The next frontier: Securing new mining investment to capitalise on global opportunities
Two decades of unprecedented investment by the Australian resources sector (facilitated by previous bipartisan reforms) have produced a bigger resources sector delivering record export values. The resources sector earns more export income for Australia than all other industries combined, generating a record $221 billion in 2017-18, or 55 per cent of total exports.
Resources companies employ approximately 240,000 people directly in highly paid, highly skilled jobs, predominantly in remote and regional Australia. Average earnings in the resources sector are around $140,000 a year, more than 64 per cent higher than the average for all industries.
Minerals companies have paid $204 billion in the 12 years to 2016-17 in taxes and royalties, funding schools, hospitals and infrastructure across Australia. At the same time, the Productivity Commission has repeatedly confirmed that Australian mining receives ‘negligible’ industry assistance.
The world’s resources and energy needs are projected to continue growing in the 21st century. The economies of China, India and South-East Asia are using increasing amounts of steel, aluminium and copper to increase their industrial capacity, create more high-density housing in large cities, and build transportation networks, communications systems and electrical grids. In addition, demand for consumer products – such as cars, televisions, laptops, mobile ’phones and refrigerators – is rising rapidly as middle-class incomes increase.
Australia is well-placed to supply these growing markets but this opportunity is not guaranteed. It demands consistent government policies that encourage investment and productivity growth and thereby make the Australian economy more competitive and prosperous.
Australian mining is a global technology leader and there is an increasing role for automation, data analytics, mechatronics, robotics and artificial intelligence that will see Australian mining continue to be at the forefront of innovation. But other nations are also developing new resources with the latest technologies at competitive costs. Consequently, Australia’s tax and regulatory settings are becoming ever more important to maintaining our comparative advantage in minerals and energy exports.
The Australian resources that have been identified and developed over the past century will need to be supplemented by discoveries of new deposits – deposits that will be more remote and harder to extract. The changing nature of skills is at the heart of this challenge. Workplaces will need to be redesigned, new skills developed and existing ones enhanced. This means that the minerals workforce will need to be even more adaptable and diverse in the future.
This submission argues that future prosperity for all will not be secured without a new wave of reform to make the Australian economy more robust, productive and flexible. A recent survey of MCA members shows that companies are most concerned about the direction of workplace relations, taxation and energy policy; that mining finance is getting harder to obtain and approval times for projects are too long; that new minerals resources need to be identified; and that the key challenge is attracting and retaining skilled labour supported by a dynamic and responsive education system.
Of course, the benefits of a new wave of productivity-enhancing reforms would not be confined to mining enterprises, workers or regions. The Productivity Commission has pointed out that reforms implemented in the 1980s and 1990s – notably reducing tariffs, liberalising markets and introducing enterprise bargaining – have helped to sustain 27 years of uninterrupted growth in output and incomes across the economy. Further, the commission found that this growth has significantly improved living standards for the average Australian household in every income decile.
Conversely, the opportunity cost of forgoing additional economic reforms will continue to rise as international competition for capital and talent expands and intensifies. There is an urgent need for bold policy action to ensure mining can keep delivering substantial benefits to all Australians.