Launch of CME Report—Investment in Resources Sector Infrastructure

Speech

JBS002/2014

05 February 2014

Chamber of Minerals and Energy of Western Australia (CME)
Perth

It is a great privilege to be involved in this function and to be launching the CME's report on Investment in Resources Sector Infrastructure.

It is always great to be in Western Australia. It's great to see a State which is powering on and driving the Australian economy, and has been for some years now.

I think, one of the impacts of the change of government that I hope you're seeing and you will continue to see, is rather than a government that believes that no matter the injury you inflict upon an industry they will continue to magically do well, you will see a government that will actually try and work with you to reduce the pressures on your industry so that you can do better, and we encourage you to do better.

Rather than a debate about how can we hold back this outrageously successful mining industry? By taxing it more? By regulating it more? I think you will see a discussion about how can we reduce your tax? How can we reduce your regulation? How can we encourage you to do better?

And there is a real impact. There is a real impact if you don't get that setting right. And as a South Australian, we've seen that real impact. You can't just keep adding regulation. You can't just keep adding tax pressures, and you can't just keep pushing sovereign risk issues and not have a negative consequence at some point.

And, very sadly for my State, the negative consequence was Olympic Dam.

We would have had, I think, one of the great assets of our country right now being mined, or in the process of being mined, but for the fact that it took BHP too long to get environmental approvals; too long to get through the regulatory hurdles. And, frankly, when capital is mobile—their board was looking around the world—and Australia all of a sudden had sovereign risk attached to it.

And the consequence for South Australia and for our country is, in a sense, diabolical because that project now is on the back burner and I sadly think it will be on the back burner for some time.

So we want to work very closely with the mining industry and with all industries to take pressure off in a taxation sense and a regulatory sense. Senator Cormann and I are certainly firm believers in doing just that. It is the direction the Abbott Government is headed and I hope you will see this constantly and consistently.

As I said, this year will be a difficult year for us in a budgetary sense. We've inherited a budget mess. We've inherited a budget which carries some half a trillion dollars of debt.

If the settings don't change, a budget which will have deficits for a decade. And if we don't start to address it in this budget, we will be in a worse situation that we are currently.

So this year's budget will be difficult.

There will be some really genuine hard decisions that have to be made and we need to do that to ensure that Australia lives within its means once again, but it will take some time and it will be politically difficult.

We also have an economy which is flattening out and has trouble on the radar. Here in Western Australia, of course, you're moving from the construction phase of the latest mining boom to the production phase, and that has an impact on our revenues and on economic growth.

So one of the areas where we are focussed very heavily on is to invest in productive infrastructure, because we believe that Australia has a productivity problem and for a few years into the future we are going to have a drop-off in construction activity and there will be a big gap.

So the Treasurer, Joe Hockey, Mathias and I have been working very heavily on building an infrastructure agenda. We've announced in the mid-year economic and fiscal update a $35.5 billion programme over six years which we're working with the States on to implement.

A lot of our investment is here in Western Australia.

We announced two additional road projects in December.

The North-West Coastal Road, which we're visiting tomorrow in the Pilbara, and other roadwork in conjunction with some of the projects that are already underway and some of the work that Troy Buswell and the WA state team are doing here also.

But there is a lot more to be done and the settings, we think, need to be addressed in some respects as well.

So this report is very welcome. It fits nicely with the work that we're doing in the early stages of our government through the reforms to Infrastructure Australia to get it working more effectively, or working at all in some cases.

And also the Productivity Commission review which we have high hopes will give us a broad agenda about how to reduce costs in the production of infrastructure and to deliver projects in a more timely fashion, and also canvass ways to use alternative finance mechanisms to drive more infrastructure investment; not just by government but by the private sector.

So we are very keen and eager to build productive infrastructure into the future because, as I said, we have a productivity problem in our country and unless we begin to address that we can't rely on the uplift of terms of trade as we have for a decade to increase our living standards.

We must address some of the bottlenecks and some of the challenges within our own economy right across the nation. And unless we do that we won't be as prosperous as we could be.

And that is part of the focus of the infrastructure investment program and that's why this report will add to that. The work that PWC have done, I congratulate them on it, and the Chamber themselves. It's great to see industry associations adding genuine value and not just being sort of political commentators which some of them, particularly in Canberra, tend to be.

This is real value-added information which will help us as we consider our agenda going forward.

So, again, it's a real privilege to be here. I'm really looking forward to the next two days in the Pilbara. We will get up there and I think it will be fascinating to see one of the great drivers of our economy and to see what potential there is for our future.

So thank you for having me and for listening to me, and with that, I formally launch the CME report. Thank you very much.