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Labor's plan for a stronger resources sector.



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Labor’s Plan for a Stronger Resources Sector

Senator Chris Evans

Federal Labor Leader in the Senate Shadow Minister for National Development, Resources and Energy

ELECTION 2007

Overview

The resources sector is one of Australia's great economic assets.

The sector contributes enormously to Australia's economic growth, employment, regional development and national prosperity.

The mining industry alone grew by 8.5 per cent in 2006-07 1, faster than any other sector in the Australian economy.

Resources are by far the largest contributor to our export revenue, earning $106 billion, or 49 per cent of the total, in 2006-07. 2

The resources sector is also a major source of employment, with 136,500 Australians working directly in mining, and tens of thousands more employed in downstream manufacturing, processing and refining industries. 3

Many of these jobs are in rural and regional Australia where the resources sector is the lifeblood of hundreds of communities.

A Rudd Labor Government will work with industry to help realise the enormous potential for future economic and employment growth, and the further development, of Australia's resources sector.

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

New Leadership 2 www.kevin07.com.au

Future challenges for the resources sector

While the resources sector has undergone an unprecedented period of economic expansion, it faces significant capacity constraints that have the potential to limit future growth, including:

� A shortage of skilled labour.

� Poor or unreliable physical infrastructure, such as telecommunications, roads, ports,

railways and water supply.

� Deteriorating or non-existent social infrastructure such as schools, hospitals,

telecommunications and child care in rural and remote mining communities.

� A lack of certainty about future gas and liquid fuel supplies.

� A slowdown in exploration.

� Regulatory impediments.

� The uncertain impact of climate change, particularly on our valuable fossil fuel industries.

Labor believes that securing our long term economic prosperity is one of the Australian Government's most important responsibilities.

By failing to provide the leadership and direction needed to confront and overcome constraints to continued growth in the resources sector, the Howard Government has failed to lock in the benefits of the boom for future generations.

A Rudd Labor Government will:

� Work with industry to continue the expansion of the resources sector.

� Lead a new cross jurisdictional reform agenda through the Council of Australian

Governments to overcome constraints to growth.

� Ensure that the resources sector can fully capitalise on the opportunities available in the

current, favourable international conditions so that the economic benefits can be shared among all Australians, now and into the future.

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

New Leadership 3 www.kevin07.com.au

Labor’s Plan for a Stronger Resources Sector

Summary

A Rudd Labor Government will:

� Work with industry and State and Territory Governments to build a coordinated national

agenda for securing, sustainable long term growth in the resources sector.

� Implement practical initiatives to overcome capacity constraints, encourage new

investment and support the expansion of existing operations.

� Ensure that future generations of Australians share in the benefits of the current strong

international demand for our natural resources.

Addressing the shortage of skilled labour

The critical shortage of skilled labour is a major capacity constraint on the resources sector - increasing costs, delaying investment and holding back development. A bigger and more highly skilled workforce will not only help the sector to continue to grow, it will also provide Australian workers with greater choices and economic opportunities for their careers.

By investing in greater skills development now, we can increase workforce participation and productivity in the future - leading to higher output, increased living standards and sustained economic prosperity.

A Rudd Labor Government will help to develop a more highly skilled workforce through an Education Revolution - ensuring that the resources sector can continue to grow. This will include a comprehensive Skilling Australia for the Future plan, to increase and deepen the skills capacity of the Australian workforce and ensure demand for skills and skills training are matched.

Skilling Australia for the Future will close the skills gap in the Australian economy in three key ways:

� Funding an extra 450,000 skilled training places over the next four years - commencing in

April 2008 - 200,000 more than the Howard Government. Around 15 per cent of the additional places will be for apprenticeships, including in the traditional trades.

� Ensuring that 90 per cent of these places lead to a higher qualification than the Howard

Government’s proposed new training places.

� Placing industry demand at the heart of the skills training system - so that training

providers equip Australians with the skills that industry needs.4

Building better infrastructure

Infrastructure constraints and export bottlenecks are a serious barrier to the further development of the resources sector. The lack of adequate road, rail, port and other facilities means that the sector is unable to access export markets in the most efficient and cost effective ways possible.

A Rudd Labor Government will:

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

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� Work with industry, the States and Territories, and local government to address critical

infrastructure deficiencies.

� Create a $100-million-a-year Infrastructure Fund to give Western Australia its fair share by

reinvesting Petroleum Resource Rent Tax revenue from the Gorgon gas project.

