Economic wisdom from the Bush Summit coalface

The Bush Summit is a vital forum to get a sense of how those in the productive engine of Australia can feel short-changed and overlooked in the decisions taken in Canberra and the major centres. Mining magnate Gina Rinehart has been quick to cut to the chase that over the past decade, our mining industry has provided trillions in export earnings, supporting many Aussie businesses and paying $252bn in wages and $357bn in taxes and royalties along the way. Decisions such as the one by federal Environment Minister Tanya Plibersek to effectively pull the plug on the proposed $1bn McPhillamys goldmine in central western NSW for cultural reasons that cannot be made public are sending an unwelcome message to boardrooms and the bush.

The view from those gathered this week in the Pilbara, the geographic heart of the nation’s modern mineral riches, was of rising government interference and increased sovereign risk. These concerns are borne out by research by the Mining Council of Australia that we are currently losing out on $68bn of investment each year given major projects not proceeding.

Ms Rinehart says “an avalanche of dangerous policies increases in the size and expense of our governments, saddling future generations with the burden of record debt, increasing governments’ bureaucratic reach with ever-increasing tape, is in reality not good for our future or that of our children and grandchildren”. She is particularly concerned about the fragility of the energy transition given that access to cheap and reliable energy is what has allowed human beings to lift themselves out of abject poverty and to obtain the standards of living we have today. Her comments follow confirmation by the Australian Energy Market Operator this week that the energy transition is on a fragile path and dependent on the billions of dollars of government programs being delivered on time to avoid blackouts in the nation’s most populous states as early as this year. Big commercial users of electricity are increasingly being asked to curtail their power use at times of high demand. The outlook is most concerning regarding gas. High domestic prices are putting local manufacturers at a competitive disadvantage but politicians, at both state and federal level, have been more focused on the demands of ideologically driven groups that want to stop future gas developments. Meanwhile, farmers and bush communities are being asked to bear the brunt of industrial development for an uncertain renewable energy revolution.

Ms Rinehart’s views are shared by many in regional centres who feel disconnected from the decisions that are made about them. Western Australian Treasurer Rita Saffioti gave the Bush Summit a fresh perspective on the controversial GST carve-up that gives her state a guaranteed share of the consumption taxes it raises. If reform is on the agenda, Ms Saffioti wants Canberra to consider a range of bizarre calculations she says punishes her state financially. She says funding national parks on a per capita basis, as opposed to the land area they occupy, defies logic and rewards the smaller states. She wants the Productivity Commission to recommend funds be allocated as they are for erosion and foreshores, which is correlated on the length of the beach that needs to be maintained, instead of the population. Ms Saffioti also questions why Tasmania, which is 68,000 square kilometres in size compared with WA’s 2.6 million square kilometres, received $648m for remoteness compared to $633m for WA.

The fact is things that make sense to bureaucrats in Canberra do not always ring true on the ground. Events such as the Bush Summit are an invaluable opportunity to get a much-needed broader perspective.