Government must focus on serious productivity growth

Approval processes for energy projects must be streamlined. Picture: Getty Images

How does a nation as rich in minerals, energy and skills as Australia lose its standing as a global resources hotspot?

To borrow Ernest Hemingway’s famous take on bankruptcy, two ways. Gradually, then suddenly.

Gradually, when layer after layer of law and decree slow project approvals to a trickle and starve the sector of new investment. Then suddenly, when energy costs soar at the precise moment industry’s demand for low-emissions and low-cost electrons explodes.

Throw in productivity-crushing workplace reforms and it’s not hard to understand why Australia’s appeal has dimmed.

International capital is fluid. It flows to the path of least resistance and highest returns. Right now, that path leads elsewhere.

It is a problem only likely to grow in the face of a Trump administration determined to unshackle business, slash regulation and supercharge US investment.

Australia can no longer ignore or downplay the threats facing its resources sector. They are real. Left too long, they threaten to become existential.

We’re not there yet. But the window for action is closing. And it’s closing especially rapidly on long-held aspirations to capitalise on our natural advantages and move into further downstream processing.

The Chamber of Minerals and Energy WA has released a comprehensive federal government pre-budget submission.

A little over three months – at most – from a nation-defining election, the document is perhaps best read as a wish list for our policymakers. A wish list and a warning.

At the heart of the more than 90 recommendations put forward is a singular goal: a long overdue return to meaningful productivity growth.

The spiralling cost of living has rightfully captured headlines. But underpinning that crisis is another. A decade of anaemic productivity growth – including three years in reverse to mid-2023 – is reverberating through the economy. The shockwaves have now reached the kitchen table. Living standards, in the form of GDP per capita, have fallen for seven consecutive quarters.

The resources sector has long been among the most productive in the country. For evidence, look no further than wages 57 per cent higher than the national average.

Achieving that has required enormous investment – $1.7 trillion across the past two decades alone – to adopt new technology and build economies of scale.

It has required harmonious industrial agreements that have allowed workers and businesses to share the spoils of lower costs and higher profits.

It has required efficient and timely access to land. And it has required reliable, low-cost energy.

Each of the ingredients of that success is now at risk, threatening to deprive the sector of the substantial capital required to get productivity moving again.

Federal workplace reforms have dramatically increased the threat of disruptive industrial action, including strikes that the Pilbara has not experienced since the 1980s.

Project assessment and development timeframes have progressively blown out and trail behind competing jurisdictions.

Wholesale electricity prices in Western Australia have roughly doubled in three years to levels comparable to those on the eastern seaboard.

All of this threatens the pursuit of investment required just to maintain and replace existing mines, let alone expand and grow.

The chilling effect on both current and prospective downstream industries like critical mineral refining, hydrogen and green iron production is even more pronounced.

That is why the CME has ­recommended unwinding destructive workplace changes, particularly multi-employer bargain­ing and the ability for unions to initiate bargaining without majority employee support.

Every mine site and refinery in this country has unique production costs. An IR system that fails to recognise that basic commercial reality risks the future viability of the entire sector.

We have also called on the federal government to hit pause on stage two of the “Nature Positive” reforms to allow further consultation. Industry supports reforms that are better for the environment and better for business. The Nature Positive laws as currently written are neither.

A more immediate priority must be the pre-election passage of the proposed production tax incentives (PTIs) for critical mineral refining and hydrogen production that sit at the heart of the Future Made in Australia Plan.

To complement those supports – and the Green Aluminium Production Credit announced last week – CME is also calling for the introduction of a green iron PTI to encourage investment in a promising initiative.

Production credits are required to compete with significant tax incentives elsewhere but must be accompanied by action to shore up Australia’s fundamentals. This must include streamlining the end-to-end approval process – for both energy and resources projects – and significant additional investment to accelerate the supply of low-emission, reliable and affordable electricity.

Rebecca Tomkinson is chief executive of the Chamber of Minerals and Energy WA.