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Cabinet Minute ~, ·if~ ~ 63.5' h ~~~nA' // DE ~ CABINET MINUTE BRISBANE, !' I I' 119/? Department of Mines - State Economic Development Strategy Submission. ~ do Copies Received at L,,L. oo p.m. Copies Made CIRCULATION DETAILS GOVERNOR Decision Fi le 1 21 2 MR. AHERN 22 ' /// ~-C7 / 3 23 1 Copy of rel n - - - J4 MR. GUNN ~ J C'. -' . ,.., II t -II - ...., '"' .....,,,c1 che 4 MR. GIBBS 24 rel=~... -~ t- Z..,,,,.~ _, I r , · ··.1·~·- l . I "' .. ( MR. GLASSON I 5 25 ./ , ( I'..i._ <:(" y~~ ,.: - ~ v 'f' ( 6 MR. AUSTIN .. / 26 MR. LESTER 7 27 MR. TENNI 8 ;£ 28 . 9 MR. HARPER 29 10 MR. MUNTZ 30 11 MR. MCKECHN :E 31 12 MR. KATTER 32 13 MR. NEAL 33 14 MR. CLAUSON 34 MR. BORBIDG ~ 15 35 16 MR. RANDELL 36 17 MR. COOPER 37 18 MR. HARVEY 38 MR. LITTLEP ~OUD 19 39 Master File 20 40 inches cm • 1 12 Kodak Color Con•.;;"' Blue Cyan Green White 20 Copy No. C 0 N F I D E N T I A L C A B I N E T M I N U T E Brisbane, 8th August, 1988 Decision No. 54852 Submission No. 49448 TITLE: Department of Mines - State Economic Development Strategy Submission. CABINET decided:- That the contents of the Submission be noted. CIRCULATION: Department of Mines and copy to r1inistor. Premier's Department and copy to Premier and Trcasurero Treasury Department and copy to Minister. All other Ministers for perusal and return. d.~ Certified Tr ue C9py JI )}//-~ . Secretary~ - to Ca b'inet. ~94~8 SECURITY CLASSIFICATION "C" - CONFIDENTIAL Submission No. •·•••·····••···••·21 C<>I>.Y' No. ........................ FOR CABINET DEPARTMENT OF MINES Sl'ATE ECONOMIC DEVELOPMENT Sl'RATEGY SUBMTI:SION 1. Honourable Ministers will recall that the State Economic Development Strategy is being prepared within the Premier's Department and with the assistance of Stanford Research Institute in conjunction with Strategies Pty Ltd, Consultants. 2. Submissions have been invited from Government Departments and t he private sector to assist in preparing the strategy. Following this request, the Department of Mines as the Government agency responsible for the planning and management of one of the leading sectors in the Queensland economy, has prepared a Submission on the mineral and energy resource n 5 · sector of the State. A copy of the Executive Summary is attached at 3 ,,,.0 Attachment I together with the complete Submission. a:J "' c: ..... CD 3. The Submission covers important issues affecting the prospects of the ~ Queensland mineral resource sector and the contribution of the sector to Q. the State's economy. Because of its current size and prospects, the GI,._.. minerals and energy industry is recommended as one of the main sectors (") to be targetted for encouragement and support. ~ n :l 0 4. The Submission also lists policies and actions proposed for inclusion in the - strategy. These policies and actions, which compliment and supplement 0 policies and actions already in place within the Department of Mines, are G) ()"""" designed to stimulate expansion and development of the sector with a view caCD Q to maximising its contribution to the future economy of the State. :::s :l 5. In line with this concept, the recent re- organisation of the Department of Mines involved program management grouping. The new structure and subsequent actions have an active focus on identification of opportunities, and the targetting of the more promising projects through strong promotional and marketing efforts. 6. SUBMl'rl'ED for the information of Cabinet. MARTIN TENN! MINISTER FOR MINES AND ENERGY Brisbane 4th August, 1988 ATTACHMENT I 1. EXECUTIVE SUMMARY Introduction This submission is made by the Department of Mines as part of its contribution to the preparation of a State Economic Development Strategy. The submission covers important issues affecting the prospects of the Queensland mineral resource sector and the future contribut ion of the sector to the State's economy. A limited time was provided for submissions. Consequently, it was not possible to carry out the level of research or prepare the standard of documentation commensurate with the significance of the mineral resource sector and its role in the future economy of Queensland. Resource Base Queensland has a wide range of deposits of metallic and industrial minerals, fossil fuels and gemstones. In particular, the State's coal, oil shale, bauxite, mineral sands, magnesite, sapphire and opal deposits are of major significance by world resource or trade standards. Copper, silver, lead, zinc and gold are other important economic resources of the State. These geological resources allied with the m1n1ng industries well developed technical and marketing skills have provided a comparative advantage for the State to compete successfully on world markets. Current Economic Significance The mineral resource sector has for many years played an important and growing role in the Queensland economy. Exploitation of the State's mineral and energy resources leads directly to economic activities involved in exploration, extraction, primary processing and transportation. Indirectly, the sector has widespread influence throughout the economy. The sector provides broad industry