“The national interest must come first. We must secure a long-term investment model in our resource sector that is sustainable and meets the expectations of our people,” O’Neill said.
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O'Neill and PNG look to not kill their Golden Goosie. As AU LNG projects delayed and cancelled more exploration and processing will take place next door in PNG.
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High Costs Killing Huge Construction Projects
Browse LNG Development downstream layout. Image Source: Woodside Petroleum
In the wake of the cancellation of the $45 billion James Price Point LNG development, a key business lobby in Australia has warned rising cost pressures are leading to abandonedconstruction projects and impacting the broader economy and jobs.
Business Council of Australia president Tony Shepard says last week’s decision by Woodside signaled a stark warning of the cost pressures facing our economy.
“(Friday’s) decision adds to the deferral of BHP’s Olympic Dam project as two very big examples of what the Business Council has been saying for some time, that Australia has become a high cost and low productivity place to do business and this is placing important investment at risk,” Shepard says.
“This is a worrying sign because these major projects are the main game in Australia’s economy.”
Shepard’s warning comes as cost blowouts on a number of significant resource developments have underpinned growing doubts about Australia’s ability to deliver large infrastructure and heavy industry projects within budget. Recent examples include a $9 billion blowout at Chevron’s Gorgon project and blowouts of $4 billion at BG Group’s Queensland Curtis LNG plant, $4 billion across the life of Citic Pacific’s Sino Iron Ore project and $2 billion for the Santos-led Gladstone LNG project.
Tony Shepard. Image Source: Australian Aging Agenda
Along with the natural complexity of large scale developments, blowouts have been caused by the high Australian dollar, rising labour costs and low productivity gains.
Citing last Thursday’s jump in unemployment (up 0.2 per cent to 5.6 per cent) Shepard says the impact of rising costs is spilling into the broader economy and that while the Australian economy remains sound, warning signs are building about the need to lift productivity.
He says the government needs to resist urges to increase business taxes to plug fiscal holes in the budget and press ahead with tax and labour reform as well as efforts to reduce red tape.
“We can no longer avoid the need to put in place a plan for comprehensive tax reform, to reform our workplaces so they are more competitive and flexible, to end the rising tide of red tape such as our inefficient and costly environmental approvals and to improve our project planning approval times,” Shepard says.
“Getting the cost of doing business down is a project that must succeed for the long-term prosperity of all Australians.”