� Focus transport policy and funding on Australia’s national economic priorities, particularly

productivity gains in our export supply chains and integrating land transport with ports.

� Invest in crucial transport infrastructure to help the resources sector access export

markets more readily, including:

— $350 million for the Perth Urban Transport and Freight Corridor to improve supply chains and connections to the Fremantle Port.

— $160 million to upgrade roads vital to the Pilbara mining export hub of Port Hedland.

— $95 million for the Townsville Port Access Road.

— $80 million to upgrade roads vital to the Pilbara mining, oil and gas industries, linking the town of Karratha with the rapidly growing industrial and port areas of Dampier and the Burrup Peninsula.

— $60 million to upgrade road and rail networks in Esperance to improve access to the port for export industries.

— $52 million towards better mining and community access roads in the Northern Territory.

� Appoint a Minister for Infrastructure to be responsible for developing a nationally

coordinated infrastructure strategy.

� Establish Infrastructure Australia, a new agency with responsibility for coordinating,

planning, regulating and developing infrastructure.

� Conduct a national audit of our infrastructure assets to identify gaps and devise a National

Infrastructure Priority List by the end of 2008.

Building strong and sustainable mining communities

Many rural and remote mining communities lack the community and social infrastructure that most Australians take for granted such as schools, hospitals, housing, child care, emergency services, law and justice, recreation facilities and libraries. The lack of these basic services is as much of a barrier to the future development of the resources sector as the lack of modern physical infrastructure such as roads, telecommunications, railways and ports.

The development of strong and stable and effectively functioning communities that are sustainable beyond the life of a mine is a key challenge now and into the future.

A Rudd Labor Government will:

� Support the further development of strong and sustainable regional mining communities.

� Create a $100-million-a-year Infrastructure Fund to give Western Australia its fair share by

reinvesting Petroleum Resource Rent Tax revenue from the Gorgon gas project.

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

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� Foster the development of Northern Australia to create economic, social and

environmental benefits.

� Work with industry and other levels of government to give greater priority to the provision

of social infrastructure in mining communities.

� Work with industry and other levels of government to ensure that mining communities

have better access to essential services like hospitals, housing, schools, child care, law and justice, recreational facilities and emergency services.

� Build the capacity of local government to collaborate with industry and facilitate greater

community engagement in the development of mining communities.

Ensuring the future of the coal industry

The coal industry has always been a key driver of Australia's economic prosperity. The industry employs over 30,000 people directly and a further 100,000 indirectly - with many of these jobs in regional areas including the Hunter Valley in New South Wales, Central Queensland, Victoria’s Latrobe Valley and Collie in Western Australia.

Coal provides jobs, powers industry and homes, and is one of our biggest export industries, earning $22 billion in 2006-07.5

Australia's national interests demand that our response to climate change includes putting the coal industry on an economically and environmentally sustainable footing.

A Rudd Labor Government will:

� Protect coal industry jobs by helping the sector to move forward on an economically and

environmentally sustainable footing into the future.

� Ensure the future of coal through a $500 million National Clean Coal Fund to accelerate

the development and deployment of clean coal technology, with the ultimate objective of having clean coal generated electricity in the national electricity grid by 2020. This Fund will invest:

— $50 million in a National Carbon Mapping and Infrastructure Plan, including $20 million to map and test carbon storage sites in Queensland, and $5 million to undertake this work in Western Australia.

— $75 million in a national research program, including $25 million to support CSIRO research into the development of clean coal technologies.

— $50 million in a pilot coal gasification plant in Queensland.

— $50 million to demonstrate carbon capture and storage in New South Wales.

— $50 million in a large scale post combustion capture plant in the Latrobe Valley in Victoria.

Ensuring domestic gas supplies

Australia’s enormous gas reserves are a strategic asset, offering huge opportunities in an environment of growing demand for energy, both internationally and domestically.

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

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Exports of liquefied natural gas (LNG) have increased sharply over the last three years, with earnings increasing by 47 per cent in 2004-05, 38 per cent in 2005-06 and 18 per cent in 2006-07.

While increased LNG exports are welcome, the industry needs to further develop to open up greater supply for domestic use. This may require encouraging smaller players to develop finds suitable for meeting growing domestic demand in addition to the larger LNG export oriented fields.

Securing adequate supplies of natural gas will be important over the next decade. With its competitive emissions profile, natural gas could help to meet our growing energy needs as Australia makes the transition to a more carbon constrained economy.

