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Sectoral policy for the coal industry: new investment growth and jobs

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DPIE91/309J 2 December 1991



The Minister for Primary Industries and Energy, Simon Crean, the Treasurer, John Kerin, the Minister for Industry, Technology and Commerce, Senator Button, and the Minister for Industrial Relations, Peter Cook, today announced a package of major reform measures for the coal sector.

"Coal is Australia's largest export industry. A healthy coal industry is a keystone for our industrial competitiveness, export income and expanding job opportunities. The measures we are announcing today are aimed at keeping it that way," Mr Crean said.

The Ministers said that following intensive negotiations over the past three months the Government was pleased to announce that the Coal Export Duty was to be abolished.

"The Coal Export Duty was an inequitable and potentially distortionary tax which had been the target of reform for successive governments since 1975," Mr Kerin said.

It has been levied at the rate of $3.50 per tonne on coal exported from certain mines in Queensland. Since 1984 the tax has applied only to six open cut mines operated by BHP Utah Coal Ltd. The Duty currently raises about $48m per year.

As a result of the negotiations leading to its removal BHP Utah has committed to:


•$122.5m in new capacity expansion of its coal mining operations involving at least 120 new jobs; •$65m research and development expenditure over the coming three years;

•$50m expenditure on accelerated mine site rehabilitation over three years if possible, and certainly within five years; •an $8m feasibility study of further mine development opportunities which if found feasible, would lead to investment of about $200m and creation of some 200 new jobs;

•a $3m feasibility study for coal seam gas extraction and utilisation with potential for a $30m operation phase, if successful.

Mr Crean said that he saw these arrangements as typifying the mutual gains that could be made when governments worked closely with industry on sectoral impediments.

"This is another good example of the Government's approach to the facilitation of major projects announced on 5 November," he said.

The Ministers said they anticipated the creation of some 120 jobs in the short term with good prospects for substantial further job creation as BHP's program of commitments take effect.

Mr Crean said that there was a sharp contrast between the immediate gains in jobs, R&D, and environmental protection achieved through sensible negotiations to remove an identified impediment, and the unilateral scrapping of the duty as proposed by the Opposition in its recent GST package.

The Ministers noted the ongoing efforts and co-operation of the Queensland Minister for Resource Industries, Mr Ken Vaughan, regarding the issues of the Coal Export Duty, R&D and mine-site rehabilitation.

Mr Kerin said the Commonwealth would be seeking to establish a suitable process for further consultation with the Queensland Government on the issue of rail freight rates for the coal industry.

The Ministers also announced today a major package of institutional reform in the coal industry to promote growth and jobs.

Key elements of the reform package are: •reform of the Joint Coal Board; •radical overhaul of coal industry research and development arrangements;

•improved coal industry industrial relations arrangements; •introduction of a new national scheme for coal miners' long service leave; •a consultative process to address the specific needs of the NSW Coal Miners' superannuation scheme;

•a new emphasis on coal in the Uruguay Round of GATT negotiations.

"These initiatives are micro-economic reform in action," Mr Crean said.

"This Government is committed to removing unnecessary impediments to growth and change in industry and to facilitating - in co-operation with industry - the major investments that will be necessary to take advantage of coal market growth to the end of the century." "

Mr Kerin noted that some of the reforms tackled institutions and arrangements dating from the immediate post-war years. The reforms would ensure that the Australian coal industry was able to grow within a framework of modern and relevant institutions.

"For example, today’s reforms to the NSW Joint Coal Board are the most far reaching in the 44-year history of the Board," Mr Kerin said.

Mr Crean said that he took particular satisfaction from the new, clearer focus of the Board on the health and welfare of mine workers and their families. "The Board will retain its responsibility in the all important area of dust monitoring in coal mines," he said.

The Board's powers in areas such as the opening and closing of coal mines, which were appropriate in the post-war period, are to be removed.

Mr Crean said that the changes to the role of the Joint Coal Board flowed from an independent inquiry conducted by Mr Bryan Kelman. The Government had accepted Mr Kelman's advice that the Board's role should be focussed on activities where it had demonstrated a successful track record. The Government expects that the Board will be fully self­ funding by 1992-93.

