Well thank you very much Vanessa, it is wonderful to be here. I want to acknowledge of course our host Vanessa Guthrie who spoke, Chair of the Minerals Council Australia and Managing Director and Chief Executive of Toro Energy. Mr Mike Henry, the Vice- Chair of the Minerals Council of Australia. Mr Brendan Pearson Chief Executive of the Minerals Council of Australia and so many leaders of the resources sector here tonight, joined by so many of my Parliamentary colleagues including the Deputy Prime Minister Barnaby Joyce, the Foreign Minister Julie Bishop, the Treasurer Scott Morrison, the Resources Minister Matt Canavan and many others.
It’s a big night and I’m delighted to be here. I’m particularly pleased to be here because I agree with – I’ve got to develop this theme, but I’ll just say this, that there has been a tendency sometimes for people to think that risk-taking and innovation is only to be found by brilliant young software engineers operating perhaps in their mother’s garage with some seed capital. Can I say to you the industry you represent is now and always has been the most innovative and the one that takes the greatest risks in Australia’s whole corporate sector. You take the biggest risks, you face the biggest challenges and you succeed because you innovate.
The greatest assets of Australia are not the rocks under the ground, they’re the men and women of Australia and the greatest assets of your industry are you. The resources are there to be sure, to be found in Australia and in many other parts of the world. I know that from my own experience, in one period of my life I was commuting a gold project in Siberia and a zinc project in north China. So I’ve been around a bit in terms of mineral resources. But I know that the key difference is you - your talent, your expertise, your ability to reap the very best out of the toughest markets. And Vanessa pointed out that yes – the construction boom, the last phase of the construction boom has tapered down, as it was always going to, that was inevitable, but the phenomenal advantage we have is that between 2001 and 2015, our mining net capital stock increased by nearly 300 per cent, from $167 billion to $641 billion. The challenge, the opportunity now for your industry is to utilise this new capital stock as effectively and efficiently as possible.
Now notwithstanding the recent spike in met coal prices, most would agree I think with the Chairman Andrew Michelmore, former Chairman, as he put it last year at this dinner that we are returning to a time where no-one owes us a living, where cycles come and go, where cost competitiveness and productivity, that’s what you deliver, are the lifeblood of survival and success.
I admire that realism and that pragmatism.
But it’s worth observing that we have emerged from this construction boom stronger than ever. Our economy grew by 3.3 per cent over the last year—its fastest pace in four years. Over 225,000 jobs were added. And non-mining economic activity grew by a healthy 2.9 per cent.
Record mining sector investment is now translating into increased production capacity as more projects come on stream.
In 2014-15, no other sector was more successful in lifting its productivity than yours. Multifactor productivity rose by 5 per cent in the resources sector - a remarkable figure next to the market sector average of 0.3 per cent in the same year.
Resources remain close to two thirds of Australia’s exports. And Australia remains the world’s largest exporter of iron ore and coal. And it won’t be long before we have that title in gas as well.
Modern Australia owes much of its prosperity and economic security to your industry —and of course to the extraordinary demand we've seen from Asia in recent years, particularly from a rapidly, developing, urbanising China.
China’s demand may have moderated somewhat of late, but the world will still need – will always need - energy and steel.
Far from diminishing demand for our mineral exports, the digital revolution has enhanced the importance of cities and the infrastructure which enables them, not to speak of driving massive growth in demand for rare earth elements and lithium - of especial importance as battery storage expands from personal devices, to vehicles, to householders, to businesses, to national grids.
The times we live in are characterised by enormous change: a pace and scale of change is unprecedented in human history. A shifting geopolitical landscape; a transitioning global economy; a changing climate; quantum leaps in technology; and entirely new industries virtually popping up like mushrooms overnight.
It is the pace and scale of change that is so remarkable in our times.
But it would be neither realistic nor pragmatic to neglect the vital role our minerals sector plays in our response to all these challenges.
Having said all that, no industry will survive the barrage of change without innovation. The survival of any industry, any business depends on its ability to innovate—and that was never more true than right now.
Your industry has seen some remarkable innovations in the past, many of them developed right here in Australia. The international patent record shows that we’ve been at the forefront of mining innovation for many years.
Huge advances in automation —smart drills, driverless trucks — have transformed mining’s scale, speed, efficiency and safety, with value added in the industry now more than $650,000 per worker.
The Prime Minister’s Prize for Innovation last year was awarded to Professor Graeme Jameson AO, who revolutionised the froth flotation technique developed at Broken Hill in the early 1900s—another great Australian invention.
The Jameson cell cost just $65,000 to develop, but since the first installations in 1990, has retrieved coal particles worth an estimated $36 billion. More than 300 Jameson Cells have been installed in over 25 countries.
