SPEECH - AMEC CONVENTION 2017 - DELIVERING A STABLE POLICY ENVIRONMENT: LABOR’S APPROACH TO THE RESOURCES SECTOR

TIM HAMMOND MP
SHADOW MINISTER ASSISTING FOR RESOURCES
SHADOW MINISTER FOR CONSUMER AFFAIRS
FEDERAL MEMBER FOR PERTH

DELIVERING A STABLE POLICY ENVIRONMENT: LABOR’S APPROACH TO THE RESOURCES SECTOR

SPEECH – AMEC CONVENTION 2017 

WEDNESDAY, 7 JUNE 2017

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It’s a privilege to be with you today in my capacity as Shadow Minister assisting Jason Clare in the Resources portfolio. I bring with me Jason’s apologies and well wishes, together with the warm regards of Federal Labor Leader Bill Shorten.

I’d like to start by acknowledging the traditional owners of the land on which we meet – the Ngyoongar people – and pay my respects to their elders past, present and emerging. I think it’s important also to acknowledge the traditional owners of the lands from which so much of our nation’s wealth comes – land on which we explore for, extract and transport the minerals that underpin the reason why we are all meeting here today.

AMEC represents an industry that contributes an enormous amount to our nation’s wealth and economic activity. Since 1981 AMEC have provided a profound and compelling voice to governments on behalf of the exploration and mining sector. The work you do, particularly in policy analysis and advocacy, is something you all should be proud of.

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I would like to take this opportunity to pay tribute to outgoing AMEC president Simon Bennison, who announced his retirement from that position last week.

Simon, as you know, has led AMEC since 2008, and has contributed to campaigns to see off more than a few challenges – from various quarters – to the resources sector in the last nine years. Simon, thank you for your contribution, good luck with the next chapter.

We’ve already heard this morning from Commonwealth Resources Minister Matt Canavan and WA Mines and Petroleum Minister Bill Johnston – the first a respected colleague and the second, in addition to being a respected colleague, is someone I have now known for almost a decade. Can I say that working with both of these ministers is an incredibly rewarding aspect of my role as a Member of Parliament.

Despite the din and clamour of the parliamentary battleground, there is far more that the both sides of politics agree on than may meet the eye. We share a belief in the role that the resources sector plays in our nation’s and our state’s economy – its contribution to our economic growth, our trade current account, and importantly, creating jobs both directly and indirectly.

It is a relationship that continues the long held tradition of bipartisanship in the portfolio. Recent custodians of the Resources portfolio on our side of the Parliament – Gary Gray and Martin Ferguson – have made no secret of their passion for the sector and commitment to working with industry to get the best outcomes for the nation. Indeed, like Ian Macfarlane, that passion has continued into their post-parliamentary lives. And I am indebted to them for the sound position that Jason Clare and I have inherited in relation to our dealings with industry.

Federal Labor acknowledges incontestably the importance of stability in the mining sector. A recent example of such stability can be found in what I believe to be a principled, bipartisan stand against the new mining tax advocated by former WA Nationals Leader Brendan Grylls in the lead up to the recent WA State Election.

I say principled because the tax proposed by Mr Grylls was harmful to our nation’s economic interest, for a number of reasons. 

First, the tax was a tax on production, not profits. It had the potential to kill off otherwise viable projects before they had even begun by taxing them before they’d sold a single tonne of ore, threatening our state’s economic growth and job creation.

Second, the arbitrary nature of the tax provided no comfort to otherwise unaffected mining companies whose royalty rates are governed by other State Agreements that they too would not come into the firing line in future years.

Third, the revenue stream, while attacking job creation in the West, would not see the bulk of the revenue remain in this state. The nature of the Commonwealth Grants Commission’s carve up of GST revenue is no secret – it’s been canvassed quite extensively in the media for years. On current indications, two thirds of the revenue raised by Mr Grylls’s proposed royalty rise would have been given away to the Eastern States.

The election was a punctuation point for sound resources industry policy in this state, and I commend colleagues on both sides of the aisle for the sensible approach taken in the lead up to the poll.

Looking to the future, I’ve been asked to speak today on the topic of Labor’s approach to a stable policy environment in the resources sector. 

Labor is committed to supporting the mining and resources sector in a way that is enduring and reflects the importance of the industry to our nation’s prosperity. The mining sector generates roughly $140 billion each year – over half of total goods and services. It employs almost 200,000 people directly, with another half a million employed in support industries. It contributes twice as much to our GDP as agriculture, and three times as much as tourism. A third of the companies listed on the ASX are in the resources sector – with a value of almost 20 per cent of that market by capitalisation.

What you do as a sector – and the approaches that we politicians take in relation to this sector – matters enormously. The existential questions of Australia’s economic future are necessarily asked and answered by the organisations represented in this room.

There are three areas of public policy that I’d like to touch on. The first one is an update on the very high profile public policy debate around gas in the East Coast domestic gas market. I’ll move from that on to the Exploration Development Incentive, and finish with some brief remarks about where we are at in relation to our approach to Native Title issues in the wake of the McGlade decision.

Domestic Gas

The oil and gas industry has taken up a lot of column inches in the mainstream media in recent months. A plethora of differing views have been published about whether there is indeed a crisis in domestic gas prices, if there is, who is responsible for it, where the pinch points are, and what the ‘solution’ is.

