PRIME MINISTER
EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY
AUSTRALIAN MINING INDUSTRY COUNCIL ANNUAL DINNER
CANBERRA 7 MAY 1987
Ladies and gentlemen,
within a relatively short time we will be celebrating our
Bicentenary. Undoubtedly this will be an occasion of great
enjoyment. But the Bicentenary also offers the opportunity
for serious reflection about our national achievements
over our first two hundred years and about the national
challenges that await us in the future.
it is important as we approach the Bicentenary that we make
use of this opportunity. For we meet tonight in a period of
great challenge and of great opportunity for the nation as
a whole. and, certainly, for the mining industry in
particular. If together we prove we are capable of meeting that
challenge and exploiting that opportunity, we will move into
Australia's second two hundred years as a competitive,
productive nation able to provide jobs for its people and
exports for its region and the world.
if however we fail, Australia risks being left behind by the
world, weighed down with an imbalanced economy whose
capacity to provide jobs and security for our people has
fallen permanently below its potential.
The theme of this seminar is " Mining Still the Backbone of
Australia". As a description o f the current position, that assertion is
incontrovertible in economic as well as geological terms.
mineral and metal exports now account for about half of
Australia's total merchandise export earnings. In other
words, your industry makes an indispensable contribution to
underpinning the living standards of the Australian people.
International commodity markets are, however, weak,
including the markets of most of the minerals Australia
exports. The continued overcapacity on world markets in
recent years and the resultant depressed prices are problems
that most commentators agree are likely to persist into the
1990s, despite the important exceptions of gold, mineral
sands and diamonds. t.,
And our major resource buyer, Japan, is facing enormous
pressure to restructure its economy following the strong
appreciation of the yen. That is having a harmful impact on
Japan's capacity to buy Australian mineral products.
The mining industry has reacted with great determination to
those difficult circumstances.
However the assertion that mining is still the backbone of
Australia must not become a self-satisfied description of an
assured future.
If the industry is to remain the nation's economic backbone
it must continue determinedly to confront an unfavourable
trading environment. Further, the industry must play a
central role in the process of massive restructuring which
the Australian economy is undergoing a process which will
change forever many of the economic assumptions on which
Australia relied during its long easy decades of
commodity-based wealth.
Clearly that is a long term strategy. At its most basic, it
must involve a willingness to seek out and to take advantage
of all the opportunities our economy and our region offers.
It also requires the mining industry to expand and diversify
its market base. Both traditional raw materials processing
and the exploitation of high technology to manufacture new
materials must increasingly supplement the export of
unprocessed minerals. The Government has recently asked the
Basic IMetals Industry Council to review policies to promote
the processing of minerals and metals within Australia.
It is in this sense that your industry, far from being a
spent force, is what Gareth Evans describes as a bridge to
the future.
The Federal Government is determined, within the realities
of the international commodities market, to create the best
possible macro-economic environment so as, among other
things, to allow the mining industry to achieve this
transformation. I
Principal among these policies is the task of economic
reconstruction facing Australia.
The slump in Australia's terms of trade meant that a
temporary reduction in domestic living standards was
necessary, and that the task of economic restructuring had
to be thoroughly addressed after decades of neglect by
conservative governments.
I outlined this task in my Address to the Nation last June.
No-one would have been more acutely aware of the dimensions
of the task than you who earn your livelihood in the mining
industry.
The Government took steps to reduce inflation and preserve
international competitiveness; to dampen growth of domestic
demand to facilitate increased net exports and lower
domestic expenditure; to increase domestic savings; and to
encourage the development and manufacture of new products,
employing the talents of our skilled workforce and capable
of finding new export markets.
Tight fiscal and monetary policy and continued wage
moderation were necessary to achieve our policy objectives.
There car. be little doubt that these policies are producing
the desired results.
As we predicted in the last Budget, the slowing in the
economy then evident was short lived. The December quarter
saw a return to strong growth in Gross Domestic Product with
an increase of 1.1 per cent.
Latest estimates of the 1986-87 current account deficit are
of he order of $ 1 billion less than the Budget forecast of
$ 14-billion.
Moreover net exports are expected to contribute
substantially more to growth than the 1 ecnaepit
forecast at Budget time. 4pecnaeoit
Weaker than forecast consumption growth a desirable
development in present circumstances has also greatly
assisted this turnaround in the current account.
It should be noted that interpreting the current account
trend over the coming months is likely to become more
difficul-as the seasonal increase in the deficit begins to
inflate the monthly statistics.
However the underlying improvement in the current account is
now well established and is expected to continue in 1987-88.
