Pilbara: remote, but not forgotten

Minerals Council of Australia CEO Mitch Hooke sets the record straight on why mining companies should not be used as a surrogate for government responsibilities in the remote north. Story by Daniel Hall

Hall: The northern half of Australia is fundamentally underdeveloped, particularly the Pilbara region of WA, how critical is this issue for mining companies and remote communities in the remote north?

Hooke: I recently participated in the North Australia Forum, up in Darwin, which was put on by the ABC. There was a very strong consensus from that forum that there was a great deal to be done in developing the north of Australia. Delegates at the forum basically classified the north of Australia as anything above the Tropic of Capricorn. The discussion raised some interesting questions. There was a lot of discussion about the role of commercial enterprise in supporting and sustaining communities, in other words, what commercial enterprise was going to be the foundation for normative economic behaviour or economic communities. Of course mining and minerals processing got a big mention. The crowd at that forum tended to be more about a non-development agenda. That is not what they need to be looking at. They need to be looking at development, but what they had difficulty doing was looking at development through the prism of sustainable development and the three pillars, which are financial, environmental and social. These pillars do not have to be mutually exclusive, and in fact they can’t be. If the balance is not right, one of these pillars is going to compromise the other. We talked about the multiple and sequential value of mining, and that is mining should not be excluded from the mix. We talked about the social impacts in terms of communities being involved and integrated in the economic activity, rather than be isolated from it. If there is one thing that the minerals industry has done really well over the past decade is to better integrate into communities, in the commercial activity, and also in the decision making processes. That’s a really important point. The industry has moved from decide, announce and defend, to engage, listen and learn.

Hall: Some communities feel they have been short changed in the remote mining regions of Australia’s north. Is this the case?

Hooke: I can’t make a call on that. I honestly don’t know whether or not they have been short changed. I am certainly not going to insult their intelligence by making a call from Canberra about whether they have or haven’t been short changed. What I can tell you is that there would barely be a mining company, and certainly none of my members who would want to perpetuate that perception or reality. That is what enduring value is about, and every one of our members is committed to enduring value. I can tell you that the mining royalties that MCA member companies are paying have increased three to four fold nation wide. Western Australia has experienced the same kind of increase. In 2008-09 royalties are projected to be $2.6 Billion, last year it was $1.7 Billion. Firstly, that is a substantial increase and consistent with the national trend. Secondly, the amount of revenue we have contributed to the commonwealth government is huge. That is the royalties and the tax. Then you have the local agreements, particularly when it comes to Indigenous peoples, Arygle Diamond’s agreement for example, then you have agreements at Weipa, Ranger and more. There is a whole stack of agreements on foot with Indigenous communities that work through a whole range of tangible benefits. Those are financial, employment, enterprise development and education and training. When you put all this together, you start drilling down to recognise responsibility and opportunity.

Hall: What is the industry doing to improve the situation for remote communities in the northern half of Australia?

Hooke: One of the things that we are working through with the Government is what we can actually do to assist wealth creation with Indigenous communities. We are working through the taxation system, which, because of a range of definition issues, delivers a level of unintended discrimination against wealth accumulation from the current activities for the benefit of future generations. For example, tax concessions to encourage the long term accumulation of funds currently exist, including superannuation and the future fund, but there are no similar concessions available to encourage accumulation of funds for sustainable Indigenous communities. There is tax deductibility or access to upfront capital expenditure, and ongoing tax losses is recognised for a range of essential expenditure, like capital works, but there is no such recognition provided for expenditure building on Indigenous communities. Existing tax legislation recognises a stack of worthwhile causes through specific categories of tax exempt status, like legal definition of charities, but there is no category for Indigenous trusts. We have been banging on about resourcing appropriately, native title representative bodies and prescribed bodies corporate, so they can sit down with us on a platform of dignity, integrity and autonomy, to negotiate and discuss mutually beneficial agreements. There are more than 360 mutually beneficial agreements with Indigenous communities in the mining industry, of which not one contests native title. What that tells us is that in the last decade we have moved from a platform of confrontation and divisiveness, to actually sitting down with communities and saying there are things we can actually do better. This answers your fundamental question. This is what we are doing.

Hall: Beyond the key challenge of working with communities, what are the key challenges with meeting infrastructure requirements in communities such as the Pilbara?

Hooke: Brining Governments together at all levels. Recently in The Financial Review I said that one of the greatest impediments to mining in the Pilbara is land release. The situation is deplorable. Are we short of land there? Is land really the fundamental limiting factor in the Pilbara? It has more to do economic rent than social infrastructure. The point that I am trying to get at is that this has to be a tripartite approach. There has to be a critical intersection between the wants and needs of the local communities, the commercial enterprise and endeavour of mining and minerals companies, and the social and moral responsibility of Governments. Governments can’t keep transferring the responsibility for building social and physical infrastructure to the mining companies as a surrogate for their own responsibilities. State and local Governments have a responsibility to provide social and physical infrastructure in those regions, but because they are remote and regional there is a line in the map about where governments have responsibility. There is a willingness to see the mining companies as a surrogate. Why are the mining companies expected to build day care facilities, housing and hospitals? These things are regarded as a citizenship right in just about anywhere else in Australia, except for where the mining companies can afford to pay. This is the wrong call. Those living in regional communities would actually be feeling a little bit miffed that the concentration of the mining companies royalties have been used to repair fiscal positions in the Sates, and not being used for the benefit for future generations. That is what sustainable development is about.

Key contact:

Minerals Council of Australia

info@minerals.org.au

www.minerals.org.au

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