Comparison of Mining in Australia and New Zealand - Case Study Example

Comparison of Mining in Australia and New Zealand Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Comparison of Mining in Australia and New Zealand Mining is a major economic activity which has the potential to transform economies as it has done with the likes of Australia and South Africa amongst other countries in the world (Ergas, Harrison & Pincus, 2010). However, not all the countries that have mineral deposits are able to benefit from them, as it is witnessed in several countries in the world for instance in Congo and Nigeria in Africa, Middle East countries amongst other states in the world. One of the main factors which lead to this ironic scenario is the establishment of inappropriate policies and laws to govern the mining and natural resources industry. The better the mining policies are in a country, the more the country is able to benefit from its mineral resource. In order to expound on this, the following assessment paper will discuss the how the Australian and New Zealand governments develop industry policies in the mining industry. The paper will also discuss the existence of interest groups in the two countries and their influence on the mining industry in their respective countries. The paper is being done as an assessment assignment in the unit ‘Government –Business Relations’. Australia is one of the largest iron ore and coal. The country is rich in a wide range of mineral deposits and mining is one of the major economic activities of the country. Among the minerals which the country has includes iron ore, silver, coal, petroleum, natural gas, diamond, gold, bauxite/aluminum, Zinc, copper, nickel, opal, uranium and rare earths (Australian Government, 2012a). From this big list, it is evident that the country is very rich in mineral resources. So as to ensure that the country is able to benefit from the large deposits of minerals, it is necessary for the government to establish appropriate polices and legislation. The country mineral resources are managed by the government via the ministry of energy and mineral and other government departments (Cullen &Peterson, 2012). The policies and the legislations of the country are made in by the government. New Zealand is also rich in minerals, although not to the extent of Australia (McCready, 2008). The country is rich in coal, sand limestone, rocks, goal, lignite, petroleum and natural gas, gold, coal, silver, lithium, iron sands and other non metallic minerals. Just as it is the case with Australia, New Zealand’s, mineral resources are managed by the government through specific mineral departments. The legislation and policies governing the mining industry in New Zealand are contained in the Minerals Act 1991, which is updated as necessity comes up (Forest and Bird, (2012). The mining of the mining activities with respect to their impacts on the environment are managed by the Resource Management Act. The following section will compare and contrast some of the mining policies in Australia and New Zealand. One of the policies which are common among the two countries is environmental conservation and sustainability. Both Australia and New Zealand have a deep interest in environmental conservation. Generally, mining activities have a very dad effect on the environment for instance on the landscape, use of natural resources for instance water and emission of carbon gases in their processing. In order to control the mining activities in the industry, the New Zealand government established the Resource Management Authority (RMA) under which the effects of the mining activities on the environment are controlled and monitored. One of the most recent policy to be introduced in the country is the Crown Mineral Amendment Act No 2 1997 which sought to protect some regions of the country from mining activities (Woollaston, 2011). On the other hand, Australia is also actively involved in environmental conservation. Via the ministries concerned with environment, industry and mining, the government has been able to pass policies which have gone a long way towards enabling the country embraces environment sustainability. One of the major achievements of the policies was the protection of the Great Barrier Reef in Queensland (Australian Government, 2012b). The EPBC ACT 199 has also gone a long way into ensuring that the mining industry is environmentally sustainable (Australian Government, 2012c). Another government policy which has influenced the mining in both Australian and New Zealand is government financial policies. The financial policies include levies and taxes which are charged on the players in the mining industry (Jones & Robinson, 2010). For instance, the Australian government taxes the Iron ore exports on the country more than other minerals. This is because iron ore is the largest mineral export in the country. On the other hand, New Zealand has spread various taxes on the mining industry. The alcopop tax is one of the common taxes in both countries. The tax is charged on the mining industry’s stakeholders. In addition to providing revenue to the government, the tax also controls the mining activities in the two countries (Novak, 2012). Another similar mineral ownership policy in both countries is the ownership of minerals. In both countries, the government is the owner of the natural resources. Any company which seeks to exploit the mineral resources must abide by the laws of the country. According to the agreements signed, the companies have to give percentage of their revenues accrued from mineral exploitation to the state. There are several policy differences between Australia and New Zealand which are consequently the reason as to why Australia is doing better that New Zealand with respect to the management and exploitation of minerals. One of the major policy differences is the market policies used by the two countries. The Australian government