As for GDP growth overall, it appears likely to be rather
weaker for 1986-87 as a whole than we forecast at Budget
time, essentially because of the slower growth of
consumption. Employment growth has however exceeded our expectations.
In the six months to April, employment grew by 1.4 per cent.
This means just over 100,000 new jobs, bringing the total
number of jobs created under my Government to over 780,000
the highest rate of employment growth in our post-war
history. More than any other statistic, this robust employment growth
demonstrates the underlying strength of the economy and the
success of the Government's economic policies.
lIt demonstrates too that we are making progress in achieving
our social goals.
We are and we remain committed to the creation of a fairer
and more compassionate society and no better solution
exists to poverty than the creation of jobs.
We can confidently-expect inflation to decline over the
course of the coming year or so, given continued wage
restraint and currency stability.
Interest rates, which have been high for some time, have
begun to decline. This is partly in anticipation of further
responsible fiscal measures and lower inflation, partly
because of the progressive reduction in our current account,
and partly because of greater overseas interest in $ A
assets.
We are determined to preserve and build upon these gains.
Our commitment to that goal will be reaffirmed in next
week's May Statement and in the Premiers' Conference later
in May.
There is always a danger at a time like this of unrealistic
expectations being created. But those who would set
impossible targets for this, or for any Government, must be
able to answer this question: how should we balance our
economic responsibilities with our responsibility for the
poor and the disadvantaged?
This Government has a proud record of being able to strike
the right balance and we will do so again on Wednesday
night. The May Statement will reinforce the Commonwealth's efforts
to cut public sector demand and reduce our national need to
borrow abroad to finance domestic expenditure.
But we cannot do the job by ourselves. The reality is that
the total Public Sector Borrowing Requirement must decline
as a share of GDP and not simply the Commonwealth's share
of it. The States will be required to play their part.
Wage moderation will also continue to be a crucial element
of our economic management.
The new two tier wages system is designed to continue the
wage restraint which has seen a 6 per cent fall in real unit
labour costs since we came to Government.
But it can only do so if each party is prepared to play its
part constructively and within both the letter and the
spirit of the Commission's principles.
Productivity offsets are central to the operation of the
second tier. I am aware of many instances in this industry
in which workers and management have co-operated for their
mutual benefit to raise productivity and to preserve
competitiveness. I
The new two tier structure provides a further opportunity to
secure increased productivity at all levels of the
enterprise, from pit-face to desk top.
We remain committed to the centralised wage fixing system.
But we are also determined to make whatever sensible reforms
are necessary to ensure it remains a relevant and useful
element of the Government's economic policy.
The Government will next week be introducing into Parliament
a new Industrial Relations Bill based on the Hancock Inquiry
which will contain a number of reforms to enhance the
centralised system.
On the matter of sanctions, I can assure you that the new
legislation will ensure the effective operation of the
industrial relations system, and will include appropriate
penalty provisions and means of redress.
I am sure that when they have studied it both unions and
employers will generally recognise the inherent good sense
and equity of the new Bill.
Having discussed the macroeconomic environment, let me now
turn to some matters of specific relevance to the mining
industry.
We recognise that State taxes and charges on the industry
are in urgent need of rationalisation. The Federal
Government favours the application of profit-related taxes
rather than the more inefficient production-based ones.
The Resource Rent Tax for the petroleum industry, which is
currently before the Senate, provides a good balance between
on the one hand providing an appropriate incentive for
exploration and, on the other, protecting the community's
interests in obtaining a fair share of the profits derived
from the exploitation of a non-renewable resource.
Let me add that after a review of the taxation arrangements
for the gold mining industry, we decided not to remove its
current income tax exemption so as to encourage exploration
and development and to maximise production and export
income.
The NSW Government recently introduced some welcome relief
for the coal industry but other State charges Queensland's
rail freight charges being a particular case in point are
in need of further examination.
My government also has a very positive record in terms of
eliminating unnecessary regulatory burdens on the industry.
We have given particularly close attention to reducing
export controls. Where they no longer serve useful
purposes, we are reducing them. In September last year I
announced some major changes in this area.
The controls on coal, bauxite and alumina, and crude oil
surplus to domestic needs were substantially streamlined or
relaxed. The controls on tungsten were terminated.
In addition to these very significant reforms, we have also
established a Business Regulation Review Unit which imposes
strict disciplines upon the Government to scrutinise
carefully the costs and benefits of all proposed
regulations. A special Sub-Committee of Cabinet has been
formed to consider a number of areas in which action could
be taken to reduce impediments to trade competitiveness.
