Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Address to the Chamber of Minerals and Energy, Western Australia "The Australian Government and the resources sector: partners for the long haul": Sheraton Hotel, Perth: 9 June 2004.\nThursday, 10 June 2004



Download PDFDownload PDF

The Hon John Howard MP Prime Minister of Australia

Address to the Chamber of Minerals and Energy, Western Australia

“The Australian Government and the resources sector:

Partners for the long haul”

Sheraton Hotel, Perth Thursday, 10 June 2004

** EMBARGO UNTIL DELIVERY **

** CHECK AGAINST DELIVERY **

I always like to come to the West to experience the dynamism and optimism that is such a part of this great state. And I’m particularly pleased to be here at the WA Chamber of Minerals and Energy which represents so many of Australia’s great resource companies.

Politicians should never overlook the companies and the individuals that generate the growth, the jobs, the investment, the exports and the taxes. You and the rest of the 34,000 Australians employed by member companies of the Chamber provide the where-with-all for those of us in government to play some part in making Australia a great place to live, to work and to bring up our children.

Lately I have spent a bit of time reminding Australians that good economic management and higher living standards do not happen by accident. They rely on disciplined, long-term decision-making in the national interest. But they also require a fundamental recognition that private sector growth is essential for a strong economy and a decent society.

One of the silliest lines of my political opponent is his claim that Australia’s economic prosperity of recent years has lacked a social purpose.

Without wealth creation we cannot begin to fund government programmes on things like health, education, welfare support or national security. And anyone who takes economic prosperity for granted has not begun to understand the responsibilities of good government.

To illustrate, in the last eight and a half years we have reduced national debt by $70 billion from the $96 billion inherited from Labor. This has led to interest savings averaging $5.5 billion a year which, in turn, have been available for spending on things like health and education, and for tax relief.

Taking the long view

The Government I lead is unapologetically committed to making Australia’s economic pie bigger. We came to office determined to take a long view and to put in place some critical building blocks for Australia’s future prosperity.

If I had to nominate the Big Three, they are: (1) bringing the budget into surplus and slashing Labor’s debt; (2) freeing up the industrial relations system to unleash greater productivity; and (3) reforming the tax system through the GST and shifting the burden off direct taxation.

But there are still many things we need to get right if Australia is to continue to prosper. Another building block is the Australia-United States Free Trade Agreement and I’ll be saying something shortly about the prospects for the FTA following my visit to the United States.

2

For the first time since Federation, an Australian Government has sat down and developed a comprehensive plan to meet Australia’s long-term land transport needs. The AusLink package announced by the Deputy Prime Minister John Anderson this week funds the critical road, rail and freight connection projects that will underpin Australia’s future economic growth and development.

In a few days time, I will be releasing an Energy White Paper that will set out a long-term policy framework for an efficient, sustainable and reliable energy industry. This will build on the Government’s sensible, balanced approach that promotes both energy resource development and protection of Australia’s unique environment.

Both of these things are examples not only of nation-building, but also of planning Australia’s future for the next ten years and beyond.

Managing our precious water resources is one of the other great challenges we face in Australia - not least here in WA, the driest part of our sometimes heart-breakingly dry continent. Water is one area where state parochialism cannot be allowed to stand in the way of sensible, national strategies to deal with the challenges of salinity, ocean outfalls and river system sustainability.

As a nation, we need to look at fast-tracking innovative solutions to these problems and I intend to elevate discussion on water at the Council of Australian Governments meeting later this month.

I know there are some people who believe that wealth creation and environmental protection are inevitably part of a zero-sum game. Not only is this wrong, it gets this relationship completely backwards. Good, sustainable environmental stewardship is made possible by a dynamic, resilient, innovative and competitive economy. And this is something the Australian Government is determined to maintain.

We can never be complacent in a tough global market-place. That’s why, for example, the Government is preserving incentive in the tax system by cutting taxes and ensuring that 80 per cent of taxpayers pay no more than a 30 cents in the dollar on the extra money they earn.

That’s why we are strengthening our education and skills base with a focus on literacy and numeracy in schools, expanded apprenticeships and the modernisation of Australia’s higher education sector. I know that securing and retaining skilled workers is a big issue for WA’s mining sector.

Today I want to announce a new initiative for the mining industry as part of the Government's National Skills Shortages Strategy. This initiative - at a cost of up to half a million dollars over the next two years - will identify current and future skill needs for the mining industry; develop industry-led approaches to promoting careers in mining; and devise and implement strategies to attract both young and mature-aged workers into the industry.

3

We also have a shared objective of boosting student engagement in Maths and Science at all levels of education and I encourage the Chamber to continue working with Brendan Nelson on initiatives we can take together.

The Government’s clear economic direction stands in contrast to a Labor Party in total confusion about the detail of its economic policy. Labor wants you to believe that if it got into government it would spend more, tax less, have a bigger budget surplus and put money away in an intergenerational fund.

