Canberra
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Introduction
I am pleased to have the opportunity to participate once again in Minerals Week.
Since meeting last year we have seen record levels of new investment in the industry.
Managing and supporting this growth is at the top of our agenda.
Meeting the needs of new projects means getting more workers on the ground, boosting training and increasing skills.
A close partnership between industry and government is key to making this happen and is at the heart of the Government’s 2011-12 Budget.
The Minerals Council will be a key partner in delivering our budget measures.
You are more than just a passionate advocate for your members, you have also shown yourself a leader when it comes to the all important questions of safety, skills, training and productivity.
Australia’s minerals sector and the broader economic context
We recognise how closely linked the fortunes of the mining industry are with state of the national economy.
While the outlook for Australia’s economy remains very strong we took a major hit earlier this year as a result of one of the worst natural disasters this country has ever seen.
ABS National Accounts data to be released today will show the impact of this on GDP.
The Balance of Payments for the March quarter released yesterday, showing the biggest quarterly fall in export volumes in 37 years, suggest this impact will be substantial.
The Queensland floods shut down over half the coal mines in that state.
Pumping out these mines and returning to production has required enormous efforts and industry is to be commended on the speed at which it has resumed operations.
And these operations, not just in Queensland but around Australia, underpin what the most recent OECD report shows is one of the best performing economies in the developed world.
Despite the temporary setback from these and other adverse weather events, the fundamentals of our economy remain strong and the growth we are seeing across the industry is showing no immediate signs of slowing.
As the latest update of ABARES’ major development projects listing released last week shows, we are still on an upwards trajectory.
Investment in resources and energy is yet to peak and the record set for planned capital expenditure in April will not stand for long.
The ABARES report also showed that a key ingredient to sustaining this growth - mineral exploration expenditure is continuing and estimated to be $5.9 billion in 2010-11.
In real terms, this would take exploration expenditure to be the third highest on record and amounts to a near doubling of the average exploration expenditure of the past 30 years.
Expenditure on gold exploration is estimated to increase by 10 per cent, expenditure on base metals by 34 per cent and iron ore exploration by around 13 per cent in 2010–11.
Coal and uranium are also looking good with projected increases of 12 and 37 per cent respectively.
While I understand many in the industry advocate for exploration tax credits or flow through share schemes the Policy Transition Group’s report into exploration completed in December found that there is no case at this time for such fiscal incentives to encourage exploration.
Budget 2011 -12
But there are others areas where Government action is appropriate and warranted.
Previous governments have struggled with commodity price booms resulting in inflation, under-investment in future capacity and often decided expenditure on the basis of votes rather than sensible economic policy.
This is not a mistake our Government intends repeating.
We have found the necessary savings to return to surplus by 2012-13.
But we have also delivered a budget that is good for the mining industry – that meets your needs and puts in place a framework for continued growth.
In the last year 27,700 jobs have been created in the mining industry and predictions are that a further 70,000 skilled workers will be needed but 2015.
The Government will help you access the workforce you need now by increasing the skilled migration intake and introducing Enterprise Migration Agreements.
The framework for EMAs was developed in consultation with industry and your input will be crucial as we put them in place.
Getting projects off the ground will secure more opportunities for Australians in the future.
And the Government will help you find and train those workers through our $3 billion Building Australia’s Future Workforce package.
We have proven that by working together can effectively deliver skills and training.
Earlier this month recruitment commenced as part of the National Apprenticeships program – a joint initiative between Government and industry and I commend the MCA for its support of this important program.
The Budget also includes measures to increase productivity through greater participation, which is of course not a new concept for industry.
There are numerous examples of resource companies putting in place programs that make a real difference on the ground.
In recent years we have seen a welcome focus on increasing Indigenous employment.
This is making a real difference, town by town, community by community and I am looking forward to further announcements on this front in the not too distant future.
The Government also recognises that a more mobile workforce can benefit resource projects while at the same time boosting employment in communities where the job opportunities have declined.
That is why we are establishing a FIFO coordinator in Cairns and in my view north-west Tasmania could also benefit from this type of arrangement.
The Budget also provides funding to support local content with a $34.4 million package over four years to encourage better linkages between major resource projects and Australian firms.
Mandating levels of local content poses too great a risk in a highly competitive global market and is therefore not supported by Government but we can help Australian companies increase the competitiveness of their bids to win more work.
Government reforms: resource taxation and a carbon price
Let’s now turn to Government policy and the question of resource taxation reform – a question that dominated my discussions with you for much of last year.
I said to you all here during Minerals Week 2010 that as friends we will sometimes disagree, sometimes robustly.
