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Australia's resources and energy future: speech to the CEDA State of the Nation Conference 2011, Canberra

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The Hon Martin Ferguson AM MP

Minister for Resources and Energy

Minister for Tourism

Hotel Realm, Canberra

8.15 am, 20 June 2011

*Check against delivery

Good morning ladies and gentlemen, thank you for the

invitation to address you on this brisk Canberra morning.

The theme of this year’s conference, “Rethinking

Australia”, is well chosen.

But before discussing where we might be going let us

consider where we've come from.

In 1900 about 22 per cent of Australia's gross domestic

product came from agriculture, now that’s down to around

4 per cent; 10 per cent came from manufacturing which

following a dramatic increase after the second world war

now accounts for around 9 per cent.

Mining generated around 9 per cent of GDP in 1900 and

after declining until around 1960 has since grown steadily

to about 10 per cent today.

Most importantly in 1900 about 55 per cent of Australia's

GDP came from the provision of services. This had grown

to 76 per cent of GDP in 2010.

In short, the Australian economy is constantly evolving.


Australia and world demand

So, where to now?

Resources and energy have always gone hand in hand.

Historically, thermal coal has been the primary fuel source

for the world’s electricity.

But since electricity was first generated from centralised

power stations, energy sources have diversified

considerably - a trend that will only accelerate in coming


Looking more broadly than just the electricity sector, oil is

the dominant fuel for world energy supply today.

Gas is daily increasing its slice of the energy pie.

We have seen the emergence of nuclear power globally

as a source of clean, baseload electricity.

And today renewable energy, from wind, solar, tidal and

geothermal, has the fastest growth rate of any power

source in the world - albeit it from a relatively low base.


Of course these are global trends and energy mixes vary

considerably from country to country, as indeed does

access to electricity itself.

But these global energy trends very much reflect the

evolution of Australia’s resources sector.

Australia has developed strong coal, uranium and

petroleum industries to meet global demand, capitalising

on the abundance and diversity of our natural resources.

We are a major supplier in each of these commodities, as

well as others such as iron ore that are so vital to


The current record level of investment in our mining sector

is a clear demonstration of how world demand drives

Australian resource development.

Improvements in technology and forecast increases in

global demand for LNG for example have spawned a huge

new coal seam gas to LNG industry in Queensland.


Demand for all energy sources, including coal, will

continue to rise.

For instance the IEA predicts that global coal demand will

increase by 17 per cent between 2008 and 2015 under a

scenario taking into account policy commitments by

countries made as part of the Copenhagen Accord.

Australia will benefit from this increased demand.

The strength of our economy and the growth in our

resources sector puts Australia in an enviable position.

So in thinking about Australia’s resources sector there are

three goals we need to keep in mind.

The first is how we maintain Australia’s place as a key


This goes to the issues of competitiveness, productivity

and increasing capacity.

In the context of increasingly footloose global capital it is

critical that we maintain Australia’s attractiveness as an

investment destination.


The role of Government in this is clear.

We are focussed on:

- increasing productivity;

- building capacity by investing in infrastructure

- pursuing necessary economic reform;

- nurturing innovation;

- building skills and the capacity of our workforce;

- while at the same time streamlining regulation, in

essence, ensuring Australia remains a great country

in which to do business.

Through this year’s Budget we are directly addressing

many of these issues.

Let me highlight just one example.

The Government is introducing Enterprise Migration

Agreements for large resource projects.

This shows how flexible and responsive government

policymaking can meet the needs of industry to support

major capital investments.


We will implement this initiative in partnership with industry

and last Friday I met with companies and relevant

Government departments to begin this process.

The second goal is effectively capturing and spreading the

benefits from the development of our resources to lock in

Australia’s economic prosperity for the long term.

Mining investment has skyrocketed as a percentage of

Australia’s GDP - from 1.5 per cent back in 2000 to 4 per

cent of GDP now - and is higher than it has ever been in

Australia’s history.

Capital expenditure in mining is projected to outstrip that

of the non-mining sector for the first time in the next few


We have seen a marked shift in our export market shares

over the last decade that will continue as China and India

continue their growth.

The projected increase out to 2030 of the middle class in

the Asia Pacific is almost five times that of any other



Increased consumerism and outbound travel - the

hallmarks of increased wealth - are evidence of this

occurring now.

While acknowledging the discrepancies between different

sectors in the economy here at home, it is important not to

lose sight of two important facts.

First, as I outlined earlier the mining sector comprises

around 10 per cent of the economy as against the services

sector which accounts for approximately 76 per cent.

And second, that the benefits from mining are already

being felt broadly.

The strength of the mining sector contributes to our low

levels of unemployment.

It is no coincidence that the employment participation rate

in Queensland and Western Australia has been

consistently higher than that of other states.

