Natural Resources - Maximising Value for Growth and Development
Perth
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Introduction
I add my own welcome to you here in Perth – a hub for expertise in resource exploration and development.
And as Minister for Tourism, might I also add, a very attractive destination for both leisure and business travel.
It is of course the latter that brings us all here today.
However, I would note that for Perth's tourism and hospitality sector, CHOGM epitomises the benefits of business events, which are an increasingly valuable part of our tourism market.
Directly accounting for around 2.6 per cent of GDP in 2009-10, tourism in an important part of Australia's strong and diverse economy.
So too is mining.
Indigenous Australians have been mining Australia’s natural resources for centuries.
Here in Western Australia, at Wilgie Mia there is an ochre deposit that has been mined for at least 1,000 years.
The first mineral exports following the establishment of New South Wales was that of coal to India in 1799.
However it was the discovery of gold at Bathurst in New South Wales and at Ballarat in 1851 that laid the foundations for Australia’s mining culture.
With significant growth in recent years up from just under 6 per cent of GDP in 2001 to around 9 per cent today - and with development continuing - the resources and energy sectors are more central to our prosperity than at any time since the gold rushes of the 19th century.
Last year export earnings from minerals and energy commodities reached $175 billion and accounted for 60 per cent of Australia’s total goods and services exports.
This financial year they are forecast to reach $215 billion – an increase of 21 per cent.
These numbers give a real indication of the benefits to Australia that are now flowing and will continue to flow from this rapid expansion of our resources sector.
Benefits such as increased employment, investment, services, supplies, government revenues, as well as lower prices for imported energy and other goods and services.
Maximising the value from the development of our resources, growing these benefits and spreading them widely amongst our citizens, is what we are here to talk about today.
Indeed, it is a theme that underlies not just this session but the Forum more broadly.
For all of us, and Australia in particular as the host nation, this forum is an opportunity to showcase our mining expertise, outline the opportunities for investment, and encourage further trade.
Because nations, both within and outside the Commonwealth, are, simultaneously, competitors customers and collaborators.
We compete to attract the investment required to pursue develop our natural resources.
And of course we are customers too, trading our minerals and energy commodities, as well as our mining technology services and equipment – a sector worth upwards of $9 billion in exports annually for Australia.
But most importantly, we are collaborators.
When it comes to questions of safety, sustainability, and good governance there should be no secrets, rather a sharing of experience, insight and advancements to serve all of our best interests.
So while the pursuit of new business opportunities is an important feature of the business forum, we also are here to learn from each other's experiences to our collective benefit.
So in that spirit of constructive, mutual collaboration let me briefly canvass briefly some of the headline issues from an Australian perspective.
Australians are proud of the way we have developed our natural resources.
But we also recognise that this is a process of continuous improvement.
Our current fast-paced and substantial growth in resource and energy development is throwing up both challenges and opportunities.
Capitalising on demand
Firstly, we must focus on capitalising on surging demand from emerging economies – including members of the Commonwealth.
Pinpointing our markets is fundamental, both for business and government.
The Asia-Pacific is the global economy’s fastest-growing region.
China alone, we are told, adds two billion square metres of new buildings a year.
That’s like taking every high-rise in New York and putting another dozen alongside each one – in just one year.
And we are seeing this reflected in global iron-ore production, which has gone up by more than half in the past decade, with prices going up even more.
Globally demand for energy is forecast to grow by a third by 2035, with non-OECD countries accounting for 90 per cent of that growth.
In this context the IEA predicts increased global demand for Australia’s two main energy exports - coal and gas - for the foreseeable future.
Australia is rising to the challenge of meeting growing demand.
Companies are targeting their investments and ramping up production capacity.
Foreign Investment
And foreign investment is to a large extent providing the capital required to fund this growth.
Foreign investment makes up as much as 80 per cent of capital in Australia's resource projects.
In the past five years, the Australian Government in conjunction with its Foreign Investment Review Board has approved over $400 billion of proposed investment.
Brazil, China, France, India, Japan, Korea, the U.S. and the U.K. – some new investors, some foundation investors, others returning – are all investing to grow our economy.
Having in place a transparent framework for assessing foreign investment proposals, that balances national interest considerations, is essential to attracting capital in an intensely competitive global environment.
Policy framework
So too is a sound policy and regulatory framework.
Central to investment decisions are certainty and stability .
A predictable and resilient commercial and regulatory environment is vital to encourage development.
That isn't to say our systems couldn't or shouldn't evolve over time.
Resource development is dynamic and policy and regulation must keep pace with evolutions in practice.
That is why we must have regard for safety, sustainability and maintaining a social licence to operate.
Practical reforms, such as a single national regulator for the offshore petroleum industry – as we’re introducing here in Australia – will help improve safety.
That, in turn, will nurture community confidence.
Genuine community engagement is vital and the success of this is measured by how little complaint politicians receive about a project - the less the better!
Financial transparency also promotes trust and Australia joins a number of Commonwealth countries in supporting international efforts on this front.
We have committed $11 million to the Extractive Industries Transparency Initiative.
Similarly, we are seeking to share our experience to promote sustainable mining practices around the world.
As you may know, we have a program called Leading Practice Sustainable Development for mining operations.
Fifteen handbooks are distributed free of charge, with advice and practical case studies on biodiversity, managing hazardous materials and engaging with Indigenous communities, for example.
We have also held policy-exchange workshops overseas.
This work assists our partners – in particular Commonwealth member nations – to implement practical solutions adapted to their circumstances.
Tackling capacity constraints
In the context of growth appropriate strategic planning is vital to avoid capacity constraints.
Early investments in infrastructure and skills and training help mitigate the risk and maximise the opportunities of development.
Here in Australia, rapid growth has meant that a potential emerging development constraint is a shortage of skills and labour.
Industry and government are both taking action to respond to this.
The Australian Government is making substantial investments in training and skilling and is working in partnership with industry on key initiatives, including with regard to apprenticeships and indigenous employment.
Australian companies excel when it comes to working with indigenous communities, both here and overseas, providing opportunities for social and economic advancement.
Inpex and Total's Trade Training Centre in Darwin in partnership with the Larrakia people, is a prime example of this and the ways in which industry is stepping up to the skills and training challenge.
The Australian Government is also adapting migration policy to help assist industry in the short term for resources projects that cannot meet their workforce needs locally.
Enterprise Migration Agreements and fast-track processing of temporary work visas are two examples of this.
And of course temporary migration has the added benefit of allowing greater dissemination of experience across resource projects internationally.
Resource taxation reform
I will finish with a few brief remarks on resource taxation.
As you may know the Australian Government is currently finalising legislation to introduce a Minerals Resource Rent Tax, to be levied on iron ore and coal and to extend the Petroleum Resources Rent Tax.
These are profits based taxes which will enable the Government to use the extraordinary profits during boom times to drive broader economic growth, while at the same time maintaining the competitiveness of our industries.
By cutting company taxation, providing tax write offs for small business and increasing investments in superannuation and infrastructure the Government can help ease the pressures created in the wider economy from the resource sector's success and ensure the community benefits more from the development of their natural resources.
We have consulted with industry on the design of these reforms and investment has not been deterred, in fact it continues apace.
Mining investment alone has jumped from $35 billion last year to $47 billion this year, and we expect about $80 billion next year.
We have over $200 billion in capital committed in advanced resources and energy projects.
Conclusion
Ladies and gentlemen, maximising value from our natural resources is about economic development and all the benefits that flow from it.
It is something we all aspire to, and that working together, we can achieve.
Thank you