COMMONW EALTH   PARLIAMENTARY LIBRARY

C. I. s.

PRESS RELEASE __________ ____________________EMBARGO 1400 EST

SENATOR PETER DURACK, Q.C.  DEPUTY LEADER OF THE OPPOSITION  IN THE SENATE  SHADOW MINISTER FOR

TRADE AND RESOURCES

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The Liberal Party's Resources and Energy Policy will open the way  for new growth and further development of Australia's resource  base.

The policies outlined represent a clean break with the tired  formulas of the Hawke Labor Government.

A Liberal Party Government will create a framework within which  private enterprise operating in free markets can develop  Australia's resources for the maximum benefit of all Australians.

We will phase out the highly regulated oil marketing system. A  free market for Australian oil will mean lower fuel prices for  Australian consumers than the present Import Parity Pricing  formula allows. Petrol prices will be about 1.5 cents per litre

below current levels and that difference will remain even though  world oil prices may increase.

A lower corporate tax and the abolition of thb Fringe Benefits  Tax and Capital Gains Tax will help restore competitiveness and  profitability to the industry. Under a Liberal Government there

will be no gold tax.

In particular the Liberal Party's tax proposals offer new life to  the petroleum exploration industry at a crucial time for

Australia in the light of declining oil reserves.

The Labor Government's petroleum tax policies have only made  matters worse.

The Liberal taxation policy will offer the industry its greatest  opportunity since the 'new' oil policy of the last Liberal  Government.

Based on a 42% corporate tax rate,  12 1/2% royalty and a policy  that only imposes royalty on future discoveries, industry will  only pay a top marginal tax rate of 49.25%.

In contrast the Hawke Government imposes a much higher rate of  corporate tax and will introduce a Resource Rent Tax. Under a  Labor Government the industry will continue to pay out large sums  in fringe benefits tax and the capital gains tax on non cash

farm-ins remains a significant disincentive to the exploration  industry.

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The veto on the development of new uranium mines will be removed.  This refusal to allow uranium developments has severely

undermined Australia's position in the world market. We have  lost export earnings and foregone employment opportunities from  the development and operation of new mines.

Commonwealth involvement in the coal sector will be much reduced  and industrial relations issues brought within the concilliation  and arbitration system.

In addition to removing regulation such as by abolishing export  controls on minerals and reducing taxation a Liberal Government  will not interfere in land use decisions that are properly the  reserve of the States.

The Resources and Energy Policy together with our tax and

spending proposals, industrial relations and other policies will  provide the'incentive needed to get investment moving again.

Our policy will result in increased investment in the exploration  and ^development of Australia's resources.  As such all

Australians will benefit from the export income and employment  opportunities generated.

PERTH 19 JUNE 1987 CONTACT: (09) 221 1277

ources

1 INTRODUCTION

Australia’s resource industries have played a major role in our economic  development. Today they provide approximately 40 percent of our export  earnings, invest large amounts in the development of the resource base and

generate substantial employment.

Effective development of Australia’s resources is of critical importance to  our Nation’s future economic position and to the living standards to be  experienced by each one of us.

The objective of this policy is to generate a climate in which our mineral  and energy resources can be utilised for the maximum benefit of all

Australians. Economically efficient utilisation of Australia’s mineral and  energy resources requires policies that should result in:

. improvements in the size and quality of the resource base through

increased exploration,

. competitive and export oriented development to allow the best possible  trade performance to be achieved including where appropriate, the further  processing of our natural resources within Australia.

Australians will benefit from resource development through increased national  income and employment. In approaching the development of our resources we  must recognise that:

. without increased mineral exploration, Australia will be unable to sustain  the current contribution of the resource industries to economic growth,

- in particular increased exploration for oil is needed to offset an

import bill which will increase rapidly in the next few years,

. development of our resource base depends on a greater market share for  Australian exports and on improving the attractiveness of investment,

- development of the resource trade depends on maintaining international  competitiveness in all respects including technical and cost efficiency  and reliability of supply,

- attracting further investment will depend on increasing the rate of  return on resource sector investment through ensuring adequate  corporate profitability.

2 FRAMEWORK FOR DEVELOPMENT

The Liberal Party has developed a framework within which specific policies  for the resources sector will be developed. Its main ingredients include:

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Policies will be stable, consistent and as simple as possible:

- they will not be changed adversely after investments have been made,

- they will take account of the major distinguishing features of the

resources industry namely large scale, high level of risk and long life  cycle projects.

Private enterprise operating in free markets as the basis for progress:

- recognition of profit as the incentive and reward for investment and of  the need for increased corporate profitability to reflect the risks

involved in investment,

- provide uninhibited access to domestic and international markets at  world market prices,

- remove disincentives to exploration and development activity.

