Continue reading »]]> Australian Mining Magazine – Aug 2011

Hugh Tobin, Director, North Australia Project, Institute of Public Affairs

Despite the hype surrounding the mining boom. Australia is fast becoming an unattractive destination for new major projects.

Once the first choice for investors and buyers of commodities from iron ore to copper, emerging nations are now looking to places like Brazil and Guinea for raw materials.

Recently the ABS released data that indicated unadjusted mineral exploration expenditure in Australia fell 8.3% in March 2011.

The Association of Mining and Exploration Companies has said that this shows Australia’s mining exploration investment is beginning to move offshore.

In addition to the proposed new taxes targeting the resources sector, the Foreign Investment Review Board and its powers add to the risks and costs associated with major investment in Australia.

A recent Ernst & Young report titled Ungeared for Growth found that Chinese strategic investors shifted their focus last year from Australia and Canada to other investment destinations such as Brazil, Ecuador and parts of Africa.

Mining giant Xstrata recently announced it is closing its smelting operations in north Queensland.

It has warned that mining in Queensland is in danger of becoming globally uncompetitive due to rising labour costs and red rape.

This came just weeks after Anglo American Mining CEO, Cynthia Carroll, warned that the introduction of a carbon tax could place parts of her company’s $4 billion of investment ill mining projects in jeopardy.

The competitive freight advantage chat Australia has enjoyed over its geographically distant competitors in South America and Africa is being steadily eroded.

Three years ago, Australia had a U5$40 a tonne cost advantage over Brazil, now it is only U5$12 a tonne.

The introduction of very large ore carriers, capable of carrying 400,000 tonnes of iron ore from Brazil to China will erode this competitive cost advantage even further.

Australia has substantial future growth opportunities in exporting resources to our neighbours.

But this economic potential will be squandered unless there is a significant policy shift by government. Australia needs policies encouraging sustained investment and growth in mining for future generations.

Special Economic Zones (SEZ) have supported economic growth throughout the world by streamlining regulation and lowering taxes to promote economic growth in a region.

The introduction of an SEZ in Northern Australia has widespread public support.

Galaxy poll results released by the IPA in June indicate that 60% of Australians support low taxes to stimulate economic growth in the north.

Most of Australia’s mining industry is located in areas which suffer skills shortages and scarce infrastructure. There are also high costs of living, rough living conditions and a lack of available housing for those who live there.

A Northern Special Economic Zone, comprising Northern Western Australia, the Northern Territory, and Northern Queensland will allow Australia to make the most of our natural mineral wealth and will reduce some of the problems that exist for people living in these regions.

There are too many competitors in the global resource market for us to sit on our hands and assume the resource boom will continue without support.

Instead of taxing the resource sector further, Australia should create a Special Economic Zone to ensure we remain globally competitive.

Continue reading »]]> Northern Miner 09/08/2011

Elizabeth Griffiths, North Australia Project, Institute of Public Affairs

The live cattle export ban is a reflection of the lack of vision and local knowledge of our politicians.

The needs of Northern Australia and its inhabitants have been ignored since federation.

Australia, a land that prides itself on an independent and rural heritage has, with the recent ban imposed on live cattle exports, altered an integral part of its agricultural history and destroyed the economic future of an industry and its workforce.

They have done this to satisfy urbanised, inner city electorates, and in the process hung the hardworking northern farmers out to dry.

Responding to a report on the ABC’s current affairs program Four Corners, which highlighted incidents of animal cruelty in Indonesian abattoirs, the Federal Government reacted by abruptly imposing a ban on live exports to Indonesia.

Leading the charge have been the Greens senators and an independent senator from South Australia, Nick Xenophon. Senator Xenophon has finally travelled north this week to meet live exporters after campaigning for a live export ban to boost his political standing.

None of these politicians can accurately claim to represent majority opinion of any state or territory and only two have any constituents in the northern half of the continent.

The Institute of Public Affairs and Australians for Northern Economic Development and Vision (ANDEV) argue that Australia’s north is underutilised and increasingly marginalised by politicians who lack vision and understanding of the north.

What is needed in the north is the development of a Special Economic Zone (SEZ) with reduced taxes and regulation to encourage investment and provide security to the north’s residents and businesses.

