Since the 1960s and Donald Hornes’ book ‘The Lucky Country’, Australians have spoken about how Australians should do a better job at managing the country rather than relying on ‘luck’. For example Ex-Australian Prime Minister Bob Hawke said “Australia must become the clever country.” 

And while we at Dynamics G-Ex support the cultivating of knowledge and skills that will help the country compete in the ‘Information Age’, to put all our eggs in this “clever” basket is not the wisest move. This rhetoric dismisses the very industries that have helped Australia prosper as a nation.

Since the 1980s, much investment has gone into supporting the Australian services industry. The basic problem with this is, that by doing so, it means undervaluing the contribution that the agricultural, manufacturing and mining industries have played in the Australian economy. Let’s not forget that the country still relies heavily on these industries by way of providing employment to people and revenue to governments.  

Consider this for a moment: what would have happened to the Australian economy during the global financial crisis, if the mining industry hadn’t stepped in to do the lion share of the economic work?

Our economy would have tanked, so to speak.

Now instead of ‘thanking’ the mining industry during the GFC, the government instead proposed the Carbon Tax and Minerals Resource Rent Tax (simply known as the “mining tax”). A blow to the industry that helped Australia not only survive the GFC, but thrive in a time of global economic uncertainty.

Biting the hand that feeds it.

The federal government receives money in the form of royalties from mineral producers as well as corporation tax and employees PAYE tax. When revenue from mining decreases, it signals a “downturn” which is what the industry is experiencing at the moment. Our whole economy is actually worse off when the mining industry is struggling.

In fact, budget papers indicate that the biggest contributor to the federal government not meeting its budget forecast in 2015-2016 is the shortfall in company tax. Receipts were 5.1 per cent lower than forecasted, primarily driven by the fall in commodity prices which lowered the sector’s profitability. This data should encourage the government to focus on strategies that will help bolster the industry so that it can regain some ground and reduces its losses. 

If the government profits heavily from the mining and exploration companies, does it not make economic sense to invest in these industries? 

The mining future is bright for those most prepared.

We know that global consumer demand for goods will continue as the third and developing worlds come out of poverty and - propelled by capitalism - become increasingly wealthy. Thus the “white collar” service industries won’t replace the “blue collar” industries any time soon.

Let’s not forget that many services such as call centres and account/order processing are already being outsourced to other countries by Australian businesses. So the focus on being “clever” may be not the smartest route to economic success. The Australian government needs to determine what industries cannot be outsourced and support those. 

So while it is important to invest in a “smart” future as many have suggested, we believe there should be an equal focus on investing in the traditional industries that lay Australia’s “golden eggs”. After all, the minerals and resources we offer the world cannot be outsourced to another country. Australia being resource-rich is what gives us competitive advantage as a nation. 

Thankfully, in the 2016-2017 Federal Budget, we see signs that the government has come to this same conclusion. It has increased investment in mining by developing The National Resources Development Strategy, “Exploring for the Future” a $100.5 million program that invests in geoscience which will improve Australia’s long-term exploration prospects.

We at Dynamics G-Ex welcome any initiative that will boost the productivity and competitiveness of the mining sector and help Australia maintain its position as one of the world’s wealthiest nations.

The mining industry is the backbone of our economy. To pretend that it isn’t is foolish.

Now over to you - What do you think? Do you think the Federal Government should be doing more to support the mining industry? Feel free to leave a comment below. 

If you’re a mining and exploration company and would like to discuss an ongoing partnership, don’t hesitate to contact us on 1800 105 584 or +61 7 5482 6649.

Sources:

http://www.mining-tax.com.au/

https://www.australianmining.com.au/features/how-the-federal-budget-affects-mining/