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Monday, 20 August 2012
Page: 9341

Mr O'DOWD (Flynn) (21:27): Our resources sector has been swimming along in what have become increasingly rough waters. We have just experienced what could possibly be the biggest boom in mining that our country has ever seen, but it has become clear that conditions are more difficult for the industries that kept us going through the global financial crisis. They face increasing input costs, falling commodity prices, IR laws, unstable government and a high Australian dollar. All these things are causing concern for our mining and industrial sector. On top of that, we have the carbon tax and the MRRT. The waters are rough enough without these extra burdens on industry, which will impact on every industry and are vital to our prosperity.

That is why the carbon tax is the cork in the snorkel of Australian industry. It will cause our aluminium, manufacturing, processing and every other industry to face the serious prospect of discontinuing any further investment in this country. Despite over $100 million worth of investment and development projects in and around Gladstone, companies are facing tightening margins and are now looking for ways to reduce costs to offset this. We have already seen job losses across the aluminium and mining sectors. This is a sign of the times, showing that the window of investment opportunity has narrowed considerably. The writing has been on the wall now for some time. Australia's debt position has highlighted our continued dependence on the resources sector and this all but dictates our future.

We need the resources sector like we never have before if we are to have any hope of improving our economic viability in the long term. There has been much speculation recently around whether the end is near for the mining boom. Whilst my primary responsibility is to my constituents in the electorate of Flynn, I feel an inherent obligation to voice the concerns of this industry to the rest of our nation over the lack of direction and instability of the current government.

Government ineptitude only compounds several other factors which are combined to make it more difficult for companies to justify future investment in Australia. Very recently, Anglo American signalled that, out of its seven criteria for assessing country investment suitability, Australia failed on five counts. In fact, further to this, they highlighted that the only nation that was considered a higher risk than Australia against the criteria was the Republic of the Congo.

Commodity prices is the next issue—and it is a big issue. The Australian recently reported that $7.7 billion will be wiped off the value of coking coal exports. Prices that we saw for coal post the flood crisis were never going to hold up for that long, and unfortunately what has happened is that the coal prices dropped. Last quarter Rio Tinto took a 12 per cent cut—and that was based on the Canadian prices to the Japanese market. They have identified that there has been a 38 per cent reduction in the value of this commodity over the course of the last 12 months. We are heading out on our own in waters uncharted and we do not know when this coal price will turn around or how long it will be down. We do not know whether it will be down for four or five years or when it will come up again.

Prices right across the commodity market have also fallen. Aluminium is down eight per cent; copper, five per cent; lead, eight per cent; nickel, three per cent; tin, six per cent; zinc, five per cent—and on it goes. Since December last year the price of thermal coal per tonne has dropped steadily. It has dropped from $120-130 per tonne to $80 per tonne—and $80 per tonne is considered to break even. At these prices, new developments are brought into serious jeopardy. Add the carbon tax and the MRRT and you have a situation where companies are struggling to find good reasons to invest in Australia.

Our electricity prices are also a big factor in our manufacturing and mining industries—and I have spoken before on these issues. The price of electricity for households over the five years between 2002 and 2007 remained reasonably stable, but since then, up until 2011, prices have gone up about 40 per cent in real terms. It is reported that prices are projected to rise by another 30 per cent by 2013-14. The EUAA cites the carbon tax as another cause for further price rises. I have been shown evidence that the carbon tax impacts on electricity prices for virtually all small business, such as the Biggenden Meatworks.

I recently received a letter from UnitingCare Australia which highlighted the Queensland Council of Social Services statement that more than 7,000 residential electricity consumers had lost their power—had their power cut off—in the first quarter of 2011-12 because they could not pay their bills. I asked the Prime Minister during question time recently if she could guarantee that the rate of households that have their power cut off will not increase because of the higher electricity prices due to the carbon tax. Of course, the Prime Minister did not adequately address this issue, in my opinion, and blamed the states.

On behalf of my constituents in the electorate of Flynn, I call upon the government to listen to the people. I call on the government to listen to small business. I call on the government to listen to industry and what is left of our manufacturing industry. I call upon the government to listen to our miners. We do not want the carbon tax in Central Queensland. We want our steelworks, our car manufacturing and our oil refineries to continue. The fact is that we now might have to look at importing refined fuels from Singapore or Asia. How vulnerable does it leave us if we have no fuel refined in Australia? This is a crisis in the making. I understand that we are about to lose another 28 per cent of refinery capacity, with Shell and Caltex pulling out of their refineries along the eastern seaboard of Australia.

Industries in resources in Central Queensland are among the fastest growing and well-positioned in the world, but they need help. They cannot do this alone, and we cannot tax them out of existence. Whilst these companies were making good money, the bubble has burst and we look at a sadder picture altogether.

Domestic political turmoil and the Treasurer's unrelenting attack on some of the most successful individuals have undoubtedly added pressure onto what have become more difficult trading conditions for our miners. I would argue that something needs to change and change very quickly. If we are to learn anything from the past five years, it is that the focus needs to shift towards greater balance between what we can gain from the resources sector versus what we can offer in return as a sound and stable environment in which to do business. This will be imperative if we are to realise our vast natural wealth and meet the continual growing needs of a hungry and developing world, on top of rectifying our own financial situation.