Mine Safety (Cost Recovery) Bill
Page: 20152
Second Reading
Debate resumed from 17 November 2005.
Mr THOMAS GEORGE (Lismore) [7.32 p.m.]: I lead for the Opposition on this somewhat contentious legislation. I state from the outset that the Opposition will not oppose the Mine Safety (Cost Recovery) Bill 2005. However, as the name of the bill suggests, the Opposition has a number of concerns regarding the imposition and administration of the mine safety levy to fund the mine safety regulatory activities of the New South Wales Department of Primary Industries. Before I discuss these concerns in greater detail, I state that the Opposition is extremely supportive of any measures to improve mine safety in New South Wales. This State is fortunate to have one of the lowest levels of mining fatalities and serious injuries in the world. There has not been a death in the coal industry for approximately 18 months. Further, in recent years, the New South Wales mining industry has been lucky to experience a significant decrease in deaths and serious injuries.
According to the New South Wales Department of Primary Industries Mine Safety Advisory Council's Industry Performance Measures Quarterly Report, dated March 2005, the lost time injury frequency rate in this State's coal mining industry fell steadily from 39 in 1998-99 to 22 in 2003-04. Over the same time the rate for the metals mining and extractive industries has oscillated between lower rates: 8.46 in 1998-99 and 11.5 in 2003-04. Fewer people than ever in the New South Wales mining industry are sustaining serious workplace injuries. In the coal mining industry the number of serious injuries fell from 61 in 1997-98 to 23 in 2003-04; and in the metals mining and extractive industries from 42 to seven. Eight deaths occurred across the New South Wales mining industry over the four years 2001-2004—an average rate of 0.07 based on the number of fatalities per million employee hours worked. These losses, though tragic, compare favourably with the 28 deaths that occurred during the preceding four years from 1997 to 2000, at an average rate of 0.19.
The Opposition is supportive of achieving zero deaths and serious injuries in the mining industry. To achieve this end, we have supported the Government on appointing former Premier the Hon Neville Wran, QC, to review mine safety in New South Wales. The review made 31 wide-ranging recommendations to improve mine safety in this State and all of them, except one, have been adopted in this State. Included in the review's recommendations was the formation of a Board of Inquiry by the Minister under the Coal Mines Regulation Act 1982 to examine enforcement policy and the processes used to implement that policy.
The review also recommended that the Mine Safety Advisory Council be reconstituted, strengthened and enhanced for future examination and progression of mine safety and health issues. The review recommended that the Mine Safety Advisory Council be resourced appropriately to carry out its charter and work program. The review favoured the imposition of a small levy on the coal companies in order to provide financial independence for the Mine Safety Advisory Council, together with the capacity for that council to engage independent advisory consultants as required. The review stated that this levy might also be used to help provide funds necessary to enhance inspectorial resources and mine safety initiatives in-New South Wales.
At the same time the Government would need to give consideration to an appropriate levy system on the metalliferous and extractive sectors of the industry. The bill provides for the raising of a levy through the workers compensation system from mining employer across New South Wales that will cover the cost of mine safety regulation and the implementation of recommendations of the Wran safety review. The estimated cost to cover the two activities in 2006-07 is $13.55 million with an amount for the administration of the levy to be added. This is a blatant money grab from the mining industry by a greedy, debt-ridden Government.
The New South Wales Government has recovered $396 million from the coal industry in mining royalties this financial year to help fund police numbers, schools, hospitals, and other important public works. This is in addition to the environmental levies, lease fees, high workers compensation premiums paid by the coal industry to Coal Mines Insurance, not to mention the community development funds of mining companies that are used to invest in local communities. For example, the Westpac Rescue helicopter, local hospitals, and local sporting clubs are all major beneficiaries of the community development funds of mining companies. By lumping the industry with yet another levy, the New South Wales Labor Government is removing a proportion of the funds that mining companies would otherwise invest in their local communities. This Labor Government is unashamedly bleeding the New South Wales mining industry dry.
