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So what have the mining companies ever done for us?

Jobs, I hear you say?

Despite what you may hear in advertising campaigns and certain sections of the media, mining comprises a small part of the Australian workforce. The highest percentage of mining employees was last year with 2.2% of the workforce – less than a quarter of those who are employed in manufacturing. Most years the industry has accounted for 1% or even less of the total Australian workforce. Despite the expansion of mining over the past seven years, mining accounts for only 7 per cent of new jobs created over that time.

Results from the 2011 Australian Census released by the Australian Bureau of Statistics (ABS) show 11.6 per cent of Australians are working in health care and community services and 10.5 per cent in retail.

Of the 838,500 jobs created over the five years from November 2007 to November 2012, the biggest jobs creator, with 270,000 new jobs, was the healthcare and services industry as more Australians were employed to take care of an ageing population. About 130,000 were created by the mining industry and another 130,000 in professional, scientific and technical services – no doubt supported by the mining boom.

But at the same time, 92,000 jobs were lost in manufacturing as the higher dollar and higher wages squeezed profits.

According to the OECD, more than three-quarters of national employment in 2011 was in services, reflecting Australia’s strengths in the knowledge-intensive finance, ICT and business and professional services industries. Industry comprising mining, manufacturing, utilities and construction employed 20.9 per cent and agriculture 3 per cent.

As Richard Denniss points out, the mining companies tend to be fair weather friends:

“When commodity prices fell during the global financial crisis the first thing the mining industry did was sack thousands of their workers. Indeed, according to Treasury, if all industries had been as quick to punt their employees as the mining industry the unemployment rate would have hit 19 per cent rather than its peak of 5.9 per cent.

While the miners are quick to claim credit for all the ”indirect jobs” their projects create, they refuse to take responsibility for all of the jobs that the mining boom – and its accomplice the rising exchange rate – have helped to destroy.”

Not only has the persistently high dollar, caused largely by the mining boom, hit manufacturers exporters, tourism and educational services, the mining companies themselves are shedding jobs, and they can destroy entire communities in the process as is happening in the Northern Territory with Rio Tinto’s decision to shuts its Gove alumina refinery next year. About 1100 jobs will be lost, leaving about a quarter of the population of nearby Nhulunbuy out of work, not to mention those who have bought homes and businesses in Gove on the expectation of a very vibrant, ongoing continuing economy.

Similar things are happening all over the country:

26/6/2013 – Peabody Energy Corp and Glencore Xstrata will cut around 500 mining jobs in Australia, a company official and trade publication says, as a global glut in coal supply pushes down prices.

29/6/2013 – Dark clouds continue to gather over the nation’s coal industry. Job cuts at dozens of foreign and locally owned mines in Queensland and NSW total more than 10,000 since the start of last year.

26/9/2013 – In the mining industry, job vacancies fell by almost 40% to 4,900 in the latest survey from a year earlier.

3/10/2013 – Almost 16,000 workers have been lost from the mining industry as companies rush to slash costs amid a perfect storm of high costs and tumbling prices.

22/10/2013 – Mining giant Rio Tinto has signed a back-office outsourcing deal with US tech player IBM, which is believed to be worth up to $100 million and will see the company shed between 700 and 800 positions globally.

22/10/2013 – Gold Fields has cut 60 workers from its newly acquired Lawlers operations, and a forthcoming operational review of the company’s newly acquired Yilgarn South mines has got employees worried more jobs will go.

25/10/2013 – Centennial Coal is cutting 120 jobs from its operations across New South Wales, with the majority of positions to come from the Mudgee and Lithgow areas.

5/11/2013 – Mining equipment manufacturer Caterpillar has announced it will cut up to 200 jobs at its Burnie plant.

Mining could create many more jobs here if it sourced its material in Australia, but without local content rules, most materials are sourced offshore. Australian steel, for example, make up only 10 per cent of the steel used for mining. If mining used more Australian steel, it might have been a very different outcome for 1,400 BlueScope workers.

