Growth in the Coal Industry and Economic and Social Consequences

1. Growth in the Coal Industry and Economic and Social Consequences John Rolfe Central Queensland University Regional Social Impacts of Economic Growth Forum

2. Acknowledgements • Work with several other researchers in this field • Stewart Lockie, Galina Ivanova, Vanessa Timmer, Bob Miles, Grant O’Dea • Research projects supported from different sources • Mining companies, Queensland Govt, Australian Coal Association Research Council (ACARP) Regional Social Impacts of Economic Growth Forum

3. The focus of this presentation • Identifying the key economic and social impacts of mining • Looking at some of the patterns flowing from this boom • Providing some analysis of the relevant issues • Key messages Regional Social Impacts of Economic Growth Forum

4. The rollercoaster of current expansion • Growth in almost all aspects of coal industry in past 4 years • Employment • Contractors • Construction • Output • New mining operations • 7% growth per annum to 2010 • The industry will double production in less than 10 years Regional Social Impacts of Economic Growth Forum

5. Coal prices Regional Social Impacts of Economic Growth Forum

6. Value of Queensland exports Regional Social Impacts of Economic Growth Forum

7. Production levels and employment Regional Social Impacts of Economic Growth Forum

8. The economic stimulus • An additional 10,000 directly employed • Estimate this is $1.06 B in extra wages in central Qld • (85% of coal industry, $125K average wage) • Expect a multiplier effect of 2-3 times for income, expenditure, population Regional Social Impacts of Economic Growth Forum

9. Two key characteristics of the economic stimulus • 1. The economic effects are much deeper and wider in this economic boom • Mining service industry is more developed in region • Higher use of contractors and support companies • 2. The regional effects are much stronger than the local effects Regional Social Impacts of Economic Growth Forum

10. Are we making the best of our opportunities in Central Queensland? • At current rates, the coal industry will double in size from 2000 – 2010 • Population change in the Bowen Basin ? • Wealth in the area ? • Developing service industries for coal ? • Minimising economic, social and environmental impacts? • Creating lifestyles that make people want to stay here ? Regional Social Impacts of Economic Growth Forum

11. Growing pains - 1 • Dutch Disease – when a growing industry sucks labour and resources away from others • Shortages in skilled labour now widespread • Agriculture, Local Government, etc, find it difficult to retain staff • Attracting staff is difficult Regional Social Impacts of Economic Growth Forum

12. Labour productivity Regional Social Impacts of Economic Growth Forum

13. Growing pains - 2 • Housing prices – high rents and shortages make housing too expensive • Surveys indicate high levels of concern that higher housing prices are ‘blocking’ development • Economic impacts – hard to develop service and other industries when it is too expensive to live in the town • Social impacts – people on lower incomes may have to shift Regional Social Impacts of Economic Growth Forum

14. Housing - Mackay Regional Social Impacts of Economic Growth Forum

15. Housing - Moranbah Regional Social Impacts of Economic Growth Forum

16. Housing – Nebo (Data sourced from Property Data Solutions) Regional Social Impacts of Economic Growth Forum

17. Median rents - Moranbah Regional Social Impacts of Economic Growth Forum

18. Housing market responses • In an open market, high prices and high rents will normally stimulate the construction of more housing • Limited evidence of this happening in mining towns • Reliance on workcamps, shifting population base • Distance and labour shortages make it expensive to supply new housing Regional Social Impacts of Economic Growth Forum

19. Building activity, Belyando Shire(Year to September 2006) Regional Social Impacts of Economic Growth Forum

20. Building activity, Nebo Shire(Year to September 2006) Regional Social Impacts of Economic Growth Forum

21. Building activity, 2005 Regional Social Impacts of Economic Growth Forum

22. This is a different mining boom • Very limited positive impacts on small local towns • Limited population growth • Limited housing development • Very little commercial, business development • Impacts flowing more to larger centres and regional hubs • Facilitated by block shifts and work camps Regional Social Impacts of Economic Growth Forum

