It’s accepted that oil and minerals in the ground are owned by Australians.
So how do we transfer ownership to mining companies? “Gifting” them and then applying taxation and royalties is, as we will see below, a poor commercial practice that is now creating problems with public disclosure and accountability.
It’s time that the government accepted its management responsibility for our resources. Rather than gifting and then applying taxation and royalties as an afterthought, it should be selling the minerals in the ground to mining companies at a price based on the undeveloped mineral value plus the cost of monitoring the extraction according to publicly-acceptable standards, subsequent remediation and any additional infrastructure requirements.
A simple domestic parallel is when the contents of a house are for sale. Buyers choose to come and explore but the owner will determine what they can take and will also estimate the value, which is usually a preset (contract) figure or negotiated at the gate. For expensive items, buyers may even travel from interstate: they take into account the potential value and explore at their own risk.
But under the current Australian taxation and royalty systems, the buyer takes first and then may make some recompense. This discourages public disclosure and accountability, and the analogy of selling home contents shows the commercial nonsense of this approach. A sale, on the other hand, allows the owner to manage the transaction, as any respectable owner must.
Mining directly affects local conditions and must be balanced against other options and opportunity costs. A domestic buyer may have an eye on the piano but another member of the family may not want to sell that particular item. But if a sale is agreed, the buyer isn’t allowed to damage the house when taking it out.
Independent cross-discipline and intra-government assessment is essential for resource extraction. Individual industries and companies can only assess opportunities within their own market, whereas mineral extraction has impacts well beyond the minerals themselves.
At a broader level, Australia should promote the establishment of international bodies for marine resources and ocean health to develop standards and monitor international waters so that explorers and miners do not move to less regulated and easier-to-pollute areas, as this is likely to damage Australia’s opportunities and destabilise international waters with adverse long-term political, environmental and economic impacts.
It all comes back to proper, accountable commercial practice. The government is putting Australia at a disadvantage if it does not follow this simple due process of responsible ownership transfer.