John Roskam- Resources & Energy Symposium 2012

Australia’s Bust Will Be Our Fault

John Roskam – Executive Director Institute of Public Affairs

Resources and Energy Symposium Broken Hill 20 - 23 May 2012

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Problems already apparent... BHP Chairman Jac Nasser - Australia is “one of the higher-cost countries in the world".

Rio Tinto CEO Tom Albanese – “Something that you would have planned to have built four years ago might be 50 or even 100 per cent more expensive to build now, so your dollar doesn't go as far.”

BHP Petroleum Chief Michael Yeager - “Right now, the Western Australian province in general is very, very expensive.”

Deloitte Access Economics report – “policy uncertainties and cost increases have the potential to increase the risks and costs of investing in Australia and make other countries more attractive.”

APPEA chairman David Knox - “changes to policy and regulatory settings are undermining confidence.”


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OPPOSED

Regulation

In 2007 the government declared its “one in, one out” policy on regulation.

That worked (not). They’re only 12,777 regulations off the mark.

Since 2007 there’s been 12,835 new regulations and just 58 were repealed.


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Legislation


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Public Sector Growth


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Source: Australian Taxpayers’ Alliance

Public Service Salaries


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Head of the Department of Climate Change - $700,000 Secretary of the Prime Minister’s department - $825,000 In comparison: Head of the US Treasury - $186,000 Governor of the Bank of England - $487,000 Chairman of the Joint Chiefs - $215,000 Plus 2790 bureaucrats in Canberra who typically earn between $200,000 and $360,000

The Carbon Tax

http://carbontaxcalc.com/ Resources and Energy Symposium Broken Hill 20 - 23 May 2012

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The Claim: "Treasury modelling estimates that under a carbon price

average incomes will grow strongly." (‘What a carbon price means for you’, page 7, Australian Government publication

sent to every household

The Research: The government's own forecasts show Australians will lose at least $1.4 trillion

in national income by 2050 because of the carbon tax.

(‘Australia's low-pollution future’, Department of Treasury, July 2011; Henry Ergas, 'Climate policy a burning issue', The Australian, 10 June 2011)

AUSTRALIAN FINANCIAL REVIEW, JULY 1, 2011

KATHERINE TIMES, JULY 6, 2011 THE AUSTRALIAN, JULY 8, 2011

THE AGE, JUNE 30, 2011

HERALD SUN, JULY 7, 2011

COURIER MAIL, JULY 12, 2011

Risks to Australian Prosperity

Forty years ago only 3% of working age Australians depended on welfare payments as their main source of income. Today it is 16%. Today 5 workers support each person on welfare.

Government projections indicate that by 2050 it will be 2.7

For each older person in 2007, there were five working-age people, while in 2056 there will be less than three working-age people for every older person.

%

Percentage of Australians 65+ Workers per Welfare Recipients

Source: Intergenerational Report 2010

Risks – Complacency

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Australia’s geographic proximity to Asia was once a significant advantage, however, with the acquisition of Very Large Ore Carriers (VLOC’s) the relative cost of shipping ore from Brazil has decreased

Source: International Shipping Reports

Risks – Shipping

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AUSTRALIA to CHINA BRAZIL to CHINA

Cost of shipping Iron Ore – BRAZIL vs AUSTRALIA

Competitive Challenge

Source: The Economist, 6 January 2011

Australia also faces an increasingly competitive global marketplace with competition from previously unlikely challenges. In terms of mineral wealth and proximity to Asia.

Africa is shaping up as a likely provider of commodities.

According to the IMF, in the next 5 years, 7 of the worlds fastest growing economies will be in Africa, including:

• Mozambique

• Congo

• Ghana

• Zambia, and others

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Gross Value Added to State Product by the Mining Sector 2009-2010

Source: Aroney, Prasser & Taylor “Federal Diversity in Australia – A Counter Narrative”

The Mining Sector

%

Northern Australia

Ten electorates in the Commonwealth Parliament, predominantly in the North, make up:

• Approximately 6,442,299km2

• Approximately 83% of Australia’s land mass

• 6% total representation in the Lower House


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Does Istanbul govern Dublin?


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%

North Australia is Different

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Australian States % Population Growth 1901-2009

Source: ABS

Northern Australia

Land Mass


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Population

Rainfall in Gigalitres


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Percentage of Australia’s Agricultural Production

Competitive Advantage of the North

Special Economic Zone


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Regional Queensland & WA


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The percentage of respondents in regional Western Australia and regional Queensland who answered IN FAVOUR…

OPPOSED OPPOSED

DON’T KNOW

IN FAVOUR

“Would you be in favour or opposed to a establishment of a Special Economic Zone with low taxes to stimulate growth in Northern Australia”?

Source: Galaxy Poll 13-15 May

Special Economic Zones SEZs have low taxes and low regulation

They encourage rapid economic growth in underdeveloped areas

An SEZ in Northern Australia would mean economic development and population growth in the North

SEZs have been successful in generating economic growth internationally. There are currently 3,500 SEZs in 115 countries.


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OPPOSED OPPOSED

DON’T KNOW

Technology

John Roskam- Resources & Energy Symposium 2012