Following an earlier break down of the Coalition’s workplace relations plans, AREEA executive director, industry Scott Barklamb provides this wrap-up of the Abbott Government’s specific policies for developing the resource industry and supporting more prosperous trade and investment in Australia.

WHILE AREEA is a highly regarded stakeholder across workplace relations and other employment policy areas, the Abbott Government’s plans in the areas of resources and energy, and trade and investment also have great potential to influence our members’ operating environments.

A key aspect of the Coalition election platform was to ‘back Australia’s strengths’ through supporting our nation’s ‘five industry pillars’ of resources, manufacturing, services, agriculture and education.

AREEA and other representatives of our industry have welcomed the scrapping of the mining and carbon taxes, as well as plans to fast-track project approvals, provide greater exploration incentives and reduce tax and regulatory barriers.

These policies are a refreshing move towards an Australian Government that is interested in developing and supporting the national resource industry, rather than demonising and excessively taxing it.

Not all the Coalition’s policies are in-line with our sector’s interests however, with employers’ particular cautious of its flagged policy to revoke offshore oil and gas leases if projects do not commence in a timely manner.

Overall though, the advent of a new federal government provides an opportunity for certainty and stability for the resource industry, and a return to a more supportive and engaged stance from our national policy makers.

RESOURCES AND ENERGY POLICY

One of the first orders of business for the new Coalition Government was a revision of frontbench portfolios, including the implementation of a new Department of Industry.

Headed by the experienced Ian Macfarlane, the former Howard government’s resources minister, the Industry portfolio now encompasses energy, resources, research and innovation and has its top priority to restore Australia’s strong reputation among the global investment community.

For an insight into Ian Macfarlane’s approach to the job, read AREEA’s exclusive interview with the Industry Minister in Resource People magazine here. The Coalition Policy for Resources and Energy contains eight key components, outlined as follows:

1. Abolition of the carbon and mining taxes is a priority, but will require negotiations in the Senate and therefore may only be achievable after the change to the new Senate in mid-2014.
2. Streamlined approval processes will be delivered through a ‘one-stop-shop’ for environmental approvals that allows state governments to administer a single approval process under federal legislation. NOPSEMA may become the sole designated assessor for major offshore developments.
3. New exploration incentives including a development incentive that allows investors to deduct the expense of mining exploration against their taxable income. The scheme will commence 1 July 2014, be capped at $100m over 4 years, and will target junior explorers.
4. Oil and Gas Retention Leases: The Coalition will seek to verify that companies seeking to retain a lease over offshore oil or gas fields have a legitimate need to secure gas for long-lived production projects and are not simply seeking a competitive commercial advantage by their retention. Companies may have their offshore development leases revoked if left inactive for two to three years. Onshore resource deposits remain controlled by state governments.
5. CSG management by the Abbott Government hinges on overcoming community opposition to exploration by ensuring access to agricultural land has the farmer’s agreement, does not have any long-term damage to underground water supply and that agricultural production is not permanently impaired. The Coalition will leave other on-land access matters largely to the states and intends to promote CSG development in New South Wales and solve the state’s “gas challenge” by forming an expert committee.
6. An updated Energy White Paper will be commissioned that investigates the role of alternative transport fuel sources (biofuel, LNG, NCG and LPG); seeks to consolidate Australia’s competitive advantage in mining and petroleum service industries; and examines the potential use of thorium as an energy source.
7. Other energy policies including formalising the agreement to sell uranium to India; establishing real-time monitoring of wind farm noise emissions to allay community concerns with wind farming; and convening an urgent meeting of relevant stakeholders to set in place a workable gas supply strategy for the East Coast gas market to 2020.
8. Greater consultation with the energy and resources sector will be delivered through an industry advisory council co-chaired by a respected industry expert and the Minister.

TRADE AND INVESTMENT POLICY

The Coalition has made several changes to the Trade portfolio including combining these responsibilities with foreign investment – uniting the two major areas of foreign economic policy.

