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Growth in the Coal Industry and
Economic and Social Consequences
John Rolfe
Central Queensland University
Regional Social Impacts of
Economic Growth Forum
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
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
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
Coal Price ($AUS)
Se
100
120
140
160
180
0
20
40
60
80
p-
0
No 3
v-
0
Ja 3
n-
M 04
ar
-
M 04
ay
-0
4
Ju
l-
Se 04
p-
0
Coal prices
No 4
v-
0
Ja 4
n-
0
M 5
ar
-
M 05
ay
-0
5
Ju
l-
Se 05
p-
0
No 5
Economic Growth Forum
Regional Social Impacts of
v-
0
Ja 5
n-
M 06
ar
-
M 06
ay
-0
6
THERMAL
HARD COKING
COKING OTHER
Value of Queensland exports
20,000
18,000
16,000
14,000
Value of exports ($ M)
12,000
10,000
8,000
6,000
4,000
2,000
0
2001-02 2002-03 2003-04 2004-05 2005-06
Coking Thermal All coals
Regional Social Impacts of
Economic Growth Forum
Number of employees
19
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
20 000
0
83
19 /84
84
19 /85
85
19 /86
86
19 -8 7
87
19 -8 8
88
19 -8 9
89
19 -9 0
90
19 -9 1
91
19 -9 2
92
19 -9 3
93
19 -9 4
94
19 -9 5
95
No. of Employees
19 -9 6
96
19 -9 7
97
19 -9 8
98
Economic Growth Forum
Regional Social Impacts of
19 -9 9
99
Production
20 -0 0
00
20 -0 1
01
20 -0 2
02
20 -0 3
03
20 -0 4
04
20 -0 5
05
-0
6
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
Production '000 tonnes
Production levels and employment
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
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
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
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
Labour productivity
Tonnes/Employee/Year
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
7
8
9
0
1
2
3
4
5
6
-9
-9
-9
-0
-0
-0
-0
-0
-0
-0
96
97
98
99
00
01
02
03
04
05
19
19
19
19
20
20
20
20
20
20
Regional Social Impacts of
Economic Growth Forum
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 of
Regional Social Impacts
shift
Economic Growth Forum
Housing - Mackay
900 $180
800 $160
700 $140
Value of land sales ($000)
600 $120
Number of lots
500 $100
400 $80
300 $60
200 $40
100 $20
0 $0
2000 2001 2002 2003 2004 2005 2006
Lot production Regional Social Impacts of Median Value land sales
Dwelling approvals
Economic Growth Forum
Housing - Moranbah
$400,000 350
$350,000 300
$300,000
250
Average sale price
Number of sales
$250,000
200
$200,000
150
$150,000
100
$100,000
$50,000 50
$0 0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
Average sale value Number of sales
Regional Social Impacts of
Economic Growth Forum
Housing – Nebo
(Data sourced from Property Data Solutions)
Regional Social Impacts of
Economic Growth Forum
Median rents - Moranbah
700
600
500
400
Value
300
200
100
0
Nov-01
Nov-02
Nov-03
Nov-04
Nov-05
Nov-06
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Time Series
Median Weekly Rent
Regional Social Impacts of
Economic Growth Forum
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
Building activity, Belyando Shire
(Year to September 2006)
0.3
Percent of Queensland
0.25
0.2
0.15
0.1
0.05
0
New residential Total residential Total non- Total building Population
buildings building value residential value value ($000)
approved ($000) ($000)
Shire as % of QLD
Regional Social Impacts of
Economic Growth Forum
Building activity, Nebo Shire
(Year to September 2006)
Shire as % of QLD
0.06
Percent of Queensland
0.05
0.04
0.03
0.02
0.01
0
New Total Total non- Total Population
residential residential residential building
buildings building value value
approved value ($000) ($000)
($000)
Regional Social Impacts of
Economic Growth Forum
Building activity, 2005
3.5
3
2.5
% of state total
2
1.5
1
0.5
0
bo
ga
a
o
d
nd
y
on
ni
nd
ka
al
Ne
in
ou
pt
i
er
uh
ac
lya
ar
m
Em
ds
Ba
M
Du
Be
ha
oa
ck
Br
Regional Social Impacts of Ro
Economic Total building
Building approvals Growth Forum value 2005 population
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
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
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
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
Attitudes of Mackay population to
mining impacts on communities - 1
Mackay
100
90
80
70
60
Agree 2003
%
50
Agree 2006
40
30
20
10
0
or
k s ps es le re se se e
W ilie elo vic sty nt or ea r im
e Fa
m ev se
r lif e Ce rw nc
r
d
C
or es ss fo si se
M or
e yD & g ea
Ci
t s ov in e in te
cr
M ad pr us ng l ra
In
ro Im -B a ca
t ter ay Ch Lo
k
Be ac
M
Regional Social Impacts of
Economic Growth Forum
%
At
tra
En ct
0
10
20
30
40
50
60
70
80
90
vir f am 100
on ilie
m s
en
Co ta
lP
st ro
b ur bl
de em
ns s
fo
Su rc
pp ou
or nc
tl ils
oc
Ri al
si bu
ng si
ho ne
us ss
Ri
si e
ng pr
ic
tr a es
ffi -g
c- oo
St di
st d
Mackay
at ric
e tn
G ot
Economic Growth Forum
ov
Regional Social Impacts of
er sa
nm fe
Lo en
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lG oo
ov d
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nm b
en
t- g
oo
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jo
b
Attitudes of Mackay population to
mining impacts on communities - 2
Agree 2006
Agree 2003
Relocation options
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Medium Small mining Medium Small coastal I am I would not
minig town town coastal town town undecided move to any
of these
locations
Regional Social Impacts of
Economic Growth Forum
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.
Part-Worth
Length of Placement Not signif.
Jobs for Families $21,469
Health and Education Services $35,681
Housing and Rental Prices -$936
Standard of Public Infrastructure $14,971
Regional Social Impacts of
Economic Growth Forum
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
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
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
Regional Social Impacts and workcamps?
options between housing of
Economic Growth Forum
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
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
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
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
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
Regional Social Impacts over the longer term
Encourage better planning of
Economic Growth Forum
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
and economic impacts
enough for socialSocial Impacts of
Regional
Economic Growth Forum