Minimise Government regulation and intervention:

- recognition that Government involvement is generally undesirable and an  ineffective means of bringing about productive growth,

- test any proposed Government involvement by analysing the costs and  benefits and eliminate or not introduce regulation where costs outweigh  the benefits,

- limited role for supervisory and regulatory authorities,

- offer neither taxpayer funded participation in industry nor subsidies,

- where Government provides services and information to industry and  consumers it will where practicable, be on a cost recovery basis.

Land use policy will accept the need for multiple uses where they are compatible:

- Commonwealth Government will not remove from exploration and  development large tracts of land whose potential remains unassessed,

- exploration and development will be peimitted subject to fair

protection for or reasonable compensation to. those whose rights are  affected,

- resource developments should be subject to reasonable environmental  controls and be required to restore the mined area to its previous

condition as far as possible.

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Promotion of co-operation between the States and the Federal Government:

- acknowledges the Constitutional division of responsibilities,

particularly the State control over access to land and the right to

mine,

- retention of primary responsibility by the States for many areas. They  have an important role in industrial relations, aboriginal affairs, the  environment and intra-state transport,

. - the need to streamline, simplify and unify relevant procedures.

3 SECTORAL POLICIES

This section takes from other policies, parts that have a direct influence on  the conduct of resources policy.

Aboriginal Affairs

. land rights outside Northern Territory to be the responsibility of State  Governments,

. opposition to uniform national land rights legislation,

. amend Northern Terri 1017 legislation to provide for equitable working  arrangements for the industry which pay proper regard to Aboriginal  interests,

- there should be no legal or de facto veto over exploration and/or

development,

. the next Liberal Government will encourage Aboriginal communities to enter  into arrangements for the economic development of their land.

Environment

. avoid Federal and State duplication of requirements and administration,

. only use direct environmental controls in Federal Territories and in

off-shore areas where there is direct Federal responsibility (e.g. Great  Barrier Reef and areas under Joint Authorities),

. where an environmental issue of national significance arises within a  State area of responsibility, the next Liberal Government will require an  appropriate EIS inquiry to be held, consult with the State about its

recommendation and endeavour to achieve a co-operative arrangement with  the State concerned to resolve conflicting interests.

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Transport

The resource industries depend on their ability to efficiently transport  their products from mine sites to ports and on to international markets. To  facilitate this the next Liberal Government will:

. encourage publicly owned port facilities to adopt commercial management  practices,

. encourage Australian shipping to become more cost effective.

Foreign Investment

. additional long term foreign investment (together with the management  expertise and skills that accompany it) should be further encouraged by  the removal of all remaining foreign investment controls except for  certain limited and clearly defined strategically important areas.

4 RESOURCES TAXATION

Taxation must generate sufficient revenue to meet a Government’s expenditure  commitments, while minimising the adverse incentive effects that are an  inevitable consequence of its imposition. The next Liberal Government will:

. reduce and simplify the overall taxation burden on businesses and

individuals,

. remove anti incentive, anti business taxes introduced by the Labor

Government such as the capital gains tax and fringe benefits tax,

. not impose a tax on gold mining income.

A healthy and growing petroleum sector is of great importance to Australia’s  economy. Current high levels of secondary taxation on petroleum production  are having large negative effects on exploration activity and have led to  some production becoming uneconomic.

For future discoveries of oil both onshore and offshore there will be no  secondary taxation. Royalty arrangements will apply.

To overcome the negative production effects of the high current levels of  secondary taxation the next Liberal Government will negotiate with producers  a gradual reduction in the levy regime (old, new and intermediate) that  applies to existing discoveries in exchange for higher production.

The next Liberal Government will only impose fees necessary to cover the  administrative cost of issuing oil exploration permits and retention leases.

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The next Liberal Government will: .

. repeal the cash bonus bidding system and develop appropriate oil

exploration permit bidding systems in consultation with industry, ,

. not impose a Resource Rent Tax.

5 RESOURCE INDUSTRY POLICIES

Free markets and minimal Government regulation will provide the basis for the development of our resource industries:

. export controls will not be applied except on the grounds of national  security or to comply with international agreements such as those applying  uranium safeguards,

. government provided technical services will be reviewed with a view to  implementing a user pays system,

. the next Liberal Government will support legislation to enable producers  to retain tenure over currently non-economic discoveries. ,

5.1 FUEL

Oil

A free market will be introduced as soon as practicable upon return to  Government. This will involve:

. world prices applying to Australian oil,

. continuing with an appropriately formulated 1PP in the period prior to the  operation of a free market,

. phasing out the crude oil allocation system except for small producers,

. discontinuance of the freight adjustment scheme.

. closely watching developments and acting to remove any critical market  imperfections that would otherwise lead to a misallocation of resources  and sub-optimal economic development.

The next Liberal Government will work towards coherent industry deregulation  and regulatory reform. In addition to a general regulatory review, the next  Liberal Government will abolish the Prices Surveillance Authority and  encourage States not to introduce price controls.

