Mining: Olympic Dam, Carbon Pricing Take Note of Answers

I rise to take note of the answers by Senator Wong to questions from Senators Brandis, Cormann, Birmingham and Bernardi. There has been a lot of talk about who said what and who has read what. I think it is important that we get some of the facts on the table. It is a fact that Marius Kloppers said that the government has created a higher cost environment. It is a fact that BHP in their statement yesterday said that one of the reasons for the pullback was the weaker outlook for commodity prices and rising costs. On 16 May Jac Nasser said, ‘I cannot overstate the level of uncertainty regarding tax.’ In the statement on 22 August regarding results, BHP said that development and construction costs had surged by some $2.7 billion and a third of that was the result of labour and industrial action.

As one of my colleagues highlighted, some 3,500 BHP workers on strike contributed to that. What that says to people looking at investment is risk. You have to price risk into your business plan. It is instructive to note what other people in the same sectors—copper and gold—are looking at. PanAust, an Australian company, has copper operations around the world. It has statements on its website looking at the feasibility of a program in Chile. The No. 2 factor that they list is the cost of electricity. They say the development of the Inca de Oro project depends on competitively priced power and water.

South Australia, as we all know, currently has the world’s highest electricity prices and before members opposite jump up and say, ‘That is all to do with infrastructure,’ the Essential Services Commission of South Australia has said that 25 per cent of the price rise is due to the carbon tax. Importantly, that is currently at $23 a tonne. The government’s own modelling, which BHP is well aware of, says that the carbon tax is going to increase to $350 a tonne. So if we currently have the world’s highest electricity prices with a carbon tax of $23 a tonne that has driven 25 per cent of the increase and that tax is going up to $350 a tonne over the life of the project which is the kind of time frame that BHP will be looking at, then is it any wonder that they say the project was canned because of rising costs. The article in the Australian Financial Review says:

… the federal government should understand that mining “super profits” are not guaranteed. Australia is in a competition with other resource-rich countries, and the BHP decision is a timely warning that we have allowed our cost base to increase too far and too fast thanks to our overregulated labour market and overbearing environmental regulations.

BHP Chairman Jac Nasser warned earlier this year that uncertainty surrounding our tax regime could deter investment.

As BHP looks at the life of this program, it looks at the fact that we already have the world’s highest electricity prices here and we see from other players in the global market that power costs are its No. 2 consideration in the feasibility of projects. Is it any wonder that BHP, in its statement, quoted rising costs as one of the reasons that that project would be canned when this government is on track to raise the price per tonne of carbon from $23 to $350 in the future? It is a shame that this government does not think more about the future of South Australia, about the future of our children and their jobs and our economy than it does about the future of their current parliamentary term in coalition with their alliance partners, the Greens.