If you’re looking for a copy of the Magic Pudding to read to your kids, it’s hard to go past the latest Latham-Crean edition - though I’m working to ensure it finds its way into the remainders section of your local bookshop before long.

Ladies and Gentlemen, the resources sector is central to the long-term challenges we face as a country. The people in this room know a thing or two about long-term thinking given the long lead times needed to earn a return on the huge investments required to develop Australia’s natural resources.

In setting the long-term direction for the country, governments have a responsibility to keep the economy strong, to get the tax and regulatory regimes right, and to invest in the infrastructure that will allow Australia’s resources sector to prosper in the decades ahead.

In last month’s budget, the Government announced additional tax incentives to encourage petroleum exploration in Australia’s remote offshore areas. Australia has some 40 offshore basins that show signs of petroleum potential, but half remain unexplored due to the cost and high-risk nature of exploration in remote frontier areas. These new incentives lower the cost of petroleum exploration in these areas.

The Chamber has worked closely with the Government on our Mineral Exploration Action Agenda. This Action Agenda, along with the Mining Technology Services Action Agenda, shows how the minerals industry can work with governments, research agencies and education bodies to develop practical strategies for a sustainable and internationally competitive mining sector.

A prosperous resources sector relies on governments to invest in critical physical and intellectual infrastructure. That’s why AusLink’s upgrading of Australia’s land transport corridors is such a vital part of getting the big things right for industry.

Last year, we announced additional funding of $61 million for Geoscience Australia, with $36 million in new funding for the oil exploration programme and $25 million for a seismic data acquisition programme for remote areas and for preservation of existing data. Over the next four years, the Government will also spend $50 million on critical infrastructure security and $4 million was earmarked in this year’s budget for protecting Australia’s energy infrastructure from disruption.

4

Energy White Paper

The Energy White Paper I’ll be releasing in Canberra next Tuesday will guide the production and use of energy in Australia well into the 21st century. Securing Australia’s Energy Future will set out a range of policies to deliver the investments over coming decades that will ensure prosperity, security and environmental sustainability in our energy sector.

This sector directly employs more than 120,000 Australians. Australia’s low-cost, reliable supplies of energy support many hundreds of thousands more jobs and underpin our world competitive resource-processing industries.

The Government’s energy strategy will encourage further investment in the development of our energy resources. But it will also recognise that environmental sustainability is not an optional extra. Among other things, I will be outlining measures next week to ensure Australia is a world leader in energy technologies that lower Australia’s greenhouse emissions while maintaining our economic prosperity. In this - as in other policy areas - we are determined to avoid the easy path of simplistic, symbolic promises and to deliver practical results for Australia’s long-term future.

Opportunities for future prosperity

As many of you know, I have just returned from the United States where I engaged in some very direct lobbying on behalf of Australia’s commercial interests - broadly on the Australia-United States Free Trade Agreement, and very specifically on Australia’s interest in expanding LNG exports.

I return greatly encouraged by the chances of the Bush Administration securing congressional approval of the FTA. This in turn will help to integrate our economy with the largest, most productive economy in the world. The FTA will deliver considerable benefits to Western Australia in industries as diverse as wine and seafood, as well as to the resources sector.

Under the FTA, all metals and minerals will be immediately duty free. The agreement also expands opportunities for mining services and technology companies, a number of which are based here in Perth. Perhaps even more important for this audience are the dynamic gains from the agreement in the area of investment. The FTA has helped to put Australia on the map of America’s economic decision-makers as never before. I urge you all to take advantage of this in the months and years ahead.

While I was in the United States I also met with California Governor Arnold Schwarzenegger to promote the proposal for an offshore terminal to permit Australian LNG to be supplied to Southern California. I was accompanied in these representations by Don Argus, the Chairman of BHP Billiton, and senior executives of the company. And I want to recognise today the larger Australian interests in this endeavour that formed part of the Chamber’s delegation to the United States last year.

5

In its own right, California would rank as the world’s fifth biggest economy . It is about three times the size of the Australian economy. It has enormous energy needs and the Southern California project alone could be worth up to $15 billion with associated gas supply from fields off the Western Australian coast.

Australia’s pitch as an efficient, secure and reliable supplier of LNG was received very positively by Governor Schwarzenegger. I also had a very good discussion on energy issues with President Bush.

I am encouraged by the reaction of both leaders to the prospect of an expanded link between Australia’s abundant gas reserves and America’s energy needs.

As the largest natural gas market in the world, the broad outlook for American LNG imports is very encouraging. The US Energy Department projects that by 2020 Americans will consume over 60 per cent more natural gas than today.

Of course, any proposal brings with it the inevitable planning, regulatory and environmental issues to be addressed. But the strategic fit is striking. Our political stability, our technological capacity and our proven record of on-time, on-budget delivery make us a natural partner for helping to satisfy the US’s expanding energy needs. And I want to assure you that the Australian Government will be doing all it can to further reinforce our credentials in the months and years ahead.