It’s time Australian policy makers took the north seriously. We should stop squandering the potential of the north and establish a Northern SEZ to create an environment to stimulate economic growth and development.

Continue reading »]]> Townsville Bulletin 12/08/2011

OPINION:

Hugh Tobin, Director, North Australia Project, Institute of Public Affairs

For too long Australia has overlooked the North and the region remains undeniably underdeveloped as a result.

The recent federal budget relies heavily on the resource sector to get into surplus yet shows no vision for the future of the industry.

While the budget includes funding to address the skills shortage, it will not be enough to adequately deal with the problem.

What Australia needs is a vision for unlocking more of the investment opportunities that exist in Australia’s North.

The government needs to ensure that Australia remains competitive against other developing resource nations.

People who live in the North of Australia recognise that they inhabit a socially and economically dissimilar region to people who live in the south of Australia. Government policy should recognise this difference.

However, it is clear that the federal government does not.

According to a Galaxy poll conducted exclusively for the Institute of Public Affairs, 71 per cent of Queenslanders did not think that decision makers in Canberra understood the needs of Northern Australia.

In light of recent federal government policies that disproportionately disadvantage Australia’s North, these results are hardly surprising.

The reactive blanket live cattle export ban continues to have devastating effects on farmers and pastoralists across Northern Australia.

The carbon tax targets energy-intensive industries like mining and minerals processing which are predominantly located in the North.

Australia’s North is abundant in natural resources and still has enormous potential for further development. Our entire economy relies heavily on the North’s resource wealth.

Australia should be introducing policies that encourage further economic development of regional and remote North Australia.

Policy frameworks with low taxes and minimal regulation have been internationally successful strategies for revolutionising economies in both developing and developed countries.

Special Economic Zones are one such framework.

Despite their popularity in the USA, UK, Singapore and Hong Kong, Special Economic Zones have been largely disregarded by policy makers in Australia.

Northern Australia, that is the Northern Territory, North Queensland and North Western Australia, is a perfect candidate for a Special Economic Zone.

A Northern Special Economic Zone would include policies which reduce regulatory duplication and burden. and lower tax rates with the intention of strengthening business security; attracting international investment; supporting the growth of existing businesses and industries; encouraging domestic and international skilled migration to the under-developed: a new special economic zone for Northern Australia would help industries North, and bolstering property rights.

The Institute of Public Affairs is a free market think tank which started in 1943 in recognition of the need for a strong liberal voice in public policy making.

The IPA’s North Australia Project, with support from Australians for Northern Development and Economic Vision is investigating the establishment of a Northern Special Economic Zone.

The project is an acknowledgement that the North is substantially different from the South-East and should be treated by governments as such.

The North is being politically disregarded and desperately needs a clear vision for future development.

We know that the North is suffering: severe skills shortages, exorbitant house prices and inadequate infrastructure are serious challenges.

A Northern Special Economic Zone is an opportunity to implement policies that are designed for the North in order to encourage economic development for the entire country.

Continue reading »]]> MEDIA RELEASE

| Hugh Tobin

Free market think tank, the Institute of Public Affairs, has today said that high taxes and overregulation are choking the Australian economy. This follows reports that China’s sixth largest steel maker has invested US$1.5 billion in Sierra Leone and ongoing data which shows Australia’s productivity growth remains flat.

‘Chinese resources companies are frustrated by delays and cost blowouts in their projects due to Australia’s increasing regulatory and tax burdens and West Africa is more than happy to fill the gap we’re creating for ourselves,’ Hugh Tobin, Director of the IPA’s North Australia Project said today.

‘China is looking more and more towards West African resources for investment because it’s cheaper and easier to do so. Australia’s geographical freight advantage is becoming irrelevant as global shipping costs continue to fall.’

An Ernst & Young report released in March 2011 stated that China has ‘shifted its strategic direction’ towards Brazil and Africa, and away from Australia, for its iron ore requirements.

‘China has no reason to continue to invest in Australia if the costs just continue to rise.’

The growing unease of Chinese investors in Australia comes at a time when Australia can least afford it. This week the Reserve Bank of Australia released a report highlighting the significant decline in Australia’s productivity growth and expressed concern that this would negatively impact on Australia’s economy.