Disagree we did but twelve months on I still consider myself among friends.
Together we were able to sit down and work through the issues to reach an appropriate end point.
At the time I said that our imperative as a Government was to settle on a final package that gets the balance right.
In my view we have achieved this.
The PTG’s package maintains the international competitiveness of our mining industry and aims to minimise compliance costs, especially for small miners.
It is a reform that is particularly important in times like these.
When commodity prices are high, and the resources sector is growing, a profits-based tax will allow the Government to spread the benefits more widely across the economy by funding:
- a cut company tax rates for all businesses,
- tax breaks for small business; and
- boosting superannuation for workers.
Revenue from these reforms will also allow the Government to tackle capacity constraints in the resources sector created by inadequate investment in infrastructure.
Our Regional Infrastructure Fund will support key projects such as the gateway project in Perth to fix once and for all the roads around Perth airport, the Townsville and Mackay Ring roads, the Gladstone Port Access Road and Peak Downes Highway upgrades.
These long term investments will serve the industry well in good times but they will also be important when the current rapid pace of growth slows.
I am not naïve enough to believe that the record terms of trade we are currently experiencing will last forever.
That’s why the framework the Government is putting in place is designed to support industry through both the highs and lows of the cycle.
Unfortunately, there are some who choose to ignore industry and seem to be addicted to the old ways of taxation under the royalty system.
A system that penalises companies in hard times and fails to maximise the benefits in good times.
The Western Australian Government’s Budget announcement to increase royalties on iron ore fines flies in the face of the expert advice from the PTG reports that royalties are an inefficient tax that can discourage investment.
Western Australia’s royalty hike will hit smaller miners and start ups, while also reducing the Commonwealth’s capacity to invest in infrastructure for the state. This is not a good outcome for Western Australia’s mining sector.
Carbon Price
In the same way we sought to get the balance right on resource taxation, so too must we get the balance right when it comes to pricing carbon.
As we learnt last year, extensive and genuine consultation is the only way to achieve this – and that is exactly what the Government is doing.
Consultation with stakeholders, including in the resources sector continues and the Government will release further detailed information in July this year.
The Minerals Council has already lodged its submission and I would like to extend to you my thanks for engaging in this process.
It is a complex and challenging debate and clearly there will be different views from different stakeholders that need to be worked through.
But there are also real parallels.
Your primary objectives: preserving jobs; maintaining the international competitiveness of industry; delivering real environmental benefits – are shared by the Government.
The real question is how we achieve this.
How we put a mechanism in place that meets all of these objectives.
How we put in place the right transitional measures, particularly for our energy and emissions intensive trade exposed industries.
How we deliver the certainty that is so necessary to investment.
How we make a smooth transition to a lower emissions economy.
We are working hard to ensure we get this right - our continued economic prosperity depends on it.
More than just mining
Mining remains very much a part of Australia’s future.
I’ve heard the lament in recent times that Australia is fast turning into Asia’s beach and quarry.
As Minister for Resources and Energy, and Minister for Tourism I am responsible for both Australia’s beaches and quarries and I have to say that I welcome tourists coming to enjoy our beaches just as I welcome demand for our resources.
But I dispute that this is all Australia’s resources sector has to offer.
Mining doesn’t just mean the export of minerals.
It involves engineering and technological feats.
Our mining technology services and equipment sector is worth around $9 billion a year.
Added to this are all of the highly skilled supporting services from construction, legal support, finance and IT services to name just a few.
Australia has developed technical and management expertise in these areas that we now export to the rest of the world, in the same way that we export our raw commodities.
The value of our expertise as an export will further develop as our resource sector continues to grow.
These are the jobs of our future, good jobs for our young people and a big part of where our future prosperity lies.
Conclusion
Australia has a unique opportunity.
We have some of the world’s best coal, iron ore and other minerals in vast quantities.
We have world class companies, technologies and mining operations.
Let’s have world class workers and jobs in a sustainable modern economy.
The Government understands the immense value of the resource and energy sectors and the support you need to grow the industry further.
But this understanding is not shared by all political parties.
I have in the last week been called a dinosaur and accused of being stuck in the industrial age for my defence of the mineral sector’s future.
I wear these barbs as a badge of honour.
Just as the industrial age helped lift many people out of poverty by providing jobs and new technologies to improve their standard of living, Australia’s mining sector today is building a prosperous and strong economy for our future.
All Australians want to share in the benefits of a strong, modern economy and I will continue to work with industry to ensure that we maximise and share our nation’s economic potential.
I wish you every success for Minerals Week and look forward to an exciting year ahead.
Thank you