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Wednesday, 31 August 2016
Page: 209

Senator REYNOLDS (Western Australia) (13:35): In my first contribution in the 45th Parliament, I mark the 50th anniversary of iron ore shipments from Western Australia and I also share the remarkable impact that this industry has had, and continues to have, on Western Australia and our nation. It is a story that showcases the true pioneering and entrepreneurial spirit of our wonderful state. This extraordinary story of vision, enterprise and nation building should be a source of great pride not just to Western Australians but also to all Australians. It is an absolutely amazing achievement that far exceeds any other nation-building program in Australia's history. It is exponentially larger in size and scope than the Snowy River project.

Fifty years ago, in March 1966, the Premier, Sir David Brand, despatched the first commercial shipment of iron ore from Western Australia. Last week, I had the great privilege of attending a Rio Tinto event marking their own first international shipment of iron ore from the port of Dampier. It was an extraordinary achievement in 1966 that the first shipments occurred at all, given there was an iron ore embargo from Australia in place until 1961, there were no contracts and, indeed, as Senator Back has just said, there was absolutely no infrastructure in the Pilbara to support this new industry.

In 1938, the Lyons government placed an embargo as they had been advised that Australia had just 350 million tonnes of accessible ore deposits, so they needed to be conserved for domestic and wartime use. The partial relaxation of the iron ore embargo by the Menzies government in 1961 heralded in a new era of exploration, enterprise and innovation in one of the harshest and most remote and undeveloped regions in the world. As a result of this exploration, Australia's accessible reserves today are estimated at 54 billion tonnes, placing our nation as No. 1 in the world, with 29 per cent of known global deposits.

The history of this remarkable industry is not well understood by many Australians but it should be. Not only is it a wonderful story to be proud of, it generates the critically important national wealth that pays for our schools, our hospitals, our pensions, our Defence Force and our family supports. In a wonderful book released by the Minerals Council of Australia last year, author David Lee observes that there was nothing inevitable about the Pilbara becoming 'the jewel in the crown of Australia's mining industry'. Thanks to the leadership of Sir David Brand, Sir Charles Court and Sir Robert Menzies, working together with pioneers of the industry and supported by the blood, sweat and tears of thousands of West Australians, we built our own luck.

On Friday night I had the real privilege of meeting some of the early pioneers of this industry. I heard the stories of how they not only built the infrastructure—roads, rail and ports—but also delivered the first shipment, as Senator Back said, in 18 months. Just think about trying to achieve that all in 18 months today! Sadly, it is inconceivable. Guess how many pages the contract for this first shipment of Hamersley Iron was? It was eight pages, including two pages of signatures! The contract for over 52,000 tonnes of iron ore was eight pages long. Sadly, that is no longer the case.

In this 50th anniversary year it is important to ensure that this vital industry to Australia's economy remains sustainable into the future. With other nations having 70 per cent of the world's known iron ore reserves, it is indeed a highly competitive future. So to remain competitive in a depressed market, with major competitors like Brazil nipping at our heels, the iron ore industry is undergoing a significant efficiency drive to lower production costs, so that we can keep exporting. It is also essential in this environment that Western Australia remains a stable and reliable place to invest and do business in and that the state and Commonwealth governments are not seen as sovereign risks.

Confidence in Australia as a stable and reliable place to invest in is easily shaken and incredibly hard to regain. Sadly, that confidence has already been shaken a couple of times to the point where Australia, in international iron ore markets, is being seen as a potential sovereign risk. The first were the ridiculous Minerals Resource Rent Tax and the carbon tax implemented by the previous government. The Minerals Resource Rent Tax was so poorly designed that not only did it not raise the money it was designed to but for the first time we were seriously discussed internationally as a sovereign risk. Sadly, today, the Western Australian Nationals of all people, under the leadership of their new leader, are kicking what I would call another highly politically expedient economic own goal, which is again shaking confidence in the security of our mining sector in Australia and in Western Australia as a safe place to invest.

The policy of the National Party in Western Australia is to increase the iron ore rental fee from 25 cents per tonne to $5 per tonne just for two of the biggest contributors to the WA and national economies. So this is specifically BHP Billiton and Rio Tinto. This is a 1,900 per cent increase to these two companies at a time the sector is struggling with low iron ore prices. It is simply utter madness. There are few ideas that are more anti-West Australian, anti-Australian and anticompetitive. So let us look at the impact of this tax if it were ever implemented. It would equate to an additional $5 a tonne on top of the 7.5 per cent royalty that BHP and Rio Tinto now pay. This would mean that both companies would pay nearly $10 a tonne in royalties and tax. The implication of that for our economy is frightening. This would bring the cost of production for both of them above our major international competitors exactly at the wrong time and when our nation and our economy can least afford it. Not only are billions of dollars in taxation revenue at risk but thousands of Australian jobs. The kicker of it all for me as a Western Australian senator is that, even if this were implemented and the tax were raised from both of these companies, over 70 per cent of that money would go to the Commonwealth coffers—it would not be staying in the Western Australian coffers. It is outrageously ridiculous.

So let us have a look briefly at these two companies and their contribution to our country and our state. BHP and Rio Tinto are actually the two largest taxpayers in Australia today. Between 2005 and 2013 they paid $54.5 billion and $38.9 billion respectively to the Australian Taxation Office—more than any of the four big banks. In the 2014-15 financial year alone, 33 companies in the Western Australian resources sector themselves payed over 33,000 employees $5.2 billion in wages and contributed 11.6 per cent of the entire gross state product for Western Australia, supporting well over 7,000 local second tier companies through the supply chain. But it does not stop there. Their contribution to the Australian economy was $50 billion directly in that year alone. This includes over $5 billion in direct wages and salaries to workers in 8,000 companies and direct community grants to over 1,000 organisations, and those 33 Western Australian companies alone also paid over $10 billion in Commonwealth taxes.

The WA Chamber of Minerals and Energy reports also that 90 per cent of the $1.1 billion Barnett government Royalties for Regions program was paid for by the iron ore sector. These funds have supported more than 3,600 projects in regional Western Australian communities. Recently, the resources sector made a $350 million voluntary contribution to the new Perth children's hospital.

Sir Charles Court said in 1971:

We seek to do more than just develop a number of iron ore deposits. Our objective is to develop a great region with all the complex infrastructure and associated developments that are necessary to have a permanent, contented, well housed, well‐educated and well cared for community.

It is time we stopped demonising our resources sector and had a sensible national discussion about how to support it. Business is not a stakeholder in the economy—it is the economy. (Time expired)