Just a few weeks ago, those at the helm of major mining companies – notably BHP chairman Jac Nasser and Rio Tinto chairman Jan du Plessis – acknowledged that developing mining projects in Australia had taken a turn for the worse.

Speaking at the Australian Institute of Company Directors on May 16, Nasser said Australia had become an increasingly high-cost place to operate.

“Growth in development activity has driven higher operating and investment costs,” he said.

“While this is not restricted to Australia, it is true that Australia is increasingly one of the higher cost countries in the world.”

Nasser said in conjunction with high costs, restrictive labour regulations had quickly become one of the most “problematic” factors for doing business in Australia.

His comments followed on from a recent talking hotspot after BHP confirmed it would be slowing down investment in $A80 billion of growth projects globally.

New research from the Business Council of Australia also has the potential to put shivers down mining investors’ spines.

The report released last week and titled Pipeline or Pipe Dream? Securing Australia’s Investment Future, found at present, there was an unprecedented $921 billion pipeline of investment in resources, energy and infrastructure in Australia.

Of this, about 86% of projects in the investment pipeline were in the resources and infrastructure industry, accounting for $790 billion of the $921 billion projected.

According to the report, two factors currently stand in the way from the pipeline of resource projects coming to fruition: high costs and low productivity.

“We are becoming a high-cost and thus high-risk place to invest, and low labour productivity compared to other nations has reduced the competitiveness of our project delivery,” BCA president Tony Shepherd said.

“This is not only placing future projects at risk but is also undermining the efficiency of existing projects, which could mean less money for subsequent investment and lower tax revenue impacting the whole community.”

With half of the $921 billion project pipeline not yet locked in, Shepherd said more needed to be done to ensure the Australian economy didn’t suffer because of the inability to deliver on this pipeline.

While steps have been taken to sidestep these issues, including the Council of Australian Governments streamlining environmental assessments and approvals, the boost to skilled migration and skills training and the introduction of enterprise migration agreements, Shepherd said this was not enough to ensure the economic backbone of Australia, underpinned by the booming mining and resources industry, continued to prosper.

Du Plessis recently said that the federal government needed to implement measures to ensure Australia remained a sustainable investment destination.

“They need to provide a stable fiscal environment,” he said.

His suggestion about ways to help prop up Australia and mining projects in its current high capital cost environment came after he said Australia had become a more expensive place to operate due to the mining and carbon taxes, the high Australian dollar and rising costs.

“There is no doubt that Australia as an investment destination has changed for the worst,” he said.

Despite the cost pressures in Australia, du Plessis said the company would continue to invest in the country.

It’s not just mining executives bringing issues facing Australia’s up and coming resource and mining developments to the forefront, with the World Bank’s Ease of doing Business index finding Australia dropped back from 11th place last year to 15th spot in 2012.

Meanwhile, according to the World Economic Forum’s Measure of Global Competitiveness, Australia dropped four places, to number 20 last year.

Despite what the statistics suggest, investment in Australia’s resource industry is growing at an unprecedented pace.

According to a report by Deloitte Access Economics, called Large Capital Projects – Defining Australia’s Investment Challenge, about 54% or $222.8 billion worth of resource projects are “under construction” or “committed” while 31% or $125 billion worth of potential projects are “under active investigation for a decision in the reasonably near future”

These projects will help provide the foundation of gross domestic product and employment growth in Australia for many years, but as the BCA’s report found, there are a few sticking points blocking the country’s potential for growth.

The study found that Australian resources projects were 40% more expensive to deliver than in the US Gulf Coast with the average resource or infrastructure project costing $1.5 billion, up from $294 million in 2001.

On the labour front, BCA’s report concluded Australian labour was 35% less productive than in the US Gulf Coast for resource projects near cities, and 60% less productive for projects in remote locations.

The report also found that “major productivity problems, labour shortages and planning approvals and conditions are all contributing to delays and project costs.”

The BCA report, which was overseen by the council’s Infrastructure and Sustainable Growth Committee, drew on 15 years of project performance data in Australia and around the world.

Recommendations from the report will be delivered at this week’s economic forum in Brisbane.

Among the recommendations include expanding Australia’s capacity to deliver multiple capital projects by growing and developing the workforce, improving project delivery efficiency by streamlining and improving planning approvals processes and outcomes and build confidence in investors to risk capital in large, long-term and complex investment project in Australia by maintaining a predictable policy environments and fiscal stability.

However, Shepherd said mining companies also had an important role to play in fast tracking the development of future resource projects.

“While the findings and recommendation in this study focus on policy levers that governments control, the BCA recognises that companies have a vital role to play in lifting performance in major project planning, design and management,” he said.

This article first appeared in ILN's sister publication MiningNews.net.