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Natural Gas and LPG

The next Liberal Government will rely upon the free market to provide the  necessary incentives. A review of policies which inhibit or distort the use  of gas will be undertaken:

. a free market for LPG will be introduced as soon as practicable. This

will lead to discontinuance of a Government set wholesale price,

. alternative uses of gas will be encouraged so as to maintain and extend  our liquid fuels self sufficiency. Any assistance provided will be by way  of research and development grants and not through subsidies. ;

The next Liberal Government will seek tenders for the purchase of the  Pipeline'A uthority. In a situation where there is no purchaser, at an

appropriate price, the private sector will be encouraged to extend the grid  in response to demand and supply and competitive alternatives:

Coal ' ' ' 'Ã¢ÂÂ   ' ’

In order that the coal industry can maximise sales and productivity,

Government interference needs to be reduced: Our policy will result in:

. abolition of coal export controls,

. repeal the Coal Industry Act 1946:

- this will lead to the abolition of the Joint Coal Board and the Coal

Industry Tribunal. Industrial relations within the coal industry will  be brought within the mainstream industrial relations institutions.

. repeal the Coal Excise Act 1949:

- any research that needs to be funded by the industry can be organised  jointly through the industry association,

- the industry long service leave scheme should be administered by  individual companies or by the industry association and not rely on the  Government excise.

Uranium and Nuclear Industries

The export of uranium and development of nuclear technology, such as the  production of isotopes used in medicine, will be valuable to Australia. The  next Liberal Government's policy will result in:

. removal of the veto on further uranium mine development immediately on  return to Government,

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. permit exports for peaceful purposes, such as electricity generation,  under strict safeguards including the monitoring of materials and the safe  disposal of waste. Any trade restrictions will be limited to ensuring the  maintenance of intemationalv >safeguards,r'‘,|‘? Ã¢ÂÂ

. phasing out of floor price controls and a review of the administration of  export control requirements to see if a more flexible approach can be  developed.

The next Liberal Government will implement all ASTEC Report recommendations relating to the further development of the nuclear fuel cycle including:

. continuing support for the Australian Nuclear Science and Technology  Organisation,

. encourage private sector involvement in the development of the nuclear  fuel cycle in Australia,

. continued research and development on technology of isolation and safe  disposal of nuclear waste i.e. Synroc,

. an assessment of the feasibility of establishing a uranium enrichment  industry,

. adhere to our obligations under the Nuclear Non-Proliferation Treaty and  through the International Atomic Energy Agency.

5.2 METALS

The exploration for minerals, development of mines and marketing of  production are essentially matters for industry and not Government. The main  contribution of Government to long term development is to remove impediments  to exploration and development. The next Liberal Government will:

. abolish export controls on minerals,

. encourage the States to adopt charging policies for freight based on cost  recovery for efficient services.

Australia's technological competence needs to be maintained and improved if  our competitive position is to be improved. The next Liberal Government  will:

. encourage further processing of minerals in Australia where this is

commercially viable,

. review the role of research organisations to ensure that they are not

duplicating work undertaken by other organisations such as Universities or  industry sponsored initiatives.

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5.3 OTHER

Electricity

While recognising that this is primarily a State matter, the electricity

authorities borrowing and investment requirements have a significant impact  on the economy and the availability of their product has an effect on the  ability of the economy to grow:

. for security of supply reasons proposals for further inter-connection of  State systems will be encouraged where the benefits outweigh the costs,

. believing that the private sector should be the prime generator of

development the next Liberal Government will examine the involvement of  private enterprise in power generation using a variety of energy sources  (for example, gas, other liquid fuels, geothermal, solar, nuclear and  coal).

Alternative and Renewable Energy Sources

The next Liberal Government will support the use of alternative and renewable  energy sources where they are commercially viable.

The major role of the Commonwealth Government in this area is strategic; to  reduce investment uncertainty by developing and maintaining suitable tax,  environmental and foreign investment policies. The next Liberal Government  will:

. continue to support the Research and Development work undertaken through  the NERDDC. We will ensure that the work is focused in those areas where  Australia can make a real contribution.

Water Resources

The next Liberal Government will continue the Commonwealth’s commitment to  water resources development through a national water resources programme,

. precise extent and level of commitment determined in consultation with the  States, advisory bodies, and significant consumer groups:

- priority in consolidation and completion of existing projects in

particular for agricultural use,

- support the co-ordination work carried out by the Murray-Darling Basin  Ministerial Council.

Authorised by T Eggleton, Federal Director, Liberal Party of Australia,  Cnr Blackall and Macquarie Streets, Barton, ACT  Printed by Pirie Printers Sales Pty Ltd, 140 Gladstone St., Fyshwick, ACT 2609