As well as direct job creation in mining, there are also

more and more opportunities being created in the support


services, everything from cleaners to caterers to

accountants and of course in construction.

Growth in mining employment has been matched by

growth in employment in the services sector.

But the benefits are more widespread than that.

As the Reserve Bank Governor noted last week, almost all

of us are shareholders in the mining industry through our

superannuation schemes.

Good mining profits are providing a return on these


As Glenn Stevens said although “we don’t get this income

to spend directly now…it is genuine income and a genuine

increase in wealth.”

And of course the Government’s resource taxation reforms

capture and spread the benefits of the boom even further.

They will allow us to use revenue from the good times in

mining and petroleum to fund more superannuation

savings, additional infrastructure and help every business


in Australia with a tax cut as well as additional write offs

for small businesses.

This brings me to the third goal for Australia’s resources

sector, sustainability - making the good times last as long

as we can while at the same time preparing for

fundamental changes in the future.

These days being environmentally sound, socially

responsible and commercially viable are inseparable

concepts for resource developments.

Companies and governments alike are increasingly being

held accountable for delivering sustainable mining

outcomes - and so we should.

Gone are the days where we produce and consume raw

commodities without consideration of impacts on the

environment, specifically in terms of greenhouse gas


Which brings me to our changing energy future.

Clean Energy


Clean energy technologies, like carbon capture and

storage, provided we can realise their potential, will

prolong the viability of traditional energy sources in an

increasingly carbon constrained world.

Extending the application of CCS technology will make

countless industrial processes more sustainable and more

competitive in the long run in an environment where there

is a price on carbon.

CCS technology is already being used effectively in the

petroleum sector. It is a proven technology and one that

warrants further development.

That’s why the Government is contributing its support

through the CCS Flagships program and the Global

Carbon Capture and Storage Institute.

A week ago I announced the first $52 million in funding

from the CCS Flagships program for the

Collie South West Hub project in Western Australia.

The Collie project will be a world leading commercial scale

CCS demonstration project.


To give you an idea of its potential, the project could in

one year capture the equivalent emissions from around

454,000 passenger vehicles, or 178,000 households.

But CCS isn’t the only technology the Government is

pursuing, we are providing support to test the full range of

renewable energy technologies.

In terms of solar, where we are seeing a welcome

decrease in costs particularly in solar PV, the Government

on Saturday announced the two successful projects from

round one of our Solar Flagships Program.

Over $770 million in Government funding to help build two

of the largest solar power stations in the world right here in


400 megawatts combined, enough to power over 115,000


With the changing global energy mix it is imperative that

Australia remains at the forefront of new developments.

Projects like these two large scale solar developments are

key to achieving that.


We need to do everything we can to secure a share of the

fast growing clean energy market.

Our abundance of fossil fuel resources is matched by our

abundance of renewable energy resources.

And if we want to derive economic benefit from the

development of renewable resources in the same way that

historically we have done from our fossil fuel commodities

we need to invest where our strengths lie - in researching,

developing and deploying new technologies.

That means making the technological breakthroughs and

nurturing them through the demonstration stage to

commercialisation and ultimately deployment at scale.

The Government is supporting clean energy technology

right through the innovation chain.

We are committed to a market-based approach and

putting in place a policy framework through the expanded

Renewable Energy Target and a price on carbon to drive



These provide opportunities for Australia in terms of jobs

and prosperity.

Toward Future Energy Discovery

Energy security is the end game, for Australia and as it is

for others.

All our work centres on delivering that most important


As I said at the outset, resources and energy go hand in


Continued exploration for mineral resources is

fundamental to maintaining energy security.

So today I am pleased to release a key part of that work.

It is a report by Geoscience Australia (GA) called Toward

Future Energy Discovery.

It details the outcomes and achievements of the

Government’s five-year, $134 million Energy Security

Initiative and the results are impressive.


This work gives new impetus for energy and mineral

exploration activity across the country and provides

important input to Government policy making for

Australia’s energy future.

Results from both the offshore and onshore components

of this work are already paying dividends.

Industry has committed more than $600 million in offshore

exploration in initial three year work programs with

proposed secondary programs worth an additional $1


Onshore, additional exploration expenditure is estimated

to exceed $300 million.

And in a first for any continent, GA commissioned an

Australia-wide airborne geophysical survey.

The competitive edge this gives Australia should not be


No other continent in the world has been so extensively

mapped in such detail.


The fresh insights it provides into Australia’s mineral

potential will help reduce the cost and risk of exploration

for companies and is expected to attract further

investment in years to come.


In rethinking Australia from an energy and resources

perspective we need to focus on enhancing our

competitive advantages.

Now is the right time to be doing that.

When it comes to resources - not just in commodities but

also in the skills to exploit them profitably - we are a global

leader, and we need to hold that position.

In energy more and more opportunities are opening up,

we need to seize them.

Thank you.