Business says that in the drive for national wealth, we’re losing our way

The Albanese government’s boast of a fistful of new laws and regulations is the very thing that threatens to hold back the economy over the long term.

Prime Minister Anthony Albanese and federal Treasurer Jim Chalmers. Picture: Martin Ollman

When Rio Tinto’s board recently met in Montreal, there were half a dozen top officials from the Quebec government as well as senior ministers from Ottawa, the Canadian capital, along for a session.

Their presence was the latest in a constant and increasing dialogue between the miner and all levels of Canadian government – whether that be the bureaucrats or both side of politics.

And the message Team Canada delivered to the very top of Rio?

“What can we do to help?”

At another meeting in the past month between BHP chief executive Mike Henry and several Canadian officials, this time in Saskatoon, the message was the same. And, according to those who were at the meeting, the BHP boss said he intended to keep Queensland on his no-go zone for new investment – even after this month’s change of state government.

BHP workers at the Olympic Dam mine in South Australia’s far north. Miners are facing more and more regulation which add more friction to doing business here.

The contrast was significant; BHP has committed more than $US10bn ($15bn) building out the Jensen potash project in Saskatchewan. At the same time Rio Tinto is spending $US1.1bn to expand its aluminium smelter north of Montreal using cutting edge low-carbon technology.

That investment has promises to extend the life of the plant which is becoming strategically important and includes up to $US113m of financial support and tax breaks from the Quebec government.

While energy intensive, the plant is a major supplier of aluminium to US carmakers – and it’s not Russian or Chinese. The Canadians are proud of this point.

Many Australian politicians would struggle to name the four operational aluminium smelters here.

BHP was blindsided two years ago by the then-Palaszczuk government, when it rushed through substantial increases to the Queensland coal royalty scheme without warning or consultation. Queensland’s new LNP government has said there would not be any change to royalty rates in the next four years, which has drawn anger from the usually cool-headed Henry.

The BHP boss has previously said it was not so much the size of the royalty rise that really irks him but the way the decision was made that’s fundamentally going to damage the state – because it will impact long-term investment.

Others have said Australia is falling behind in relative rankings and, apart from net zero targets, they noted the lack of a long-term planning or at least signalling.

And while it’s a stretch to describe Australia as hostile to mining – which is its biggest export industry – the states and Canberra do need to be aware global miners have choices about where and how capital is spent. And this is being exercised.

The Boyne smelter in Queensland. Australia has four aluminium smelters and is the world’s sixth biggest producer of the strategic metal. Picture: Mike Richards

The same job, same pay rules which apply to contractors stand to hit BHP more than Rio Tinto or Fortescue. They will add to the mining industry’s conviction to commit to the upfront costs of automation at their Australian sites.

This comes at the expense of high-paid jobs at remote sites. It’s not the stuff of science fiction; a large slice of Rio Tinto’s Pilbara mine and iron ore transport networks are already operated from a low-rise warehouse near Perth Airport. More work is being done on automation.

Rio is bending over backwards to switch its Boyne smelter in Queensland on to renewable power. This involves rebuilding a power grid and this investment case needs to stack up financially as well as technically.

Other issues miners have seized on is extending to multi-employer bargaining which, they argue, along with same job same pay is a weight on productivity. There’s the glacial speed in securing permits and approvals – even for brownfield mine expansions.

Gas project approvals have simply stalled, with a focus on imports.

Elsewhere there’s confusion around state and federal regulation of greenhouse gas emissions. There’s access to skilled labour and state governments crowding out the market by running too many big-ticket infrastructure projects at once.

Legislation blitz

This week there were 45 bills passed in federal parliament, including more than 30 rushed through on Thursday to meet the deadline of the last sitting week.

Among new laws were a compulsory code of conduct directed at the supermarkets. There’s the contentious social media ban for those under the age of 16. There’s RBA amendments that includes the powerful override to force banks to lend to certain areas of the economy.

Other changes include rules boosting the power of tenants over developers in build-to-rent projects and a deeper ACCC review process when considering mergers.

In September Prime Minister Anthony Albanese said in a speech to the BCA annual dinner that he understands secure jobs and fair wages depend on thriving businesses. Still, business needs the rights settings to thrive.

At productivity round table hosted by The Weekend Australian and the BCA, Wesfarmers chief executive Rob Scott said his plea to both sides of politics going into an election year was simply “do no more harm”.

BHP chief executive Mike Henry. Picture: Luke Marsden

“We can talk about what the opportunities are, but we should also be mindful that there is more damage we can create with more red tape, more unnecessary taxes and so forth,” Scott said.

“The number one ask would be: ‘Please, let’s do less damage, less red tape and less regulation’.”

One mining boss this week said even if Albanese and some of his senior ministers were making positive noises in meetings, “this isn’t filtering down to the bureaucracy”.

In the relative sense Australia has been falling behind in the race for global capital. At least that’s the view from inside the boardrooms.

Canada has shown it means business and this has resulted in the country becoming a powerhouse in cars, oil and gas production, and mining. It has become so good in manufacturing that incoming US president Donald Trump has threatened a 25 per cent tariff.

In Australia one senior mining executive with hundreds of millions of dollars to spend can’t even secure a meeting with the relevant minister.

Trump’s America is going to make another go at being a destination for foreign capital – even with tariffs in place.

And make no mistake, the Argentinian economy is still a basket case but there has been a marked shift under free-market warrior Javier Milei to finding a way forward.

Wesfarmers chief executive Rob Scott. Picture: David Berrie

It’s working. In past year both Rio Tinto and BHP have flagged major developments there in lithium and copper respectively, which will involve billions of dollars in spending.

Glencore chief executive Gary Nagle recently told The Weekend Australian he had met with Queensland’s new Premier, David Crisafulli, and although he was disappointed the coal royalty would stay in place, at least the new government signalled that its wanted the state to get back on track as a destination for investment. That’s a big positive for Nagle.

In NSW, Glencore has been trying for three years to get approval to extend the life of a high-quality thermal coal mine for exports. And, more than anything, time is a killer of internal rate of return when it comes to assessing a project.

Another mining executive told The Weekend Australian that the big misunderstanding among politicians about business was there’s “no pot of gold” that sits inside the company. After taxes are paid, profit is either sent back to shareholders – and this includes millions of ordinary Australians through super funds – or is set aside to invest in future growth.

Governments should be focused on getting a bigger slice of the investment bucket by removing the barriers that stand in the way of businesses spending money, the executive said.

“The thing that gives you confidence to do that is when governments say, ‘we want you to do business. We want to make it easier for you – and less red tape’.”

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Originally published as Business says that in the drive for national wealth, we’re losing our way