23. Reasons for housing market failure • Changed demographic, social and employment patterns • Block shifts allow workers to live in wider region • People don’t want to live in smaller communities • Is this exacerbated by current housing costs? • What are the social / road accident costs? Regional Social Impacts of Economic Growth Forum

24. Reasons for housing market failure • Practical limitations • Land availability • Builders • Council planning and approval • Developers restricting release of new blocks and houses • These don’t explain all the large differences in development between communities Regional Social Impacts of Economic Growth Forum

25. Reasons for housing market failure • Expectations and risk adverse behaviour • Communities used to having mining companies build the houses • Investors are cautious about future decline in mining industry • But • Companies are investing Billions … • Downturn in late 1990s in mining towns was a once-off Regional Social Impacts of Economic Growth Forum

26. Attitudes of Mackay population to mining impacts on communities - 1 Regional Social Impacts of Economic Growth Forum

27. Attitudes of Mackay population to mining impacts on communities - 2 Regional Social Impacts of Economic Growth Forum

28. Relocation options Regional Social Impacts of Economic Growth Forum

29. Some model outputs • A salary premium of $55,500 would be needed to attract the average respondent to a mining town as compared to a coastal town, • A salary premium of $89,700 would be needed to attract the average respondent to a small town as compared to a medium sized town. Regional Social Impacts of Economic Growth Forum

30. The population impacts • Large non-resident populations now working in mining communities • Moranbah had approximately 7,000 residents in 2006 • And about 4,000 non-residents ‘cycling’ through the town • 1,915 non-residents estimated to be there at any one time Regional Social Impacts of Economic Growth Forum

31. The workcamp debate • Many communities concerned that workcamps and non-resident workforce is not healthy for town development • But surveys of workcamp residents in Nebo and Moranbah suggest that less than 20% would consider moving to the mining towns Regional Social Impacts of Economic Growth Forum

32. Four key issues with workcamps • Are current workcamps here to stay? • Or will some workers choose to move families into mining towns as accommodation becomes available? • Do initial accommodation arrangements set the pattern for future location choices? • Would patterns change if more housing was available? • What is the appropriate development pattern for workcamps? • Can we develop a range of accomodation options between housing and workcamps? Regional Social Impacts of Economic Growth Forum

33. Varying approaches to workcamps • Some communities don’t have workcamps • Some try to • Some keep them separate • Some integrate them into the town • Which pattern is the correct one for community development? Regional Social Impacts of Economic Growth Forum

34. Thinking through the issues - 1 • Mining boom is having major economic impacts through the region • These overlay with social, demographic and workforce changes to generate changes at region • Other centres may be getting the bulk of the economic stimulus • Other centres may also be bearing some adverse social impacts • Can we identify these a bit more closely? Regional Social Impacts of Economic Growth Forum

35. Thinking through the issues – 2 • Current social and demographic trends are focusing more to regional hubs and coastal centres • Non-resident workforce patterns likely to continue • Need to develop planning and development strategies to suit • Focus on developing hubs • Recognise sub-regional impacts of new projects • Shire amalgamations are one mechanism to allow more sub-regional planning Regional Social Impacts of Economic Growth Forum

36. Thinking through the issues - 3 • Lack of housing in communities is key transmission link between economic stimulus and social impacts • Adverse effects on lower income families • Reduced pool of labour for other industries • Forces some families into split lifestyles between work and home locations • May set patterns for new itinerant workforce • But it is difficult to address housing shortages in current environment. Regional Social Impacts of Economic Growth Forum

37. Five key lessons • 1. Mechanisms are needed to improve the supply of housing, • perhaps by stimulating private investment and building activity • Encourage more realistic choice between housing and commuting at the initial employment point • 2. Addressing labour shortages is important in the longer term • 3. Need mechanisms to improve information about new development • between industry, state government and local government • Encourage better planning over the longer term Regional Social Impacts of Economic Growth Forum

38. Five key lessons … • 4. Planning is needed to cater for demographic and other changes • To provide additional services • To provide additional infrastructure • To develop regional hubs • To allow population shifts • 5. Improved planning and response mechanisms should identify who is responsible for funding • Current EIS mechanisms not working well enough for social and economic impacts Regional Social Impacts of Economic Growth Forum