OPINION - WA RESOURCES CAN REVITALISE ECONOMY

By Matt Keogh MP

29 April 2020

The last couple of months have been a time of information overload, fear, evolving restrictions, a renewed focus on health, and economic life support for the nation.

Here in WA we’ve been successful in keeping our coronavirus cases and related deaths to a relatively low number — though every death is tragic — and that can be attributed to the strong, clear stance taken by our State Government in closing our borders early. 

We’ve seen an unprecedented degree of co-operation and co-ordination between WA resources companies, resources peak bodies, the State Government and the union movement. 

While no process is ever perfect, and there have been occasional unhelpful developments, the consistent feedback I have received from the State Government, Federal Government, industry players and workers’ representatives is that everyone is working together to make sure that our resources industry has been able to stay open and productive in the safest way possible for all involved. 

Long may this constructive co-operation continue. 

The benefits of this collaborative effort have been important not just for WA workers and businesses but for the nation as a whole. 

Our national quality of life, even more so during this lockdown, is very much dependant on the revenue derived from our resources industry, and even during this crisis, we have seen very positive developments. 

While other parts of the economy have necessarily gone into hibernation, the agreement at a State and Federal level that our resources sector is essential has enabled us to see a near 30 per cent increase in the value of Australian exports in March compared to February, led by iron ore, gold and gas — all WA resources. 

In the ever-continuing justification of the Hawke-Keating government decision to float the Australian dollar, the increase in iron ore and gold prices in March coupled with a fall in the value of our currency has seen an increase in national revenue, just when we needed it. 

And there are more good signs on the horizon, signifying the WA resources sector is not only helping see us through these glum economic times but will be a key part of leading any economic recovery. 

Resources companies have indicated that they will be increasing their take up of apprentices by the thousands over the next few years, which is not only important for jobs growth for the future but also the development of local skills to support industry.

We are also seeing confirmed interest from the United States in our critical minerals, not just for extraction but also for investment in downstream value adding. Beyond the initial value from royalties, job creation and skills development maximising our critical minerals sector adds further complexity to our economy and enables us to retain more value in Australia by maximising the value of more refined product exports. 

It also enables diversification of our export offerings and our customer countries, as well as offering geopolitical alternatives for increasingly important strategic products. 

Continued support for the expansion and development of these resources, alongside downstream processing and manufacturing is now more important than ever. 

However, we cannot afford to be complacent. Iron ore prices have fallen again (though nowhere near the low levels of 2016, let alone 2018) and there has been a very significant fall in the international price of natural gas, of which Australia, and WA in particular, is one of the largest exporters globally. 

When oil prices go negative, as they did in the US last week, it is not just petrol prices that drop, the economic viability of our gas exports is also severely affected. 

Locally, for example, Woodside has had to defer its Scarborough, Pluto-2 and Browse projects, just as its counterparts have had to defer projects around the world. 

It is vital that governments and industry work together to support the appropriate progress of these projects in the near term to match projected increases in gas demand globally from the mid-2020s onwards or risk our local gas producers giving up opportunities to our global competitors

This opinion piece was first published in The West Australian on Wednesday, 29 April 2020.