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Economic Implications for Tasmania of the Proposed National Heritage Listing of the Tarkine Area

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Economic Implications for Tasmania of the Proposed National Heritage Listing of the Tarkine Area Potential Socio- economic implications for Tasmania of the Proposed National Heritage listing of the Tarkine area Tasmanian Government submission to the Australian Government - Minister for Sustainability, Environment, Water, Population and Communities October 2011 Table of Contents Section Section Heading Page Number Number Executive Summary 3 Introduction 5 1 North-West Region – Economic Data 5 2 Sovereign Risk and Uncertainty 12 3 Existing Mining Projects and Developments 12 4 Review of Adverse Impacts on Future Value Adding 19 Projects (Mining) 5 Potential for New Mineral Discovery in the Area 20 Under Assessment for National Heritage Listing 6 Current Regulation of Mineral Exploration and Mining 22 in Tasmania 7 Tourism Overview 23 8 Forestry 24 Conclusion 25 Attachment Comments from Local Government Authorities 27 1 2 Potential Socio-economic implications for Tasmania of the Proposed National Heritage listing of the Tarkine area Executive Summary As outlined in the Tasmanian Government’s submission to the Australian Heritage Council on the Proposed National Heritage listing, the Tasmanian Government does not agree with the proposed National Heritage values and boundary listing of the area of North-West Tasmania referred to as the Tarkine. The Government has issues with the approach taken to identifying values within the proposed boundary. In addition, pursuant to section 324JJ (5)(b) of the Environmental Protection and Biodiversity Conservation Act, 1999, the Government wishes to draw to the attention of the Minister that it believes serious immediate and long term social impacts should be taken into account which would occur in an already depressed region of Tasmania resulting from the closure of key industries such as mining and forestry. This will impact have flow on effects to the rest of the State. Some of the key economic and indicators for the region are: The mining industry in this region represents 73 percent of the State’s total mining industry and is valued at $609 million; The north-west region’s share of Tasmanian Gross State Product (GSP) has been estimated at $5,031 million, or around 21.6 percent of Tasmanian GSP; The unemployment rate in the north-west has consistently been the highest in the State, and by a relatively wide margin; Direct job losses over the last two years in forestry agriculture and manufacturing changes are estimated to be more than 1,000. The indirect impact is significantly greater; The outcome of the ongoing process known as the Inter Governmental Agreement on forestry will have an ongoing impact on employment beyond recent job losses; 40.5 percent of households in the North-West earn $649 per week ($33,700 per year) or less, compared with 37.3 percent of Tasmanian households; and The industries affected especially mining are a critical offset to the pressures on other industries such as manufacturing flowing from the high value of the Australian dollar. The inclusion of the Tarkine area on the National Heritage list will not only directly affect mining developments in the area but also significantly increase the perceived level of sovereign risk in the Tasmanian minerals sector and damage the investment reputation of Tasmania. Evidence of this is provided by the annual Fraser Institute Survey of Mining Companies. The Tasmanian Government has had discussions with the existing mining companies who are likely to be impacted by a listing. These companies clearly believe that both risks and costs will substantially increase due to increased approval times and other costs due to additional compliance requirements, and it clear that this will dampen, if not stop, much needed exploration and development in the area. 3 Some companies have indicated that they will cease current activities if the listing occurs in relation to their area of interest. Others have indicated they may seek compensation for investments in developments if new approval requirements are necessary and / or work has to cease. Mineral Resources Tasmania (MRT) providing advice from within Government, notes that there is a precedent for such compensation. The general industry consensus is that in the medium term the Tasmanian mining industry will gradually decline as existing mines are exhausted and new mines or extensions to mines are inhibited by the wide ranging values of wilderness and aesthetics. In terms of future alternative industries, the forestry sector is currently retracting and it will be sometime yet before the full impact of existing process are known. The tourism industry is often promoted as the replacement industry for other industries that have been impacted by environmental restrictions as it is viewed as many by being more environmentally neutral. However, the Tasmanian tourism industry, like much of the non-mining export sector, is currently stagnating under the weight of the high Australian dollar and