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Surviving the BOOM

The resources investment boom is bringing on something like $350 billion of projects down the pipeline – with the lion’s share in LNG and iron ore, and most of it in Queensland and Western Australia.

Governments and community leaders as well as business need to put in a lot of work to ensure that the resources boom does not impoverish businesses, workers and families that aren’t directly connected to the boom.

There’s a well accepted economic theory known as the Resource Curse – that being “blessed” with resources can actually leave a community or even a nation worse off. It’s drawn from the experience of many developing nations that have remained poor despite having immense mineral resources, but it can apply to developed nations too. It’s sometimes called the “Dutch Disease” after the destruction of manufacturing in The Netherlands following the discovery of major natural gas fields in the 1960s.

The central idea is that a resources boom is temporary, but while it is happening it drives up the exchange rate, making other export industries uncompetitive and drawing labour away from those other industries. The other industries decline. Expertise and market share once lost may never be regained.

There can be other associated problems too – governments and workers can become over-reliant on the one industry, living off the wealth that the resources industry generates. There may be a decline in community and individual investment in a broad range of skills, leaving the region, state or nation less able to grow and develop when the resources boom loses its puff.

We already have the situation where many non-mining businesses, many service industries, branches of the public service and even essential services are finding it hard to retain workers.

For those earning the higher wages in mining, life is not all beer and skittles. Sometimes most of the income goes straight back out again in astronomical rents and other higher living costs. For the tens of thousands of workers on ‘Fly-In Fly-Out’ rosters there is the social dislocation of being away from family and friends for long periods. The stories abound about family break-ups and high-risk behaviour including drug abuse, and health problems including from fatigue.

As a mining union, the CFMEU is obviously keen on industry growth. But with over a hundred years of history under our belt we are also too familiar with the boom-bust cycle of the mining industry, and we don’t think that the China-India growth story (that is driving the resources boom) will continue without some major upheavals along the way.

Mining regions work best when they are more diversified and resilient, able to ride the minerals cycle without being devastated by it. Workers need reasonable working hours and a life outside of work. It shouldn’t be near impossible for a mine-worker to be an active member of sporting clubs and community organisations.

The Royalties for Regions project in WA is seeing significant investment in sorely needed social infrastructure in mining regions. The CFMEU is a strong supporter of the Mineral Resource Rent Tax because we think the tremendously profitable mining businesses should be contributing more to economic development for all Australians. But we also supported a Sovereign Wealth Fund into which most of those rent taxes should ultimately go – so that future generations of Australians will have a source of wealth for future investment that will last far beyond the current resources boom.

Making the most of the resources boom requires far more than just “letting it rip”.

Gary Wood WA Secretary CFMEU Mining & Energy Division

Gary Wood has been Secretary of the CFMEU Mining & Energy Division WA since 1996.

Gary was appointed by the Minister for Mines and Petroleum, Norman Moore, to the Ministerial Advisory Panel in 2009. This Panel’s objective is to deliver a best practice safety regulatory regime for the Western Australian resources sector based on practical risk management, and taking due account of current reforms in occupational.

The Advisory Panel will provide advice to the Director General of DMP and the project implantation team on:

  • legislative reform and the development of guidance material to support these changes;
  • strategies which will increase the safety capabilities of both industry and regulator;
  • performance reporting criteria and appropriate governance arrangements;
  • communication and implementation of safety reforms, to ensure a common understanding.

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