Council studies value-adding

Australia is too reliant on the resources industry, according to Wesfarmers chairman Bob Every, who is heading a Business Council panel on the decline of value-adding and manufacturing.

Mr Every, speaking at a business lunch in Sydney on Friday, said the percentage contribution of value-adding to Australia's growth had halved in the past 50 years and he was "really concerned about a hollowing out of the economy".

"We're more of a quarry now than we were 50 years ago," he said.

Mr Every will head a "chairman's panel" for the council on strategies to improve value-adding in key sectors of the economy, part of a long-term economic vision document to be released midyear.

Mr Every, who also chairs Boral and is a former long-serving chief executive of OneSteel, said while he was optimistic about a US recovery and believed that Europe would "bumble through" its financial woes, Australia could not simply rely on China to drive its economy.

Wesfarmers' former powerhouse resources division, which includes the Curragh and Bengalla coalmines in Queensland's Bowen Basin, is barely profitable.

Mr Every said the non-resources sectors of the Australian economy were struggling and Australia, which had labour, capital and energy costs, had to face up to challenges, including an ageing population, by embracing taxation and industrial relations reform.

"We probably went a step too far with WorkChoices," Mr Every said before he added that in recent years Australia's labour laws had "gone back 10 to 15 years".

Other members of the council's value-adding panel include former council president Graham Bradley, former Western Mining chief Hugh Morgan, BlueScope chairman Graham Kraehe, CSIRO chief Megan Clark and Bank of Melbourne chairman Elizabeth Proust.

Oz Minerals and Incitec Pivot director Rebecca McGrath, who also spoke at the lunch, said Australia needed a strong manufacturing sector and for the sector "to

survive and prosper, we need

to have access to competitively priced energy".

Noting a loss in refining capacity in Australia, Ms McGrath said the country was a "backwater" in energy markets and should not take its access to imported fuels for granted.

Incitec Pivot last year eschewed building a ammonium nitrate plant in Newcastle and instead invested in a $700 million plant in Louisiana in the US, which has cheaper labour and energy.

Ms McGrath said the southern states "rolled out the welcome mat" for new investment.