increased competition from alternative destinations. There are undoubtedly some specific tourism opportunities in the region, but it is highly unlikely that this industry would be able to replace the value of the existing industry, especially mining, in the short to medium term. The Tasmanian Government does not support some of the values claimed for the Tarkine, given the long history of disturbance and human activity across the region and has already made its views plain. In addition, for social and economic reasons, the Tasmanian Government strongly opposes the placing of the Tarkine area on the National Heritage list. The Government believes it would have the effect of producing significant negative economic and social impacts on the community and economy of North-West Tasmania, an area already under major stress. There would also be significant impacts on the Tasmanian economy generally. The listing would seriously damage the future growth of the mining sector and will potentially see billions of dollars’ worth of economic activity and investment projects lost to Tasmania. In effect this action could mean that Tasmania would be prevented from enjoying any of the fruits of the national mining boom, while being left to suffer the negative high exchange rate consequences on its other engines of prosperity. 4 Potential Socio-economic implications for Tasmania of the Proposed National Heritage listing of the Tarkine area Introduction: The area of North-West Tasmania referred to as the Tarkine is currently under consideration for inclusion on the National Heritage List by the National Heritage Council. The National Heritage Council will assess whether the area meets the National Heritage List criteria. In addition to heritage values, pursuant to section 324JJ(5)(b) of the Environmental Protection and Biodiversity Conservation Act, 1999, (EPBCA) the Tasmanian Government believes that any assessment of the Tarkine area by the Minister for the Environment and the Australian Government needs to consider the adverse socio-economic impacts that National Heritage Listing will have for the region, its communities, the Tasmanian mining sector and the Tasmanian economy as a whole. Of prime concern are the direct detrimental impacts on the Tasmanian mining and minerals processing sectors. The mining sector forms one of the four economic pillars for the state, along with agriculture, tourism and forestry and is therefore immensely important to Tasmania’s economic prospects. The area under consideration for listing is one of the most highly-mineralised prospective areas in Australia. The National Heritage assessment is occurring at a time of significant economic downturn in Tasmania. In particular, the North-West of the state has been hard hit by a number of economic factors including large job losses in the manufacturing and forestry sectors. Mining is one of the few bright prospects in a small regional economy hard hit by the Global Financial Crisis (GFC) and the high exchange rate for the Australian dollar. 1. North-West Tasmania Region – Economic Indicators The North-West region of Tasmania covers an area of 22, 496 square kilometers (around one third of the State’s total land area). As at 30 June 2010, the region’s population was 112, 789 persons - 22.2 percent of the State’s total population. Economy The North-West manufacturing sector accounts for 27 percent of the total State industry, but its mining industry is estimated to represent 73 percent of the State’s total mining industry. This demonstrates not only the importance of the mining sector to the north-west region, but the importance of the north-west to the State as a whole. The north-west’s mining industry is valued at $609 million. 5 The north-west region’s share of Tasmanian Gross State Product (GSP) has been estimated at $5,031 million, or around 21.6 percent of Tasmanian GSP.1 The following chart estimates each industry’s contribution to the region’s total value added: Labour Force Labour force participation has been low and unemployment high in comparison to the national average. The participation rate in the North-West region fell sharply in late 2009 and it remains significantly below the participation rates in the other regions and for the State as a whole. Total employment in the North-West region was estimated at 50,200 persons in the year to June 2011 (year-average, original terms), which was 21.1 percent of total State employment. As the chart below reveals, employment growth in the region has generally lagged behind that of the State and even further behind the nation as a whole since early 2008. As well as this, the region suffered a sharp fall in employment in the aftermath of the GFC. 1 Estimate from Compelling Economics’ REMPLAN model of regional economic analysis program. 6 7 Source: ABS, The Labour Force, Australia, Detailed, Quarterly, Cat No 6291.0.55.003 The unemployment rate in the North-West has consistently been the highest in the State, and by a relatively wide margin. The situation is even worse when comparison is made with the national numbers and the effect of the low participation rate considered.
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