A key recommendation of the Wran Review was that responsibility for the regulation of mine health and safety be given to the Department of Primary Industries, rather than being left with separate agencies as is currently the case. The Opposition is supportive of this recommendation, but shares the industry's concerns that the Government is not removing the duplications and inefficiencies that are inherent in Coal Services Pty Ltd providing the same functions through coal mines insurance, coal services health, statistical services, dust diseases services and health inspections. The Government, in true Labor style, instead of cutting red tape and inefficiencies, is forcing the industry to pay twice for mine safety regulations. The bill is testament to the fact that the Government is heading towards a user-pays system for industries it considers are able to afford their own regulation. It is a significant concern from a public policy point of view that a Government is depending on an industry to fund the functions and services of its departments.
The bill creates a dangerous precedent that the Government may continue to introduce separate taxes for each different industry sector depending on the perceived capacity of the industry to fund its own regulation. It is ironic that the mine safety levy to collect $13.55 million from the mining industry for the 2006-07 financial year comes shortly after the Minister for Primary Industries ripped $149 million from the department's budget. The Opposition is concerned that the details of the mine safety levy will not be settled with industry until after the bill is passed.
During the second reading the Minister indicated that the mine safety levy will be modelled on the other levies in place in the workers compensation system and will be charged as a small percentage of an employer's wage bill. According to the Government's briefing note, the levy will amount to less than 1 per cent of the wages bill of the mining industry. There is no mechanism in the legislation to cap the levy to ensure the industry's future capacity to pay the levy and ensure it does not spiral out of control. In the other place, the Opposition will seek a commitment from the Minister to guarantee that this percentage of an employer's wage bill will not increase over time.
Clauses 9 and 10 of the bill give the Director-General of the Department of Primary Industries unfettered power to determine an estimated amount of revenue collected from the mining industry to be contributed to the fund, the times at which contributions are to be paid, and the manner in which they are to be paid. It is entirely unacceptable that the funding of the Department of Primary Industry's mine safety activities is entirely at the discretion of the director-general. While the Government has indicated that the director-general's annual estimate will be passed on to the Mine Safety Advisory Council, which will have a high-level oversight role in advising the Minister, who approves the estimate, the Opposition remains concerned that there is no other independent body or process whereby the contribution, expenditure and investment of the levy collected by the Mine Safety Fund can be further reviewed and scrutinised.
The Government's justification for the introduction of a mine safety levy is that it will bring the mining industry into line with all other industries, and that funding for work safety is contributed to by the industry. What the Government has failed to mention is that the coal industry has not received the same workers compensation reforms as other industries. The coal industry also pays much higher workers compensation premiums and has higher liabilities than most other industries. It is the concern of both the Opposition and industry that there is a distinct lack of accountability and transparency regarding this legislation. The Government is forcing the mining industry to pay for the cost of its mine safety reforms and the mine safety regulatory activities of the Department of Primary Industries, yet there is no capacity for the mining industry to audit the processes of the Department of Primary Industries to ensure that industry funds collected through the mine safety levy are being used efficiently.
If the regulatory functions of the Department of Primary Industries are effective and work safety in the mining industry is being improved, it stands to reason that workers compensation premiums for the industry will decrease. This essentially means that there will be less money to fund mine safety activities within the New South Wales Department of Mineral Resources. The Opposition is concerned that the Government has a vested interest in keeping premiums high to enable the funding of the department's mine safety regulatory functions to continue—similar to its costly, inefficient WorkCover scheme. Another justification the Government has given for the imposition of the mine safety levy on industry is that it is in a good position to pay. While the New South Wales mining industry is certainly benefiting from a boom in the mineral resources industry, it is unlikely the boom will last forever.
The Opposition has significant concerns that if there is a considerable downturn in the minerals sector, the smaller mining companies, which are major employers in regional areas, will experience great difficulty in contributing to the Government's mine safety levy. Unlike the ad valorem coal royalty scheme payments—which are based on the market price of coal and therefore fluctuate in line with commodity prices—the levy, being a percentage of a wages bill, will most likely increase over time. A reduction in levy payments will only decrease if the mining industry reduces its wages bill. This means that workers, a large proportion of whom are located in rural and regional New South Wales, will be laid off.