We are also taking steps to reduce controls on foreign
investment. Last week Paul Keating announced further changes to foreign
investment policy. These will remove Foreign Investment
Review Board control over proposals for takeovers of
businesses with total assets of less than $ 5 million.
Takeovers within a number of industries, including resource
processing, will now be approved unless they are judged
contrary to the national interest.
Ladies and gentlemen,
I opened this evening by talking of the challenge which
faces your industry and the nation as a whole.
So far I have addressed issues which go to the economic
aspects of Government policy. But I would not want it
thought that I see the challenge as relating purely to
dollar issues, or the contribution to the nation by the
mining industry as being purely an economic one.
The truth is as AMIC recognises that the mining industry
has a vital role to play in the determination of social
issues in Australia.
At a time when the nation urgently needs export income,
there is a clear cost incurred from not exploring or
developing a particular mineral deposit.
But in some instances the social cost of proceeding with a
project is too high particularly in terms of its effects
on the environment or on Aboriginal interests.
To fully meet the challenge of our future we need to strive
together to balance the legitimate interests of all parties,
so as to maximise mineral exploration and development in
this country while being sensitive at the same time to
environmental and Aboriginal interests.
For my part, I firmly believe economic development is
compatible with the environmentally sound management of
Australia's resources.
Some recent decisions by the Government illustrate the way
in which wie have found that balance.
In the case of the Shelburne Bay sandmining proposal, the
Government concluded that as the project would not be of
major economic importance, the economic and commercial
advantages flowing from it were insufficient to offset the
adverse impact on-the environment of the Cape York
peninsula. In the case of the Stage 3 extension of Kakadu National Park
the Government has also struck a balance between its
considerable Aboriginal and environmental sensitivity and
its high mineral prospectivity.
A basis for mineral exploration in the Kakadu Conservation
Zone is currently being developed. The Government remains
unequivocally opposed to mining in Stages 1 and 2 and the
remainder of Stage 3 which, apart from uranium, are not
considered to be areas of high mineral prospectivity. our
policy on uranium remains unchanged.
The Government is also aware of the mining industry's
concern ab3out the implications of areas being listed on tho-
Register of the National Estate.
However, concerns that listing on the National Estate will
necessarily result in the permanent locking up of the
resources in an area are misplaced. Listing on the Register
is not in itself incompatible with development proposals.
It does however serve the useful purpose of focussing
attention on the broader environmental and heritage issues
involved.
As for issues of Aboriginal land rights, I know Gareth Evans
outlined to you today the details of the Government's
proposed nevy legislation covering exploration and mining on
Aboriginal land in the Northern Territory.
Gareth introduced the new Bill into the Senate this evening
and I don't want to dwell on the specifics of it at present.
I do however wish to draw out a very important principle
from it.
What we have seen has been an outstandingly successful
process of negotiation which has reached a proper and
honourable consensus.
The legislation demonstrates that conflicting interests on
sensitive dcvelopment issues can be balanced to the
satisfaction of all parties. -Wliat is needed to achieve that
balance and what was present at all stages of this matter
is genuine and committed consultation and negotiations by
the parties involved.
I was personally involved in discussions with
representatives of the Land Councils and put to them what we
proposed. I also arranged for them to meet Gareth Evans,
Clyde Holding and a committee of MPs to discuss the proposal
further.
The consensus that was reached reaffirms two principles:
the ability of aboriginal land owners to protect their land,
if they wish, from any developmental intrusion; and the
desirability, in the national interest, of facilitating and
maximising mining activity.
We reached that goal without confrontation and without
acrimony and, indeed, with unanimity.
The commitmient to the process of consultation which this
process displayed has been a hallmark of our government over
the last four years.
It is my hope that future issues will be able to be resolved
with a comparable spirit of co-operation.
For make no mistake, we will face difficult decisions as we
confront the economic challenge ahead of us.
But this government has a clear strategy to meet that
challenge.
That strategy has four elements:
We will continue to restructure the economy.
We will continue to govern with fairness and compassion.
We will continue to provide stability and strength in
government.
And we will continue to govern for the long-term future even
at the expense of copping some of the flak for decisions
which do not please everyone along the way.
I know that this is the final day of Sir Bruce Watson's
presidency of AMIC. Let me take this opportunity to thank
him for his work and to express my best wishes to Mark
Rayner of Comalco who is taking Sir Bruce's place. I look
forward, and I can speak on behalf of all Ministers who will
deal with AI4IC, to a continued constructive relationship.
Within the framework of that strategy, and with your
assistance, Australia will emerge with renewed
competitiveness and renewed confidence for a productive and.
prosperous future.