support upstream through purchase of goods and services and has linkages downstream to smelting, refining and manufacture of metal products. Additional economic activity is generated throughout the economy through multiplier linkages. Directly and indirectly the mineral resource sector is an important generator of exports, investment, State Government revenue, employment and infrastructure development. The level of rontribution of the mineral resource sector varies across the State with the industry in some areas being the mainstay of the regional economy. The mining industry is arguably the most effective instrument for decentralization within Queensland. Statistics showing the economic significance of the total mineral resource sector are not available because of classification and confidentiality problems. The extractive operations sub- sector had a total turnover of $4925 million in 1985/86. The turnover of the major commodity groupings were $3300 million for coal (67%), $920 million for metallic minerals (19 %), $445 million for oil and gas (9 %) and $260 million for other minerals including construction materials (5 %). 2. Other indicators of the economic significance of the mineral resource sector are: Foreign Export contribution (1986 /87): $4500 million (58% of State total) New Capital Expenditure 1982/83 - 1986/87 (5 year average): $666 million (23% of State total) Estimated Annual Net State Revenue Contribution $670 million (33% State raised revenue, (1986 /87): 18% Total State revenue) Estimated Direct and Indirect Employment (mid 1987): 81 000 persons (7% of State total) The workforce statistics quoted above include full and part-time jobs. Translation into full time equivalents would increase the significance of the employment generated directly by the mining industry and indirectly through multiplier linkages to other dependent sectors. Over the last twenty years major expansion of the industry has occurred. The turnover of the extractive industry sub-sector has recorded a compound growth rate of 19% over the period 1970/ 71 to 1985/86. More recently the pace of growth has slowed. In 1987 /88 the level of employment and the total value of output in real terms has appeared to plateau or marginally decline. This levelling off has resulted from a fall in the coal market which has more than offset increases in most other n 3 · commodity markets. The slow--down in the expansion of the coal industry has been 3 ..., ..:::T due to highly competitive world market conditions and industry cost conditions "' stifling investment in mine expansions thereby reducing tonnages available for export. Constraining Influences Important factors impacting on industry cost competitiveness and constraining development of the mineral resource sector are: the level of Government charges; inefficient work practices; alienation of resources from mining (10 % of the State's land is already closed to access or under threat of closure); the holding of land under idle exploration titles and mining leases; international trade barriers and subsidies; and high costs of coastal shipping and some parts of the onshore maritime industry associated with non-bulk trades. State Government Charges Of the above constraining influences, industry has voiced its concern with regard to the level of State Government charges through rail and port charges, royalties and taxes. The level of State Government revenue collection (estimated $670 million net contribution by the mining industry in 1986/87) has come under increa sing criticism from many quarters within the industry in recent years. A further cost imposed on many mine developments is the requirement to pay for infrastructure works beyond those directly associated with the mining project or dedica t ed transport and handling systems. 3. The coal industry pays State Government charges for rail freight and port services. These charges were increased for projects initiated during the resource development "boom" of the late 1970's and early 1980's, but notwithstanding reductions in rail freight already offered by the Government, the mining companies complain that the charges have not been reduced in line with the very substantial decline (in both real and absolute terms) in prices for coal exports. Low coal prices and high Government charges could impose constraints that virtually preclude development of new coal mines until market prospects improve. Similar levels of charges are not imposed on other sectors of the economy. The consequence is that resources are attracted away from the mining industry, particularly the export coal industry, into other protected sectors. Resource allocation is thereby being distorted, economic efficiency is being reduced and the full potential of the State's economy is not being realised. A critical issue in the State Economic Development Strategy therefore will be the State Government's tax policy on the mining industry. Through the royalty system administered by the Department of Mines, the industry should give a fair and adequate return to the community for the exploitation of the State's resources.
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