Thursday, July 16 2015
By Jane Goldsmith
WA needs significant policy reform if it wishes to become a global mining hub and a resource sector technologies leader, according to a new report from WA’s Chamber of Commerce and Industry (CCI).
The Future of the Resources Sector: A Vision for WA report stated that while Asian demand would continue into the longer term, WA’s resources sector was lacking, both as an attractive investment destination and in its research and development (R&D) into emerging resource sector technologies.
The urban populations of China and India were expected to increase by 270 million and 185 million respectively by 2030-35 which would drive resources demand, the report said.
To harness this, WA needed to overhaul a number of industry variables, including its labour market efficiency; port and rail infrastructure; taxes and royalty schemes; and push funding into developing new resource technologies.
“According to the Global Competiveness Index, Australia has poor ratings internationally for the effect of the tax system on incentives to invest (74th in the world), total tax rate of company profits (104th) and the effect of taxation on incentives to work (80th),” the report stated.
“The World Economic Forum Global Competitiveness Index’s ranking of Australia’s labour market efficiency has [also] plummeted from 19th in 2006-07 to 56th in 2014-15.”
CCI chief executive Deidre Willmott said that WA was heavily reliant on resources for economic stability and government revenue, and outlined 45 recommendations to bridge the investment gap – including improving workplace relations, removing red tape, and reforming the tax system.
“Significant reform and concerted action is needed to overcome the barriers posed by high costs and intense international competition, to maximise the huge potential of both the resources sector and associated export industries in future,” she said.
“WA has significant advantages with the maturity of our resources industry, skills and education of our workforce, world-leading research and development capabilities and our first-mover advantage with key new technologies, but we cannot rely on these alone.
“We can start by removing the budget cap and expanding the eligibility of the Exploration Development Incentive and expanding the scale and scope of the Research and Development Tax Incentive.”
According to CCI, resources contributed about a third ($78 billion) of WA’s output in 2013-14 and directly provided one in nine jobs.