Opinion – Lethargy threatens our resources fortune – Australian Resources and Investment Magazine

By Mrs Gina Rinehart

Why is it so difficult for some people in our government and in the media to understand that we need to keep Australia cost-competitive to entice business and investment, and that investment is good for Australia if we want to see our standards of living improve instead of the opposite?

I have often raised and praised the economic benefits of Singapore and Monaco with their low taxes and encouragement of investment, and consequent increasing standards of living, high education and hospital standards. These are countries in which you can actually walk the streets in safety! However, maybe instead I should point to North Korea and suggest we take a good look at this country. Just look at the very stark contrast between North Korea and South Korea on its immediate border. Which of these countries welcomes business and investment and which has far better living standards for its people? Which would you and your family prefer to live in? Which economy is better in the interests of the next generation and for the poor in those countries?

While we’re at it, let’s also take a look at the history of Ceylon. Once a productive economy with a well-fed populace, it then started to suffer under socialism and high taxes and regulations, and became a country today called Sri Lanka. Years of nice-sounding socialism saw its living standards decline and its people badly suffer.

And need I remind anyone what a rich country Rhodesia was? Once boasting world-envied living standards, Rhodesia today is a country called Zimbabwe, with widespread poverty and little investment.

Each of these countries is, of course, different, but their stories all send the same message: we need to ensure investment is welcome, we need business, and yes, we even need the ‘hated entrepreneurs’ if want our standards of living to continue to improve.

It is a message we should be actively focussed on in Australia if we are interested in seeing our children free from crippling taxes, debts and lower standards of living.

It is also timely to consider some of the knowledge gained from CHOGM.

In an article published shortly after CHOGM was held in Western Australia late last year, the Executive Editor of WA Business News, Mark Pownall, reported:

‘The Nigerians clearly came for business when they arrived en masse at the Commonwealth Heads of Government Meeting and its related business forum. The 200-strong Nigerian delegation was intent on using CHOGM to find ways to improve key industries in what is Africa’s most populous nation.

‘Although it has resources experience as a big player in global oil production, Nigeria wants to develop other sectors – especially mining. Like many other African leaders and their representatives, they must have thought they were on the right track when they arrived in Perth, a city that thrives on mining investment.

‘Mining was a big theme at the Commonwealth Business Forum, which took place in the few days before CHOGM proper:

  • the Perth-based Chamber of Minerals and Energy will lead the development of a Commonwealth Mining Network; and
  • there was the new Australia-Nigeria Trade and Investment Council which was understood to have included Rio Tinto among its inaugural membership.

‘Much of this was focused on Africa, which has the biggest grouping of member countries and clearly represents the most likely sources of major greenfields minerals development in the former British Empire. Of course, CHOGM-related initiatives are one thing; the reality is, dozens of Perth companies are already on the ground throughout Africa, some budding miners and others serious producers. Perth-based players in Africa include Paladin Energy and Sundance Resources.

‘The mining network includes mining companies and mining service providers who were involved with the business forum along with mining chambers from Commonwealth countries. The CME has a two-year contract as the facilitating chamber, further signalling Perth’s high involvement in these international networks.

‘Avonlea Minerals Managing Director David Riekie is trying to get a mining project up and running in Namibia, one of a number of African countries actively trying to promote minerals investment. Mr Riekie said he was too optimistic to see this as a threat to Australian industry, although he acknowledged that the rising costs of operating in Western Australia made Africa increasingly attractive despite the risks. “It goes back to the ‘70s and ‘80s,” he said. “How competitive is your economy to attract investment? It is not just employment, everyone used to bash up Africa, but Australia is no different, we created a lot of uncertainty.” Mr Riekie said some significant players in capital markets believed Africa was the place to invest.

‘Nevertheless some players are concerned this amounts to little more than a transfer of hard-earned skills and technology to places that could ultimately become rivals that want access to Western Australia’s markets and sources of capital.

‘While Premier Colin Barnett was buoyed by the success of CHOGM, less than two months ago, he identified cheap African resources as a key threat to Western Australia’s economy. He believes the state has avout 10 years to build the transport infrastructure to let Western Australian-based companies export commodities efficiently before African nations flood world markets with iron ore and other resources. “Africa is rich in natural resources,” Mr Barnett said. Mr Barnett said it was inevitable African resources would enter world markets and China was working on foundation projects.

‘At the time he warned that the Gillard Government’s mining and carbon taxes could, combined, be considered a ‘real sovereign risk, a point he returned to during CHOGM when he attacked the proposed mining tax.

‘Even without these costly taxes, however, those wanting to develop minerals projects (in Australia) have other challenges such as high labour costs, growing industrial relations issues and the state’s own approvals process. These, as much as the incentives offered by Africa’s budding resources nations, are providing the impetus for companies to look elsewhere.

‘In a Commonwealth Business Forum speech, Hancock Prospecting chairwoman Gina Rinehart warned that Australia’s resources sector could lose market share to other countries if costs continued to rise. Mrs Rinehart said the high cost of regulation here was hampering exploration, which was vital for the future expansion of mining. “You’ve always for to remember we’re not the only people with commodities,” she said. “There are new frontiers opening up which have much, much lower costs than Australia, so it’s not really a good time to keep looking at ways to make costs higher and higher.”’

Neither is this the decade for us to be lethargic in Australia, thinking we can always live off our current resource-induced good fortune, sending entrepreneurs, investment and business offshore – not if we want Australia’s high living standards to continue. We should instead be vigorously seeking better paths for Australia’s future, and even considering innovative ideas.

It’s becoming known that I’d like to see our north freed up for investment and development (www.andev-project.org), and not just for mineral development. I’d also like to see political parties putting forward the idea that we should become a more decentralised country. We need our government departments and government advisers exposed to more of Australia: regions outside of Canberra and the New South Wales coast, where they usually holiday for their annual vacations. They need to better understand small businesses, our bush and our north. Why, for instance, does our Department of Aboriginal Affairs even need to reside in Canberra? Why not in a more central location such as Alice Springs, for instance? And why do we need our Defence Department in Canberra? What’s wrong with our Defence Department being stationed in our north? The questions go on.

But let’s not stop there; let’s convince our political parties and media that we need to encourage investment, cut government spending, approvals and permits, and lower taxes (except, I’d argue, for alcohol and cigarettes), and let’s tell the world (as Africa is doing!) – a world we must compete in for our exports. Let’s then see what this welcome mat for investment could bring to our country, for our people and our future.

We’re not the only ones in this world with resources, and I believe the sooner we appreciate this and act accordingly, the better.

I’d like to finish on a positive note – this week I’ve really enjoyed discussing these ideas with young city people in their 20s, 30s and 40s and with ANDEV members far and wide who believe we need such changes for Australia’s future!