18 Jul 2013
Targeted reform needed to shore up Australia's energy and resources future, say Upstream 2013 attendees
The majority said priority should be given to reforms that tackle rising labour costs and investor uncertainty caused by the political climate, as these are the biggest factors affecting reduced resources activity.
Australia's energy and resources boom is not over, but the country's ability to attract and benefit from future investment will require a targeted reform agenda to restore our reputation as a low sovereign risk destination, according to a survey of attendees at Clayton Utz's annual national energy and resources conference, Upstream 2013.
Of the survey respondents, the majority said priority should be given to reforms that tackle rising labour costs and investor uncertainty due to the political climate, citing these as the two biggest factors in reduced exploration, development and investment activity.
Over 80 representatives from a range of energy and resources industry participants attended Upstream 2013 in Sydney on Friday 5 July, to hear from Clayton Utz partners and industry leaders on key legal and business issues impacting the sectors.
Clayton Utz asked attendees a series of questions seeking their perspective on current challenges facing the sectors, including barriers to Australia's attractiveness as an investment destination and key priorities for legislative and policy reform.
One of the questions we asked was: What are the two biggest factors in reduced or stalled exploration, development and investment activity in Australia?
Given the chance to vote twice, 61.8% said labour costs were the biggest factor in reduced or stalled exploration, development and investment activity, while 44.1% cited political uncertainty and 38.2 % blamed unstable commodity prices. Only 11.8% said declining demand was a factor, while 8.8% pointed to the foreign investment regime as a deterrent.
Other factors cited were regulatory red tape, productivity performance, and a short-term v long-term investment return mentality. One survey respondent commented that "abolishing [the] carbon tax would be [a] fast, relatively straight-forward, confidence-building measure", while another said that "standardising the regulatory and environmental regime across the country" would help to improve the investment climate.
A key theme among the responses was the need for greater regulatory certainty, a more long-term and consultative approach to legislative and regulatory reform, and greater flexibility around labour laws.
Clayton Utz partner and national energy and resources practice head Graeme Dennis, who took part in a panel discussion on Australia's energy future, said the survey feedback was unsurprising in light of the industry's much-publicised concerns over Australia's ability to maintain a competitive edge as a key exporter of energy and resources.
"Many have called the end to the resources boom, but it is clear that there is still ample opportunity for Australia to capitalise on continued foreign demand for our commodities, including from countries such as China, whose economic growth story continues to unfold. Creating the right investment climate, both in terms of domestic exploration and development activity and to attract foreign investment, will be key to shoring up Australia's long-term energy and resources future," said Graeme.
Upstream 2013 comprised a series of panel discussions on topics including Australia's competitiveness as an investment destination, funding sources and structures in capital constrained times, demand uncertainty, and Australia's energy future, including gas supply and demand. This year's keynote speaker was the Shadow Minister for Energy and Resources, The Hon. Ian Macfarlane MP, who provided an overview of the Coalition's plans to ensure that a "strong and robust" sector can grow and become more internationally competitive.
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