But they contribute so much to the economy …

Not as much as they should. Mining represents about 9.2 per cent of GDP, roughly the same as manufacturing. Average corporate tax is about 21 per cent but the mining companies only pay around 14 per cent, mainly thanks to generous tax deductions by the Government.

Figures released by the Productivity Commission show that the mining industry received almost $500 million in direct subsidies last year, but if you include tax concessions, the amount of subsidy is closer to $4.5 billion a year. The car industry’s half a billion pales into insignificance in comparison.

Exploration and prospecting deductions increased by $220 million on last year while deductions for capital works expenditure rose by $127.5 million.

And then there are the fuel tax credits. According to Christine Milne:

“Everyday Australians who pay 38c a litre in tax when they fill up at the bowser probably don’t realise that mining giants like Xstrata and Gina Rinehart’s Hancock, which make billions of dollars in profits every year, pay only 6c a litre in tax for the huge quantities of diesel they use. That’s simply not fair. These costings from Treasury show that, simply by making the mining giants pay the same tax on the fuel they use that you and I do, we could raise $5.1 billion in the next 3 1/2 years.”

Minerals Council spokesman Ben Mitchell says fuel tax concessions shouldn’t be considered a form of subsidy. “The fuel tax was imposed to build public roads. Mining builds its own roads and that’s why we get a credit on that.”

This of course neglects the amount of Federal funding put into rail and port infrastructure that the mining industry uses.

Until last financial year, BHP’s profit margins have been steadily increasing. In fact, since 2003, they’ve doubled. Lower commodity prices amongst other factors, have seen BHP’s revenues fall 14% which sounds like a lot until you look at the profits – $15.4 billion.

Rio also posted net losses but profits still exceeded expectations – $9 billion in 2012.

Gina Rinehart’s Hancock Prospecting posted a $3.27 billion headline profit in its 2012 financial report.

83 per cent of Australian mining is foreign-owned, and these profits will be sent back overseas. The top 40 miners boosted their dividends nine per cent higher in 2012 to a record $US38 billion on a payout ratio that rose from 25 per cent in 2011 to 60 per cent in 2012. That continued a trend that has seen dividends rise more than 150 per cent, from $US15 billion, since 2009.

So why get rid of the mining tax?

The Global Mail’s search of donations by 21 of the major mining companies and related industry bodies shows they have been extraordinarily generous to the conservative parties:

  • Since 1998, the Coalition parties have been gifted at least $4,136,437 from these interests, directly and through associated fundraising entities. The ALP received a fraction of that at $613,962, and the Greens got nothing.
  • Since 2007, when the issue of the taxation of mining got really hot, the flow of money has been even more skewed. The Coalition has reaped $3,076,000 and Labor just $119,500. All of the Labor donations went to the states, not the federal headquarters.
  • Other money went to mining-related lobby groups. For example the Association of Mining and Exploration Companies (AMEC) received $2,020,000.
  • Clearly many companies thought this indirect expenditure just as useful in gaining political leverage as donations direct-to-party.
  • Fortescue Metals, for instance, gave $222,000 – of which $200,000 went to the AMEC, the outfit that ran the advertising campaign against the mining tax in 2010.
  • Gina Rinehart companies under the Hancock mining umbrella gave $763,300 in donations, the bulk of that to the AMEC rather than directly parties.
  • Clive Palmer’s company Mineralogy is the largest mining donor to Australian political parties. Money recorded as donations from Mineralogy totals $1,959,000 over the years. But if you look in the ‘other receipt’ or ‘unspecified’ categories, there’s a further $987,905 signed off to the Coalition.

And when the mining tax goes who will pay?

  • Abolition of the schoolkids bonus – $4.641 billion – paid to parents to meet the incidental costs of books, uniforms, et cetera, for their kids.
  • Abolition of the low-income superannuation contribution – $3.722 billion – which topped up the retirement savings for people, most of them women, who earn less than $37,000 a year.
  • Abolition of the twice-yearly mining-tax supplementary allowance – a top-up of $210 a year for singles or $350 for couples on the dole.
  • A delay in increasing superannuation contributions, which whips another $1.64 million out of workers’ pockets.
  • Slash $4.5 billion from Foreign Aid.

