Article – Mrs Gina Rinehart, “Greetings from the lucky country (?)” – Australian Resources and Investment

12 June 2013

Australia has relied on its resources for its prosperity for a long time, especially during the last six years of record commodity prices. We started being called ‘the lucky country’ decades ago, when we rode of the sheep’s back; but now the country is riding on the back of the miners and related industries. 

I repeatedly refer to ‘related industries’, because mines don’t just sit there out in the bush, cut off from everything else. In fact, their development, construction and operations mean work and revenue to many, from every part of the country.

Just think of the dongas: we miners need the trucking industry involved to get them to site, construction workers to connect power and plumbing and anchors for cyclones, decorators (yes, dongas have curtains, bed spreads, lights and chairs, etcetera), experts for the fit-outs (basins, taps, air conditioning, beds, etcetera), plus cleaning and maintenance staff – and that’s just for dongas!

Without the mining industry, at least one third of most accounting and legal firms would shrink. It’s the same story in other industries: airlines and charters, hotels, restaurants, catering, equipment maintenance, consultancies, engineering services, geological services, testing laboratories, office supplies, cars and… well, where do I stop? And let’s not forget that without the miners and all these related industries, where would bureaucracies be? And where, exactly, would they get their money for schools, hospitals, roads, defence and much more? BHP Billiton is just one of our miners, but Chairman Jac Nasser recently estimated that this one miner alone paid $9 billion in taxes and royalties in Australia last year – about what the federal government spent on higher education. That figure did not include any of the payments under the Mineral Resources Rent Tax (MRRT) or the carbon tax.

The industry needs to keep repeating this and standing up for itself. It needs to keep reminding fellow Australians that without mining and its related industries, this country has no hope of repaying its record debt without facing the problems Greece and other countries faced with over-spending and consequent debt trauma.

Let’s not be too proud to admit that we’re really just a large island with a small population – and record debt. Trade with the world, and especially now with Asia, has always been critical to keeping up our standard of living. From riding on the sheep’s back when we were a much smaller nation, we have raised our living standards on the back of the mining and related industries, and consequent exports overseas, primarily to Asia. Without exports, we cannot sustain our living standards.

Plenty of Australians know these things in a casual way. but what few seem to properly understand – even people in government – is that miners and other resources industries aren’t just ATMs for everyone else to drawn from without that money first having to be earned. and before that, giant investments made.

This month gave us a perfect example. Woodside pulled out of its $40-billion gas hub near Broome because rising costs made it economically unviable. I wonder how much of those costs came from green tape. approvals hurdles, endless delays, carbon taxes, and the rest.

But here is the astonishing thing; even though the project was now dead, Woodside reportedly faced demands from some Aboriginal leaders that it and the Barnett Government were still ‘morally obliged’ to payout a $1.5-billion compensation package to traditional owners. and help give them real jobs.

This is spending the money of a resources company without giving even the company itself the chance to first earn it. This strikes me as so symbolic of where we are as a country; we’re forgetting the basics.

It is worth repeating that jobs and economic growth are created by the private sector. Governments do not create those jobs. More often, the government’s role seems to be to make them less viable by taking as much money as they can from resources projects to spend, and adding to the cost burden.

It is incredible that after the last six years of record commodity boom times, we now find this once lucky country in record debt, with the federal budget tipped to deliver yet another deficit to further increase our record debt. Add to that the debt in all our overspending states. and in the Northern Territory. too. This debt is simply unsustainable, especially when Australia now faces an increasing elderly population with increasing needs, and fewer workers to pay for it all. This lucky country has got to start thinking, and acting.

I’m not the only outspoken,but time-deprived, Aussie now raising such concerns; increasingly, others are raising similar concerns. A pricewaterhouseCoopers (PWC) report released on 15 April 2013 concludes: ‘Sky-rocketing costs combined with falling capital productivity are dragging down Australia’s overall economic performance.’