"There would therefore be no nett savings from the Coalition proposal to scrap the Joint Coal Board while the health and welfare standards of mine workers and their families would be jeopardised," he said.

The Ministers also welcomed the establishment of new R&D arrangements for the coal industry.

"The industry will be taking responsibility for its own research efforts," Mr Crean said.

"We have been able to gain the industry's commitment to maintenance of at least the present level of R&D funding which has been derived from the statutory coal excise.

"Transferring responsibility from a Government imposed scheme to an industry funded and managed scheme is a further example of micro­ economic reform which actually works," he said.

In relation to the new national scheme for coal miners' long service leave, Senator Cook announced that the present excise funding arrangement would be terminated and a new industry-managed fully funded scheme operational by 1 January, 1993.

"The scheme would be based on a payroll levy and managed under new Commonwealth legislation. The scheme would be wholly self financing," he said.

Initial details of the Government's decisions are in the attachment. More information will be provided in a booklet on the Government's sectoral policies on coal to be released shortly.

Information:Catherine Payne, Mr Crean's office (06) 277 7520. Ken Matthews, DPIE (06) 272 4630.


Time: 4.45pm. Where: Ministerial entrance, Parliament House.



The initiatives announced by Mr Crean, Senator Cook and Mr Kerin aim at

. updating coal policies to promote a better institutional

framework and remove impediments to efficiency.

Measures to be taken include re-focussing the role and functions of the Joint Coal Board and removal of the Coal Export Duty from 1 July 1992.

The Joint Coal Board has played a valuable role in the NSW coal

industry since its establishment in 1947. The industry has changed in a major way since then and the JOB will be given the charter to focus its operations in areas where it has proved its worth. The JCB will continue to administer the coalminers' compensation scheme and provide occupational health and

rehabilitation services including dust monitoring in underground coal mines, and noise monitoring. Some other

powers in areas such as mine opening and closing, which were appropriate to the post war period when the original legislation was enacted, are to be removed. All these measures will be undertaken in close consultation with the NSW Government, which has Joint legislative power over the JCB.

Coal Export Duty is to be removed from 1 July 1992, Since its introduction in 1975, the duty has been refined so that it now applies only to six open cut mines operated by BHP-Utah in Queensland. Removal of the duty will end a tax which has been criticised as discriminatory and will be complemented by

initiatives to be taken by the company on research and development and new investment in productive capacity. This initiative by the Commonwealth should be a strong inducement

for the Queensland Government to speed up its own r e v ie w of coal rail freights and royalties.

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Strengthening the base for future development of the Industry.

The revised Research & Development, arrangements follow upon

review of primary industry and energy R&D arrangements in 1990. Implementation of an industry managed program of research is significant in that it will provide sharper focus to coal research efforts, possibly in conjunction with the new Energy Research and Development Corporation in areas o f common interest, λ further initiative is the renewal o f A u s tr a lia n

membership of International Energy Agency Coal Research, a

government supported agency for cooperative research into coal

Improving and updating the operation of schemes providing for coalminers’ welfare.

These include reform by the Minister for Industrial Relations of the industry long service leave funding arrangements to

provide for a fairer levy collection system. The previous system weighed unfairly on open-cut coal producers. „

Also, the Minister for Primary Industries and Energy,will work with concerned Ministers to take the measures necessary at Federal level to complement the State measures necessary to

make needed reforms to the NSW coalminers * superannuation


Maintaining the momentum of workplace reform in the coal


Major advances have already been made in this area with award restructuring and recent agreement on establishment of productivity wage bargaining in the industry. Senator Cook

noted that a major challenge would be implementation of new

industry work models which will provide an industry career structure supported by appropriate training and further education arrangements. The recent appointment of the Chairperson of the Queensland Coal Boards of Reference as an

additional Commissioner of the Australian Industrial Relations Commission strengthens the relationship between the coal industry and the industrial relations mainstream.


Keeping up the pressure for * liberalisation of the international coal trade.

A u s t r a l i a will give a prominent place to coal alongside

agriculture in the finalisation of the current GATT round of trade negotiations. The coal promotion fund will be utilised to ensure key policy makers are aware of the clean use of coal in areas euch as power generation and to support bilateral trade initiatives.