Sounds fair? NOT.

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15 comments

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  1. M. R.

    Your opening posit is one that makes me so angry I wrote a blog post about it. Still angry. As for the rest, of course your research is as reliable as always, Michael. But it’s a bit like the situation re corporate business generally: it’s not nearly sufficiently legislated so continues to run riot. Can’t see it ever changing.
    P.S. How come Gina and Clive are so beautiful? – isn’t it a shame they can’t be married to each other?

  2. iggy648

    What’s rong with my rithmetic? The Australian says Holden wanted $540 million to stay http://www.theaustralian.com.au/national-affairs/holden-plays-double-or-nothing-265m-or-closure/story-fn59niix-1226677379337
    The AFR says 65,000 workers will lose their jobs as a result. http://www.afr.com/p/national/how_many_jobs_will_australia_after_mzo7oq8r5A411VZmX49dNO
    So if each worker payed an average of $8300 in tax, (i.e.an income of around $50,000, or around 2/3 of average earnings), the Guvmint breaks even. What’s up with that?

  3. joy cooper

    The Australian was incorrect iggy, as usual. (Why oh why do people believe the crap that is written in the Murdoch media.) What GM-H wanted was an extra $80million per year, which came to $160milion, till 2023 & committed to making two brand new car models but Abbott never deigned to speak to them. They also committed to repaying any government funding if they pulled out of Australia early. When compared to the subsidies & largesse granted to the mining & private health industries it is a pittance.

  4. Kaye Lee

    iggy I think everyone is realising that the compensation packages, retraining, unemployment benefits and flowon effects are going to cost a lot more than the subsidy would have.

    One silver lining to the cloud, the failure to get a successful vote on the mining tax repeal legislation last week means that the School Kids Bonus for January at least, is going ahead. Tony can waffle on about a non-existent $500 Christmas present for families from repealing the carbon tax – by not repealing the mining tax, these families will actually receive a payment in January to help with school costs next year.

  5. John Brumfield

    Gina and Clive married to each other? That would really be two pigs in shit.

  6. CMMC

    Private health insurance rebates still at $3 billion per year, Barnaby Joyce launches another “Drought Relief” pork barrel for certain Nth QLD electorates……….the subsidy square-dance never ends.

    But, you see, they are subsidising the virile individualists of society, not the deadbeat working-class drones.

  7. John Fraser

    <

    Very, very good summation of the impending disaster from "Slick" Abbott's gang.

    Unfortunately, and depressingly, "Stop the taxes" is more likely to be heard more than this article will be read.

    One could be forgiven for thinking that the running of Qantas was the "Slick" Abbott blueprint for running Australia …. but readers of AIMN know that the IPA has drawn up the blueprint plans.

    I wonder why there has never been any "Comment" on how "Slick' Abbott speaks ?

    Everyone knows (and are annoyed) by the repetitive speech and 3 word slogans but no one (to my knowledge) has pointed out the hesitant speech " there will be … hesitate … no … repeat ,, no … hesitate mining taxes".

    Every time "Slick" Abbott opens his mouth he does it …. ……………. ……………. unless of course Credlin has told him to talk about children smacking, then he is allowed to go full flight (notice how all those dots made you hesitate ?)

    Not a bad speaking trick huh !

  8. Clare

    The mining industry has such a detrimental effect on local communities. Rather than being the recipients of all the largesse supposedly created by the mining boom, these communities are now suffering from a lack of affordable housing (available properties taken over by mining companies) and labour shortages in key service industries, particularly trades and health care as workers are lured away by the prospect of short term, better paid employment. High numbers of contracted NRWs (non resident workers), mostly men, are not contributing in any meaningful way to the fabric of the community – it’s a fly-in, fly-out mentality where the mining company calls the shots and couldn’t give a toss about how it affects the non-mining sector of society.

