REG HOWARD-SMITH
CHIEF EXECUTIVE OFFICER
CHAMBER OF MINERALS AND ENERGY OF WA
PROFOUND&PRODUCTIVE
Locking in long-term prosperity for WA
The nature of the resources sector will begin to change over
the next 12 to 18 months as construction of major resource
projects near completion, but writing this off as the ‘end of the
boom’ ignores the best part – production, and many solid years of
it ahead.
No one wants to renovate their house for five years, they
want to move in and enjoy the space they created. The same
goes for resource projects. Thousands of jobs are created
during construction but it is in the production phase that
the full economic benefits are felt by governments and the
wider community.
The strength of the resources sector has unfortunately made
it an easy target for significant increases in taxes, charges and
levies over the last two to three years with a state government
royalty review on the way.
We’re
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www.hatch.com.au
With over 11,000 employees in 65 offices across the
globe, and more than 1,000 in Western Australia,
Hatch in Perth has been an integral part of the
industrial boom in the Mining, Infrastructure and
Energy Sectors in Australia.
We focus on a one-team approach, bringing value
and practical innovation to all our projects. Safety,
Quality, Sustainability and Innovation are our key
commitments to clients. That makes us unique in
our industry.
However most concerning is the potential taxation changes
by the federal government’s Business TaxWorking Group, which
will remove the deductions available for plant and equipment
first used in exploration, reduce the thin capitalisation ratio and
research and development offset. The changes are significant
and their impact on the resources sector would need to be
thoroughly understood through proper consultation.
With weaker commodity prices, the rising cost of doing
business and these additional burdens, it is imperative we
maintain, and in some cases re-establish, our international
competitiveness. So even if some of these change, it could be
critical to the financial viability of existing or potential projects.
I look back at how far the resources sector has come in the
last 20 years or so and I am amazed by the growth. In 1992
WA produced 108 million tonnes of iron ore, with the majority
exported to Japan and worth around $14 a tonne. Resource
companies contributed $350 million in royalty payments to
the state and 28,000 people were directly employed in mining,
oil and gas.
Today, we produce around 395 million tonnes of iron ore a
year; on average it is worth $120 a tonne, with China now our
dominant export market. We are now at 111,800 people directly
employed in the resources sector and for every one of these
jobs, the Chamber of Minerals and Energy (CME) estimates
that between four to five other jobs are created to support them.
This means half a million people in this state are earning their
living off the choices our sector makes. It’s a big responsibility
and the support from the community for what we do is
incredibly important.
To ensure the strength of the resources sector continues
for years – providing the jobs, royalties and infrastructure and
laying the economic foundations for the next generation – it is
important that governments embrace broad economic reform
but also new commodities to expand our export base.
In July this year CME led a delegation to Germany, France
and the United Kingdom to promote Australian rare earths and