Article by Lachlan Clark courtesy of the IPA.
Australia has experienced several wealth-enhancing resource booms, to the considerable benefit of all Australians.
And our industries were able to seize the opportunities these booms presented because previous governments understood the value of the resources sector and regulated accordingly.
Today, the mandated shift away from reliable and affordable sources of energy, towards renewables, has led to an ever-growing demand for critical minerals.
These are a large group of minerals essential to modern technology production, advanced manufacturing, and defence.
Historically, Australia has had the good fortune to possess the mineral resources the world wants to buy, and, by good management, we have earned a reputation as a reliable supplier of those resources. So, it follows, we should be well placed to meet the rising global demand for critical minerals which, again, we possess.
Yet, due to excessive red tape, Australia is not ready to capitalise on this latest opportunity.
WA dominates the nation’s critical minerals reserves, therefore any effort to improve policy settings and remove red tape should begin with a focus on this key State.
In its analysis of the State’s critical minerals sector, the Chamber of Minerals and Energy of Western Australia identified inefficiencies, costs, and duplicated assessment and approval requirements as the most prohibitive barriers to progressing projects.
Its report notes the end-to-end approvals process, undertaken by both State and Commonwealth governments, can take 10-15 years from exploration to mining stage, and current proposals for cost recovery through these processes are estimated to involve upfront costs in excess of $3 million to $5 million. In WA, when a project is considered “significant” it must go through the Environmental Impact Assessment process.
However, the Environmental Protection Act 1986 does not define “significant impact” or “significant effect”; it is left to bureaucrats at the EPA to judge what constitutes a “significant” impact or effect.
Research undertaken by the Institute of Public Affairs concluded that the Act needs to be amended, to give the terms clarity and the resources sector greater certainty.
The research also recommends that cost recovery obligations, which act as a barrier to new projects, be scrapped.
Project proponents who seek to create investment and jobs should not be required to pay for the cost of regulation.
There are multiple examples of cost recovery obligations which affect resources projects, found under the Mining Act 1978, the Environmental Protection Act 1986, and the Rights in Water and Irrigation Act 1914.
State and Federal governments should also focus on areas where there is an opportunity to improve regulatory efficiency.
Worryingly, IPA research shows that red tape created by State and Federal governments is at the highest level in recorded history.
This is why initiatives designed to reduce red tape are so important.
In WA, the State Government’s Streamline WA is tasked with removing duplication of assessments and approvals.
Since its introduction, WA has experienced the slowest growth in red tape of all the States, but more needs to be done to actually cut, rather than grow, red tape. And, of course, there should be a concentrated effort to prevent any further changes along the lines of the now repealed Aboriginal cultural heritage laws.
In the absence of any further improvements in the regulatory framework of our resources sector, and in particular with regard to critical minerals, Australia will cede its competitive advantage to other nations with less stringent approval processes and environmental standards.
Our leaders seem to have forgotten the crucial role that the mining and resources sector has played and will continue in play in the development of our great nation.
Instead of recognising the value these industries bring to the nation, and implementing policies which support their operations to maximise this value, our political leaders continue to impose unnecessarily burdensome regulation, simply making it more difficult to do business.
To help ensure Australia remains prosperous, our leaders must ensure policy making supports those industries which have been the very source of that prosperity.
Lachlan Clark is a research analyst at the Institute of Public Affairs.