Australians love their sports, and they want their teams to be at or near the top of the ladder.
For the last two decades, however, Australia has been slipping down the international league ladder of countries in which it is attractive to make major investments in the resources sector.
In Section 3 of this report, you will read about a major international comparison conducted by the Fraser Institute, which maps that decline and explains the reasons why.
In the main body of the report, you will find our analysis of the eleven main drivers of the decline in investment in our resources sector, and the lost opportunities this represents for mainstream Australians.
Nothing has changed in terms of our resource endowments, which remain the envy of the world. And while demand ebbs and flows, the current upside potential is being harvested by other countries that are hungrier and more agile.
What has changed is our domestic policy settings, and the appetite of government to remain consistently supportive of major projects over the timeframes necessary for investors to bring them to fruition.
The capricious nature of modern Australian decision making and rule changing is captured in the last of the eleven considerations examined: sovereign risk. The report’s author, Julian Coleman, neatly explains the linkages between adverse policy settings (the ‘Drivers’) and considerations of sovereign risk:
While all the Drivers listed in this paper operate independently, they all tend to eventually express themselves as perceived sovereign risk. Unpredictable Safeguard Mechanism baseline tightening turns net zero compliance into a sovereign risk premium. Reliability gaps addressed only by ad hoc ministerial intervention in coal closure dates do the same to energy costs. A federal layer that can override state approval after $300 million of investment is sunk does it to approval times. Royalty regimes altered without consultation after capital has been committed do it to fiscal burden. Cumulatively, the eleven drivers have done what no single driver could. They have made Australia a jurisdiction where capital is committed under one set of rules but must be recovered under another. This moving of the goal posts, including post approval and after a final investment decision, has meant that, in the words of then-Ambassador (from Japan) Yamagami, business leaders now approach Australia “Probably for the first time, [with] this word of sovereign risk”.
Julian has extensive private sector experience and in his career in Perth has seen first-hand what the development of the resources sector has meant to Western Australia. In his analysis he also lays out just what it means to the rest of Australia.
He worked with the IPA as a Research Fellow during 2025-26 and we are grateful for the care and attention he paid to the paper you now have in your hand.
It is a curious feature of Australian politics that many of the political entrepreneurs leading the charge to increase tax and royalty revenues from our resources projects in fact have the longer-term objective of ending fossil fuel projects altogether, and greatly constraining, if not eliminating, most mining projects.
Talking down the industry while calling for increased taxes and charges has the double benefit (for them) of scaring off new investment, while allowing the upside scenario of a fiscal regime so burdensome that the economic returns of project being developed would inevitably turn negative.
Again, Julian provides conclusive figures for the contribution Australia’s resources sector has made in terms of jobs, taxes, royalties, and household wealth.
It could also be noted that the complaints we hear from political entrepreneurs about the alleged paucity of returns from the Petroleum Resource Rent Tax (PRRT) regime applied to the offshore gas industry conveniently ignore that the back-ended nature of that taxation mechanism, by design, means that federal revenues are about to greatly increase without any need for further action by the Commonwealth parliament. But that is beyond the scope of this paper (though the IPA may return to that point, soon).
More to the point of this paper, Julian also documented the opportunity cost of the investment shortfall that we have seen in the last decade: cumulatively $688 billion. That is, if private business investment had remained at the benchmark levels of the prior decade, Australia would have benefitted from an additional $688 billion of investment.
That, in turn, would have provided an average benefit to each Australian household of $4,944.
The good news in this report is that we have a very fixable problem. The problems were never outside of our control, and neither are the solutions.
If we as a nation commit to addressing net zero compliance costs, red tape, energy costs and lawfare, while making an ethical commitment to stick to the rules then put in place, we can unleash the investment Australia needs to once again climb the ladder of international competitiveness, for the benefit of all Australians.
Is so doing we would need to once again accept that it is only the private sector that can create wealth, increase productivity, and deliver higher living standards for mainstream Australia. Governments have a role to play, but they have in the last decade in particular usurped too much of the economy for their own purposes, adding to debts and deficits, and sending us into a spiral of stagnant or negative economic growth.
From here, the only way is up.
