Minister for Resources and Northern Australia, Matt Canavan, has announced a series of government investments to promote the growth of the mining industry.
Canavan stated that the “peak of mining investment is over” as a result of falling commodity prices, job losses, and some mining companies experiencing debt issues. Canavan spoke optimistically about the future of the mining industry, stating that:
“Last year Australia exported record amounts of coal and iron ore, and we are on track to become the world’s biggest exporter of liquefied natural gas. The resources sector now employs double the number of people it did before the boom and, as a share of our economy, it is at a record post-war high of 9 per cent.”
To support the industry, Canavan announced a number of infrastructure and exploration projects, as well as a $5 billion loans fund to “help provide low-cost development finance.” Canavan argued that due to mining’s significance to Australia’s economy and the “downturn in exploration from private companies”, it was right for the government to “ramp up its role in mapping Australia’s resources.”
While it is positive to see the government acknowledge the importance of the mining industry, it is important to acknowledge the significant red tape issue affecting the sector.
Mining in Australia is awash in red tape, with overlapping legislation and duplicity between state and federal governments creating significant obstacles to the industry’s development. The myriad of red tape companies are forced to comply with is illustrated by the Roy Hill project, which required more than 4,000 licenses, permits, and approvals in its pre-construction phase.
As IPA Research Fellow Darcy Allen wrote on this issue:
“This red tape burden leads to serious delays in getting projects up and running. In 2012, research for the Minerals Council of Australia by Port Jackson Partners found that Australian thermal coal projects experienced 1.3 years’ additional delay relative to the rest of the world.”
“Every minute our mining companies spend pandering to government is a minute they don’t spend hiring an additional employee, or discovering new innovative and efficient processes.”
The best way the government can help the mining industry is by cutting red tape. This will allow companies to spend less time complying with bureaucracy, and more time increasing productivity and creating jobs.
By Michael Husek