PERTH (miningweekly.com) – The Minerals Council of Australia (MCA) on Tuesday said that greater business investment in new technology and projects is essential to ensure Australia’s skilled workforce drive higher wages and a stronger economy.

In its latest 'Economic Series' report, the MCA said that Australia needed economic reform to lift productivity if it was to unlock the growth potential across industries, adding that policy settings must enable rather than restrain the economy’s growth.

“The last decade has seen Australia going from one of the best performing OECD countries for private sector capital investment to one of the poorest performing and labour productivity growth falling 2.5 percentage points,” said CEO Tania Constable.

“Since the end of the last mining investment boom, growth in the economy’s real net capital stock substantially slowed and it is now growing at its lowest rate in 60 years.

“Unless this is turned around, Australia is at risk of experiencing continued weakness in business investment, which in turn will further weaken the contribution from our stock of capital to productivity growth.”

Constable noted that over the long term, increases in the amount and efficiency of capital per worker have been important components of productivity growth and, therefore, economic growth, which highlights why Australia must remain internationally competitive at attracting investment.

“Since the 1960s, achieving strong growth in business investment has been a challenge for Australia despite the significant contribution from the mining industry over the last two decades.

“Improving Australia’s productivity performance by attracting capital investment will require comprehensive economic reforms aimed at reducing policy distortions and disincentives that are limiting the economy’s competitiveness and the ability of business to drive economic and productivity growth.

“To attract capital investment, the report highlights the need for economic reforms that deliver internationally competitive tax settings; expanded trade and investment opportunities; efficient and effective regulatory settings; practical and beneficial workplace relations rules; an efficient transformation to net zero emissions; and, industry-focused skills and training programmes,” she said.

The MCA said on Tuesday that the minerals industry had demonstrated its ability to be a major contributor to Australia’s private sector capital investment and productivity growth owing to the expansion of mining that began in the 2000s.

“The industry can again make a substantial contribution to lifting productivity if policy settings make Australia a competitive destination for large-scale investment in mining and minerals processing projects.

“A 1% lift in productivity by 2030 would deliver a A$200-billion boost to the Australian economy, a 9.4% increase in real wages and leave Australian families A$11 700 better off,” Constable said.

“Policies that improve productivity and competitiveness and attract investment, are integral to Australia maintaining its comparative advantage in mining and minerals exports, and expanding minerals processing and mining-related manufacturing, which will ultimately benefit all businesses, households and workers.”

The report noted that policy settings must support and enable businesses to innovate, invest and acquire the workforce capabilities and flexibilities that they need to successfully compete and grow

Productivity-based reforms will also help mining continue to underpin the federal government’s revenue as it is doing today with the industry paying a new record high of A$26.5-billion in 2020/21, Constable said.

The report pointed out that there were currently over 100 prospective mining and processing projects totalling about A$50-billion of investment and potentially providing around 30 000 construction jobs and 20 000 operating jobs. However, it noted that while in terms of policy perception and mineral potential Australia is ranked the most attractive region in the world for mining investment, converting perception into actual investment would greatly depend on policy settings that affect the return on investment.

“While the outlook for demand for the mineral and energy commodities Australia produces is strong, a substantial increase in capital investment in mining is needed if Australia is to seize the opportunity,” the report stated.