Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I rise this evening to talk about an extremely important issue in my home state of South Australia. The House would be aware that some months ago the South Australian parliament in a largely bipartisan move passed legislation to give the green light to the expansion of the Olympic Dam mine at Roxby Downs in South Australia. Most members are aware that the proposed expansion of that site is so exceptional that it will be a huge boon for future generations of South Australians. It is the fourth largest copper resource, the largest known deposit of uranium and has rich deposits of silver and gold.

The expansion will create one of the world's largest open pit mines. By 2050 the size of the pit will grow to be 4.1 kilometres long, 3.5 kilometres wide and one kilometre deep—basically the square mile of Adelaide. It will take about six years of mining to remove the 350-metre thick layer of overburden and expose the upper surface of the ore body. It will employ some 4,000 to 6,000 additional people and, over the long term, see a doubling of the existing operational workforce to 8,000 people. It is expected that the flow-on effect will create some 15,000 jobs in South Australia.

The royalty revenue from the expansion so far averages about $60 million a year from the Olympic Dam project and this is expected to increase four-fold on the completion of the expanded operation. Independent economic analysis of the project's impact on South Australia's economy estimates it will add more than $45 billion to the gross state product over the life of the mine and it is expected that when the mine reaches full production, the South Australia's GSP would be an estimated 8.7 per cent higher in annual average terms compared to the business-as-usual case projection. It was largely a bipartisan state parliament decision last year—except for the Greens, of course, who opposed the expansion of the Olympic Dam—and South Australians hope that it will go ahead when the BHP board decides on this sometime later this year.

But significant threats have emerged that the BHP board is now considering seriously, which put this project in the near future in doubt. I think that it is high time that this parliament and particularly the government very quickly addresses those threats to ensure that the benefits of this expansion, so well known particularly for South Australia, can go ahead.

Last week Jac Nasser, the chairman of the BHP board, one of Australia's most well-respected businesspeople, made a comprehensive speech in which he talked about the challenges that the resource sector in Australia now faces. Those on the other side would have you believe that there is no competition in the global resource market, that Australia has it cornered. Of course that is not true. We compete like any other industry and it is a tough competitive market.

The chairman of the BHP board last week made it very clear that there are four factors which have changed and which are making it harder for this project to go ahead: high investing and operating costs, making us one of the highest cost economies in the world, soon to be made worse by the biggest carbon tax in the world; cost increases due to the industrial relations environment and in particular union militancy; the uncertainty in relation to taxation laws—and I quote Mr Nasser here:

It is the right of governments to set the tax regime but I cannot overstate how the level of uncertainty about Australia's tax system is generating negative investor reaction.

And finally, there is global volatility. Three of the four issues are directly the responsibility of this federal government. Mr Nasser went on to make clear that these factors will be considered when consideration is given by the board to the $20 billion expansion. He said:

We are fortunate to have a diversified portfolio of choices. Given our range of options, if we can't meet our criteria in any one project, product or geography, we will redirect our capital somewhere else or we simply won't invest at all.

This is not code; it could not be clearer. It is a real and present danger to this project going ahead. The question has to be asked: why would the government be trying to openly hold back our best performing industry? It is like running Black Caviar at Royal Ascot and putting Fat Albert on as the jockey. Black Caviar would not win, and neither will we win the race for investment. Costs in Australian mining have risen too fast and too far and now investment is at risk. There is no bigger threat than that to the expansion of Olympic Dam.

The chairman of Rio Tinto backed those comments up recently in the Australian Financial Review when he said:

... are you worried about your over-exposure to Australia... That's not a good thing, that's a damning testimony—

It certainly is. This government must stop the carbon tax. They must take away the regulation burden of the workplace relations reregulation that they have made. Otherwise it will be on their head if Olympic Dam does not go ahead. (Time expired)