Another concern that has been brought to the attention of the Opposition by industry is that the definitions of "employee" and "employer" in the legislation are not used to extend coverage of generous workers compensation provisions available to the mining industry to people who are not considered employees within the mining industry. The effect of doing so would bring more people into the Coal Mines Insurance Scheme and add significant costs to mining industry employers. This is dreadful legislation. It forces the mining industry to pay for the functions, services and wages of the New South Wales Department of Primary Industries without any accountability or transparency whatsoever. In conclusion I foreshadow that the Opposition will move two amendments in the other place, the first to ensure that the Mine Safety Fund is used to fund only the Department of Primary Industries mine safety functions and the second to place a cap on the levy.
Ms PETA SEATON (Southern Highlands) [7.47 p.m.]: The Mine Safety (Cost Recovery) Bill could equally have been called the "Another Labor Tax Bill" or "Another Labor Slush Fund Bill". This is yet another new tax by the highest-taxing State government in the country. The tax will reap around $13 million a year, with no clear limits as to where government can spend the money. As usual, there is no accountability, no discipline, no benchmarking, no way anyone could know whether money is being spent effectively or with due process, and no cap on how much the tax may be increased by. As the honourable member for Lismore said, the Opposition will move amendments in the other place in order to get some discipline and rigour back into those two issues.
This new tax comes hot on the heels of the increases to the coal royalty tax two budgets ago, which again happened with absolutely no consultation. Whilst original forecasts were that the tax would raise around $44 million, the Government has reaped a windfall from the tax and used that money to plug its budget deficit—which has been caused by its failure to rein in its spending on wasteful and duplicative government programs. The Government is getting a large amount of revenue from the coal royalty tax. Members representing electorates in the Illawarra area ought to be very concerned about this because it is money that is being taken out of their region. Absolutely no justification has been given for this new mine safety cost recovery tax, as indeed no justification was given for the increase in the coal royalty tax.
It is important to acknowledge the great advances that have been made as a result of co-operation and very clever work between mine managers and mine employees, particularly in the Illawarra area, with regard to long-term safety improvements. Illawarra Coal statistics show that in 2001 there were slightly more than 180 total recordable injuries in terms of frequency rates. That figure has steadily decreased to an all-time low in 2005 of slightly less than 40. That is a great achievement. I congratulate all of Illawarra Coal's employees and mine management on what is obviously a productive and co-operative arrangement to try to drive down accidents and injuries and improve mine safety. It is something all members of this Chamber should acknowledge and congratulate.
Labor regards the coal sector as simply another means of filling its budget black hole. However, I want to speak about the contribution that the coal industry makes in my region, which includes the Southern Highlands, the Wollondilly area and the Illawarra. In our area we have two major coal companies: Austral Coal, which operates the Tahmoor colliery and Medway, near Berrima, and Illawarra Coal which operates mines at West Cliff, Appin, Elouera and Dendrobium and, as a result, creates jobs and industry, particularly at the steelworks in Port Kembla.
Illawarra Coal is a major employer in our region, employing more than 2,000 people, contributing $167 million in wages last year, spending $285 million annually on goods, materials and services in the Illawarra and producing 6 million tonnes of coal, mostly premium hard coking coal. It is important to understand that the success of the coalmining industry in our region contributes also to the success of major employers and producers such as BlueScope Steel, which is the largest employer in the Illawarra region and the largest steel producer in Australia, and OneSteel in Whyalla. Austral Coal is an important contributor to our local economy, with its Medway coalmine producing coal that feeds the Berrima plant of Blue Circle Cement, which is a valuable contributor to the manufacturing industry in our area. The cement plant at Picton is also a major employer producing specialised cement products.
Illawarra Coal has invested around $500 million in the past three years in our local area, around $160 million in both 2003 and 2004 and $180 million in 2005, and it has a long-term plan which involves proposed investments and extensions to activities it currently undertakes, such as the longwall replacement at Appin and West Cliff, upgrading coal handling systems at West Cliff washery, the investment that has recently been made at the Dendrobium mine and expansion at the washery. That is a significant investment and it has created a significant number of jobs in our area. In my area there has been a lot of community discussion over recent months about proposed extensions to the Douglas Park area. There has been a significant amount of community debate, many community meetings and a lot of concern over the long-term need to protect the environmental qualities of the Nepean River and other waterways in our area.