A Rudd Labor Government will:

� Encourage the development of the gas industry to open up additional supply for export

and domestic use.

� Support the increased use of gas as a transitional fuel to meet our energy needs as we

move to a more carbon constrained economy.

� Encourage a greater number of domestic gas producers to supply the market including

those sourcing their gas from coal seams.

� Examine options for linking the vast gas reserves in north west Australia with the eastern

States.

� Include projections of future gas supply and demand in a regular National Energy Security

Assessment to better inform industry and the energy sector about future gas use.

Ensuring a secure supply of liquid fuels

Australia is now facing a profound shift in the source of our liquid fuels. Unless significant new oil deposits are found, Australian domestic oil production could represent as little as 20 per cent of our total oil consumption by 2015. This would be a sharp reversal of the situation in the 1990s when domestic production met 80 per cent of our oil needs.

Without new domestic oil discoveries we could face a trade deficit in oil and condensate of $27 billion by 2015 - compared to just under $4 billion in 2005. 6 This would have serious consequences for our economy, leaving Australia vulnerable to supply disruptions and price shocks.

Australia's energy security demands that government investigate a diversity of sources for our liquid fuels and alternative technologies that are less reliant on liquid fuels, like electric powered cars.

A Rudd Labor Government will:

� Use the $500 million National Clean Coal Fund to support projects that deliver ultra clean

synthetic fuels from coal with minimum carbon emissions.

� Encourage the development of gas-to-liquids projects that can convert some of our vast

gas reserves into liquid fuels.

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

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� Support the research and development of new biofuel technologies, including the

production of ethanol from cellulose. This will include a new $15 million grant program to help develop next generation ethanol technology. These grants, worth of up to $5 million each, will help Australian companies to commercialise new technology using sugar cane waste and other woody material as alternative fuel sources.

� Establish a $500 million Green Car Innovation Fund to generate $2 billion in investment in

the automotive industry and tackle climate change by manufacturing low emission vehicles in Australia.

� Include projections of future liquid fuel supply and demand in a regular National Energy

Security Assessment to better inform industry about the probable use of liquid fuels in the future.

Increasing resources exploration

Exploration is fundamental to continued growth in the resources sector. Over the last decade, however, resources exploration has stalled, and the value of exploration was lower in 2005 than it was in 1997. Even after an increase in 2005-06, the value of exploration remains lower in real terms than in 1996-97.

Australia's share of global exploration expenditure has fallen and we are now being outpaced by our competitors in Latin America, Canada and Africa.

A Rudd Labor Government will:

� Encourage intensified minerals, oil and gas exploration effort and the development of new

exploration science and technology.

� Promote investment in exploration by allowing the selective use of flow through share

schemes for smaller operators in the gas, oil and mineral exploration industries.

� Allocate $50 million to assist with the cost of geothermal drilling, of which individual

companies can access up to $10 million in support through the scheme if they match the allocation of funds.

Uranium exports

Australia's uranium industry makes a substantial contribution to our economy and offers significant potential.

In 2006-07 Australia exported over 9,500 tonnes of uranium valued at $660 million.7 It is projected that uranium mine production will increase to 10,800 tonnes this year, and that export earnings from uranium will grow by 22 per cent to $800 million. 8

Australia has the world's largest uranium reserves, with Geoscience Australia estimating more than 700,000 tonnes of Economic Demonstrated Resources - 36 per cent of world resources in this category. 9

Over the period from 2004 to 2025 world reactor related uranium requirements are projected to grow by between 22 and 50 per cent. 10

Australia's uranium resources offer significant economic and employment opportunities for the nation.

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

New Leadership 8 www.kevin07.com.au

A Rudd Labor Government will only allow the mining and export of uranium under the most stringent conditions. Labor will:

� Allow uranium exports from mines that have been approved by the relevant State or

Territory Government.

� Strengthen occupational health and safety requirements for employees working at

uranium mines in Australia.

� Ensure stringent environmental controls on uranium mines, based on world’s best practice

standards.

� Strengthen export control regimes, and the rights and authority of the International Atomic

Energy Agency, and tighten controls on the export of nuclear material and technology.

� Only allow export of Australian uranium to countries which observe the Treaty on the Non-

Proliferation of Nuclear Weapons, and which are committed to non-proliferation and nuclear safeguards.

� Reinvigorate diplomatic efforts towards nuclear disarmament and the responsible use of

nuclear technology.

