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Boom and dust

August 2012

  • Paul Cleary

In less than a decade, the frenzied pace of Australian resource development has tipped the balance of coexistence to the point where mining dominates our society, our economy and even our political system. The revenue earned by mining companies has already tripled as a share of our economy, from around 5 per cent for most of the post-war era to 15 per cent.

Even on this scale, the industry has been able to dictate terms to compliant state and federal governments. It has erased small communities and towns; occupied vast tracts of prime farmland; constructed ports and liquefied natural gas (LNG) plants in the Great Barrier Reef Marine Park; diverted entire rivers; and built on top of 30,000-year-old sacred sites. It has even helped remove an elected prime minister from office. If this is what the industry can do now, how much more power will it wield if it rises to one-fifth or even one-quarter of national income?

Such a rise depends on the direction of commodity prices, but certainly the industry is gearing up to expand massively the volume of production. Having already doubled iron ore production since the beginning of the boom, global and local companies are preparing to double output again over the course of this decade, possibly reaching a mammoth 1 billion tonnes a year by 2020. This iron ore production would be equivalent to all of Australia’s mineral output in 2011. Likewise, coal production has increased by about 60 per cent since 2002, but output could double this decade. Meanwhile, gas companies have already doubled LNG export volumes and are on track to quadruple them by 2020. Soaring prices and profits have made the resources companies hell-bent on expansion, transforming Australia from a country with a diversified economic base and relatively healthy democratic institutions into one dominated by the interests of global mining giants. In the future, Australia will be even more dependent on volatile resource exports for its foreign income. These have already doubled in the space of a decade to account for two-thirds of our export income. As the high dollar squeezes out other exporters, the share could go considerably higher.

The human cost of this expansion seems too high a price to pay. The mining juggernaut has rolled over communities in the Hunter Valley and the Darling Downs, and many more will be wiped off the map. Those not lucky enough to be bought out are left to endure the assault – dust, noise, blasting, gases and lights as bright as at a football stadium – of the 24/7 operations occurring at most mining and coal-seam gas (CSG) operations. The expansion is driven by grueling rosters that involve 12 hour–plus shifts and fortnightly spells away from family and community. Rising road carnage is another result of the long drives that workers are forced to take at the end of their shifts.

The resources industry has an insatiable demand for new territory and is encroaching onto our best farmland, imposing on farmers and rural communities like never before. The cost of giving these companies such sweeping access to our resources could be permanent damage to Australia’s food bowl and water resources – a high price to pay for the driest continent on earth. Yet our state governments, which have the biggest say over resource developments, are remarkably enthusiastic about handing out mining concessions in these areas, largely because they get an upfront cut of the earnings.

Little stands between the people and the resources rush. Long-time farmers who have been inundated with government inspectors throughout their careers, and who now have mines or drills on their land, say they’ve never had an official come to check that CSG wells have been properly drilled, or to measure the dust, noise and fumes stirred up. Governments do surprisingly little to monitor the harmful effects of mining, leaving the task almost entirely to the companies involved. Much of this reporting seems inadequate or biased and is kept confidential; even when companies exceed safety limits, repercussions are rare. Our governments are ill-prepared and, it seems, unwilling to manage and monitor future expansion.

If Australia is to avoid the pitfalls of resource-sector dominance, then serious regulatory reform is needed. Only then will we have first world governance over the extraction of the resources that belong to all Australian citizens – and to future generations. Our political leaders need to think and act as the masters rather than the servants of the companies making a handsome profit from our common wealth. In other words, our leaders need to think and act more like Arab oil sheiks than hapless clients.

Reform is desperately needed in three key areas: project regulation, taxation and minimising the human impact. Firstly, most project regulation sits in the hands of weak state governments that are prejudiced in favour of development. Companies generate their own Environmental Impact Statements (EISs) without any independent review or quality control. The capacity of states to oversee developments is being undermined by companies that poach their best officials. Australia needs a well-resourced federal ‘super regulator’ to be run jointly with the states. This regulator would manage the environmental assessment process and deliver real-time monitoring, instead of filing away confidential reports.

Second, there is an imbalance at the heart of Australia’s economy and society: we are a first world country with third world rates of taxation on exploitation of our national resources, a situation that has brought about a tsunami of investment to exploit them. The federal government’s mineral resource rent tax won’t make much difference; in fact, from the time the tax was announced in July 2010, to April 2012, just after it became law, the value of major resource projects approved by company boards for development had more than doubled to $261 billion. State governments have shown they have no idea how to tax the resources sector, as they insist on retaining an archaic system of royalty payments that fails to capture a share of profits. Even worse, these production- based royalties penalise small domestic companies at the expense of big multinationals and have become a form of inducement that leads to distorted decision-making.

Finally, companies should be made responsible for their impact on people living on the edge of resource projects, and they should also be forced to minimise the impact of work regimes that border on the inhumane. Fly-in fly-out (FIFO) rosters are destroying marriages and communities, and companies are in denial about the road accidents caused by exhausted workers.

It is not a case of governments and companies putting royalties and profits before people; instead it is as though people don’t matter at all. Presently, regulation is focused more on flora and fauna than on the people affected by mining and energy developments. Some of these people live on the edge of ever-expanding mines or close beside the railway lines that ship ore from mines to ports, or near exposed coal dumps and loading facilities. Many live with the knowledge that a huge mine or CSG project is about to open up on their land and they have no negotiating power, let alone a right of veto, in the face of the government’s enthusiastic approval. Others are living with the memory of their land, perhaps held by their families for generations, after a mining or energy company has given them no choice but to sell. Indeed, so great, so far-reaching and so uncontrolled is the resources boom that it appears to be driving the biggest forcible transfer of land on this continent since the first wave of white settlement.

Mine-Field gets down in the dirt to count the human and economic costs of Australia’s mineral addiction, while also looking for solutions to better manage the once-only development of our resources for the benefit of all parts of society and our economy, and for the benefit of future generations of Australians.

Paul Cleary is a senior writer with the Australian and a researcher in public policy at the Australian National University.


This is an edited extract from Mine-Field: The Dark Side of Australia’s Resources Rush by Paul Cleary, published by Black Inc. RRP $24.99.
Also available as an ebook.





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