No Change

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-By John Boley

You don’t get much change out of Martin Ferguson – in either sense. He doesn’t give ground in an argument, and he certainly retains a consistency about his views. Former ACTU president, he is Member of Parliament for Batman and federal minister for resources and energy and for tourism. Martin talked to Australia Resources Focus and gave us his characteristically uncompromising views.

I put to Martin the views of numerous ARF readers who have echoed the recent widely-publicised comments of BHP Billiton director Lindsay Maxsted (who complained about “a lack of overall vision” in the current government, “and therefore you don’t get consistency in the determination of policy and application of policy, and that’s the thing we all dislike about it. Everything is about short term and ‘what will win my vote tomorrow?’ as opposed to what is in the long-term interests of the country.”)

Martin reacted as if stung by criticism of the Gillard government as lacking vision. “I don’t accept that. I have dealt with issues of importance: firstly, trying to do the right thing by industry from an infrastructure perspective. I didn’t see the Coalition out there barracking for the privatisation of QR, standing up in support of the need to resolve outstanding issues from a railway infrastructure or coal loading point of view in NSW, or working with industry in SA to resolve long-standing issues going back to Coalition government days and the decisions of the previous treasurer Mr Costello with respect to railway access and working out how we overcome the failure of industry overall to invest in the skilling of Australia and fronting up to a very difficult issue in terms of migration and guest labour under approved conditions on our major resource projects.

“They seem to me to be pretty important issues.”

He does not worry that the harsh criticism has derailed relationships. In the specific context of the pending MRRT, “I think my department and I have a good working relationship with industry. We worked hard at trying to achieve the necessary investment outcomes and I think they appreciate the process of consultation that has occurred since the original announcement.” More generally, “I personally have a good relationship with both the minerals and the petroleum sector.”

That doesn’t prevent Martin from taking a dig at leading figures. Commenting on the MRRT, he says “to a large extent within industry there is an acceptance that a profit-based tax is a fair outcome and an appreciation that the tax will come into operation from July 2012.” However: “Obviously you get speeches from the likes of Andrew Forrest, but that’s not surprising. He wanted to design a tax to suit Andrew Forrest’s needs – this is about a tax that suits Australia’s needs while at the same time maintains Australia as an attractive place for investment. Commodity prices are exceptionally good and the Australian community expects that each gets a share of the huge increase in prices that have occurred.”

Martin is adamant the government is taking the right direction on the skills issue and that industry needs to move with it. “The last budget focussed on [industry’s] priorities, which were increased skilling of Australia and they also understood that they would meet the government halfway – they themselves have got to do more. I commend the MCA on behalf of the major companies in Australia for also entering into a formal agreement with the Commonwealth government in respect of adult apprenticeships.

“But they also understand that, more than ever, we have used a migration scheme to focus on their skill requirements and we have gone one further step to actually work with them to put in place enterprise migration agreements, focussed on the major projects in Australia”¦ to work out how we bring to Australia both skilled and semi-skilled labour to take pressure off them from a labour force and wages point of view.”

Government is working with the industry “to work out how we can do whatever we can to help them achieve their investment horizons – and also work out a resolution of outstanding infrastructure issues and the commitment of the government for funding and guaranteed loans.”

If you look at Australia today, Martin reminded me, “our fundamentals economically are very sound – it’s not our AAA rating that is in trouble – compare us to countries like the US, North America in general, I could say Europe [too], we are in pretty good shape.”

He rejected the ‘lack of infrastructure’ barb too. Canberra has decided to upgrade the Coral Railways in the Hunter (with the NSW government) and is supportive of the QLD government’s decision to privatise QR “which has been a basket case for some time – it’s leading to a bigger focus on running the business in a commercial way and also lifting productivity, so to be fair, from the resources and petroleum sector’s point of view we have been seeking to work with industry to resolve any concerns they have.”