does not regulate the mineral markets by a large extent as compared to New Zealand. In Australia, mining companies operate and sell their products in the country and across the county’s borders without many restrictions from the government. This in turn lures more investors to the country as opposed to New Zealand where the government controls the mining and selling activities in the mining sector. Currently, the largest mining company in New Zealand is government owned; hence it is subject to manipulation from the government. The protectionism in the New Zealand mining industry is a major challenge to the industry. Therefore, the market policies in the two countries are a major difference. Another major difference between the two countries is the labor policies. The Australian government has established several laws and policies aimed at ensuring that the labor force to the mining industry is adequate. Due to the fact that the Mining industry is one of the backbones of the Australian economy, it is of utmost importance to the government that the labor laws and policies do not work against the sector. One of the most remarkable actions by the Australian government in the recent past is the sourcing of skilled manpower from outside the country. This has ensured that the country has a constant supply of competent labor force and skills. On the other hand, the labor policies in New Zealand do not give the country a chance to boost its labor force with the much needed skills and expertise in the mining sector. Instead of this, the government protected mining industry suffers from lack of skilled manpower. Lastly, internationalization policies form another great policy difference between the two countries. Comparing the two countries, it is evident that Australian is more involved in relating with other countries with respect to Ming activities. The development by mining strategy adopted by the Australian government is a clear indication of the countries strategies of incorporating other countries via giving aid to them in the mining industry. There are several forces which affect every industry, and so is the mining industry in Australia and New Zealand. The pressure groups range from labor unions to environmental agencies, the general society and other cooperates in the business world. One of the pressures which the Australian mining industry faces is the tax pressure with Respect to the Henry Tax Review report that recommender the revision of taxes on the Australian mining companies (Unionswa, 2012). The industry is also facing intense pressure from workers through their labor unions. The unstable mineral prices especially with respect to iron ore are affecting Australia by a large extent (Gylnn, 2012).The Australian mining industry is also facing stiff pressure from the economic forces which are facing China, which is the largest destination of Australia’s iron ore, one of the country’s major mineral exports (Sainsbury, 2012).The larger an industry is, the more it interacts with the people and vice versa. Since the Australian mining industry is bigger than the New Zealand industry, it faces more pressure from the pressure groups as compared to New Zealand economy. In conclusion, the Australian mining industry is doing better than its New Zealand counterpart. From this paper, it has been seen that the policy making process in Australia is far much ahead of New Zealand’s. This is partly one of the reasons as to why the Australia is faring better than New Zealand in addition to its large amount of mineral deposits. Both countries are doing well environmental sustainability, financial policies, and ownership of minerals. However Australian is doing better than New Zealand with respect to market policies, labor policies and international relations. From this assessment paper, it is evident that the policy making in Australian’s mining industry is better than in its New Zealand counterpart. References Australian Government, (2012a). Australia’s Minerals, Retrieved on 11th October 2012 from http://www.ga.gov.au/image_cache/GA6886.pdf Australian Government, (2012b). EPBC Act Environmental Offsets Policy, Retrieved on 11th October 2012 from http://www.environment.gov.au/epbc/publications/environmental-offsets-policy.html Australian Government, (2012c). The Great Barrier Reef Queensland, Retrieved on 11th October 2012 from http://www.environment.gov.au/heritage/places/world/great-barrier-reef/whc-concerns.html Cullen, R., Peterson, D., (2012). Mineral and Energy Policies, Australian Journal of Agricultural and Resource Economics, 56(2), 149-151 Ergas, H., Harrison, M. & Pincus, J. (2010). Some economics of mining taxation. Economic Papers of the Economic Society of Australia, 29 (4), 369-389. Gylnn, J., (2012). Iron Ore Slump Hits Australia, The Wall Street Journal [Online] Retrieved on 11th October 2012 from Forest and Bird, (2012). Mining Q&A, Retrieved on 11th October 2012 from http://www.forestandbird.org.nz/saving-our-environment/mining-q http://online.wsj.com/article/SB10000872396390444772804577623441216174570.html McCready, P., (2008). New Zealand, Special Publication, Mining Journal, pp.1-12 Novak, J., (2012). Nanny State Taxes : Soaking The Poor In 2012. Institute Of Public affairs. Jones, S., & Robinson, L., 2010.Saving Lives Or Raising Revenue: Analyzing Media Coverage Of The Alcopops Tax In Light Of The Evidence On Its Effects, University Of Wollongong. 1- 7 Unionswa, 2012. Ordinary west Australians must be heard in Mining Tax Debate, Retrieved on 11th October from http://www.unionswa.com.au/index.php?option=com_content&view=article&id=1306:joint-statement-ordinary-west-australians-must-be-heard-in-mining-tax-debate&catid=220:news&Itemid=654 Sainsbury,.M. 2012.China Output Shows no sign of Rebound, The Australian [Online] Retrieved on 11th October from http://www.theaustralian.com.au/business/economics/china-output-shows-no-sign-of-rebound/story-e6frg926-1226486149135 Read More