Industry insights: Energy & resources

The energy and resources industry is experiencing considerable change and disruption caused in part by a growing focus on ESG issues, sustainable development goals and net zero emissions. The industry is a key contributor to the Australian economy and export values (excluding renewables) have increased to approximately $350 billion in 2020-2021.

The renewables sub-sector is growing quickly, increasing its share of Australia's power mix and set to exceed 35% of total generation by 2031. We are seeing rapid growth and interest in the developing technologies of hydrogen, energy storage and offshore wind. Energy transition has encouraged significant mergers, acquisitions and divestments, and hydrogen may soon infiltrate existing gas infrastructure.

Our mining clients are decarbonising, driving innovation and resetting operations by electrifying, swapping to renewable power, abating carbon emissions and continuing to explore carbon capture and offsets. Asset life planning and decommissioning is on the agenda. For some, energy transition has brought a switch in focus to critical minerals to fuel batteries and electric vehicles. Green certification is highly regarded.

The industry is also facing commodity trade disruption and is exploring new international markets and trade patterns. Global investment into Australia is continuing with interest in existing and greenfield projects. We anticipate most of these significant developments will continue to play out in the next 12 months. COVID-19 has resulted in supply chain blockages, disrupted FIFO conditions, a lack of skilled workers and vaccination mandates. Safe and fair workplaces are in the spotlight.

During 2021, MinterEllison's Energy and Resources specialists worked closely with companies to assist them prepare for and respond to opportunities and challenges arising from the changes faced by the industry.

“There is always something brewing in this fascinating industry but this last 12 months, and we expect the next, is bringing a rate of change and disruption I've not witnessed in my 25 years working in the industry. Suffice to say our team is digging in with our clients to guide and support their ambitions. We're excited for their future opportunities and the bright future of this dynamic industry."

Simon Scott, Energy & Resources Industry Sector Lead

Industry Insights: Real Estate

The real estate industry is Australia’s largest employer and contributes 13% to Australian GDP. The industry, which has ridden a COVID-19 wave between lockdown and recovery, has managed significant and unexpected challenges during the past year.

MinterEllison’s real estate team has been working closely with clients to navigate the evolving economic conditions. The high volume of activity in the market this year reflected the industry’s renewed appetite to do deals after the ‘wait and see’ approach of 2020. Our clients’ have been resilient and flexible during 2021 in managing significant and unexpected challenges.

To best support our clients, we brought a whole-of-firm mindset to our work, creating holistic, effective, and pre-emptive solutions.

We are proud to have supported the successful proponents of a new initiative – two large scale build-to-rent developments in Brisbane. The project, in its pilot stage, is a partnership between the Queensland Government and our clients, two private sector property developers.

Both transactions required unique solutions to commercial and legal issues that were being addressed for the first time in Queensland – particularly as the projects brought together both the public and private sector to address the important issue of affordable housing.

Emerging assets have been a hot topic this past year and our clients have sought out our expertise and trusted us with their forays into new asset classes including build-to-rent, co-working, data centres and land lease.

Looking ahead, we are focused on providing solutions that help our clients to respond to evolving demands and industry trends and meet the challenges of 2022. We're seeing our clients take a more long-term approach to planning as organisations strategically look for new value opportunities and seek to mitigate risk in a rebounding market.

The real estate industry continues to deal, invest, develop, finance and re-shape portfolios across all asset classes and our team is committed to working with our clients as the sector continues to bounce back with a positive outlook as we head into 2022.

“As the real estate industry rises to meet the next phase of recovery, firms will be presented with many new and complex challenges. And while it has been a time of change and uncertainty, it has also been a time of collaboration and innovation as we work with our clients to share ideas and solutions. Much about the way we live and work will be transformed as our cities and urban centres reshape their purpose with a keen focus on liveability, sustainability, resilience and affordability.”

