Lang Hancock, “We Mine to Live,” Quadrant, September, 1981, pp. 51-53. Update: this was largely written by Viv Forbes who gave Hancock permission to use it without attribution (so as not to offend his employer at the time). Forbes is also the anonymous friend Hancock quotes.

Australia has more natural wealth under the ground than North America. We could be greater than America if we followed the “free enterprise” system and developed it as America did in the early days. But, before we can develop we must have minimum government, good leadership, and of course we must have infrastructure, so that the vast wealth that is in the ground can be got out of the earth, exported and earn livings for all of us and for the nation. Fourteen million strike-ridden Australians cannot possibly consume everything that Australia can create: we manage to produce more than 1,000 million Government-controlled Chinese.

We have in our resource industry two distinct sectors — the private sector, which is controlled by government departments, and the public sector, which is controlled by no one.

The key to resource management in the 1980s will be the extent to which we can reverse this destructive state of affairs.

A friend of mine summarises Australia’s situation like this:

Our politicians seem to think that minerals are produced by taxes, levies, enquiries, commissions, regulations, export controls and senate standing committees.

At best these activities merely use up energy. Usually, however, they also deter exploration, defer development and restrict production. They also distract producers who are forced to spend valuable time and energy preparing submissions, appearing before tribunals, educating bureaucrats, and apologising to the media if they make profits.

Australia is fast approaching the situation where the number of energy departments and committees exceeds the number of oil explorers.

There are at least 10 State and Federal department promulgating contradictory and often inept energy policies. In addition there are four Federal energy standing committees continuously debating all aspects of energy, plus the Australian Science and Technology Advisory Council. As if all this was not enough, Deputy Prime Minister Anthony has appointed a new National Energy Advisory Committee consisting of 7 professors, 5 public servants, 2 laymen, 1 unionist, 1 energy consumer, 1 energy producer, and not one explorationist.

Should anyone be considering using foreign capital to build an oil refinery, the approval of at least ten more government departments is required.

It is a simple truth that individuals and families and nations prosper best where there are plenty of well-paid jobs created by the free interplay of supply and demand. Our own Australian Prime Minister agreed with us when he rejected the Labor Party’s demand for creation of more government jobs to ease unemployment; yet his government, and other governments of the same political colour in individual States, except Queensland, have a record of interference second to none in Australia.

It has been estimated by the Confederation of Australian Industry that in 1978-79 the cost of Federal and State regulation of industry was $A3,720 million — equivalent to $A900 a year for every Australian household, with the cost of Federal regulation alone $A1,384 million.

And it is not only the economic burden — it is the overall effect of government — the stultifying and the delaying, the frustration and the destruction of initiative and incentive — that do even more damage.

At this stage, I do want to say that I am NOT an anarchist. I believe in the essential role of government to keep the peace nationally, commercially and internationally. But I also believe that what governments do best is enforcing the commandments: Thou shalt not steal; Thou shalt not make false or misleading statements; Thou shalt not break contracts; Thou shalt not assault peaceful neighbours. They should leave it at that.

Have said that, let me now go on to state what I believe governments SHOULD NOT DO, summed up in what I call a Five Point Plan for Energy Chaos:

1) DISCOURAGE EXPLORATION

The following policies can be relied upon to decimate exploration activity:

  • Make frequent changes to tax laws, especially retrospective changes.
  • Harass foreign investors and inhibit promotion of new exploration companies.
  • Force the re-negotiation of mining agreements after exploration has been successful.
  • Impose super-profits tax on successful explorers.
  • Delay offshore exploration while royal commissions consider the safety of offshore drilling, the environment and so on.
  • Avoid open public tendering for allocating new exploration areas.
  • Make secret arbitrary decisions wherever possible.
  • Maintain confusion as to mineral rights in aboriginal areas.

2) STERILISE EXISTING ENERGY RESERVES

  • Apply a stifling network of taxes, rules and regulations covering every aspect of production and trade in energy products. They can usually be justified if they can be related even vaguely to “safety”, “health”, “national security” or “concern for the environment.”
  • Insist on numerous inconclusive environmental enquiries.
  • Prohibit the use of high sulphur fuels without considering the costs and benefits.
  • Force the introduction of unproven air pollution devices which increase fuel usage.
  • Limit open cut mining for cosmetic reasons, even if it is the safest and most efficient method.
  • Impose costly controls on underground mining that force the closure of some mines.
  • Increase mining royalties and impose export levies.
  • Impose windfall profits tax on oil producers to discourage the development of secondary reserves and reduce the life of marginal fields.

3) ENCOURAGE WASTEFUL USE OF ENERGY RESOURCES

  • Fix the domestic price of oil, gas or coal below the world price, to accelerate the use of domestic fuels and discourage exploration and development.
  • Use special tax concessions, power rationalisation schemes, export controls and petrol price equalisation schemes to encourage waste of fuel.

4) CRIPPLE PRODUCTION OF ENERGY

  • Delay construction of new refineries and processing plants with environmental enquiries, royal commissions and federal-state red tape.
  • Prohibit the import of foreign fuels.
  • Criticise and threaten large highly efficient producers.
  • Delay mining and prohibit processing of uranium.
  • Delay construction of nuclear power plants for years, or prohibit them outright.
  • All unreasonable union demands to delay and defer construction of conventional power stations.

