Australians 'short changed' by mining boom, main trade union says

Australia mining boom felt by few
Australia's decade-long mining boom has generated enormous wealth for some. A report in July 2012 showed that miners working on some remote oil and gas rigs could earn upwards of $200,000 per year. The country's richest person, Gina Reinhart, owes much of her wealth to iron ore. The list of mining billionaires goes on.

But a new report commissioned by the Australia's Construction, Forestry, Mining and Energy Union (CFMEU) says that companies' mining profits have "far outstripped growth in resources taxes and royalties."

According to the study by SGS Economics and Planning, the boom has has not delivered on the promised long-term economic benefits.

Some key findings show that:

  • The share of industry income going to workers has fallen from 30% in 1990 to 20% now
  • Mining industry cash flow after operating costs nearly doubled between 2006-07 and 2011-12
  • The royalty and tax regime covering mining is archaic, complex and inefficient
  • Mining communities are lagging behind in social infrastructure and services, exacerbated by the growth in fly-in fly-out commuter workforces
  • Mining hasn’t driven enough growth in other sectors of the economy like manufacturing
  • A sovereign wealth fund could use proceeds from resources development to invest in long-term projects in the national interest

The CFMEU argues that more money should be flowing from the mining sector to education and other public services.

"We need a federal government willing to stand up to self-interested mining companies and manage this resources boom in a fair and sustainable way," CFMEU Energy Division General Secretary Andrew Vickers said in a news release.

The report cites Norway as a good example of how resource wealth can be equitably distributed. Fuelled by oil revenues, the Nordic country's sovereign wealth fund is the largest in the world. The fund invests strategically in domestic companies, predominantly through the Oslo Stock Exchange.

"Norway is relevant to the Australian experience. Both are small and developed economies with strong resource endowments. But Norway has taken a longer view regarding strengthening inter-industry relationships by levering its natural resource base. Australia has developed a short term market oriented approach and left it predominantly to large global corporations and has not been pro-active in developing interventionist policies to strengthen local industry competitiveness." – SGS report.

Study authors conclude by arguing that Australia adopt certain "appropriate elements of the Norwegian model."

Australia's Mineral Resources Council doesn't agree with the report. The group's public affairs director spoke to Australia's ABC News on Monday, saying that 98% of everything mining companies have earned out of Australia "has been invested back in Australia to keep operations going."

He also released a series of Tweets, highlighting the industry's successes at spreading the wealth.