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Tuesday, 8 September 2009
Page: 5897

Senator MINCHIN (1:28 PM) —On behalf of the coalition, can I indicate our support for the Uranium Royalty (Northern Territory) Bill 2008. This bill will establish a uniform royalty regime for any future uranium project in the Northern Territory. The royalty regime of 18 per cent of net receipts will bring uranium into line with the mining of other minerals in the Northern Territory. On behalf of the coalition, I thank the secretariat of the Senate Economics Legislation Committee for their work in conducting the inquiry into this bill. I thank Senator Eggleston, as the deputy chair of the committee, for his remarks as provided in his additional comments to the report.

The changes proposed here have come about from a process that was commenced by the former coalition government, under the then Minister for Industry, Tourism and Resources, Ian Macfarlane. Australia is, as many know, the world’s second biggest producer of uranium. Our industry generated $658 million in export revenue in 2006-07 and provided over 800 jobs, mainly in remote parts of Australia. The Australian Uranium Association estimates that production of Australian uranium could increase from around the current level of 10,000 tonnes per year to 30,000 to 40,000 tonnes per year in 2030. The coalition in government recognised the economic benefits from uranium mining and understood that our uranium exports contribute to a reduction in global greenhouse gas emissions through use in nuclear power generation.

Worldwide adoption of clean energy generation and the role of nuclear power as a cleaner alternative, combined with Australia’s low-cost reserves, means there is enormous potential for growth of our uranium mining industry—a fact that the coalition consistently recognised and supported but that, regrettably, was always opposed by the Labor Party, who held onto their antiquated three-mines policy way beyond its use-by date.

In late 2005, the then coalition resources minister, Ian Macfarlane, announced the development of a Uranium Industry Framework in recognition of Australia’s low-cost uranium resources. The framework was a project to identify opportunities for and impediments to the further development of uranium mining in Australia, with the aim of reducing impediments to exploration, mining and the export of Australian uranium. The framework was to also look at ensuring a consistent and efficient regulatory regime and promote community understanding of the economic benefits of a safe, secure and responsible uranium mining industry in Australia. In 2006, the framework’s steering committee presented a report containing 20 recommendations to support and develop uranium mining in Australia. The steering committee’s report stated:

The application of royalty arrangements for uranium development in the Northern Territory on a project-by-project basis is a major source of uncertainty and therefore a deterrent to further investment in the sector. New entrants to the industry are unsure about their potential royalty liabilities, and current arrangements mean that multi-product uranium mines would be subject to the Northern Territory Government’s profit-based royalty and the royalty regime imposed by the Australian Government. This leads to administrative complexity and could result in tax-driven investment decisions. These problems could be avoided by the consistent application of a more sustainable uranium royalty regime in the Northern Territory which balances the needs of Indigenous communities, the mining sector and government.

Recommendation 13 of the report stated:

The Australian Government should establish, in consultation with stakeholders, a royalty framework for the uranium industry in the Northern Territory.

In January 2007, Ian Macfarlane announced the formation of an implementation group to work through the framework recommendations. That of course was interrupted by the 2007 election. But I am pleased that this bill gives effect to the NT royalty recommendation of that framework.

As I said, the coalition welcome this bill and the implementation of the recommendations of the framework because we have a consistent and longstanding commitment to responsible, environmentally sensitive and effectively regulated uranium mining in this country. There are of course some areas in Australia that should not be subject to uranium mining. One was advertised yesterday on the front page of the Australian: the Arkaroola Wilderness Sanctuary in the state of South Australia. It is one such area which many could not imagine could ever be subject to uranium mining. But there are many other areas in Australia where uranium mining can occur safely and with minimal environmental consequences.

This bill implements a recommendation of the Uranium Industry Framework and signifies that on some level Labor may be seeing sense on uranium and its potential benefits to the economy in Australia. In its submission and evidence to the Senate inquiry, the Australian Uranium Association highlighted a 2008 report by Deloitte Insight Economics that was prepared for the association. This report found that there would be significant economic benefits to the Northern Territory through to 2030 with an expansion of uranium mining, including $405 million more in investment and a $2.3 billion higher gross Territory product. The association advised the Senate committee that the Northern Territory has about 13 per cent of Australia’s uranium.

Unlike Labor, which as I said only abandoned its three-mines policy prior to the last election, and has a Queensland Premier and cabinet ministers still opposed to any expansion of uranium mining in this country, the coalition believe that investment in uranium mining should be encouraged and appropriate regulation put in place to ensure it is safe, efficient and of course environmentally sensitive. The coalition have always had a consistent policy in support of uranium mining—as long as it is conducted according to a very strict regulatory regime, one that was originally put in place in this country by the Fraser government back in the late 1970s. That is why we are pleased that this bill will give effect to a recommendation of the Uranium Industry Framework.

Currently, royalty regimes in relation to uranium in the Northern Territory—as I mentioned in quoting the steering committee report—are negotiated on a project-by-project basis. The Ranger mine has a 5.5 per cent ad valorem royalty. This bill will apply the existing profits based mineral royalty regime under the Mineral Royalty Act 1982 to new projects on Aboriginal land and non-Aboriginal land, meaning that all minerals in the Northern Territory will be under the same regime. I note that the committee gave significant consideration to the issue of an ad valorem versus a profit based royalty regime, particularly in terms of the moneys that would flow to Indigenous communities for mines on Indigenous land under each royalty scheme. Officers from the Department of Resources, Energy and Tourism stated in evidence to the Senate economics committee:

… we consider that a profits based royalty charge is more economically efficient in that it does not of itself act to distort investment decisions …

They also said:

A profits based regime can also result in greater returns to the community, particularly during periods of higher profits.

I note that coalition senators on the committee concluded that there would be no real difference in the royalties paid to Indigenous communities with a profit based system and therefore indicated their support for this proposal after consideration of all evidence presented, but particularly the evidence from the Northern Land Council on this issue. The department also highlighted the administrative improvements that would result from the bill and the reduced complexity for all involved in the mining sector in the Northern Territory, particularly, as highlighted in the committee report, in relation to polymetallic mines.

As a South Australian senator and a former resources minister myself I am encouraged by this bill and the fact that the Labor Party has brought this forward, and I confirm coalition support for its provisions.