GLOBAL SURVEY UNDERLINES THE NEED TO REVERSE AUSTRALIA’S DECLINE AS INVESTMENT DESTINATION
Australia’s attractiveness as a destination for mining investment continues to suffer from red and green tape, according to the 2014 Fraser Institute Annual Survey of Mining Companies released this week.
Results from the latest Fraser Institute survey, which canvasses the views of mining executives from around the world, show Australia is falling further behind major competitors Canada and the USA.
Western Australia is now the only state in Australia to be ranked in the top ten mining jurisdictions, with the ranking of all Australian states except South Australia falling over the last year.
Global executives expressed concern at duplicative and costly approvals procedures, higher royalty charges over recent years and development delays caused by anti-coal activism.
If Australia’s attractiveness continues to decline, the cost will be borne across the Australian community in slower growth in household incomes, real wages and higher unemployment.
On the other hand, the gains on offer from lifting Australia’s ranking are considerable.
The abolition of the carbon and mining taxes are important steps forward, as is the conclusion of free trade agreements with nations that import more than $125 billion in minerals exports annually.
To build on these reforms, the Senate must also pass the legislation to pass the one stop shop approach to streamlining federal and state environmental approvals.
Research by BAEconomics has shown that reducing project delays by one full year would add $160 billion to Australia’s national income over the period to 2025.
That dividend will happen because by reducing costly delays Australia can start to regain market share in major global markets, with subsequent flow on effects on additional investment in the sector.
The continued success of Australia’s mining industry must not be taken for granted.
Australia’s minerals exports reached $164 billion in 2013-14, with the sector producing more gross value added per unit of labour than any other industry in Australia. According to official data, each worker employed in the mining sector generates around $515,000 for the economy.
Research by the Reserve Bank has shown that the mining expansion over the decade from 2005 lifted household incomes by 13 per cent, real wages by 6 per cent, while unemployment was 1.25 per cent lower than it would have been without the boom.