The latest quarterly survey of resource companies CEOs reveals the challenges the sector is facing across multiple fronts.
The Queensland Resources Council (QRC) Chief Executive Michael Roche said the quarterly *QRC CEO Sentiment Survey, released as part of the State of the Sector report points to the biggest factors expected to affect resource businesses over the coming 12 months.
“A worrying lack of transparency clouds local government rate hikes, a stark lack of consultation from state and local governments, reactive and damaging laws and regulatory changes, green lawfare and sovereign risk are issues that are highlighted in the latest survey,” Mr Roche said.
Some of the CEO comments from the survey about local government rates include:
“We believe there is a need for legislative reform on this issue (local government rates) in Queensland, and that it represents a genuine threat to Queensland’s competitiveness…” (October 2016)
“If faced with soaring increases in rates as an overhead cost it simply increases the NPV (new present value) required for a project to become viable and therefore a decrease in viable projects that make it to production…” (October 2016).
The survey has also found that CEOs report a growing problem of insufficient state government resources and is at its worst in four years, despite the number of public servants increasing by about 20,000 over the past couple of years (Chart 8).
“The company CEOs call out that the lack of resources from the state government is an impost on their businesses, especially over the past 12 months – this is despite an overall rise in public servants,” Mr Roche said.
“The link between the two factors suggest the allocation of resources based on the priorities of the Queensland government does not match the expectations and needs of the resources sector.”
Some of the CEO comments include:
“State government appears to lack the strategic understanding of our industry and the impacts that ill-thought legislation/regulation has …”
“The lack of consultation with industry by government prior to the introduction of new legislation which has a significant impact upon business is negatively impacting business confidence to invest in Queensland. …”
“The regulatory environment continues to be dynamic with the Queensland government seemingly disinterested in creating a legislative framework that will sustain and grow the mining sector. This is reflected in poor industry consultation, knee-jerk responses to issues raised by left wing interest groups and ill-considered legislation. …”
Mr Roche said that the disconnect between government’s willingness to impose new regulation and its ability to resource that new regulation can be seen most starkly in the Chain of Responsibility law, which was enacted back in April, but the promised statutory guideline on how the law will be applied is still to be finalised some six months later.
*The QRC CEO Sentiment Index is a quarterly survey of QRC’s producer and explorer members with the typical sample size covering between 20-35 companies. The participating companies cover the majority of mining and energy, minerals processing, contracting, exploration, electricity generation and oil and gas extraction activity in Queensland.