Carla Deluca, Real Estate Industry Sector Lead

Industry insights: Health

Healthcare affects the lives of all Australians, its importance amplified during the past two years due to the impact of Covid-19. The healthcare industry is estimated to be worth $162.5bn, with revenue being driven by increasing demand for GP and specialised services, digital innovation and an ageing population.

In 2021, the health industry faced a myriad of challenges and opportunities emerging from COVID-19 including heightened scrutiny over decision making and the need to pivot business and care models to remain viable. Our health system was called on to navigate us through the biggest public health challenge in over 100 years.

This sparked a period of transformation which accelerated organisational change as the industry worked towards achieving better health outcomes.

The health industry will continue to respond to changing consumer expectations, advances in technology and a growing ageing population to achieve sustainable growth in 2022.

At MinterEllison, we had the privilege of sitting in the front seat – right next to our clients – witnessing and assisting with the extraordinary work our clients have been leading during the pandemic.

Our multi-disciplinary health team supported clients across hospitals, aged care, health and government departments with advice including a 24/7 hotline for Covid assistance, rapid technology implementation and managing investigations and inquiries as they lead the community to a place of confidence and safety. Our health team professionals understand the science as well as the law, and our team has members with qualifications in disciplines including biochemistry, neuroscience, computing, mathematics, genetics, molecular biology, veterinary science, public health and clinical nursing.

“Health services providers are in a period of growth and transformation as demand rises in line with an ageing population and the burden of chronic disease. The sector is grappling with rising medical costs and private health insurance dropouts, as well as workforce shortages. Consumer expectations are shifting with growing demand for more accessible and personalised care. We are seeing a strong pivot towards more integrated, valued-based, patient-centred, preventative care, enabled through technology and data."

Shane Evans, Health Industry Sector Lead

Industry insights: Government

COVID-19 has continued to be the focus for the federal, state and territory governments during the past 12 months. The challenges have been unique, immense and have required a swift response. MinterEllison has supported our government clients on complex matters relating to protecting the health of the community, stabilising the economy, trade and border protection and initiatives for the recovery.

Australia is emerging from the pandemic-led economy to a ‘new normal’ and all levels of government will remain front and centre to support and harness the necessary reforms to take us forward. As governments have adapted to absorb the shocks and disruption of the past two years, they have ensured the legal framework has been agile and flexible to adapt to the current crisis and collaborated with agencies, business, and industry to manage the crisis and support the recovery.

Throughout the past year, we have acted on momentous projects and the most sensitive and high-profile matters federally, and in every state and territory.

We advised governments on a range of matters relating to significant health procurement, commercialisation and intellectual property, workplace reforms and safety, regulatory matters, impacts of COVID-19, the defence of a high-profile class action and delivery of an ambitious digital transformation agenda.

“We have been proud to work with all levels of government throughout 2021 as government has responded to significant challenges such as the national health crisis along with economic and social disruptions.”

Amanda Story, Government Sector Lead

Industry insights: Financial Services

The financial services industry contributes $140 billion per annum to Australia’s GDP, employs almost half a million people and manages more than $8 trillion in assets. It is a highly regulated and fiercely competitive industry, with international reach. It's also a dynamic and constantly evolving industry that adapts rapidly to changing trading conditions. Operating in a crowded market, the financial services industry is highly competitive industries with some 160 banks and ADIs, 174 insurance companies and more than 2,000 superannuation funds.

The past year has brought many challenges to our financial services clients. In addition to the macroeconomic challenges faced as a result of the pandemic, clients continue to respond to the tsunami of regulatory changes resulting from the Financial Services Royal Commission, Design and Distribution Obligations Regime (DDO), breach reporting and regulatory investigations, as well as grappling with ESG and climate risk generally. AML/CTF regtech has yet to be widely adopted despite record fines and we foresee another wave of this occurring in 2022.