Any miner could give you a long list of the rising costs of obtaining government approvals and their ongoing expense, meeting government requirements, delays in government allocation of land, payroll tax, capital gains tax, stamp duty and other taxes. No wonder major projects like Browse have been cancelled. This should make us all sit up and think. We are becoming too expensive and cost-uncompetitive.

Even the Business Council of Australia on 15 April 2013, said: ‘The decision by Woodside Energy Limited to shelve its proposed Browse LNG project near James Price Point in Western Australia is a stark warning of the cost pressures in the Australian economy.

‘This is a worrying sign because these major projects are the main game in Australia’s economy. Missing out on opportunities like this impacts on the whole nation. ‘If we don’t ensure major projects can be delivered more efficiently, then our standard of living will be reduced.’

Governments need to be reminded that if they want more taxes from miners and related industries, they can’t discourage the investment needed to first earn what they want to take. The costs must come down. Investment needs to be welcomed; our country must compete against all others for investment. The reverse happens when a government imposes increased taxes, apparently unable to understand how that hurts investment and makes it harder to sell our products at competitive prices internationally. Tax increases can destroy businesses, and that means fewer taxes and fewer jobs and fewer opportunities.

It is amazing that this point still needs to be made. Too many of our governments seem to have had their thoughts clouded by six record years of revenue. They seemed to think the ATM would never empty, and would never need refilling. They seemed to think we could somehow afford to be increasingly cost-uncompetitive, and become deeper in debt. It is as if Spain, Greece, Britain, Italy and Portugal had no warnings to give us about the similar path we are now taking. It is as if their struggles with unemployment, riots, increase crime, debt and a sheer lack of money for even essential services had nothing to teach us.

Now the warning signs are coming closer. Holden has had to cut yet more jobs, and Jac Nasser – a former senior executive of Ford – is predicting the demise of the Australian car industry.

It is time for bold new ideas for Australia – ideas like developing the largely untapped resources of northern Australia through the establishment of Special Economic Zones throughout this region.

This is the vision of Australians for Northern Development and Economic Vision (ANDEV).

The north has abundant water and under-utilised land at a time when the world’s population is growing bigger and richer. The global population is prOjected to rise from seven billion to nine billion by 2050, and the global middle class from 500 million in 2009 to 3.2 billion by 2030. This will create an explosion in demand for food and energy.

The north has the potential to develop beyond our imaginations. We should learn from the successful economic policies of Lee Kwan Yew, who transformed Singapore from what it was when I was a teenager – a poor, thirdworld country with no water of its own, insufficient land to feed its people and no minerals – to the rich, ultra-modem and debt-free nation it is today, with major investments for its future, very low crime rates, very good hospitals and schools, truly five-star hotels, a leading international airport, excellent shops and restaurants, entertainment complexes and more. Lee Kwan Yew kept taxes low and encouraged investment, and look what happened to our neighbour – without even any of the natural benefits that our north has!

In contrast, we’ve been saddled with bad government policies that make us uncompetitive, when we could instead make the north a productive food bowl and source of minerals, as well as a centre for medical care, tourism and services for not just Australia but our Asian neighbours.

And for those doomsayers who don’t think lowering taxes could have any benefit, don’t forget what happened in Queensland when then Premier Sir Joh Bjelke Petersen, Queensland’s longest serving premier (who is still loved by the many Queenslanders I meet) eliminated just one tax – the death duty. People left the south in their droves. bringing billions of dollars of investment with them that created new jobs in construction, hotels and restaurants. Even without the benefit of the record resources prices, Sir Joh left his state debt-free and with cash in the kitty, something neither our current federal government, nor even one of the state governments, have managed to do.

And for those negative scribes who are simply anti a free-market approach to anything, please read the outstanding speech Rupert Murdoch recently gave for the Institute of Public Affairs (IPA), which is on the IPA’s website at www.ipa.org.au and on the ANDEV website www.andev-project.org. Try to consider that not only is a free-market approach the most effective economically, but importantly, the best morally also, as poverty and less opportunities are usually not the best for people, especially those in poverty.