In an equally notable move, the Liberals’ Andrew Robb has been appointed the new Minister for Trade and Investment, the first time since 1956 that a Coalition government has not placed a Nationals member in the trade post.

The moves put free trade and foreign investment at the centre of the Coalition’s economic agenda with a promise to spur exports, investment and employment.

Maintaining Australia’s position as a global leader in coal, iron ore and (more recently) LNG exports is clearly high on Minister Robb’s agenda, given resource and energy export earnings contributed $180bn to the Australian economy in 2012-13.

One priority for Robb is advancing Australia’s Free Trade Agreements (FTAs) with partners in Asia, including China, Japan and South Korea – the most significant customers of Australian iron ore, coal, gold and petroleum.

Key aspects of the Coalition’s policy to boost trade and investment include:

1. A lower Company Tax rate of 28.5% from 1 July 2015, representing a cut of 1.5%. According to the Coalition, cutting corporate taxes we will make Australian jobs more secure, boost real wage growth and ensure ongoing investment in the economy. It should be noted however that many of AREEA’s larger members will likely incur the 1.5% company levy to pay for the government’s paid parental leave scheme.
2. Finalise Free Trade Agreement negotiations by increasing resources within the Department of Foreign Affairs and Trade. Priorities are China, South Korea, Japan, India, the Gulf Cooperation Council and Indonesia; while the feasibility of FTAs with the European Union, Brazil, Hong Kong, PNG, South Africa and Taiwan will also be assessed.
3. Enhance Australia’s commitment to Regional Trade Negotiations: the Coalition supports the Asia Pacific Economic Cooperation’s (APEC) lead role in promoting trade and investment liberalisation and is committed to the negotiation of a Trans Pacific Partnership Agreement as a stepping stone to a longer term goal of an Asia-Pacific free trade area.
4. Enhance Australia’s commitment to Multilateral Trade Negotiations: Despite the current World Trade Organisation’s impasse, the Coalition remains committed to the Doha Round of negotiations to remove the barriers that restrict trade and investment. The priority is to improve global market access for Australia’s manufacturing, agricultural and mining sectors.
5. A Minister for Trade and Investment whom will act as a ‘sales rep’ for Australia in trade missions, private investor road-shows and capital raising ventures. The united portfolio means Australia’s trade representative will also engage with large multinational enterprises to promote Australia as a favourable investment location – reporting annually to Parliament on the outcomes.
6. Boost Australian manufacturing export base by restoring funding to the Export Market Development Grants (EMDG) program with an initial $50 million boost.
7. A Ministerial Advisory Council on trade and investment will be re-established after John Howard’s former Trade Advisory Council which was abolished by Labor. The council will act as the pre-eminent source of advice from the business sector on trade and investment issues.

AREEA’S APPROACH

AREEA is committed to working closely with the Abbott Government to restore Australia’s rightful reputation as a globally competitive and attractive place to invest, employ people and do business. As part of this mission we look forward to representing the interests and priorities of our members as the Minister for Industry and Minister for Trade and Investment begin to implement these policy plans.

We particularly welcome Minister Macfarlane’s commitment to support the resource sector’s next phase of growth through policies to wind-back red and green tape duplication and ‘kick start’ the struggling exploration market.

However, we do maintain a cautious approach to some aspects of the outlined resources policy including the proposed measures for regulating Oil and Gas Retention Leases. We believe the introduction of any ‘development deadline’ must be balanced against the legitimate need for firms to assess how they best develop the deposit.

While specific policy initiatives such as the exploration incentives are welcome, we will continue to advocate that a ‘whole-of-business’ approach that includes workplace relations reform is required to truly support our industry’s potential for productivity and global competitiveness.

For more information on the Coalition’s non-workplace relations policies in the areas of resources and energy, and trade and investment, contact AREEA’s policy team via 1800 627 771.