Gina Rinehart launches book
Mining magnate Gina Rinehart launches her new book in Sydney on Thursday fielding questions from businessman Jack Cowin.PT0M0S 620 349
A long line of people waited patiently in the ballroom of the Four Seasons hotel in Sydney on Thursday night. Everyone waiting had bought at least one book. A table laden with 300 copies had been set out at the entrance and they were all now gone. People were waiting for the author, the wealthiest woman in the world, and Australia's most successful entrepreneur, to sign their books.
Waiting and waiting. The entire process took two hours. Because each person had a conversation with the author. Each was asked what inscription they would like. The dinner and speeches had ended at 9.45 but when the last book was signed it was 11.40 pm.
It had been a very long day but Gina Rinehart was still chatting to guests when I departed. She had launched her book in Brisbane that day, given a speech, then flown to Sydney to attend this sold-out dinner, hosted by the Sydney Mining Club. Another speech, followed by questions from the floor, then the marathon signing session.
All of which raised a big question: when you own a business worth about $18 billion, when you have built an enterprise that is 100 times more valuable than the one you inherited from your father, when you have more money than you ever dreamed of, and more than you could ever spend, what keeps the drive going? Because the drive is clearly evident.
People who know Rinehart have described her to me as a workaholic. Every person I have spoken to in her inner circle tells me she is a formidable emailer, busy, on top of the details. Yet her company's expansion plans, mega-projects in Western Australia and Queensland, are no longer her main goal. Her main goal is to help achieve something much bigger and potentially much more important than her own business.
It's laid out in the book she launched on Thursday, Northern Australia, And Then Some. There is no summary to be found in the 220 pages, so I'll boil it down:
Australia needs to recognise that the commodities gold rush is over. Australia has lost its competitive advantage. A large number of mega-projects have been postponed indefinitely. Australia is now the highest-cost commodities producer in the world. It has suffered a decline in reputation and an increase in sovereign risk.
Investment capital is flowing elsewhere. The pipeline of major resource developments will shrink radically from 2014. Resources projects already in place have become over-taxed, over-regulated and over-priced. Numerous developments have been caught in a pincer of cost blow-outs and declining commodity prices. Many small and medium mining operations are becoming marginal as a result of high taxes and red tape. Mining companies in Australia have enormous compliance burdens.
A combination of taxes, red tape, high costs, a high dollar, militant unions and deluded government has seen a quantifiable decline in Australia's business reputation. In the latest World Bank Ease of Doing Business index, Australia fell from 11th to 15th in just one year. In the World Economic Forum ranking of economies, Australia also fell from 16th to 20th in a year.
Australia now has an international reputation for over-regulation. The World Economic Forum ranks Australia a dismal 75th on red tape. The current federal government has turned out to be a nightmare for small business, which employs the majority of Australians in the workforce. This applies with profound negativity in the mining sector. Rinehart writes in her book: ''The cost, risk and time lost on approvals, permits and licences before revenue can be earned has very greatly increased in Australia, making it almost impossible for small companies to carry and comply with such burdens.''
Strangulation by red tape and green tape was exactly the story told by a man next to me at the dinner. He is the chief executive of a gold mining company. He told me the carbon tax and red tape were putting the company's Australian goldmine into stress. It is shifting resources to Thailand.
Rinehart does see a way out of the problem. Her first call is that Australia wakes up to reality. An illness needs to be diagnosed before it can be cured. She sees enormous potential for nation-building in the northern third of the country, where just 5 per cent of the population live and which the remaining 95 per cent take for granted.
The north needs the creation of special economic development zones where investment projects are not over-taxed, over-regulated and over-priced. If this happens Australia would recover its competitive advantage and mega-projects could become viable, not just in mining but in agriculture and the services and infrastructure that go with them. Enormous seasonal water flows could be tapped and diverted. Investment, not consumption, is the key to long-term national growth.
Rinehart concluded her speech: ''We don't want to see Australia continue on a course with too many heads buried in the sand, critical investors discouraged by bad policies, or even hated, with too few understanding the problems while Australia moves towards being another Greece, Spain or Portugal.''
Many readers will scoff at the very notion that Australia is heading towards a dangerous path of debt and spending.
But Australia is carrying a lot of public and private debt and the idea that the federal government is capable of producing a budget surplus and winding back the national debt it created, while curbing the growing cost of red tape, belongs in the realm of the tooth fairy.