In addition, “we will soon complete the upgrade of the Hume Highway (from Sydney to Melbourne) which effectively means dual-carriageway each way; we are investing heavily in completing a similar upgrade of the Pacific Highway from Sydney through to Brisbane.” The M7-F3 connection is an outstanding issue that will “probably have to be addressed through public-private partnership. We’ve also started an upgrade of the Bruce Highway, which is again going to take a considerable time. These projects are not going to be done overnight.” (The Queensland government says it would cost about $1.3 billion to flood-proof the Bruce Highway between Brisbane and Gympie. Queensland Main Roads Minister Craig Wallace says “both sides of federal politics have neglected the Bruce for the last 40 years.” Federal Treasurer Wayne Swan has confirmed $285 million in the budget will fund five major upgrades to the Bruce Highway in Queensland.)

Still combative, Martin added: “In the case of QR, Labor was listening to industry demands [to privatise it]. There’s a question of vision and a question of doing practical things in an ongoing basis that lead to improvements in productivity. I generally find those that like to make speeches about vision tend to do very little in reality.”

Both government and industry “failed over the previous decade to predict how strong the last resources boom was going to be or predict how strong the growth in China was going to be. For those reasons there was a failure (on both sides) to invest in the expansion of the commodities sector, especially iron ore and coal, which effectively meant that we lost market share.

“Similarly I don’t think we spent well – as a government – the dividends on the last resources boom. There was too [little focus on] investing in the fundamentals of infrastructure and skilling. I am critical of both the government and the private sector’s performance and, privately, some of the mining houses actually accept that criticism.

“I think the major mining houses are in catch-up mode. There are billions and billions of money committed to the new investment in Australia to expand our resources sector. There is an opportunity there for Australia to grab and I think industry has appropriately responded.” For example, take Mr Maxsted. “I am looking forward to achieving a very important decision from BHP on the expansion of the Olympic Dam in SA.” (A much-publicised $30 billion copper and uranium mine extension at BHP Billiton’s Olympic Dam in South Australia would make it the world’s biggest mine and transform it into a trillion dollar project with a life of at least 100 years. The company’s decision was expected any day.)

“One of our problems is the impact of the mining sector on the rest of Australia. We have a major transformation of the Australian economy occurring. It wouldn’t matter who was in government, Abbott or Gillard, this will occur irrespective of government policy. The role of government is to try to assist that and at the same time manage the impact of a strong dollar which is putting real pressure on other sectors of the economy such as manufacturing and tourism, especially the latter where they cannot compete for labour with respect to the wages and conditions now being offered by the mining and petroleum sectors.

“I think the resources and energy sector know that Australia is well placed with proximity to growing markets. Hence the substantial investment pipeline, hence pain at the moment in terms of growth from an infrastructure and skilled labour point of view. It’s that challenge we all have to work together to meet. I might say, some of [the industry] must lift their game on training – including working constructively with indigenous communities, a source of labour that for too many years was neglected by industry.

“Industry wants to grab the opportunities for growth and we have to work together to facilitate it. If they want to talk about vision” – this has bothered him throughout our chat – “that’s the vision of this government. They might talk about [high] speed rail and China but they didn’t have to try to decide which is our greater priority – speed rail from Brisbane through to Melbourne or fixing our key transport and commodity corridors. My view is you have to put the horse before the cart. Firstly you have to get the fundamentals right and that’s about real vision, not about people who make speeches and never deliver.”

But, as a sign-off, Martin sounded a conciliatory note: “I don’t go round looking to have ‘short-term’ jibes at industry because I think historically both industry and government have got it wrong and to be fair, both are now trying to work out how we can overcome the failures of the past.”

Strategic Resources

There are 17 classified rare earth elements, many of which have strategic purposes. Rare in name only, these elements are anything but scarce as they are found all over the world. The challenge rare earth elements pose is during extraction, as they exist in low concentrations and are difficult to separate from one another.

September 26, 2017, 7:15 PM AEST