At MinterEllison, we have an industry focus, bringing multi-disciplinary teams and services to assist our financial services clients navigate complexity and manage risk. These include developing a dedicated team of M&A, tech law and tech consulting lawyers focused on helping clients identify hidden IT costs in M&A transactions. In response to ASIC's new breach reporting requirements, our Risk and Regulatory consulting team and Capital Solutions team produced a guide for clients to navigate the changes and created a subscription toolkit for clients to purchase and upskill their teams.

There is very much a future focus in financial services, from looking at challenges facing credit and personal loans with the growing Buy Now Pay Later market, to managing the impact of superannuation outgrowing the Australian economy and the globalisation of asset managers. Bigtech digital wallets intermediating banks away from their customers is also a trend we see continuing into the future.

“Despite the myriad of challenges, the industry has responded quickly to changing consumer demand. Digital transformation remains the focus for the future, creating new innovative customer product offerings; advancing fintech and investing in upgrading and replacing legacy systems to create more agile environments.”

Michael Lawson, Financial Services Industry Sector Lead

Industry insights: International

In 2021, we continued to see strong in-bound investment into Australia, a surge in M&A activity and foreign companies expanding into the Australian market as they revised their business strategies in response to the pandemic normalising. A number of significant regional free trade agreements have also been signed, creating further impetus for regional and global trade. The Australasian region remains the centre of world growth.

Australia’s largest listed companies are diversifying their expansions globally with ASX200 companies reporting that 34% of their revenues are being derived from foreign sources, a much higher percentage than their US and UK equivalents. Many of these companies are looking to Asian growth markets including Singapore, which is also quickly gaining a reputation as a fintech hub for Australian start up technology companies.

MinterEllison’s international team has supported this expansion activity and has seen inbound investments increasing substantially from North America, the United Kingdom, Singapore, Japan and Hong Kong. The top five areas attracting interest are renewable energy projects, real estate, financial services, technology and the retail sector. The financial services and real estate sectors have experienced double digit growth in foreign investment over the past 5 years.

Some of the notable deals we advised on this year include advising NYSE & TSX listed Ceridian HCM Holding Inc, on its acquisition of payroll services group Ascender to create the most comprehensive payroll and human capital management company in the Asia Pacific region.

We also advised H.E.S.T Australia Ltd as trustee for the Health Employees Superannuation Trust Australia (HESTA) on its investment in the holding company of global software and services group, Citadel Group, and we acted for Japanese trading giant ITOCHU Corporation in relation to its partnership with Australian cleantech developer Mineral Carbonation International (MCi).

The pandemic hasn’t stalled international activity and we expect to see continued confidence in Australia as a preferred investment destination in 2022, building further on the $4 trillion of foreign investment stock in Australia.

"As a top tier firm, we know that our clients expect to receive leading edge advice and excellent service. We commit to meeting clients’ needs in a timely and responsive manner, that our advice is commercial, tailored and fit-for-purpose, and that we work to our client’s operating rhythm and overall commercial objectives."

Jeremy Blackshaw, International Managing Partner

MinterEllison is the only top tier firm offering an international trade capability that has been ranked Chambers Band 1 for nine consecutive years.

Industry insights: Infrastructure

Australia’s social and economic prosperity are acutely intertwined with the health of our infrastructure sector. Great infrastructure keeps us connected, healthy and educated, connects the utilities that run our homes, and mitigates the impact of climate change. It fuels economic growth and has an important role in facilitating trade.

The major forces at the heart of the infrastructure sector have remained consistent in recent times. For decades Australia has been focused on digitisation, sustainability, funding and the interaction between the private and public sector. That said, the progress, innovation and resilience we have seen in the sector during the past decade has been nothing short of phenomenal. The infrastructure we rely on so heavily is now more connected, accessible and resilient than ever before.

MinterEllison’s infrastructure team has a multi-disciplinary approach to supporting the industry and during the past 12 months we have worked closely with clients who have adapted their businesses and seized opportunities that have emerged through COVID-19.

