The Productivity Commission’s study of resources sector regulation is a positive first step to advance the COAG strategic reform agenda for resources, but it needs to result in fewer and better regulations and better performance by regulators and governments.
Federal and state resources ministers agreed to six actions in December 2018, the first of which was to ‘establish a framework for the regular benchmarking of policies and regulation which will assess current settings and highlight best-practice across Australia and internationally.’ If the Productivity Commission is to achieve this objective, then its study must assess the cumulative effect of federal and state policies, regulations and regulatory practices on the international competitiveness of Australian mining.
Australia is underperforming competitor nations in critical areas. Business taxation is high. Federal and state environmental regulations are inefficient, prescriptive and uncoordinated. Statutory timeframes for approvals are often not met. Approved projects are subject to unmeritorious legal challenges. Energy costs are unduly high. Restrictive workplace relations rules hinder productivity.
A comparative analysis of regulatory processes within Australia, as well as benchmarking Australia against other mining regions, is necessary to guide a new wave of reform across jurisdictions.
The stakes for streamlining resources regulation are high. Australia’s resources sector generates more export revenue than all other industries combined (i.e. 58 per cent), pays the highest average earnings ($140,000) and directly employs approximately 240,000 highly skilled workers, predominantly in remote and regional Australia. The minerals industry paid $18.6 billion in company tax in 2017-18 alone, accounting for 22 per cent of all company tax paid that year.
Modern mining environmental practice is highly regulated, better implemented and more accountable than ever before. The minerals industry upholds high standards of environmental protection based on the use of sound science and robust risk-based approaches. The industry pursues continuous improvement in the areas of land use and mine rehabilitation, water use and biodiversity conservation. Companies may also offset significant residual environmental impacts and undertake voluntary conservation initiatives that go beyond regulatory compliance.
Government policy and regulatory settings vary significantly across Australian states – reflected in the Fraser Institute’s annual Survey of Mining Companies that rates mining regions on their public policies and mineral potential to assess their overall investment attractiveness. While Western Australia, South Australia and Queensland usually rate strongly for perceptions of public policy when compared to other mining jurisdictions around the world, perceptions of other states have deteriorated in recent years.
For example, only 14 per cent of respondents stated that environmental regulations in New South Wales either encouraged investment or were not a deterrent to investment. This ranks New South Wales 76th out of 83 rated jurisdictions – only one position higher than Venezuela (77th) and lower than Bolivia (66th). In comparison, five Canadian provinces are ranked inside the top 20.
The MCA urges federal and state governments to pursue important and overdue opportunities for regulatory reform, notably by streamlining environmental regulation while maintaining high standards of conservation, modernising workplace relations rules so managers can innovate and redesign jobs, and ensuring energy markets deliver affordable and reliable energy with lower emissions.
Australia’s complex and duplicative processes for approving major projects are generating unnecessary delays and uncertainty. Companies, workers and regional communities have been frustrated by long delays for projects such as Adani Carmichael (Queensland, eight years), Wallarah 2 (NSW, 16 years) and Cameco Yeelirrie (WA, five years).
The minerals industry appreciates that each project should be judged on its merits and should satisfy the rigorous requirements of federal and state jurisdictions. But what is highly concerning – and discouraging to international investors – is the excessive number of project approval conditions, their highly prescriptive nature, the inconsistency and overlap between jurisdictions, and the fundamental uncertainty of process. This damaging approach results in significant compliance costs and delays in wealth creation for little or no environmental gain.
