mining boom

Paul Cleary’s book Too Much Luck: The Mining Boom and Australia’s Future, is a timely appraisal of the dramatic economic and social impacts, as well as the political ramifications of the current resource boom.

(The reviewed work covers much of the same ground as Dirty Money of 2011 by Matthew Benns, which I am currently reading and can also recommend.) This review of Paul Cleary's book by Professor Kerry Carrington, Head of School of Justice at Queensland University of Technology was originally published on theconversation.edu.au on 25 November. It is being reprinted here with her kind permission. Professor Carrington asked that this review be republished as widely as possible.

Paul Cleary’s book Too Much Luck: The Mining Boom and Australia’s Future, is a timely appraisal of the dramatic economic and social impacts, as well as the political ramifications of the current resource boom.

Cleary argues that the resource investment stampede is squandering Australia’s precious non-renewable fossil fuels, leading to a high dollar, inflation and interest rates, at the expense of manufacturing, education and tourism industries.

There is, he argues, a strong case for a more measured approach to harvesting these resources in the long-term interests of all Australians through better taxation, saving and regulation of the resource sector. This book is not anti-mining and does not argue that resources should be left in the ground, as Stephen Kirchner would have us believe.

Cleary coins the phrase “investment stampede” to capture the seismic shifts at work. The sector is growing fast – too fast – at 15% per annum, with a pipeline investment of $174 billion. Global demand especially from Asia has fuelled this boom. Current economic returns for the mining corporations and their shareholders are staggering.

Cleary coins the phrase “investment stampede” to capture the seismic shifts at work. The sector is growing fast – too fast – at 15% per annum, with a pipeline investment of $174 billion. Global demand especially from Asia has fuelled this boom. Current economic returns for the mining corporations and their shareholders are staggering.

In August 2011 BHP announced an annual net profit of $23.5 billion, while earlier in the year Rio Tinto had announced an annual profit of $14.3 billion.

Cleary’s book analyses an array of adverse impacts resulting from an investment stampede, including the growth of fly-in, fly-out (FIFO) workforces. Until the 1970s, mining leases tended to be issued by governments subject to conditions that companies build or substantially finance local community infrastructure, including housing, streets, transport, schools, hospitals and recreation facilities. Townships and communities went hand in hand with mining development.

Not any more. The haste of this extraction process has become increasingly reliant on a continuous production cycle of 12-hour shifts, seven days a week, and one increasingly reliant on fly-in, fly-out or drive-in, drive-out (non-resident) workers who typically work block rosters, and reside in work camps adjacent to existing rural communities.

There are estimated to be around 150,000 non-resident workers directly employed by the resources sector, anticipated to rise to around 200,000 by 2015, but no government body appears to be counting and projected growth is equally elusive.

This is an odd oversight given the rapid growth of reliance on non-resident workers in the resources sector carries significant impacts for individual workers and their families and host communities, as evidenced by the many submissions to the Australian Parliament House inquiry into FIFO/DIDO work practices, chaired by the Independent MP Tony Windsor. Some of the significant impacts include:

• A sudden influx in high risk populations (young single males with large disposable incomes) exacerbating crime and alcohol-related social disorder problems
• The creation of new lucrative unregulated drug markets and markets in commercial sex work.
• Rises in traffic congestion and road accidents.
• Stretch on infrastructure.
• The erosion of community wellbeing.
• Heightened risk of protracted social protest over coal-seam gas extraction.
• Ongoing widespread social protest against the erection of camps in close proximity to established rural communities.
• Increasing burden on local services.
• Soaring housing costs and other local costs of living
• “Fly over effects” on the local economy, and an ever-decreasing permanent resident workforce
• Increasing rates of staff turnover,
• Reversal of the trend of women entering the mining industry (down from 15.7 to 12.6% according to the most recent ABS statistics)
• Increases in the average hours worked each week exacerbating fatigue related car accidents and work injury as they commute either end of work cycles than in the workplace (an average of hours 45 hours as at August 2011, with 1 in 3 working over 60 hours per week).

These impacts undermine the long-term sustainable community development of rural Australia. It is troubling therefore that dramatic socio-demographic processes have been unleashed by this boom without concerted attempts to accurately research, measure or account for the numbers of non-resident workers involved and their nation-changing impact on the Australian society and economy.

Just as the number of non-resident workers is not being researched or counted, Cleary draws our attention to how the rapid depletion of natural non-renewable resources is not being counted either. Again, the long term social and environmental costs, including the time value of Australia’s natural resources and the opportunity costs of squandering them through an investment stampede are not being measured.

Instead, the gaze of most state politicians in particular has been transfixed on the short-term economic benefits shared by so few. Cleary draws attention to the dominance of a short-term economic view which frames the current resources boom – a view to which Kirchner appears wedded.

The real challenge for a government of and for the people – and not just a government at the beck and call and in the pocket of the powerful mining industry lobby – is to recalibrate the frame of reference for assessing and responding to the social and ecological impacts of the mining boom in the long term interests of the nation.

The corporate power of the mining industry, especially to lobby governments, state and commonwealth to influence policy making in Australia is alarming. As Cleary points out, “Not only did the miners change the prime minister and change government policy, they went on to brag about how their coup had stopped similar schemes from spreading around the world.”

State governments who grant mining licenses and regulate the industry also earn a share of the minerals extracted through royalties. Last year Queensland and Western Australian governments collected around $6 billion.

The Queensland government’s endorsement of the BHP Billiton Mitsubishi Alliance proposal at Moranbah to allow up 100% of workers to be non-resident is a more recent example of Cleary’s complaint about the impact of corporate power. It even contradicts Queensland’s own resource sector housing policy that workers should be allowed the choice where the live and work industry. The Moranbah mining community, with its long history of communal solidarity, is now destined to become surrounded by thousands of non-resident workers housed in dongas.

While the Queensland government introduced social impact assessment processes as part of the Environmental Impact Assessment approval process in Sept 2010 in part to address these concerns, it has failed to regulate the long term cumulative impacts of resource development. Why? State governments have a fundamental conflict of interest in setting themselves up as the arbiters in disputes over access to agricultural land, the granters of exploration licenses and the approvers of environmental and social impact statements, precursors to project development consent from which royalty payment to the state flow

Cleary’s book offers a much needed critique of the collision of self-interest between state governments and mining companies which both profit handsomely from the speedy extraction of resources.

Given the state governments’ conflict of interest and susceptibility to being courted by corporate power, the need for a commonwealth power to over-ride state powers in the interests of the more effective long-term regulation of the mining industry is long overdue. This week, Australia got one thanks the insistence of independent MPs Tony Windsor and Rob Oakeshott, who supported the Mineral Resources Rent Tax (MRRT) in return for the overhaul of the environmental approval processes and legislation.

Given the state governments’ conflict of interest and susceptibility to being courted by corporate power, the need for a commonwealth power to over-ride state powers in the interests of the more effective long-term regulation of the mining industry is long overdue. This week, Australia got one thanks the insistence of independent MPs Tony Windsor and Rob Oakeshott, who supported the Mineral Resources Rent Tax (MRRT) in return for the overhaul of the environmental approval processes and legislation.

Too Much Luck can be credited for fanning the shift in public opinion and political climate in support of the MRRT. We are at a critical moment in the boom, when strong, not weak, Australian Government leadership through the policy-making processes of federalism are absolutely vital, if, to use one of Cleary’s metaphors, Australia is not to look like Nauru, “but on a continental scale”.