The Gorgon, Browse Basin and Sunrise fields have schedules that could readily meet the future LNG needs of the United States and other markets. In coming months, NW Shelf Train 4 will come into production. And I look forward to a 5th Train in the future.

New markets in the United States would complement our large and growing markets in North Asia. And just as Australia’s resources sector helped fuel industrial growth in Japan and South Korea over several decades, we are now developing a strategic resources partnership with China.

China has become our third largest trading partner and our second largest customer for mineral and energy commodities, after Japan.

Australia’s political stability, economic strength and record as a reliable, competitive resources supplier have given China the confidence to commit to long-term commercial relationships with Australian firms.

The Trade and Economic Framework Agreement signed at the time of President Hu Jintao’s visit to Australia last October sets the course for the Australia-China commercial relationship for the next decade and beyond. Under the Framework, we are undertaking a joint study into the feasibility and benefits of a free trade agreement between Australia and China.

6

Encouragingly, Australia’s Trade Minister Mark Vaile and his Chinese counterpart agreed last month to fast-track this study which is now scheduled to be completed in the first half of next year.

Again, I urge the companies represented here today to take advantage of this process and to ensure your commercial interests are at the table. As was shown by Australia’s successful bid to win the $25 billion LNG contract with Guangdong province - the biggest single trade deal in our history - I am personally committed to working hand in glove with industry to advance Australia’s commercial interests in China.

Threats to future prosperity

The 2003 Resource Stocks World Investment Risk Survey ranked Australia number one in the world across a range of risk factors for energy and mineral investments. Among our key strengths are Australia’s political stability, certainty of tenure, relatively low levels of red tape, and flexible labour relations.

These are strengths that underpin Western Australia’s position as a global powerhouse in minerals and energy trade. These are strengths we cannot afford to put at risk with policies that would damage Australia’s credibility as an investment destination and resources supplier.

At a time when the outlook for our resources sector has rarely been brighter, Federal Labor in some cases seems intent on harking back to a Whitlam era model of resources diplomacy - one more akin to a Rex Connor view of the world.

Labor’s so-called ‘use it or lose it’ policy displays a basic lack of understanding of the resources sector and its need for certainty. Its resources spokesman Mr Fitzgibbon has made no secret of the fact that he would strip companies of their retention leases after five years. He wants to second-guess commercial decision-making, failing to appreciate that Australia is part of a fiercely competitive global market-place with increasingly mobile investment dollars.

Regional mining communities in the West would also be hit hard by Labor’s plan to cut the diesel fuel rebate for the mining sector, imposing additional costs of nearly $500 million.

Another threat to Australia’s mining and energy industries comes from Labor’s agenda to re-regulate industrial relations. A Federal Labor Government would abolish Australian Workplace Agreements (AWAs) that currently cover some 50 per cent of employees in the mining industry and more than 80 per cent of hard rock miners.

These AWAs have clearly delivered higher pay and higher productivity in the resources sector and opposition to them stems from nothing more than blind ideology and union muscle.

7

8

Labor’s obsession with symbolism over an effective, balanced approach to resource development and environmental protection is another threat to WA’s future prosperity. We see this in their almost mystical belief that ratifying the Kyoto protocol will bring untold economic and environmental benefits to Australia.

Labor’s policy will cost jobs and do great damage to many of Australia’s competitive resources industries. Australia will meet our Kyoto target. We are well on track to do that without destroying jobs and imposing unnecessary costs on business.

We will continue to work towards a more effective global response to climate change, but that global response must include all the major emitters and until it does it is not in the interests of Australia to ratify the protocol.

Kyoto is far from being a silver bullet when it comes to serious long-term planning for greenhouse emissions constraints. We need to look beyond the symbolism of Kyoto. The Australian Government’s approach is not simply to sign bits of paper, but to invest in technologies that will significantly lower the cost of reducing greenhouse emissions. And we want you - the resource companies, the technology companies, the wealth creators in this room - to be partners with Government in this technology-driven strategy.

Conclusion

Finally, I want to pay tribute to the Chamber for the work you do in local communities in Western Australia. You take your responsibilities to the community very seriously - responsibilities to protect the environment, to promote education, to provide safe and flexible workplaces, to improve the lives of indigenous Australians throughout WA.

My message to you today is simple. Australia must remain at the forefront of global resources development. And that means Western Australia - home of so much of Australia’s natural wealth - must maintain and enhance its status as a minerals and energy powerhouse. We are about working with you to deliver prosperity, security and environmental sustainability to your industries.

As the Chamber’s Bedrock 2004 report recently put it: ‘The window of opportunity for Western Australia to provide the raw materials to underpin the global economy is clearly open.’ The Australian Government is your partner for the long haul - determined to keep this window open and to open it even wider in the years to come.

[ends]