� Remain strongly opposed to the development of a nuclear power industry in Australia, as

well as the importation and storage of nuclear waste that is sourced overseas.

Helping other mineral export industries continue to grow

Australia’s export earnings from mineral resources rose to a record $106 billion in 2006-07, a 17 per cent increase on earnings in 2005-06. These earnings reflect higher export prices for almost two thirds of all minerals and energy commodities exported, along with increased export volumes for nearly three quarters of the commodities.

The commodities that recorded some of the largest increases in export earnings last year were nickel (up 145 per cent), zinc (up 69 per cent), gold (up 46 per cent), iron ore (up 21 per cent), aluminium and alumina (both up 18 per cent) and copper (up 16 per cent) 11.

If our export earnings from mineral resource industries are to continue to grow into the future, we need to act now to upgrade critical infrastructure, tackle the skills crisis and help overcome labour shortages in the resources sector.

A Rudd Labor Government will overcome these capacity constraints through measures (outlined above) to:

� Address the shortage of skilled labour.

� Build better infrastructure.

� Build strong and sustainable mining communities.

� Increase resources exploration.

These initiatives will help the minerals industry realise the enormous potential for future economic and employment growth, and ensure that future generations are able to share in the benefits of strong international demand for our natural resources.

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

New Leadership 9 www.kevin07.com.au

Protecting trade exposed emissions intensive industries

Labor recognises that the transition to a more carbon constrained economy has the potential to disadvantage emissions intensive trade exposed industries. There is no global environmental benefit to simply shutting down LNG plants or aluminium smelters in Australia only to have new plants open up in other countries which may have inferior environmental protection standards and higher emission intensities.

A Rudd Labor Government will:

� Ensure that Australia's international competitiveness is not compromised by the

introduction of emissions trading.

� Consult with industry about the potential impact of emissions trading on their operations to

ensure they are not disadvantaged.

� Establish specific mechanisms to ensure that Australian operations of emissions intensive

trade exposed firms are not disadvantaged by emissions trading.

Tackling climate change

The Howard Government's climate change inertia has stifled growth in the resources sector and delayed major investment decisions.

A Rudd Labor Government will give industry certainty and establish an economically responsible emissions trading scheme, with a long term target of cutting emissions by 60 per cent of 2000 levels by 2050.

Given our substantial reserves of coal and gas, Australia's national interests demand that our response to climate change includes putting our fossil fuel industries on an economically and environmentally sustainable footing.

A Rudd Labor Government will:

� Ensure that Australia's international competitiveness is not compromised by Australia's

response to climate change.

� Ensure that Australian operations of emission intensive trade exposed firms are not

disadvantaged by emissions trading.

� Ensure the future of coal through a $500 million National Clean Coal Fund to accelerate

the development and deployment of clean coal technology, with the ultimate objective of having clean coal generated electricity in the national electricity grid by 2020.

Driving regulatory reform to promote development

The Productivity Commission has found that implementing competition and regulatory reforms affecting transport, energy and export related infrastructure and planning could add to national output by two per cent. In recent years, however, the regulatory reform process has stalled, and it remains a significant capacity constraint on the development of the resources sector.

A Rudd Labor Government will:

� Progress reforms through the Council of Australian Governments as a matter of priority.

Election 07 Policy Document Labor’s Plan for a Stronger Resources Sector

New Leadership 10 www.kevin07.com.au

� Remove unnecessary regulatory constraints on the resources sector.

� Adopt a 'one in, one out' principle for all new business regulation, meaning that when new

regulations are proposed, they must be accompanied by proposals to remove existing regulations.

� Task a minister to oversee cuts in regulation and a senior public official to enforce the

restrictions across the public service.

Generating opportunities for Indigenous Australians

The resources sector is a leader in providing innovative employment and training programs for Indigenous Australians.

A Rudd Labor Government will encourage Indigenous Australians to become involved in the resources sector to maximise employment, business, education, training and community development opportunities

Labor also acknowledges that mining operations may have an impact on Indigenous communities and traditional landowners. A Rudd Labor Government will work with these communities and mining operators to identify and minimise any adverse impact, including proper resourcing of communities for Indigenous land use agreement negotiations.

Ensuring safety, flexibility and fairness in the workplace

Occupational health and safety

Occupational health and safety (OHS) is critically important in the resources sector, with many employees working in dangerous conditions. The Federal Government can and should do more to ensure appropriate health and safety standards are applied for Australian workers irrespective of where they work.