The people involved in the Nepean Action Group should be pleased with the persuasive case they have put forward. We should also acknowledge that Illawarra Coal has responded positively to those concerns and has changed the mine layout proposal for that region so that now there will be no longwall extraction directly beneath the Nepean River, which has sterilised around 12 million tonnes of coal. It is important that we acknowledge that that change has occurred and that the action group has made a very strong case, to which Illawarra Coal has responded, that will be of great benefit to water users and farmers downstream who have concerns about potential loss of water in the waterways, as well as legitimate environmental concerns.
The Mine Subsidence Board has the heavy responsibility of making sure that people understand that proposed future coalmining could well occur in their area, that those people get a fair hearing and that appropriate compensation is given to them, if that is necessary. I understand that an additional $500 million investment is proposed for our area, partly through the extension that I have just mentioned as well as some other local projects. It is important that we also acknowledge that further development is needed of the coal resource in our region because it makes an enormous contribution not only to our local economy but to the State and national economies. That development requires certainty and clarity in the approval process, appropriate arrangements being made for stakeholder input, rigorous environmental assessment balanced with an acknowledgement of the environmental solutions where they are delivered, and appropriate fair and speedy outcomes in Mine Subsidence Board matters.
The importance of clear and long-term future planning for the coal industry and investment in our local industry and jobs must be thoroughly understood. It must also be understood that plans to invest an additional $500 million in our area have the capacity to deliver an additional 500 direct and indirect jobs. I hope that everyone in this place is keen to play a part in ensuring that those things happen and that the process balances environmental interests as well. In relation to one coal company alone, Illawarra Coal, I have noted the $500 million investment over the past three years and the potential for an additional $500 million over the next three to five years. I understand that the $500 million invested so far is practically a total reinvestment of the profits made in that period. That is admirable.
These investments are essential not only to future economic development and jobs growth in New South Wales steel production but also to the Australian economy. The investments have the potential to create hundreds of jobs. It is worth noting that during the first three months of the Iemma Government there has been a continuous worsening of the unemployment rate in New South Wales and New South Wales has almost continually maintained a situation where its unemployment rate is worse than the national average. We need to get every single job opportunity we possibly can—
Mr Paul McLeay: You said there is a declining unemployment rate. Hear! Hear!
Ms PETA SEATON: A worsening of the unemployment rate. The figures show that the unemployment rate has worsened every month for the past three months. The point has been made to me by many coal industry representatives that investment in the coal industry is a long-term process. It cannot be done in one year, two years, five years; it needs long-term planning over a 20-year or 30-year horizon. That is why it is important that planning processes are clear, effective and efficient. That is why it is urgent that we see the Metropolitan Strategy, which has been promised again and again by the Government, but which it has continually failed to produce. It is essential to introduce certainty for those who are planning to develop and build homes in areas that may also be of interest to coal producers.
If the Government is serious about harnessing all of that investment potential, it is important that it gets its planning processes right and makes sure that both industry and local communities have confidence in the process. As I said, the Opposition will move amendments in the upper House in an attempt to seek guarantees that the Government will only spend this money on mine safety. We question again the accountability in the bill, how the money will be spent and the effectiveness of the proposed measures. We need to be sure that the levy will not spiral further out of control with more and more increases in the rate. We are concerned that the levy will be regarded as yet another blank cheque by a cash-strapped, wasteful Labor Government that is trying to find every possible opportunity to squeeze more tax out of businesses and families, who are already paying the highest tax rates in the country.
Mr PAUL McLEAY (Heathcote—Parliamentary Secretary) [8.00 p.m.], in reply: I thank honourable members for their contributions to the debate. The bill introduces a levy on mining industry employers to pay for the implementation of the recommendations of the Wran review into mine safety. The levy will also cover the costs associated with the safety regulation of mine workplaces undertaken by the Department of Primary Industries. The bill is an important step in making sure that mine safety continues to improve. It is also important in bringing the mining industry into line with other industries, which pay for regulation of their workplace safety through the WorkCover scheme. It is a responsible bill with an important purpose, and I commend it to the House.
Motion agreed to.
Bill read a second time and passed through remaining stages.