Tony Abbott has sought to reassure wary colleagues and big mining companies that any government-backed inquiry into Australia’s iron ore sector would be a fact-finding mission rather than an attempt to regulate the market.
The prime minister said on Monday a parliamentary inquiry “may well be a very good way” to sift through various claims about the iron ore market, but it was important that the terms of reference be framed in a way to avoid a “witch-hunt” against particular companies.
The comments followed concerns from some ministers that a parliamentary inquiry would send the wrong signal to Australia’s trading partners. But the finance minister, Mathias Cormann, who is based in Western Australia, appeared to be comfortable with an inquiry so long as it was “handled maturely in a responsible fashion”.
The push is being championed by the WA-based chairman of Fortescue Metals Group, Andrew Forrest, who has accused Rio Tinto and BHP Billiton of increasing iron-ore production to reduce prices and damage smaller competitors. Rio Tinto and BHP have rejected this criticism.
After reports that at least two ministers – Andrew Robb and Ian Macfarlane – were opposed to a government-backed inquiry, Abbott sought to allay concerns.
The prime minister said iron ore was one of Australia’s “absolutely critical industries” and it was important to know what was happening in the sector.
“I think it is important to get to the facts and an inquiry may well be a very good way of doing that,” he said during a visit to Mackay in Queensland.
“If we are going to have an inquiry it has got to be a fair inquiry; it can’t be a witch-hunt, it can’t be directed against any particular company or companies – it has got to be fair and square and reasonable.”
Abbott added that the government would not make “any attempt to regulate a market which is working well” and “the last thing we want to do is to crackdown on people’s creativity”.
WA Liberal backbencher Dennis Jensen said he did not think an inquiry was a good idea, arguing Australia could not be viewed in isolation and it should be up to the companies to decide the rate of production.
“If you’ve got a free market, you’ve got a free market,” he said. “I don’t know what information an inquiry is going to give you apart from the observation that some miners have lower quality resources than others and with a low iron ore price it means that some operations become marginal.”
Macfarlane, the industry minister, said cabinet was yet to make a final decision on an inquiry and he would express his views directly to his colleagues.
“We’ll wait and see the outcome of that,” he said. “I’m sure all of those views will be discussed in cabinet and as a result of that cabinet discussion a proposal will be put to the party room.”
Robb, the trade minister, said he expected a decision “in the next week or so”.
“The leadership group have, quite appropriately, been canvassing views, various views amongst various colleagues,” he told the ABC. “I’ve put my views, as others have, to the leadership group.”
The independent senator Nick Xenophon gave notice last week that he would move a motion in the Senate to set up an iron-ore inquiry, but did not press ahead with it after discussions with the treasurer, Joe Hockey. The government was looking at establishing a joint committee inquiry chaired by a government member.
Xenophon said the terms of reference should cover the long-term economic and budgetary implications of the fall in iron ore prices “and to look fairly robustly at the allegations made by Andrew Forrest about the iron ore market and the power of BHP and Rio”.
“I’m sure that BHP and Rio, and for that matter Andrew Forrest, are big enough and ugly enough to put their cases forward and answer whatever questions are thrown at them,” Xenophon said. “Why is it that there are some cabinet ministers who are more concerned about this inquiry going ahead than one of the miners that would be called to give evidence at the inquiry?”
Rio Tinto’s iron ore boss, Andrew Harding, indicated the company was not worried about what facts an inquiry might uncover: “A parliamentary inquiry into iron ore would show that the market is operating freely, openly and normally.”
Harding said, however, that parliamentarians should be mindful of the signal such an inquiry would send to major trading partners. Australia’s reputation as a supporter of open markets, he said, had “already been undermined by calls to cap iron ore production and for government intervention in the market”.
Cormann said a parliamentary inquiry might simply “separate fact from fiction” and not necessarily lead to any changes. “But then again, it might well be that there are some sensible suggestions on things that could be explored,” the finance minister said.
The opposition leader, Bill Shorten, said Labor would closely examine the proposed terms of reference, but warned the government to “be careful that they’re not putting politics ahead of commonsense in the long term”.
The manager of government business in the Senate, Mitch Fifield, said the Coalition did not “have anything to fear” from an inquiry focused on finding facts, but told Sky News: “We’re not the sort of government that is going to seek to intervene in markets or to unnecessarily tame the animal spirits.”
Labor’s shadow assistant treasurer, Andrew Leigh, told the same program he took “the old-fashioned view that parliament ought to write the competition laws and leave it to the Australian Competition and Consumer Commission to administer them”.