The resources sector has identified that a consistent approach to OHS regulation is critical.

Labor has committed to taking a leadership role in developing a national strategy to radically reduce the regulatory burden on business. Part of this process involves working with the States and Territories to harmonise OHS regulations within five years if a Rudd Labor

Government is elected.

Labor’s plan to harmonise OHS regulations and workers compensation schemes will uphold existing safety standards, while streamlining the different State systems and reducing complexity for employers and employees.

Specifically, a Rudd Labor Government plan will seek to:

� Adopt more common laws, with consistent legal definitions for key processes in the

calculation of premium and workers compensation payments.

� Cut red tape by more closely aligning premium processes and procedures.

� Improve service and assistance to help employers manage their claims and help injured

workers return to work.

Industrial relations

A Rudd Labor Government will get the balance right in industrial relations.

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Flexibility is critically important in modern workplaces, especially in the resources sector where many employees have fly in, fly out working arrangements and there are massive capital investments that often need to operate 24 hours a day to be profitable.

A Rudd Labor Government will:

� Ensure fairness for working Australians, whether they are in high skill or low paid jobs.

� Provide flexibility for business to operate efficiently.

� Deliver stability for the national economy.

It is important that in moving to Labor's new industrial relations system there is a smooth transition that provides certainty and stability. That is why a Rudd Labor Government will implement sensible transition arrangements. These arrangements will allow existing Australian Workplace Agreements (AWAs) to continue until their expiry date.

As new AWAs will not be available under a Rudd Labor Government, employers who currently use these agreements will be able to use Individual Transitional Employment Agreements (ITEAs) for a two year transition period until 2010. ITEAs will be able to be offered to employees currently on AWAs or new employees.

From 2010, employers and employees will be able to choose from a range of options including new modern, simple and flexible awards, collective agreements or individual common law agreements.

A Rudd Labor Government will also allow high end flexibility for employees who earn over $100,000 a year. These employees will be entitled to the protection of Labor's ten National Employment Standards, but their terms and conditions will not be covered by awards.

A Rudd Labor Government will also introduce new flexibilities into the award system. Australia’s 4,300 awards will be modernised and simplified, with new flexibility clauses.

Under Labor, awards can allow for all up rates of pay and rostering arrangements that reflect individual industry conditions - like the common practice of fly in, fly out working arrangements in the mining sector.

In addition, under Labor collective agreements will be required to contain new clauses that provide flexibilities relevant to the workplace. These clauses may be used to encourage family friendly work arrangements or provide for performance pay.

Business certainty will also be enhanced because under a Rudd Labor Government business will be protected from unlawful or disruptive union activity by clear, tough rules that ensure protected industrial action is limited to bargaining, is supported by mandatory secret ballots and there will be no strike pay.

Existing right of entry provisions will be retained and secondary boycotts will be regulated by the Trade Practices Act.

A Rudd Labor Government will retain the Australian Building and Construction Commission (ABCC), including all of its powers and its full resources, until 31 January 2010, after which its responsibilities will be transferred to a specialist division of the inspectorate of Fair Work Australia.

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Endnotes

1

Australian Bureau of Statistics (2007), Australian National Accounts: National Income, Expenditure and Product, Catalogue Number 5206.0, June 2007, Canberra, Australia, page 5.

2

Australian Bureau of Agricultural and Resource Economics (2007), Australian Commodities , Volume 14, Number 3, September quarter 2007, Canberra, page 550.

3

Department of Employment and Workplace Relations (2007), Australian Jobs 2007 , Canberra, page 9.

4 See Australian Labor Party (2007), Skilling Australia for the future , 2007 Election Policy Document, for further details.

5 Australian Bureau of Agricultural and Resource Economics (2007), op. cit.

6

Australian Petroleum Production and Exploration Association (2006), Australia's Upstream Oil and Gas Industry: A Platform for Prosperity , APPEA Issues Paper May 2006, Canberra, pages 9-10.

7

Australian Bureau of Agricultural and Resource Economics (2007), op. cit., pages 565 and 575.

8

Ibid., page 466.

9

Geoscience Australia (2006), Australia's Identified Mineral Resources 2006 , Canberra, page 78.

10

OECD Nuclear Energy Agency and International Atomic Energy Agency (2006), Uranium 2005: Resources, Production and Demand , Paris, page 53.

11

Australian Bureau of Agricultural and Resource Economics (2007), Australian Mineral Statistics , June quarter 2007, Canberra, page 1 .