  9. John Fraser

    <

    @Kaye Lee

    The Sunshine Coast (QLD) is becoming recognised as an area with a high concentration of FIFO workers.

    A lot of reasons for this, and you have pointed to one being young families in an area where service industries comprise the highest employer.

    The other being a population of young, fit, workers, and the mining industries churns that type of worker.

    The mining industry, to the best of my knowledge, has not "donated" any money to the Sunshine Coast Public Hospital, which was built under a PPP arrangement.

    Is it any wonder that no private health organisation wanted to take over the running of the Sunshine Coast Public Hospital ?

    newman's gang sold the problem as the governments public hospital system being able to do a better job.

  10. Kaye Lee

    There are many concerns about FIFO workers, both for the community and for the workers and their families.

    We hear about the lack of affordable housing, relationship breakdowns, mental illness, under-resourced and over-stretched local services.

    The workers themselves – mostly men – have long working rosters in arduous conditions. This can disrupt normal daily routines, and contribute to poor physical health and significant disturbances in sleeping patterns. FIFO work can be lonely and workers lack social support from family and friends while they’re away.

    Men with families face repeated separation from their partner and children. They can experience difficulty re-establishing closeness with their family after lengthy periods away, and relationship strain and discord can emerge. In some cases, this may end in marital breakdown.

    Individually and collectively, these experiences can increase a person’s vulnerability to suicide. Also, they can play a role in the development of two very prominent contributors to suicide: depression and anxiety, and “self-medication” through alcohol/drug misuse.

    Workers’ families face strains too. Aside from separation from their loved one, the regular absence of one partner can expose the other partner to the myriad pressures of single parenting. This raises the likelihood of that partner experiencing psychological distress, especially if they are a new mother.

    Tension between the two parents is a worry, not just for how it affects adults, but because family conflict and breakdown are documented risk factors for youth suicide.

    Problems can develop between the absent parent and their children. Children may struggle to re-integrate their FIFO/DIDO parent into their lives once each work roster ends, and, equally, can experience emotional upset when the time comes for dad to leave again.

    At the community level, residents of towns where FIFO/DIDO work is a common employment practice may be affected. In some cases, impacts can include displacement of local workers in favour of FIFO/DIDO workers, and declining tourism viability.

    As income disparities emerge, prices rise and locals who are not employed in the resources sector can find themselves in financial hardship. Social disruption, community fragmentation, and diminished participation in community activities, can occur.

    Access to services – such as health care – is a well-recognised problem for people living in rural and remote areas. Sudden population growth due to an influx of workers can place strains on local infrastructure and service capacity, making access to services even more difficult than it would usually be.

    https://theconversation.com/mining-fly-in-fly-out-workers-and-the-risk-of-suicide-9998

  11. Gail T

    This is an important article which should be circulated far and wide.

  12. Caz2

    Having read Holden’s submission to the Productivity Commission, is it obvious that Holden was anxious to continue operating in Oz. I am sure Ian McDonald read the submission, but I am also sure the rest of the Govt from the PM down have not even seen it. After listening to Hockey and Abbott bagging GM, it is my opinion that they are solely responsible for GMs about face. The figures of benefits to the economy give lie to Abbott’s justification in limiting financial assistance. We are being governed by a bunch of fools.

  13. Andreas Bimba

    Kaye Lee. This article is pure gold and I agree with Gail that it must be circulated far and wide. I apologise for first reading it over a month after it was posted. The truth must count for something and must prevail over raw money and power. I’m also trying to fight against all the lies from our rubbish neo-liberal politicians whenever I can.

    http://www.japantoday.com/category/politics/view/free-trade-agreement-between-japan-australia-goes-into-effect

  14. Kaye Lee

    Andreas I actually wrote that in December 2013 hoping against hope that the government would see sense and keep the mining tax. The list of job losses would be a lot longer by now.

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