The next generation of this technology has the potential to raise Australia’s export income by an estimated $100 billion and reduce energy use by 15 percent.
Which leads us to ask: what is the next generation of mining innovation going to bring forth?
Deloitte, Ernst & Young, BAEconomics and McKinsey have all concluded that mining is at an inflection point. Developing new tools and technologies—but also new ideas for how mining works—will be critical to the health of your industry.
Rio Tinto’s Mine of the Future program is a great instance of seeking out those new ideas—not only in extraction and processing but in environmental impacts and data analysis. It is already yielding performance improvements, and promises even more to come.
I know that innovation is not easy in an already inherently risky industry. When it comes to using new technologies and techniques, everyone wants to be the first to be second.
Yet the profound truth is that only innovation will propel the next leap forward in productivity and performance for our world-leading mining industry.
From our very first day in office, my Government has put innovation front and centre of our agenda. We recognise that innovation doesn’t happen in a vacuum: it happens within a culture—an entrepreneurial ecosystem— that encourages and rewards new ideas.
An ecosystem that helps connect the best research with the right backers and developers so good ideas can get to market; that incentivise smart risk-taking and doesn’t punish failure; that drives out of your enterprises a blame culture, a hierarchical blame culture that encourages people not to make decisions and manage up; a culture that unleashes individual economic freedom and creativity; and which instils the value of innovative thinking in young minds.
Our National Innovation and Science Agenda aims to build that ecosystem in Australia, as we continue to build on our strengths as an attractive place to do business.
That’s why we are also working to preserve and expand the network of open markets in which Australia operates.
The three big trade agreements we secured last year with China, Korea and Japan represent an enormous opportunity. Those three nations combined already purchase more than two thirds of Australia’s resources and energy exports.
The China-Australia free trade agreement locks in duty free entry on over 90 per cent of our exports in resources, energy and manufacturing, rising to 99.9 per cent by 2029.
While growth in their demand, the rate of growth in the demand, for our raw materials is not as high as it was five years ago, nor was that expected to be the case, China is in the market for mining technology and mining services.
Their own mining industry is looking to improve productivity, safety, efficiency and environmental stability. There are great opportunities for Australia to capitalise on what I truly believe, as I said a moment ago is our greatest asset—that’s you and your workmates, the expertise and ingenuity of our people.
There are other important trade deals on the horizon. When I was in the United States last month I urged America’s lawmakers swiftly to ratify the Trans Pacific Partnership, as Australia is seeking to do.
Agreements such as the TPP and the Regional Comprehensive Economic Partnership, RCEP, knit our region together through trade and investment. Such agreements are essential to preserve our region’s stability and unprecedented economic growth.
And you will have seen today the Singaporean Prime Minister, Lee Hsien Loong is here to sign additional agreements following on our comprehensive strategic partnership, which will expand and enhance our free trade agreement with Singapore.
This is a critical agenda for my Government.
Free trade, open markets drives jobs and growth in Australia.
Now for this to continue, the forces of peace and prosperity must defeat the forces of protectionism and isolation.
We must be advocates of regional trade cooperation as the best defence against instability and insecurity - both of which are the enemies of prosperity.
And we must continue to remain open to investment from abroad. Foreign investment allows our capital stock to grow faster than the annual flow of savings from Australia’s households, businesses and governments.
If our economic history and the recent mining construction boom have demonstrated anything, it is that investment - particularly foreign investment in your sector - benefits all Australians.
We must also help Australian industries and businesses compete in an increasingly globalised market. This is the main goal of our 10-year Enterprise Tax Plan. Starting with small businesses this year, we are extending a tax cut to all businesses so that, by 2026-27, all companies will face a 25 per cent tax rate.
We know that if you reduce business taxes, you improve the return on investment. If you improve the return on investment, you will get more investment. It is pretty straight forward and we are seeking the support of the Senate for those important business tax reforms because we know that they will drive investment, economic growth and jobs here in Australia.
Now at the same time, we must have a tax system that reflects the values of our society, where everyone pays their fair share of tax in accordance with the law.
As I have often said, you may have heard me say this before - while we strongly support lower company tax rates on businesses, paying those taxes is not optional. It is compulsory.
The Multinational Anti-Avoidance Law which my Government passed through Parliament last year prevents companies from artificially avoiding having a taxable presence and shifting profits offshore.
We have now gone further and announced a new Diverted Profits Tax to ensure that large multinationals pay the right amount of tax on profits earned in Australia - or face a penalty tax rate.
And in the Budget we announced a new Tax Avoidance Taskforce to strengthen the ATO’s audit and compliance activities.
Another critical reform we are pursuing is the restoration of the Australian Building and Construction Commission. Ensuring an efficient and law-abiding building and construction sector is crucial to driving economic growth.
