POLICY BRIEF: FOR THE FORTY-FOURTH COMMONWEALTH PARLIAMENT

EXECUTIVE SUMMARY

Industry overview
  • The minerals industry (encompassing exploration, extraction and processing) is a major contributor to national income, investment, high-wage jobs, exports and government revenues in Australia. It operates in a global industry where competition for markets is intense, where investment opportunities abound in other resource-rich economies and where capital, people and technology are highly mobile.
  • In recent years, the minerals industry has accounted directly for up to 8 per cent of GDP (significantly more when account is taken of related activity), upwards of 20 per cent of business investment and around 50 per cent of national exports.
  • The industry is a vital source of economic activity and jobs in regional and remote Australia, including among Indigenous Australians. It accounts for up to 30 per cent of employment in some regions and is the largest private sector employer of Indigenous Australians. Research by KPMG has shown that across nine mining regions the industry is helping to boost incomes, attract families and reduce unemployment.
  • The industry has paid more than $145 billion in Federal company income tax and State royalties since 2001-02 – before additional taxes like the carbon tax and the Minerals Resource Rent Tax (MRRT). Deloitte Access Economics estimates the industry’s tax ratio has averaged 42.3 per cent between 2007-08 and 2012-13.
  • Ensuring Indigenous Australians realise employment and business opportunities from minerals resource development is an abiding focus of industry activities. The industry has led development of the Indigenous Community Development Corporation (ICDC), a vehicle to incentivise intergenerational wealth transfer and to support community and enterprise development from mining-related agreements with traditional owners.
  • Less than 2 per cent of Australia’s land mass is currently under mine lease. The industry is committed to ensuring mined lands are available both for alternative land uses consecutively with mining (including for biodiversity conservation through habitat management) and to support alternative post-mining uses (including agriculture).
  • The minerals industry’s number one value and commitment is the safety and health of its workforce, where everyone who goes to work in the industry returns home safely.
REBOOTING THE BOOM
  • After a remarkable decade of growth, the Australian economy and the mining industry have entered a more constrained and demanding phase. Yet it is both wrong and defeatist to declare the so-called “mining boom” over. This view misrepresents mining’s long-run growth trajectory, the large gains still to be won from future investment and export growth and the urgent policy challenge Australia now faces.
  • Policy and regulatory settings are critical to the scale, duration and location of gains from future resource development. Research for the MCA concludes that policy decisions made now can create or destroy an economic opportunity equal to more than 5 per cent of the Australian economy in 30 years’ time.
  • The export expansion phase arising from past investment is still ramping up and there remains a significant opportunity for future investment in projects. The reality, however, is that Australia’s position as a destination for investment and as a cost competitive supplier of minerals is not what it should be.
  • According to research by Port Jackson Partners, more than half of Australia’s existing mines across thermal coal, metallurgical coal, copper and nickel have operating costs above global averages. And on capital costs, whereas a few years ago Australia could build iron ore and coal projects as cheaply as our competitors, now iron ore projects are 30 per cent more expensive than the global average, while for thermal coal the figure is 66 per cent.

Download complete article