Governments have reached for the infrastructure lever during COVID to ensure that our economies and communities recover quickly. Funds have flooded into assets with competition for both brownfield and greenfield opportunities more intense. M&A activity has either matched or exceeded the upward trend seen across all sectors.

Post COVID we are likely to see greater demand for utilities, transport and technology to interact seamlessly. Project and precinct developments are increasingly complex and require teams of infrastructure specialists who understand that collaboration across disciplines is required to fund, design, develop and operate great infrastructure.

With different working patterns and less geographic ties the focus is switching to developing infrastructure that connects people and commerce to the regions. We are no longer tied in the same way to our CBDs and industrial heartlands, and governments therefore, are focusing on improving regional infrastructure to meet increased demand.

In terms of delivery, we are assisting clients as they adapt and innovate to navigate erratic supply chains for both goods and services. There is a scarcity of suitably qualified people in the sector and with projects in Australia often requiring globally recognised expertise, the opening of borders, within Australia and internationally, will improve access to talent.

Underscoring the trends in the sector is the drive for infrastructure to mitigate the impacts of climate change. In blunt terms, funds, resources and governments will continue to divert away from carbon intensive assets if there is no clear transition to a carbon neutral future.

“Obviously the events of the past 12 months have further complicated an already complex sector and the temptation is to wait for more certainty before we commit to what comes next. However, with 25+ year lifecycles for many of our assets we are going to have to be better at living with uncertainty. The technology sector has much to teach us in this regard and if one thing is certain, it is that we will see tech playing a much bigger role in delivering great infrastructure.”

Owen Cooper, Infrastructure Industry Sector Lead

Industry insights: Education

COVID-19 continued to have a significant impact on the education sector in 2021, as schools and higher education providers grappled with opening and closing their campuses in response to public health directives. MinterEllison’s education team worked closely with clients assisting them to build resilience among uncertainty. Our work involved ensuring their operations could continue in compliance with complex and varying regulatory standards and health directors, navigate unprecedented financial pressures, and be best positioned for the sector's rebound.

We advised the sector on a range of matters relating to significant infrastructure projects, commercialisation and intellectual property, workplace reforms and safety, regulatory matters, impacts of COVID-19 and the defence of a high-profile class action.

The financial impact of COVID-19 on our education clients continues. Universities were required to implement protective measures to assure their ongoing financial viability and sustainability. We continued to work with many Australian universities on implementing necessary restructures and reforms, in a complex industrial relations setting.

We have also been working with the tertiary education sector on planning for the return of international students through a COVID-safe corridor, notwithstanding the multiple false-starts that occurred across the year with these plans. The return of international students remains fundamental to the continued success of tertiary education in Australia.

Our clients are positioning for the sector's successful rebound. Our support to assist them in this aim has included assisting with the enrolment and commencement of students offshore in an effort to retain the international student pipeline. We worked with providers on formulating, negotiating and implementing vaccination policies for their workforce and planning for new and redeveloped campuses and schools to support long-term strategic objectives.

We continue to advise education providers in relation to a broad range of reforms and inquiries, including acting for multiple providers by challenging, in the Administrative Appeals Tribunal, their classification in new higher education provider categories. The outcome of those challenges has the potential to reshape the university segment of the sector. We also advised on the ongoing inquiry into foreign interference in Australian universities, the renewed focus on research commercialisation, and responding to allegations of sexual harassment and sexual assault on campuses and in schools.

“Australia's international education sector is at the cross-roads. Main competitor markets re-opened this year and Australia’s pipeline of new students has been significantly impacted because many chose other destinations. Future intakes will also be impacted, particularly if there continues to be confusion and inconsistency in COVID-safe corridors to return to different Australian States and Territories. There must also be acceptable delivery modes to maintain a high-quality sector with strong student satisfaction. We’re working closely with our education clients and key stakeholders to overcome these challenges as Australia plans to rebuild this critical part of our education sector."

Tom Fletcher, Education Industry Sector Lead