Industry Comment

Charges on water and ‘windy’ cows unsustainable

Pastoralists and Graziers Association of WA

A PROPOSAL to charge fruit, vegetable and dairy farmers the same price for their irrigation water as city consumers is as outrageous as the claim that there should be a tax on cows for flatulence, according to the Pastoralists and Graziers’ Association.

PGA president Barry Court said the proposal by University of Western Australia professor Jorg Imberger that commercial irrigators should pay the same 48 cents per kilolitre charge for water as Perth consumers would quickly shut down Kununurra, Carnarvon and most of the South West irrigation areas if implemented.

"Professor Imberger is either deliberately seeking headlines or he is unaware of the enormous advances in efficiency made by the irrigation industry in recent years and of its immense service and value to WA," he said.

Mr Court said the WA Government’s intervention and the loss of access and security rights in water were already threatening the sustainability of the irrigation industry.

"Since the State Government took control of water in 2000 it has employed many more bureaucrats per private irrigator than it provides policemen per head of city population and continues to devise rules and regulations that will impose unsustainable new costs on the industry as well as removing most of their traditional water rights," he said.

"The ultimate cost, if we keep going at this pace, will be the loss of the irrigation industries to this State and an urban population dependent on produce from other countries or States that still recognise a need to provide water for irrigation at reasonable cost and with adequate security."

Beekeepers back from combat

WAFarmers

WAFARMERS has welcomed the recent announcement by the Department of Defence that it will not be proceeding to extend the existing Lancelin Defence Training Area, meaning beekeepers will have continued access to 37 apiary sites around the area.

The DoD proposed last year to lease 36,500ha from the Western Australian Government to extend the area near Lancelin, potentially affecting the viability of beekeeping activities in the zone.

WAFarmers Beekeepers Section president Stephen Fewster said the announcement that the Department would not be pursuing plans to extend the training area was pleasing to the industry.

"There are valuable apiary sites located within the proposed extension area and they are now secure," he said.

"We can feel confident that we have access to sites when it is needed, without any restrictions or red tape."

The DoD has formed the Lancelin Management Advisory Committee to provide a consultative forum for matters raised by the local community and the industries that rely on that land.

Punitive workplace safety approach could hurt

Chamber of Commerce and Industry of Western Australia

THE Chamber of Commerce and Industry has urged the Western Australian Government against going down the path of overly punitive safety and health legislation.

Consumer and Employment Protection Minister John Kobelke has foreshadowed plans to substantially increase penalties for safety breaches and to give courts scope to imprison people in cases of serious harm or death.

CCI director safety and health Anne Bellamy said there was no excuse for any conscious breach of workplace safety, however, employer bashing by the Government and over-emphasis on punishment would not be helpful.

She said the best safety outcomes were to be achieved through an open and cooperative approach among the parties and authorities involved.

"If huge fines for employers and threats of imprisonment become the Government’s focus, there is a risk employers will retreat into a protective mode in which communication will suffer," Ms Bellamy said.

"The record shows there has been continuous improvement in workplace safety in WA, evidenced by the declining cost of workers’ compensation claims. To turn on employers now would be entirely the wrong strategy."

Ms Bellamy said the courts had yet to invoke the maximum fines available to them under present laws so the need to raise them further was questionable.

"We have to hope this is just posturing by the Minister to pander to the unions because the cause of occupational safety and health in WA is not best served by a big stick approach," she said.

Ms Bellamy also questioned whether empowering employee safety representatives to serve provisional improvement notices on their employers was wise.

"These are statutory powers the Government is placing in the hands of employees which is not something, as far as I am aware, that is practised in any other sphere," she said.

"Where a safety breach is occurring without being addressed, there are other avenues to give employees recourse without going to this length."

Ms Bellamy said the Government’s public response to the recommendations of the Laing Report had been merely to play up the option of higher penalties and prison terms without indicating vision or leadership on the wider issues.

Nickel prices up but weak US dollar hurting

AME Mineral Economics

THE price of nickel has risen 22 per cent this year and briefly topped $US4 a pound last month. Last year’s average on the London Metal Exchange was $US3.07/lb and five years ago it was only $US2.09/lb.

However, the world’s major nickel producers are failing to capitalise fully on this year’s bonanza.

Since pushing costs as low as $US1/lb companies such as Inco, Falconbridge and WMC are battling to contain expenses due to a combination of a depreciating US dollar and increasing labour and concentrate feed costs.

The key beneficiaries in this environment are the small, nimble concentrate producers that have long-term offtake agreements directly linked to the nickel price.

According to a new cost report from AME, BHP Billiton will knock WMC from the top of the western world cost ranking table this year with a forecast average cash cost of $US1.36/lb.

The company is one of the few to be fully exploiting the high nickel price, reaping the rewards of successful expansion of ferronickel production at its Cerro Matoso plant in Colombia. With the Colombian peso one of the few currencies depreciating against the US dollar, this is in BHP B’s favour.

However, despite the rising costs, nickel profit margins are set to increase as a looming market deficit pushes metal prices higher in the next few years.

Since the nickel price hit an all-time low in real terms in 1998, returns have steadily improved.

The average margin for the past six years is approximately 23 per cent. This is expected to rise dramatically.

AME predicts the industry will reap margins of more than 70 per cent over the next few years as total production costs continue to fall and the price surges because of a sustained shortage of metal.

Industry policy well framed

Chamber of Commerce and Industry of Western Australia

THE CCI welcomes the Gallop Government’s acknowledgement in the draft Industry Policy that industry development is central to achieving economic growth and community goals.

Commendably, the paper recommends a whole of government approach to industry policy and recognises that it is not the Government’s role to pick winners or to subsidise business.

The 34-page manifesto expounding the importance of business investment, innovation and advancement will only deliver the desired benefits to the State if the Government sticks to it.

However, if it does not and the policy is compromised, then the paper will be judged as having been little more than lip service and rhetoric.

The Government’s record to date is not encouraging. Many of its past actions would be seen as inconsistent with the goals it enunciated today.

The Government’s roll-back of labour relations reforms that have increased costs and robbed our industries of operational flexibility, is not at all in keeping with the commitment in the policy "to assist rather than hinder businesses and industry … as an important part of investment attraction and international competitiveness of our domestic economy".

In the policy, the Government itself observes that taxes and charges need to be competitive, as well as fair and reasonable. That WA has hung on to ranking third among the States for overall tax competitiveness is fairly meaningless to industry given the annual hikes in State taxes mounting to $400 million since Labor came to office – increases that have impacted disproportionately upon business.

CCI welcomes the Government’s renewed commitment to streamline the approvals process to reduce uncertainties but asks: When will it act on the recommendations of the Keating Review to implement this?

Nor is industry encouraged by the Maud’s Landing decision that was anything but simple or timely and has only served to heighten uncertainty among investors about the risks involved in attempting to get a rational and positive result from government in WA.