One reason Australia’s economy has fared well despite interest rates rising to a 12 year high is that our mining industry has been booming. While the massive increase in energy prices over the past few years has created pain for Australia’s families, as a nation we are an energy exporter so those increased prices have created more wealth for Australia as a whole.
That extra revenue is what allowed the former Liberal National Government to reduce fuel excise for six months and for this government to provide subsidies on electricity bills.
This commodity price driven bounty might be due to end abruptly and we may not even be in a position to benefit from the next commodity price boom.
Already energy prices are down from their peaks. The coal price is 30 per cent lower over the past week than the same period last year. This is despite record imports of coal in Asia. As a whole, Asia imported over 83 million tonnes in December and the highest amount on record.
This record demand has not lifted the coal price, however, largely because of increasing supply from Indonesia. Coal production in Indonesia rose an astounding 20 per cent in 2022. Unfortunately, coal production has stayed flat in Australia so we will not benefit from this rising demand.
The story is similar for oil and gas. Despite what you might read about the American Government’s climate policies, US production of oil reached an incredible 20 million barrels a day, three times more oil production than the US produced just over a decade ago.
Gas is a by-product of oil and thanks to the increased production of gas, the US is set to overtake Australia as the world’s largest exporter of LNG this year. Just like coal, there is no prospect of a substantial increase in Australian gas production. We have missed the boat.
We have missed the opportunity because our government is not welcoming investment in mining. Each year the government puts out a report on a list of mining projects that are in the pipeline and what stage they are at. The most recent list came out just before Christmas.
As my colleague, Senator Susan McDonald, has shown 72 mining projects, worth $68 billion, have failed to advance over the past year. These projects could generate 17,000 jobs but have stalled.
Three coal projects in Central Queensland have been shelved altogether, and two of these (Blackwater South and Valeria) have been because of the Queensland Government’s royalty increases.
At a Federal level, the Labor Government has imposed price controls and more red tape on coal and gas projects. The Government no longer tries to market Australia as a destination for coal and gas investment despite record demand for fossil fuels. Instead the Government prefers to sell Australia as a renewable energy powerhouse.
Yet those projects are going nowhere with new renewable projects falling to record lows last year too. A large offshore wind project has failed Federal environmental approval and people are beginning to question the wisdom of turning vast amounts of farming land over to wind towers and solar panels.
We are only creating so much wealth from mining thanks to the large investments that were made in new mines and gas fields during the last mining boom. If we do not attract new investment soon, the projects built a decade ago will come to the end of their life.
With mining companies now paying more than half of Australia’s company tax revenues, how we will afford to pay for things? The answer is we won’t be able to and we will all be poorer for it. We need governments that will back our mining industry so that our region can remain strong.