Regardless of the rationale, gas prices in the East Coast domestic gas market are simply too high for what the community – both manufacturers as well as mums and dads – are expecting to pay. These prices, and even availability of supply, are having real and damaging impacts on industrial gas consumers, and the people they employ. There is no doubt Australia should be able to manage being a global gas export player and a heavy gas user, but we should acknowledge we haven’t quite got the balance right just yet.

We took to last year’s election a clearly enunciated policy for a national interest test for new gas exports. And while gas prices weren’t then being described as being at ‘crisis’ levels, it was clear to us that there was a need – and a community expectation – to prove an answer to rising prices on the East Coast.

Let me be clear: our policy was not a domestic gas reservation policy. Rather, Labor proposed regulatory reform to make sure that Australia is a net beneficiary from the resources that lie under our seabed and in our earth.

The Government’s plan to reduce gas prices is for gas export control regulation. The regulation will commission AEMO to make an analysis of the domestic gas market, with the view to enabling the Minister, once a particular threshold has been reached, to pull a ‘trigger’ to limit gas exports.

The details of the regulation, including the data used by AEMO to analyse the market, and the threshold for the ‘trigger’, are still being worked through by Government.

The Government has set itself a high bar to jump, and the devil, as you all know, will be in the detail of how the Government intends the regulation to operate. We are in the middle of a very tight window in which the industry can still put its case in terms of the robustness of AEMO’s analysis and the trigger threshold.

Exploration Development Incentive

As you all know, the EDI was brought in with the 2014 Budget. The initiative provided $100 million over 3 years in to enable small mineral exploration companies with no taxable income to provide exploration credits, paid as a refundable tax offset, to their Australian resident shareholders for greenfields mineral exploration.

This measure was designed to encourage mining. I know that in the lead up to the EDI’s introduction AMEC advocated for a mineral exploration tax credit. The modelling they commissioned from KPMG provides compelling reading about the role of the scheme in unlocking new minerals wealth, estimating that such a scheme could create up to 4,000 jobs and contribute an additional $2.2 billion in GDP.

Labor supported the EDI when the legislation came before the Parliament. But at the time, the then Shadow Minister for Resources, Gary Gray, drew attention to what you in this room all know to be true: tax breaks don’t drive exploration. They can make it easier, sure, but they don’t drive it.

Exploration is driven by a belief that there is something to be found. It’s driven by men and women – many of you are in the room – who use their experience and expertise to assume the risk of banking on that there is something of value there.

And yes, it involves risk. And yes, it can be expensive. And Governments have a role to play in supporting and facilitating exploration.

As part of this year’s Budget last month Exploration Development Incentive was axed. Quietly, and without fanfare, the EDI slipped gently into the night, its funding having not been renewed. No warning. No consultation. No public discussion, even, of whether the EDI achieved its goals or represented value for taxpayer money.

You all know better than I whether the EDI made a difference to your sector and what the impact is of its removal.

However I currently remain to be convinced that enough work has been done by the Government to explain or defend the position they’ve arrived at or whether they have asked the hard questions about whether, if the EDI was not working as intended, what it would take to fix it.

Native Title and the McGlade decision

Moving on now to arrangements around Native Title – none of you will be strangers to the impact the McGlade decision has had on the resources sector. Let me assure you straight up that the Opposition is working with the Government to effect legislative solutions to the problems with Indigenous Land Use Agreements (ILUA) that arose from that decision.

By way of background, the decision by the Full Federal Court in the McGlade case found that an area ILUA could not be registered unless all members of the ‘registered native title claimant’ signed the agreement, including members of the group who may have died.

This ruling overturned an earlier decision, which found that an area ILUA could be registered if it had been signed by at least one member of the registered native title claimant group.

Post-McGlade, the only avenue available to a registered native title claimant group where there is not unanimous consent from all claimants, is to re-authorise a new applicant and make an application under 66B of the Act to remove the member(s) of the group who refuse to sign. This process is costly for registered native title claimants and can cause delays.

This decision has potentially far-reaching implications for approximately 125 existing ILUAs that may have been made in reliance on the decision in Bygrave over the past seven years, the validity of which could now be subject to legal challenge. These ILUAs include agreements concerning very large areas of land in every State and Territory of Australia, made with respect to national parks, agriculture, and mining ventures.

It is essential that, where significant changes to the Native Title Act are proposed, thorough consultation occur with Indigenous and other affected Australians, including the resources sector, so as to ensure that any changes are appropriate, effective, and in keeping with the fundamental objectives of this legislation.

A bill amending the Native Title Act to revert to the pre-McGlade status quo is currently before the parliament. Labor will support those provisions necessary to uphold the validity of existing ILUAs and that are necessary to provide legal certainty.

We stand ready to work with the Government on this. Unfortunately, due to poor drafting and improper consultation, there have now been five necessary amendments to the Bill to correct faults that were not dealt with by the original legislation. This has led to unnecessary delays. We believe we now have a settled position and envisage this legislation being passed by the parliament when we return to Canberra next week.

Conclusion

I would like to conclude by thanking Simon and the AMEC team for inviting me to address you today. Federal Labor understands the importance and significance of the resources sector – we have a longstanding commitment to supporting the sector as a key driver of economic activity in Australia. When your companies flourish all Australians benefit. And I think most Australians, certainly in this state at least, understand that. We want to support what you’re doing, and we want you to succeed – and it is this approach that we seek to maintain as we head into the next Federal election.

ENDS