Democracy must apply to mining

Democracy must apply to mining

The mining industry in Australia has boomed from about 4% of GDP in 2004 to about 9% today. Mining exports in the year to March last year were worth $155 billion, or 53% of Australia's total exports. Mining profits in 2009-10 amounted to $51 billion, and the estimated pre-tax profits over the next 10 years will be about $600 billion.

But who is the wealth benefiting and what are the costs of mining? And who makes the decisions about if, where and under what conditions mining takes place, and how the wealth is distributed?

The mining industry portrays itself as “important to Australia”. According to the Australian Mining website — whose members include BHP, Xstrata, Peabody and Rio Tinto — “The mining industry... supports communities all across the country, today and into the future. We work hard, we look after each other and we are committed to Australia”.

There certainly are those that benefit from the mining boom; mining workers and shareholders, for example. But for most people the benefits are less clear.

The mining industry contributes far less to Australia's tax base than most other industries. Though the corporate tax rate is 30%, the mining industry on average pays 13.9% due to generous tax deductions and subsidies. So when it comes to mining profits, the public gets a very small share.

The industry talks up the number of people it employs, but the reality isn't so impressive. Mining employs 217,100 people out of a workforce of more than 11 million. This is 1.9% of the jobs in Australia. Manufacturing on the other hand employs more than 1 million people.

Worse still, growth in the mining sector — which has a low rate of employment — is displacing industries with higher rates of employment. The high exchange rate associated with the mining boom makes it much harder for other industries — agriculture, education, tourism and manufacturing — to survive.

Due to the mining industry's disproportionate wealth it has big political influence. For evidence of this influence one needs to look no further than the debate over the Resource Super Profits Tax, proposed by the Rudd government in 2010. This tax, based on current prices, would have raised $200 billion over the next 10 years.

But due to the mining industry's $22 million advertising campaign, the government settled on the Minerals Resource Rent Tax, which was supposed to have raised just $38.5 billion in taxes over the same period. The Australia Institute has pointed out the industry campaign amounts to a 730,000% return on investment for the industry.

In other words, immense wealth has been concentrated in a few hands, and these hands hold sway over the political process. Communities are often in the dark about mining development in their area, and have no say in decisions regarding approvals.

So whatever the environmental damage, competition with drinking water catchments and food growing lands, significant Aboriginal sites and the diversified economy, the decisions are being made by those who stand to make money from development.

To get to the heart of the problem we need to discuss ways to bring the mining industry under community control. A fundamental shift in the process is required so that social and environmental costs are assessed before development can go ahead.

This would include looking at alternatives to extraction. For example, the development of renewable energy over time would reduce the need to extract greenhouse gas intensive thermal coal.

Communities have every right to demand that governments not renew mining leases until a thorough, science-based investigation has taken place into the merits and risks of development, social and environmental impact, and possible alternatives. In many cases communities are demanding leases and development consent be cancelled due to non-compliance and licence breaches.

If social benefits, such as jobs, justify a particular project's continuation, public ownership could be a way to facilitate the project's phase out while alternative employment is arranged for employees. It's unlikely this would be carried out by a private mining company.

The idea of introducing democracy to decisions about if, where and under what conditions mining takes place, and how the wealth is distributed, seems a long way off. But it is urgent to start the discussion given the rampant and destructive growth of the industry.

In the meantime, communities struggling to protect their land and water should be actively supported. Initiatives that challenge the undemocratic process regarding mining, such as the CSG free community strategy in the Northern Rivers should also be supported.

These surveys of residents expose how excluded communities are and point to the need for people to be involved in the decision-making.

Campaigns led by community groups such as Lock The Gate Alliance and affiliates are challenging the industry's power and asserting their rights. They are essential if we are to limit the damage being done. But to ensure the industry's wealth benefits society, not just line the pockets of multinational companies, is there any other alternative to public ownership with community control?