company income tax by contriving to have no taxable income and by intimidating government into making laws that advantage them and not the people of Australia.
I must reflect on the Labor leader’s speech tonight in the other place. When he says that the government are giving tax cuts of $80 billion to foreign multinationals, that is not the truth. Again Labor has lied and will put out spin. The truth is that, as I’ve stated here, foreign multinationals don’t pay tax, and the ones that do are only two per cent of the tax coming in. It is the Australian companies and businesses that we need to support with tax cuts. As I’m saying here in my delivery of my speech tonight, we must go after the multinationals who are not paying their taxes in this country.
It is about time that Australians wake up. If you give your vote and your preferences to the political party that is not doing right by you then you must consider where your vote goes. Give it to the party that will represent you and withstand political interference and rorting from foreign governments and foreign multinationals. Thank you.
