Thursday, 21 September 2017 Sydney
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Energy, Mining and Resources::

The unprecedented global economic adversity that has afflicted the globe over the past 12 months has profoundly challenged the Australian minerals industry's capacity to endure and grow.

The world has been caught in the 'perfect economic storm' but this will pass as the developing world continues to urbanize and the developed world shakes off recession. We are already seeing signs of this. As the industry works through this difficult economic phase and looks to position itself for the inevitable recovery, there has arguably never been a greater imperative to get the intersection between public policy, business operations and sustainable development right.

 

This will be a critical determinant in how we weather the storm - how we position ourselves for future growth in doing what we do well - optimizing the conversion of natural capital to societal capital, measured in environmental, social and financial terms. In the wake of the financial crisis, there will be a temptation to fundamentally re-order markets and re-regulate - this is understandable given the scale and causes of the downturn. But it is important that the pendulum does not swing too far in the other direction as a counterweight to the current economic malaise.

 

The current turmoil in the global economy, its product and capital markets, was an economic storm waiting to happen. But, within this storm, while there will be some damage, even wreckage and few really know how long it is expected to rage; there are signs that the worst of the carnage has passed, though the impacts are far from over, but we are into a clean-up and rebuilding phase.

 

We are confident that the underlying fundamentals of the economic super-cycle are checked but not compromised, and thus underlying demand for minerals products remains sound. Demand for minerals will kick back to or exceed supply, prices are likely to move rapidly and the challenge for minerals-rich countries is to ensure that we are well-positioned to work through the slow-down and to capitalize on the inevitable correction.

 

With the right policies in place to support an industry reknowned for its resilience, adaptability and innovativeness, the minerals industry in Australia will emerge stronger and better placed when the inevitable recover occurs. But much will depend of future policy settings.

 

The policy responses of the Australian and other Governments around the world will be the critical determinant of the depth and length of the current crisis of confidence in capital and product markets and the global economy as a whole.

 

We have strongly advocated a platform of policies and measures that are likely enduring in their effect in building enduring  national capacity, supportive of aggregate demand, employment, and sustainable investment and development.

 

  • Policies and measures that support investment over consumption in building national capcity;

 

  • Measures that address underlying systemic policy failures of the financial system;

 

  • Supporting continued micro-economic reform - specifically, water, energy, business and environmental regulation, OHS and tax.

 

  • Trade and investment policies that promote open and competitive markets - keeping markets open must be an absolute priority for all policy makers if the world is to rebuild confidence and capacity in the global financial system, not further erode it

 

  • A root and branch review of government expenditure to complement the same comprehensive review of the tax system and to ensure spending is targeted efficiently and effectively.

 

The Federal Government has laid down very positive markers on free trade, occupational health and safety reform and investment in nation building - specifically in their commitment in addressing the cancer of neglect in Australia's infrastructure and education system that we enthusiastically applaud. But there are other issues where, although we share the Government's objectives, we differ in the means of achieving them. None is more obvious at the moment than climate change.

 

The Government's goal for a measured transition to a low emissions economy is supported by the minerals industry as is the Government's push for a global emissions protocol and its unwavering support for low emissions technologies, and specifically, clean coal among the imperative for technology advances across the suite of all energy sources.

 

And amongst current debate on the Carbon Pollution Reduction Scheme, let me be very clear - we support a market mechanism for pricing carbon. Where we differ is on one simple, yet profound, point - the full auctioning of permits from day one of the emissions trading scheme. We support a phased approach to full auctioning, just as does the EU and now the Obama administration.

 

 

Foreward: Mitch Hooke
CEO Minerals Council of Australia