MELBOURNE – (Reuters) – You know you’re in trouble when you’re ranked worse for red tape than India. The World Economic Forum this week put Australia 129th out of 148 countries, ranking it 25 spots lower than India, in terms of the burden of government regulation.
And Australia’s red tape is hurting growth in its key mining sector at a time when other sectors are struggling to fire up to fill the gap left by a fading mining investment boom.
Australian miners sitting on coal lodes that could produce 100 million tonnes a year say they are frustrated by layers of state and national approvals that take years to secure, anti-coal campaigners using the courts to delay projects, and carbon and mining taxes eating into potential returns.
“Green tape in Australia really has become very stifling for business, to the point now where it’s difficult to tell the difference between green and red tape, it’s so embedded,” said Whitehaven Coal Chief Executive Paul Flynn, referring to lengthy environmental reviews by state and federal agencies.
Faced with high costs, weak commodity prices, emboldened environmentalists and nervous lenders, miners are counting on a new, conservative government in Canberra, expected to easily win Saturday’s national election.
Australia’s conservative opposition, led by Tony Abbott, has promised to scrap a super profits mining tax, a carbon tax, and create a one-stop shop for project approvals, eliminating duplication between federal and state processes.
“My expectation is that if Australia is going to stay competitive, they’ll have no choice but to streamline the approval processes,” said Paul Mulder, managing director of GVK Hancock Coal, a joint venture between India’s GVK Power & Infrastructure and Australian billionaire Gina Rinehart’s Hancock Prospecting, which is planning a $10 billion coal mine, rail and port project in Queensland.
When the current Labor government came into power in 2007, the mining boom had yet to peak, and the government hit the industry with taxes on carbon emissions and iron ore and coal super profits. Now, with prices having dropped and Chinese growth slowed, the industry is looking for help to revive its competitiveness and spur the next leg of the resource boom.
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