‘Australia’s living standards are dependent on our productivity. The mining sector has so far successfully shielded us from economic downturn – but the alarming trend seen in global resources investment forecasts a very different future,’ said Mr Tobin

‘With Chinese inflation at a three year high and the expectation that their economy will slow, Australia should be ensuring that we are the most attractive investment destination possible so that any growth the Chinese experience is fuelled by Australian resources.’

‘We need to help foster economic development, foreign investment and economic stability. Northern Australia is the backbone of Australia’s economy and we should make sure that the region is business friendly. A low tax, low regulation Special Economic Zone across North Australia is the vision for Australia’s future that we need,’ Mr Tobin stated.

The Institute of Public Affairs, in conjunction with Australians for Northern Development and Economic Vision (ANDEV), is calling for the establishment of a Northern Special Economic Zone (SEZ) to combat tax and regulatory burdens and skills shortages which are harming Australia’s productivity.

Media Comment: Hugh Tobin, Director – North Australia Project, 0417 303 701, htobin@ipa.org.au

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Continue reading »]]> MEDIA RELEASE

| Hugh Tobin

Free market think tank, the Institute of Public Affairs, today called on the Gillard Government to scrap its mining and carbon taxes in light of the looming economic downturn in Australia’s biggest export market, China.

‘The recent stock market roller-coaster and the European and US debt crises have shed light on the risks associated with Australia’s reliance on China’s thirst for our resources,’ Hugh Tobin, Director of the North Australia Project at the IPA said today.

‘China’s inflation is now at a three year high. They have nowhere to move on interest rates at the moment. And they can’t afford another massive stimulus package like the one that kept them growing strongly during the GFC.’

‘China is an export driven economy. As the global economy slows we will see demand for Chinese goods slow as well. This will have a flow on effect to Australia as China will need less iron ore and other raw-materials to produce their exports.’

‘China will continue to grow, but even a modest decline in Chinese growth will have disastrous consequences for the Australian economy.’

‘Once global demand drops in the resource sector we will see commodity prices fall from the current high levels. The combination of falling commodity prices mixed with the introduction of mining and carbon taxes will make many Australian projects unprofitable,’ Mr Tobin said.

‘China is deliberately moving to reduce its reliance on Australian minerals in favour of increasingly cheaper markets in parts of West Africa and South America. Why would we want to add on new taxes and make ourselves uncompetitive at a time like this?’

‘Australia should be cutting taxes. We need to simplify regulation and we need to increase the supply of skilled workers. These are problems that should be the major priorities for the government,’ Mr Tobin said.

The Institute of Public Affairs, in conjunction with Australians for Northern Development and Economic Vision (ANDEV), is calling for the establishment of a Northern Special Economic Zone (SEZ) to combat tax and regulatory burdens and skills shortages.

‘The government must think through the long term consequences of its policies for Australian jobs and the economy. We need a low tax, low regulation Special Economic Zone throughout Northern Australia so that we can remain competitive and prosperous even with a slowing Chinese economy,’ Mr Tobin said.

Media Comment: Hugh Tobin, Director – North Australia Project, 0432 098 171, htobin@ipa.org.au

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Continue reading »]]> MEDIA RELEASE

| Hugh Tobin

A new report this week from Ernst & Young reveals the threat to the resources sector from higher taxes in the wake of this week’s share market collapse.

Responding to the report Hugh Tobin, Director of the North Australia Project at the Institute of Public Affairs, said that it was wrong to assume that the resource boom in Australia was inevitable.

‘During the global financial crisis one of the reasons Australia avoided going into recession was because commodity prices were historically high. Ratings agency, Standard and Poor’s warned in June that commodity prices face a potential sudden correction. The last thing we should be doing is putting in place a new tax on a strong growth sector of the Australian economy that helped us avoid a recession during the GFC,’ Mr Tobin said.

‘The mining tax and carbon tax will make Australia an unattractive destination for foreign investment. China is already looking to Brazil and West Africa to reduce its reliance on Australian resources.’

The Ernst & Young report warns of a global trend towards ‘resource nationalism’, whereby countries tax the best performing area of the economy in order to balance their budgets and slow the development of a ‘two-speed economy’.

