The issue is that resource projects in Australia require a huge capital investment to get them going (just think of the rail lines, pipelines, power stations, ports and electricity grids that need to be built to extract and ship out these resources. Unlike Norway or Saudi Arabia, we don’t have a government owned enterprise building the mines, LNG wells And related infrastructure. This is all built at high cost by private capital.
We are therefore completely reliant on private (mainly foreign) capital to commercialise the extraction and export of our mineral wealth. Without this capital, this mineral wealth will remain in the ground. If you introduce a resource tax on top of the royalties, payroll tax, land tax already paid, high OH&S compliance costs, environmental approval and compliance costs, indigenous land use agreements and heritage compliance costs, high electricity prices as a result of net zero and unionised workforces, these projects become less attractive and the capital goes elsewhere. Africa has huge untapped resources. Rio is already investing in a huge (low cost) high grade iron one mine in West Africa which will push iron ore prices down once it is operational.
For a crude analogy that people in the Eastern States will understand. The Victorian State Government increased its port fees for cruise ships by 15% in late 2023 (with no warning). This meant the cruise liners had to wear the increase because most of their tickets for the 2024 summer cruise season had already been purchased by passengers. The result, no cruise ships visiting Melbourne anymore and Melbourne’s businesses that rely on cruise ship tourism have been decimated.
For miners and oil and gas companies, an increase in any tax on the resources produced means the cost of production goes up. They may be able to wear this while commodity prices remain high. However, your profit margin shrinks as commodity prices drop (until your mine is no longer making money). In this case, the mine will likely be closed or mothballed (the nickel industry in WA is a case in point). Future Investment will also dry up.
The world doesn’t owe Australia a living and there is no immutable law that says the rest of the world has to invest in Australia (particularly where it is less profitable to do so as compared to other countries). There are so many hungrier nations out there fighting for the investment dollar. Australia is already a high cost place to do business. Increasing taxes only makes us less attractive for foreign investors and may eventually kill the golden goose.