Reform or Risk Missing the Gas Boom

by on 21 May, 2015

By Damion Otto

Leaders in the resource-industry have warned that unless Australia immediately reforms its economy, it is in serious danger of missing out on the benefits of the looming natural gas boom.

Politicians know- all-too-well that Australia’s resource boom is drawing to a close – it is the leading excuse they use to defend their budget deficits and fiscal mismanagement. However, it is not true that our resource-rich country has ran out of things to offer.

The second-wave of the liquid natural gas (LNG) boom is beginning to take hold globally. With its large stocks of natural gas Australia should be well-placed to benefit, as long as governments can properly respond to the challenges the industry faces.

Instead of complaining about how the declining price of iron ore impacts their budget deficits, governments need to dismantle the barriers to investment that they have created in the Australian marketplace.

At the Australian Petroleum and Exploration Association conference recently staged in Melbourne, Roy Krzywosinski, Chevron’s Australian managing director highlighted the impediments to the industry:

“Among the problems were too much regulation to get approvals, an inflexible industrial relations systems, high labour costs and taxes and government policies that don’t support investment”

These comments illustrate the clear need for reforms to make Australia more conducive to business investment if it is to avoid the “serious risk” of missing out on the benefits of the upcoming LNG boom.

Industrial relations regulation needs to be relaxed to allow a more dynamic workforce and tax incentives need to be extended to all job-creators in the economy, not just to small business.

There is more to lose than just the Abbott Government’s legacy if it stays on its current path as Fraser Government Mark II. With budgets going into the red all over the country, and political pressure to keep it that way, economic reform is urgently needed to ensure that Australia’s standard of living continues to be the world’s envy.

Abbott has claimed: “[T]he age of reform has not ended, it was merely interrupted.” But he is yet to put these words into action. If our governments fail to act, then Australia could miss out on the fruits of another resource boom. And we will all be poorer for it.

Damion Otto is a 3rd year university student at UWA Perth and a member of the Liberal Party.

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