If you thought the dead hand of Canberra had been removed from the resources sector you are sadly wrong.
If you thought the dead hand of Canberra had been removed from the resources sector you are sadly wrong.
In the wake of the mining super-tax debate two new issues are on the rise which could stifle growth in WA and Queensland just as a series of new mining and oil developments get underway.
In Queensland, the multi-billion dollar coal seam gas industry is being threatened by the last minute intervention of the Environment Minister, Peter Garrett, who has over-ridden state government approval and asked for fresh studies into the industry.
For WA, there is a less obvious but potentially more damaging change being planned which could end the era of the independent contractor, leading to wholesale re-unionisation of the mining industry workforce.
Garrett's decision directly affects two projects designed to convert coal seam gas into liquefied natural gas (LNG) and will add at least three months to the timetable of investments planned by the British company, BG Group, and the Australian oil and gas producer, Santos.
Officially, the extra studies will focus on water management in the areas from which the gas is extracted. Unofficially, delay reflects a fierce debate underway within the Australian Government over the merits of most resource investments v the environment.
Green groups, which could decide the shape of the next Australian Parliament, are opposed to any coal seam gas to LNG projects, while at on an economic level the Federal Treasury (birthplace of the mining super-tax) continues to work on ways to slow growth in resource states to avoid a two-speed national economy.
The irony of what Garrett has just done, and what Treasury would like, is that demand for commodities in Asia continues to rise, and so does investment in Australian resources.
Earlier today, Rio Tinto signed off on the next stage of expanding its iron ore operations with a $US200 million investment in dredging and other infrastructure works on its port and rail system.
Tomorrow, SinoSteel loads the first shipment of iron ore from its Midwest project at Geraldton.
Both iron ore events are among a series of positive developments in the resources world which has encouraged the Chamber of Commerce and Industry to predict a return to boom conditions in the WA economy from next financial year when growth is tipped to hit 6.25% -- about double the national growth rate.
For Canberra, high-speed growth in WA and Queensland seems to be a nuisance with bureaucrats and their tame politicians spending many of the waking hours thinking up ways to slow things down.
The mining super-tax was the most obvious ploy. Garrett's intervention in the coal seam gas to LNG industry is another manoeuvre, while a move to turn independent contractors into employees could prove to be the winning hand in slowing things down.
For WA mining the threat of changing tax laws so that contractors are treated (and taxed) as employees would be a body blow.
For the past 20 years contractors have been the backbone of the resources sector, providing keenly-sought skills at a competitive rate, and with great flexibility - an offering which unions hate.
Over the past few months Treasury has been secretly working on changes to tax law in much the same way it worked on the mining super-tax which would change the definitions of who can claim to be an independent contractor, potentially boosting pay-as-you-earn tax revenue, and exposing contractors to union pressure.
Given the super-tax fiasco there is little chance that the new contractor definitions will surface before the federal election, but after that sideshow is over Treasury can get down to its curious mission of slowing growth in the resource states.