The findings from Ernst & Young were confirmed by global mining giant Rio Tinto who on Sunday warned that the imposition of a carbon tax, on top of the MRRT, was ill-timed and would lead to companies moving their focus from Australia to overseas projects.

‘We need to put in place policies that support the successful sections of our economy if we want to remain globally competitive. There is great potential in the North of Australia but it is being missed.’

‘The government should put in place a low tax, low regulation zone across Northern Australia. Galaxy polling commissioned by the IPA in June found that the majority of Australians in all states would support such a policy.’

‘A Northern SEZ will help address infrastructure bottlenecks, skills shortages, issues associated with resource nationalism, and ensure that Australia is best placed to take advantage of its vast natural resource wealth,’ Mr Tobin said.

The executive summary of the Ernst & Young report on risks facing mining and metals can be found at http://www.ey.com.

The IPA poll on Special Economic Zones can be found at www.ipa.org.au.

Media Comment: Hugh Tobin, Director – North Australia Project, 0417 303 701, htobin@ipa.org.au

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Continue reading »]]> MEDIA RELEASE

| Hugh Tobin

In a landmark Galaxy poll conducted exclusively for the Institute of Public Affairs (IPA), Australia’s leading free market think tank, 60% of Australians have said that they are in favour of the establishment of a Special Economic Zone (SEZ) to stimulate economic growth in Northern Australia.

A SEZ could include measures to encourage investment such as reducing fringe benefits and payroll tax; securing property rights; and reducing regulatory duplication across all jurisdictions.

Director of the North Australia Project at the IPA, Hugh Tobin, said that it was clear that Australians wanted government to show vision and establish a low tax, low regulation zone across Northern Queensland, the Northern Territory and Northern Western Australia.

The survey asked 1,063 Australians across all states: ‘Would you be in favour or opposed to the establishment of a Special Economic Zone with low taxes to stimulate economic growth in Northern Australia?’

Other key findings from the survey were:

- 73% of regional Queenslanders and Western Australians were in favour of a SEZ;

- This compared with 55% in the Southern States of SA, VIC, TAS and NSW;

- In Brisbane and Perth 66% were in favour of a SEZ;

- Only 20% of all Australians were opposed to a SEZ.

The results follow other recent polling commissioned by the IPA which found that 60% of Australians thought that Canberra was out of touch with the needs of Northern Australians.

‘The mining boom has the potential to improve infrastructure, the cost of living and the availability of housing in Northern Australia. But the government must ensure that the Australian resource sector remains globally competitive,’ said Mr Tobin.

‘The public don’t want new taxes. This poll shows Australians want the government to support families and businesses, rather than punish them.

‘Special Economic Zones are internationally recognised as successful policy frameworks for stimulating economic growth in under-developed areas.

‘A Northern Special Economic Zone would reduce the regulatory and tax burdens on businesses and families across the North and stimulate development for the benefit of all Australians,’ Mr Tobin concluded. The Galaxy poll was conducted over the weekend of 13-15 May 2011. A full briefing document is available at http://anewnorth.ipa.org.au. More information is also available at www.andev-project.org.

Media Comment: Hugh Tobin, Director – North Australia Project, 0417 303 701, htobin@ipa.org.au

Institute of Public Affairs, Level 2, 410 Collins St. Melbourne

ph: 03 9600 4744 fax: 03 9602 4989 www.ipa.org.au

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Continue reading »]]> MEDIA RELEASE

| Hugh Tobin

A Galaxy poll conducted exclusively for the Institute of Public Affairs (IPA) found that the majority of Australians are in favour of establishing a Special Economic Zone (SEZ) with low taxes to stimulate economic growth in Northern Australia.

Of the 1,063 people surveyed, 60% were in favour of a Special Economic Zone in Northern Australia while only 20% were opposed to the idea. The percentage of people in favour of a low tax zone was much higher in Queensland (70% of respondents in favour) and in Western Australia (68% of respondents in favour) compared to the rest of the nation. Of regional Queenslanders and Western Australians, those people most likely to live in North Australia, 73% said they would support the establishment of a SEZ.

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