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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


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                                          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
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        or                                                                 es               ss              fo          si             se
    M                   or
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                                        Ci
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                                                                                                                                  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
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                                       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
                                   ca                    t-G
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                                               er                    jo
                                                  nm                     b
                                                      en
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                                                                                                                                                         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

				
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