A strong workplace relations framework is the key to maintaining a robust economy. We are pursuing the ABCC legislation - along with the Registered Organisations Bill, which were the triggers for the double dissolution election and the Registered Organisation Bill to improve the governance standards in unions and employer organisations – and this is a key priority. We are asking for no more than standards of governance in unions, employer organisations, the same as the standards of governance in corporations.
Now, like the rest of the world, Australia is moving towards a lower emissions future.
The Government has committed to ambitious but achievable climate targets—emissions 5 per cent below 2000 levels by 2020—and what we agreed to in Paris, 26-28 per cent below 2005 levels by 2030.
We are on track for our 2020 targets indeed, the former environment minister sitting in front of me, Greg Hunt would confirm we are ahead of our 2020 target already, but we have more to do.
So we understand what we need to achieve. We need to achieve energy security. You’ve got to keep the lights on. You’ve got to keep the wheels of industry turning.
Got to achieve energy affordability. Households have got to be able to afford their electricity and their power. Businesses have got to be able to afford it. Investment has to be able to be rewarded with affordable power and we have to meet our emission reduction targets.
Now, the issue about energy security is coming to a very sharp focus following the recent state-wide blackout in South Australia. It was a dramatic reminder of the importance of maintaining a reliable and affordable energy supply.
The crisis in South Australia was a wake-up call for every jurisdiction in Australia to settle on a single renewable target. Of course we have a renewable target under our renewable energy target but we have seen what has happened when state jurisdictions decide to set heroic targets which distort the market as our Energy Minister Josh Frydenberg has been pointing out – it is critical that we focus on these issues in a thoroughly hard-headed pragmatic way and treat it as a technological and engineering challenge.
There has been too much ideology in this issue, too much politics, too much political clap-trap in fact.
We’ve got a very clear obligation. Energy security, energy affordability and meet your international obligations and that’s what we are committed to doing.
The impact on your sector from the black out in Victoria was considerable.
Four of South Australia’s largest economic contributors were without power for 15 days costing the economy tens, if not hundreds, of millions of dollars.
According to reports in the media, Arrium steel works is just coming back on-line and they have estimated that the blackout has reportedly cost them $30 million.
At Port Pirie, Nyrstar’s lead smelter will take two weeks to repair at a cost of up to $7 million.
Olympic Dam was forced to cease operations. To their credit, BHP Billiton’s immediate focus in the aftermath was on securing and restoring sufficient power to supply the Roxby Downs township and on avoiding sustained damage to equipment and infrastructure.
And at Prominent Hill, OZ Minerals is still without power, costing the company millions of dollars per day.
After talking to some of the businesses and indeed farmers who lost so much, it’s obvious that we have to have a clearer focus on those three objectives – energy security, energy affordability and meeting your international obligations.
Now that’s why I asked Minister Josh Frydenberg, I asked him to convene an emergency meeting of energy ministers to urgently consider the energy security of the national electricity grid.
As you know he has established a review led by, with the support of the states and territories, led by the chief scientist Alan Finkel to examine the state of our renewables targets and to get a current stocktake of the security and reliability of the national electricity market.
That review will draw together and build on recent and ongoing work, including by the Australian Energy Market Operator, the Australian Energy Market Commission, the Australian Energy Regulator and gas market reforms.
This will ensure that we have a national plan to maintain security, reliability, affordability and sustainability of the national electricity market.
Now your industry, I know, is acutely aware of the necessity of reducing the carbon footprint and your impact on fragile environments. You recognise that, given the right consideration and care, mining can share landscapes with agriculture and with first class nature reserves.
The industry has also come a long way in its engagement with the communities that are most directly affected by mining.
Your engagement with our first Australians, Indigenous Australians has become more constructive, particularly in the last 20 years. In that time there have been thousands of land use-related agreements and significant investments made in Indigenous economic development.
Like any other industry, mining depends on strong and effective community partnerships. The more you can do to inform, engage and involve communities in your work, the more likely you will come to a mutually beneficial outcome.
Since the days of the gold rushes in the middle of the nineteenth century, Australia’s mining industry has been integral to the prosperity of our nation.
The same will be true as your industry evolves to meet the challenges of the twenty-first century - constant innovation, improved productivity and respectful environmental stewardship.
A mining industry that is powered by innovation and technology, that is engaged with our community, that is a partner in the search for efficient and sustainable sources of energy—this is an industry that will be part of Australia’s success story forever.
It’s a great honour to be in your company. I wish you all the best for your evening tonight. I will have to leave shortly to host a dinner with the Prime Minister of Singapore and his wife Ho Ching. But I can say to you that I am proud to be your Prime Minister, to be congratulating you on the innovation and achievements, the resilience, the courage, the preparedness to take risk of our minerals sector. Well done and thank you very much.