5) IMPOSE A NATIONAL ENERGY PLAN

Appoint committees of bureaucrats and academics to investigate the course of the “energy crisis”. After years of hearings and millions of words, these committees will conclude that it was caused by grasping energy companies and greedy consumers, and will recommend a national energy planning authority. Electricity will be rationed, new taxes will be levied on producers and consumers, highway speed limits will be imposed and petrol coupons will be issued. All exploration will be done by the State Minerals and Energy Corporation which will license all current producers of energy. The new dark age will descend, and the black market in candles will boom.

Australia has plenty of prime examples of the Plan for Chaos at work. My Australian partner and I have had millions of dollars worth of iron ore assets confiscated from us by the State Liberal Government despite the fact we have spent a great deal of money on them and had obeyed the law in every respect. When our legal action to protect our rights looked as though it would be successful in the Supreme Court, the State Government then passed a retrospective Act which denied us the right to go to Court to protect our confiscated areas.

The closure of the Fraser Island mineral sands project by the Federal (Liberal) Government cost the Australian taxpayer millions, and is likely to cost even more; as well as having had a disastrous effect on investment. And why was the project closed? As nothing more than an abject, craven submission to a tiny handful of extreme environmentalists supported by the Communist Party.

If I may mention another personal instance — my own and my partners’ project of the Pacminex alumina refinery once ready to start was delayed for years due to an environmental study that was known at the time to be false and misleading and has since been totally discredited. Then after environmental approval was finally given, and the people formerly interested had given up, the Liberal government wrote to us to say that if we did not make a start on the project within three months our title to the areas would be confiscated.

Huge projects ready to go in Australia to supply minerals to other countries that need them are being hamstrung by a body calling itself the Foreign Investment Review Board, which appears determined to resurrect and refurbish what we had hoped was the safely buried corpse of a series of xenophobic foreign investment guidelines.

One current example of this involves a $350 million steaming coal project in Queensland. The foreign companies which supplied the necessary market for the project to commence, were given approval to receive equity. This approval was given under the Foreign Takeovers Act. But just prior to our recent election Mr Fraser announced what his advisors thoughts to be a vote-winning measure, that no project can start without fifty percent Australian equity. So to stop this project which had got approval under the existing Act, the Liberals applied foreign equity “guidelines”.

As I understand it, the American system does not allow the law of the country to be usurped by guidelines, virtually imposed on political whim.

Australia has just come through the antics of this Federal election where one party (unsuccessfully) tried to win office by buying votes with taxpayers’ money. The successful government parties did the same thing though on a much lesser scale at first. Then they obviously were frightened by the opinion polls and “upped the ante” in the last days of the campaign.

What the present “free enterprise” government has decided to do is to pay bigger handouts from moneys that could have helped lower the national deficit — a deficit resulting largely from excessive welfare, health and education payouts. No suggestion of cutting expenditure and taxes, encouraging growth and development and jobs — just more and more government expenditure.

I recall once speaking to a politician about some projects concerning the economic well-being of Australia. He told me frankly that ninety-nine percent of his time had to be devoted to winning his seat in Parliament; of the other one percent, some had to go to his family and hobbies. This left little time for matters concerning the economic well-being of the country!

One of the projects I have advocated is a trans-continental rail link across Australia. Not a vote-catching beer run from Adelaide to Darwin, but a link from east to west, across the north, to connect the mineral-rich Pilbara in Western Australia, which has many other minerals in addition to being the largest high-grade iron province in the world, with the Queensland coalfields, via the uranium province in the Northern Territory an the copper mines in Queensland, eventually linking up with Victoria and New South Wales, and forming a vast productive supply link with enormous benefits to Australia and the world.

The railway I envisage would shift 30 to 40 million tons a year, and could be built for only two-thirds of current dole payments. The country through which it would pass is virtual desert but with mineral potential. I have suggested that the government give mineral rights, where none exist already, for 50 miles on either side of the line to anyone who will put up money for the venture.

The “free enterprise” Federal Government is not willing to let the project go ahead, largely because it would cross some of the vast territory it has given to the Aborigines. There is still a Federal “NO” despite the courageous advocacy by the Queensland Premier, who seems to be the one leading political figure in Australia with foresight and courage enough to try to get thing moving.

It is an essential role of government to define, record, and protect mining property rights. Unless these definitions are clear and unambiguous, there will be disputes.

Every exploration or mining title should spell out clearly the rights and conditions of exploration and mining, which should not be subject to retrospective legislation nor to variation during the term of the title, except by mutual consent. Areas where mining is prohibited should be clearly identified and reviewed regularly. Existing title disputes should be settled by arbitration as quickly as possible.

There are a few other things government could do, such as introducing a ten-year moratorium on new regulations.

They could find useful jobs for the armies of highly educated experts who are now using taxpayers’ funds to produce solutions for which there are yet no problem.

They could introduce birth control to paperwork.

They could decide to cure centralisation by decentralisation.

They could act to curb the taxation industry — the largest extractive industry in the world.

They could decide to live within their incomes.

They could even decide that export controls, capital controls, and investment controls are of no assistance in the hard export markets of the eighties.

But all this, I fear, is wishful thinking, and we are now in the transfer economy where the road to riches is not through efficiency, profits, savings and investment but through political action.

Resource managers of the eighties must learn to cope with this new uncertainty — but at the same time must join in fighting it. The real heroes of the eighties will be those who work in the midst of the ideological battle, refusing to join the looters in all political parties, and speaking out against their spurious arguments.

It is no use just having good ideas and good intentions. They say the road to hell is paved with good intentions — and you can’t keep going to hell forever without getting there. This is the real challenge of the eighties.