THE Australian Bureau of Statistics’ (ABS) latest national account data has shown mining investment in the country is in the midst of a downturn, after recording its 12 consecutive quarterly fall.
The data shows mining investment (in current price seasonally adjusted terms) is down 10.6% while non-mining investment rose by 4.8%.
This continues the trend seen since the March quarter 2014 with non–mining investment’s contribution to total GDP outweighing the contribution from mining investment.
“At its peak in the December quarter 2012, Mining investment contributed 9.4% to total GDP,” the ABS said in its explanatory notes.
“This has now fallen to 3.4%, while non–mining investment’s contribution has risen from 7.5% in December quarter 2012 to 9.0% this quarter. The fall in mining investment is closely aligned to the decline in new engineering construction.”
AMMA’s principal adviser, industry and economic policy, Tristan Menalda, said the data was important as it was a leading indicator to the long-term strength of the Australian mining industry.
“This data demonstrates how as a country we need to make the Australian resource industry the premier place to do business, invest and to create jobs,” Mr Menalda said.
“If we fail to resecure mining investment, Australia:
- risks over $10 billion p.a. in mining taxes that gets recirculated by government into our schools, hospitals and community infrastructure,
- risks have a falling terms of trade and lower exchange rate
- risks hundreds of thousands of direct and indirect mining jobs – which will have a direct impact on their standard of living.
“Australia should be a global powerhouse in the mining and energy sector. We need urgent reform to turn this mining investment downturn around.”
Some of the key reforms advocated by AMMA which would address this mining investment fall include:
- A competitive tax rate (no more than 25%) for all businesses regardless of size.
- Taxation and stimulus arrangements for supporting resource exploration.
- Streamlined project approvals achieved through a ‘one-stop-shop’.
- Removal of moratoriums that are hindering Australia’s nuclear and gas industries.
- Regulatory systems that encourage both new greenfields investment and brownfields expansion.
- A strong fiscal environment that encourages research and development, innovation and technology investment in Australia.
- Sensible, sustainable and agile social licence to operate frameworks.
For more information about these reform areas, the ABS mining investment data or any other industry and economic policy issue, contact [email protected] or call AMMA’s policy team on (03) 9614 4777.
AMMA’s Resource Industry Market Outlook is a quarterly publication exploring all economic, industry and investment related indicators. Click here to visit past edition, with the next to be published in early February 2017.