Article by Joe Kelly courtesy of the Australian.
Australia must become more competitive or miss the next mining boom, with the Minerals Council of Australia warning current policy settings on taxation, project approvals and industrial relations are holding it back.
The MCA has alerted the Albanese government that it risks squandering a “once-in-a-generation opportunity” to capitalise on surging demand for the critical minerals needed to help the world meet its net-zero targets.
Chief executive Tania Constable will release a reform blueprint on Monday pushing for urgent policy changes that could increase real wages by 9.4 per cent, leave households $11,700 better off, the economy $290bn larger and GDP per person $9900 higher by the end of the decade.
Ms Constable said Australia’s attractiveness as a place to do business was “no longer assured” and that maintaining the nation’s competitive edge in mining required “immediate and co-ordinated action by government to ensure a prosperous future for all Australians”.
The alarm is being sounded ahead of a keynote address from Anthony Albanese to the industry on Monday night in the Great Hall of Parliament House, with the nation’s leading miners arriving in Canberra to attend the sector’s annual Minerals Week program, which coincides with the resumption of parliament.
Ms Constable said that miners were facing rising costs, declining productivity, stagnant investment, uncompetitive taxation, increased policy risks and growing competition from other resource-rich economies.
“Deepening investment uncertainty, exhaustive delays in environmental approvals and the proposed introduction of rigid and costly industrial relations laws are combining to blunt Australia’s ability to fully capitalise on this once-in-multiple-generations mining boom,” she said.
The MCA’s 53-page Future Critical reform blueprint found that, from 2012-13 to 2021-22, mining companies paid $252bn in wages to Australians in addition to $295bn in taxes and royalties to help fund hospitals, schools, aged care, childcare and infrastructure.
“The government can stack the odds in favour of the Australian mining industry catching the next wave of global investment with the right policy settings,” the report said. “If it does, the benefits will be widespread and durable.
If it does not, there are considerable downside risks to the economy.” Ms Constable said “the opportunity is there for the taking” but warned Australia was at “considerable risk of ceding its advantage to global competitors”.
The report predicts that global investment in mining will need to increase to $US160bn a year, more than double current levels, to achieve the goal of net-zero emissions by 2050. By 2030 alone, it argues 50 new lithium mines, 60 new nickel mines and 17 new cobalt mines will be needed to supply the materials required to meet demand for battery storage.
For Australia to seize the opportunity, the MCA is urging the government to make “support for mining a political imperative” and to put “business and productivity at the centre of fiscal policy”.
The report also calls for the sector’s regulatory burden to be reduced, the implementation of more policies to support competitive project returns, and better public infrastructure and services.
“It puts the cost to the economy from a 12-month delay in environmental approvals at a $51bn cumulative GDP loss, based on the 16 years it takes to bring a new mine from discovery to production,”
Ms Constable said. Sketching out where Australia can do better, the report warns the nation’s mining capital stock has plateaued at $933bn over the last half a decade. It also says Australia’s 30 per cent corporate tax rate is the third highest in the OECD and that industry productivity growth has halved since the Hawke-Keating era to 1.1 per cent.
It suggests the government commit to no new tax imposts on the industry and retain the current fuel tax credit scheme that mining businesses claim for their off-road vehicles – a measure forecast in the May budget to cost about $9.6bn in 2023-24.
In a warning to Labor ahead of the introduction of its second tranche of industrial relations reforms, the Future Critical report also argues against “further workplace relations changes that would reduce productivity”.
The government is encouraged to commit to a “formal process for assessing and implementing recommendations in the Productivity Commission’s five-year reviews”. Reducing the budget deficit and paying down debt without impairing the economy’s performance is identified as a key challenge. Steps that drastically cut expenditure or increase the tax burden on individuals and companies make “little sense when the result is slower economic growth and lower living standards”.
“The sustainability of the federal government’s fiscal position depends on the mining industry’s profitability,” the report says. “For the mining industry to sustain its large contribution to the economy, including to government revenues, companies must be willing to keep taking risks on investment in exploration, new projects, and the operation and extension of existing mines.”
The report also calls for the government to consider “all options for zero emission technologies”, including carbon capture, utilisation and storage, and “currently prohibited advanced nuclear technologies”.
A new national cabinet mechanism to help co-ordinate critical minerals strategic planning is recommended along with measures to streamline foreign investment screening of critical minerals proposals.
Ms Constable said that while Australia had the “attributes, the workforce, the expertise, and the array of deposits required to be a leading global supplier of the critical minerals, governments have a critical role to play”. “The push to unlock this opportunity must be supported with enabling government policy that improves Australia’s competitiveness in attracting investment, clears regulatory impediments, and boosts productivity.”