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Issue #1519      21 September 2011

Can WA afford the mining boom?

The Communist Party of Australia invited the Australia Institute’s executive director Dr Richard Denniss and Robin Chappel, Greens MLC for the mining and pastoral region of Western Australia, to address a public forum, Politics in the Pub, on the impact which the mining boom is having on the WA and on the national economy, climate change and tourism.

National CPA President Vinicio Molina introduced the proceedings and reminded the 40 plus people who attended that in the financial year 2010-11 over $100 billion were generated in net profits by mining companies in Australia. Most of that wealth went into the pockets of only a handful of people rather than for the benefit of all Australians.

As an organiser for the Construction, Mining, Forestry and Energy Union, Vinnie has travelled much of the state and witnessed some of the harsh conditions which men and women work under in Western Australia. “Many of these communities are isolated and isolating”, and many of the workers who are brought into the state’s northwest are being brought in on 457 immigration work visas which are used to drive down local wages and conditions.

Robin Chappel spoke about the mining boom in the northwest with which he has had a long association having lived or worked there since starting with BHP in the early 1980s. In those days, about 40 million tonnes of iron ore was shipped out per year from BHP’s mine at Mt Newman and elsewhere. Today BHP’s mines ship out 480 million tonnes per year followed by 330 million tonnes by Rio Tinto. This does not include the contributions by Fortescue Metals Group and other smaller miners.

What Robin Chappel would like to see is a resource rent tax which was unilaterally determined by government in consultation with the mining companies.

There are also problems with the provision of water for consumption by both domestic and industrial and mining use. Currently water use is up to 200 gigalitres per annum which is obtained from the Hardy Dam and underground bores at Millstream and other locations in the Pilbara. Water usage in the Pilbara is currently approaching unsustainable levels to which the current government’s response is to propose the construction of a desalination plant in Karratha. This is the wrong solution as it would be expensive to run and substantially increase greenhouse gas emissions.

There is also a human cost to the mining boom. This is most easily seen through the shortage of affordable housing in the Pilbara where those not connected to a mining company must frequently be flown in and flown out.

Fly in-Fly out presents its own problems and challenges for the mining industry, workers, their communities and families. For mining companies it is the high cost of training and developing staff only to see most of them leave in less than two years. This is causing BHP to reconsider having more workers live closer to their place of employment and be able to bring their families and children – like it used to be in the 1970s and 1980s.

Richard Denniss opened his presentation with criticism of the mining companies’ mantra that the mining industry creates jobs. Of a population of 22 million, only 1.9 percent or about 200,000 people are directly employed in the mining industry including only 27,000 in WA (state government figures). Although in decline, there are more people employed in manufacturing than in mining. Even if one were to include indirect employment such as contracting there are still other industries that employ more people directly and indirectly.

Denniss also spoke of the impact of the high exchange rate caused by the mining boom on economic activity in other industries such as manufacturing and tourism.

In these industries an opportunity cost is at work which forces jobs to be lost at a greater rate than those created in the mining sector.

Mining profits are the only big things that come from the mining boom and like all economic booms this one will also be followed by a bust.

Robin Chappel stated that data he had seen indicated that 81 million tonnes of CO2 currently came out of WA which was projected to increase to 150 million tonnes with the increase in coal, gas and other mineral extraction and processing.

Those in attendance were also concerned at the significant role and impact of the Chinese economy has on the resources boom. If China were to experience a downturn in economic activity this would have a significant impact on the economies of the developed world. The manner in which the global financial crisis is playing out suggests that this is not a question of if but when.

Finally, there were changes proposed to the Aboriginal Heritage Act which would remove the ability of Aboriginal groups to make submissions about sacred sites, materials and law which have an impact on mining claims. If this were to become law it would render it impossible for Aboriginal groups in WA to make claims to their land under the Federal Native Title Act and it would formalise the dispossession which has largely been characterised by the operation of Native Title in WA.  

Next article – “People are the driving force for social change”

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