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Monday, 7 March 2005
Page: 22

Senator FERRIS (2:06 PM) —My question is to the Minister representing the Minister for Industry, Tourism and Resources, Senator Minchin. Will the minister update the Senate on the outlook for Australia’s resources sector? Can he advise whether there are any threats to the industry on the horizon?

Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Ferris for that timely question. These are in fact very good times for Australia’s resources sector. Very strong demand for our resources in energy from China in particular is fuelling a surge in Australia’s energy and mineral exports. Only last week, ABARE predicted that the total value of Australia’s mineral and energy exports will reach $82.6 billion next financial year, an increase of 22 per cent on this year, and it will be the highest ever recorded in Australia’s history.

Last week we saw further evidence of the strength of the resources sector with the opening of the $1½ billion Comalco alumina refinery in Gladstone. The Gladstone refinery was made possible only as a direct result of the federal government’s $137 million interest-free loan, which we provided as a strategic investment incentive. Under our agreement with Comalco, over $100 million of that contribution was used specifically for the construction of multiuser infrastructure in the Gladstone region. I point out that this is the same investment incentive program that the ALP has pledged to abolish if it is ever elected. I also point out to the Senate that the ALP have promised to abolish Invest Australia, which was instrumental in securing this project for Australia against very stiff international competition—particularly from Malaysia. This Gladstone refinery, with a 1½ million tonne capacity initially, will ensure we maintain our place as the world’s leading supplier of smelter-grade alumina and it will generate an additional $500 million per annum in export income for Australia.

I was also asked by Senator Ferris what problems the resources sector might be facing. I think it is evident to all that pressure on existing infrastructure could limit our potential export volumes. From our point of view as a federal government, we are committed to playing our part. I think that is evidenced through programs like AusLink, where we are investing over $12½ billion in improving Australia’s road and rail infrastructure. It was not until the advent of our government that the Adelaide to Darwin railway was built, despite all the promises from Labor that they never delivered on.

But in Australia, as we all know, it is the state governments that are primarily responsible for infrastructure of this kind. It is the states, under our Federation, that are responsible—and, frankly, they have dropped the ball, despite the fact that they are the major beneficiaries of booming exports in mineral and energy industries. In fact, this financial year Queensland was going to get about $800 million in royalties from resource exports. But the states appear to be unwilling to make the requisite investments in our export infrastructure. I point out to the Senate that Australian general government capital investment has remained at around half a per cent of GDP over the last 40 years—it has been steady—while state and local government capital investment has halved over the last 10 years; it has fallen from three per cent of GDP to an average of 1¾ per cent of GDP since our government came to office. Clearly, the states are happy to accept the windfall from the GST and from royalties that are flowing their way from land tax et cetera, but they are simply not investing sufficiently in ensuring future growth.