regional social impacts of economic growth forum growth in the coal industry and economic and social...

Regional Social Impacts of Economic Growth Forum

Growth in the Coal Industry and Economic and Social Consequences

John Rolfe Central Queensland University


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)


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


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


Coal prices

0

20

40

60

80

100

120

140

160

180

Co

al P

rice

($A

US

)

HARD COKING

COKING OTHER

THERMAL


Value of Queensland exports

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2001-02 2002-03 2003-04 2004-05 2005-06

Val

ue

of

exp

ort

s ($

M)

Coking Thermal All coals


Production levels and employment

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

Nu

mb

er o

f em

plo

yees

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

Pro

du

ctio

n '0

00 t

on

nes

No. of Employees Production


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


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


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 ?


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


Labour productivity

Tonnes/Employee/Year

02000400060008000

1000012000140001600018000

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06


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


Housing - Mackay

0

100

200

300

400

500

600

700

800

900

2000 2001 2002 2003 2004 2005 2006

Nu

mb

er o

f lo

ts

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

Val

ue

of

lan

d s

ales

($0

00)

Lot production Dwelling approvals Median Value land sales


Housing - Moranbah

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rag

e sa

le p

rice

0

50

100

150

200

250

300

350

Nu

mb

er o

f sa

les

Average sale value Number of sales


Housing – Nebo (Data sourced from Property Data Solutions)


Median rents - Moranbah

0

100

200

300

400

500

600

700

Mar

-01

Jul-0

1

Nov

-01

Mar

-02

Jul-0

2

Nov

-02

Mar

-03

Jul-0

3

Nov

-03

Mar

-04

Jul-0

4

Nov

-04

Mar

-05

Jul-0

5

Nov

-05

Mar

-06

Jul-0

6

Nov

-06

Time Series

Val

ue

Median Weekly Rent


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


Building activity, Belyando Shire(Year to September 2006)

0

0.05

0.1

0.15

0.2

0.25

0.3

New residentialbuildingsapproved

Total residentialbuilding value

($000)

Total non-residential value

($000)

Total buildingvalue ($000)

Population

Per

cen

t o

f Q

uee

nsl

and

Shire as % of QLD


Building activity, Nebo Shire(Year to September 2006)

Shire as % of QLD

0

0.01

0.02

0.03

0.04

0.05

0.06

Newresidentialbuildingsapproved

Totalresidential

buildingvalue

($000)

Total non-residential

value($000)

Totalbuilding

value($000)

Population

Pe

rce

nt

of

Qu

ee

ns

lan

d


Building activity, 2005

0

0.5

1

1.5

2

2.5

3

3.5

% o

f st

ate

tota

l

Building approvals Total building 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


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?



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



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


Attitudes of Mackay population to mining impacts on communities - 1

Mackay

0

10

20

30

40

50

60

70

80

90

100

More W

ork

More Fam

ilies

City D

evelops

Better

road

s & se

rvice

s

Improv

es lif

estyl

e

Macka

y-Bus

iness C

entre

Changin

g for

wors

e

Loca

l rates

incre

ase

Incre

ased

Crim

e

%

Agree 2003

Agree 2006


Attitudes of Mackay population to mining impacts on communities - 2

Mackay

0

10

20

30

40

50

60

70

80

90

100

Attract

fam

ilies

Enviro

nmen

tal P

roble

ms

Cost bur

dens

for c

ouncil

s

Suppo

rt loc

al bu

sines

s

Rising

hou

se p

rices

-goo

d

Rising

traf

fic-d

istric

t not s

afe

State

Gover

nmen

t-Goo

d job

Loca

l Gov

ernm

ent-go

od jo

b

%

Agree 2003

Agree 2006


Relocation options

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Mediumminig town

Small miningtown

Mediumcoastal town

Small coastaltown

I amundecided

I would notmove to any

of theselocations


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


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


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


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?


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?


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?


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


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.


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


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 growth in the coal industry and economic and social...

Documents

economic effects

economic stimulus1

environmental impacts

townsocial impacts people

aspects of coal industry

growing industry sucks

queensland govt

service industries