Home' Future Building: The Australian Infrastructure Review : Volume 4 Number 1 Contents futurebuilding 69
Volume 4 Number 1
any time soon. There's still going to be a fair degree
of pain for our economy, and particular sections of
our economy, for some time.
However, recent discussions with economists,
policy advisers and other well-placed people,
certainly have renewed my con dence in Australia
generally, and in the Australian resources story.
The growth story for coal -- including thermal coal
-- in my view, is intact. Likewise for iron ore.
The growth rates in terms of percentages may well
be slowing, but the absolute numbers that underlie
those numbers continue to grow, they continue to be
strong, and they continue to be sustained.
Indeed, as is so often the case, the complexity of
the story is lost in some of those headline numbers.
For example, in the last nancial year, the north
Asian countries of Japan, South Korea and Taiwan
accounted for 40 per cent of metallurgical coal
exports and 70 per cent of thermal coal exports.
So, as important as China and India are, it is still
our north Asian colleagues that are most in uential.
The growth curve, though, for a place like India is
driven inexorably by people moving to urban settings
and enjoying a small slice of the kind of lifestyle that
today we take for granted.
Lifting millions of people out of poverty is about
light and power. Coal is -- and will remain -- the
lowest-cost option. By 2030, coal will still be used
for up to 40 per cent of the globe's electricity, while
acknowledging the growth nonetheless in that period
in gas, in nuclear, and in renewables.
If we think about China, the steel intensity
continues to grow. Many of you won't be aware
that in August 2013, for the rst time, China
produced more crude steel than the rest of the
world put together.
Our company, Aurizon, is 70 per cent leveraged
to the Australian resources sector, and that bodes
well for our future.
There will be no change to our core strategy, no
rewriting of mid-term transformation and long-term
We transport about 60 per cent of the coal that
is ultimately exported from Australia. Longer-term
prospects remain for us in the Pilbara and in the
Galilee, for example.
We know that these are not projects for the
next ve minutes; nonetheless, this kind of national
investment in critical infrastructure, underpinning
best-in-class networks, for world-class reserves,
remains a sound strategy for our company and for
I'm optimistic about growth prospects, and also
reassured that, collectively, we are making a start -- or
a restart -- on reform.
We are now seeing unprecedented restructuring at
the company and macro levels, given the challenges
that we've all experienced in the context of a slowing
It has forced a rethink, a recalibration. Frankly, it's
positive and it's overdue.
Australian companies are diversifying with
unfolding opportunities in the Asian century and
are moving, notwithstanding the importance of
resources, beyond the quarry, to education, training
We're rediscovering the capital and cost discipline
that faded through those sky-high resource price
days. And this, of course, brings us to the critically
important piece about productivity.
We need to reclaim our place in terms of global
competiveness. Companies big and small must keep
doing the hard yards of reform, reducing costs, and
improving ef ciency.
We simply cannot duck the responsibility.
In that context, overdue government reforms -- as
discussed within the sector, in regulation, in taxation,
and in labour markets -- must create a platform for
sustained long-term productivity improvements.
Investors, as is the case with our company and
many others, have a 10- or 20-year horizon, and
they have to be certain about the policy settings for a
country and a company such as ours.
It's inconceivable that over the last few years,
since Initial Public Offering (IPO), so often the phrases
'sovereign risk' and 'Australia' have been associated
in the many discussions that I've had with investors.
We need a business environment in which
duplication and bureaucracy give way to simplicity
and pragmatism, where grandiose gold-plated
solutions are replaced with cost-effective, t-for-
Policy that creates a level playing eld doesn't
pick winners, and rewards the most ef cient
outcome, so that the pipeline of projects -- Australia's
infrastructure de cit -- can roll beyond talk phase into
Projects that stack up strategically,
commercially, and with productivity dividends
must get to the top of the queue.
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