Remarks, Resources Roundtable
2 October 2018
Well thank you all for coming around today and it’s great to be joined here by Matt Canavan, Minister for Resources and Northern Australia and Melissa Price, the Minister for the Environment. Nola Marino who is here as the Chief Government Whip, but also as a passionate West Australian who has a keen interest in the resources sector here in Western Australia.
It’s great to be here in the west, the home of around about half our resources exports as a country. That’s why it’s incredibly important that while I’ve been here these few days to take a bit of stock about where you’re seeing things and where you want to see things going. I think it’s exciting to see the turnaround that’s happening. We’ve obviously come from a very difficult position over the last five years or so, that was not just a significant impact, obviously, on the resources sector, but had a very significant impact on the national economy. I knew that as Treasurer.
When WA is doing well, when the WA resources sector is doing well, Australia is doing well. It’s just fundamental maths when it comes to the Australian economy. While plenty was said about the GFC, frankly the fall off in mining investment off the peak of the mining investment boom had far greater impact on the Australian economy than anything else. For that to now be turning around I think is a great sign of encouragement and hope, not only for West Australians but I think for the entire national economy. So we only want to encourage that.
While there are many exciting things that are happening in many different parts of the economy, when it comes to digging things out of the ground, we do it very, very well and very profitably and we need to keep doing it. It’s an enormously important part of our national economic story and when people look into Australia from around the world, I know as Treasurer they always look at the health of the resources sector and the prospects for the resources sector and how the resources sector is meeting those challenges as a key barometer of how they see the performance of the Australian economy in the future. It plays into so many of the other sectors of the economy, whether it’s the housing sector, or whether it’s the manufacturing sector or all the others. While they might not be mining directly related, they are certainly linked ultimately in second and third round effects.
So there’s a lot of exciting things happening in this sector with some of the new base sectors around lithium and rare earths. There are also, as Melissa was reminding me just before, sort of new sectors from a climate and an environmental perspective as well. We’ll have a lot of renewable opportunities there and we’re excited about those. The CEFC and the NAIF have also been supportive in those sectors, but nickel and cobalt as well have come back into the mix of things and we welcome that.
There’s one thing I’ve checked every day for the last three years and that’s the iron ore price. As a Treasurer, I was in a regular habit of that and you know, as Treasurer I had it at 55 and I wasn’t too far off. I always like a surprise on the upside when it came to those things and I suspect you’re all pretty familiar with wanting to surprise your boards on the upside too. When it comes to these things, we’ve taken a pretty conservative approach; we haven’t over-estimated, we haven’t over-loaned I think on the resources sector in terms of how we built our Budgets over the last, particularly, three years. That has been a key part in our story in retaining our AAA credit rating. I think we’ve been pretty honest and pretty conservative about how we’ve been seeing things and it’s been able to perform. And the dividend of that has contributed, I think, to particularly the 2017/18 result, where we saw the lowest deficit in a decade. And it’s been a key contributor amongst many other things, I’ve got to say, people getting off welfare and into work has been one of the biggest, if not the biggest contributors to the Budget. But this has also played an important role as we go forward. We want to see that continue.
So today I was just hoping I could get a bit of a sounding, Matt and Melissa and Nola are far more directly involved in the sector. But I know certainty counts. I know stability counts. I know certainty in policy settings counts and some of you or others would have been involved in the work I was doing around the PRRT side of things and Matt was involved in that as well. We just have the view that when you engage in these sectors, you’ve got to be very clear and you’ve got to make sure that the people who are making investments which have long tails on them, can have certainty about the policy environment they are going to operate in. You know, this sector has been seen as a cash cow, I’ve got to say it, by the Labor Governments in the past. We don’t see it that way. We see it as an economic engine and the stronger the sector does, the stronger the economy does, the more jobs are produced. That’s where the revenue comes from. The revenue comes from people getting jobs and Australia doing well. So we want to see that continue.
