ONLY two bitumen roads cross the 1862-kilometre border between Western Australia and its eastern neighbours – one close to the coast in the north and one close to the coast in the south. In between is seemingly endless desert. It could be one of the easiest borders in the world to secure, if it came to that.
It seems that the mining industry (largely based in the West) is not satisfied with merely handing over 83 per cent of their profit to foreign shareholders, they want a stream of foreign workers to help them dig it up – as this week’s fury over special arrangements for miners to import foreign labour reveals.
Well, maybe the Western Australian mining industry could have a fully non-Australian labour force, with Western Australia seceding.
Indeed, in 1933 Western Australians voted 68 per cent Yes in a referendum to secede. But it was never put into effect.
In 1900, it was uncertain as to whether Western Australia would join the Commonwealth of Australia. The preamble to the Commonwealth of Australia Act of the British Parliament begins: “Whereas the people of New South Wales, Victoria, South Australia, Queensland, and Tasmania . . . .”
Western Australia is mentioned as a Johnny Might Come Lately to be allowed in if its people agreed at a referendum before the proclamation of the Act set for 1 January 1901. They voted in July 1900 with a 69 per cent Yes – lower than the average elsewhere of 75 per cent.
So, the West has always been a bit on its own.
Quite a few in the mining industry and some Western Australian Ministers have called for secession. (Incidentally, I wonder if such calls would amount to sedition under John Howard’s over the top anti-terrorism laws.)
Typically, they say Western Australia would be better off on its own. It is extremely unlikely to happen, but it is worth musing over because it reveals how unrealistically self-important the mining industry is and what masterful propagandists they have been in convincing the public and governments to give them their way – this week’s foreign-worker incident being the most recent example.
The mining boom has put a lot of strain on the Australian economy. Much of the boom has been caused, not by the production of greater amounts of minerals, but by the ever-increasing amounts of money foreigners are prepared to pay for them.
In order to keep inflation in check, the Reserve Bank has had to keep interest rates higher than otherwise because of the boom. It mentioned the mining boom and commodity prices in every decision to raise rates in the two years from May 2006 when it started raising rates before the global financial crisis ended the run.
So the mining industry caused households and other businesses to pay higher interest.
It wouldn’t be so bad if the boom resulted in concomitant wealth going to Australian households. But it does not – 83 per cent of mining profits goes to foreign owners of mining operations in Australia.
The industry has been masterful if painting a picture of a large Australian industry, employing lots of Australians, contributing lots of tax so Australians can enjoy better health, education and so on.
But a survey last year by the Australia Institute revealed the disjoin. (It had a random sample size of 1370, so you can be fairly confident of its accuracy.)
The survey shows (on average) Australians believe mining employs 16 per cent of the workforce (reality is 1.9 per cent); they believe it accounts for 35 per cent of the economy (reality is 9.2 per cent); they believe it is about half foreign-owned (reality is 83 per cent).
Those misconceptions can only be created by deliberate media manipulation – through advertising and pushing the message to media owners and journalists.
The campaign against the original resource tax was its apogee. The miners spent a mere $22 million in that campaign. The result was a change to the tax that will result in revenues cut from the original $200 billion of the $600 billion expected in profits over the next 10 years to just $38 billion.
No wonder the foreign shareholders stumped up the $22 million to deprive the Australian taxpayer of $162 billion over 10 years.
The average rate of corporate tax in the mining industry is 14 per cent, against the standard company rate of 30 per cent. This is because it has persuaded governments to give it generous tax breaks on research and development and depreciation.
The argument that Western Australia pays more than its fair share of tax and is subsidising the big states of NSW and Victoria and the struggle states of Tasmania and South Australia is nonsense.
It drags its heels on tax. For most of federation, the east subsidised the West, and you could argue it still does, even though in recent years Western Australia has received a tad less than average per-head distribution of federal funds.
The miners like to talk about multiplier effects and exaggerate the importance of their industry to other industries. But every industry can argue multiplier effects. The fact is they all help each other. Mining is no different.
We should start calling the miners’ bluff. As Norway has done, we should set the tax rate on the mineral wealth at a sensible level and establish a prudent wealth fund for the future.
At present we are getting the worst of both worlds. Foreigners are taking the lion’s share of the profits of a finite resource and we will have nothing to show for it. And the mining boom has imposed a lot of strain.
What might secession bring? Western Australia would have its own currency. That currency might well go through the roof as the Western Australian Reserve Bank raises interest rates to moderate the economy. Meanwhile the Australian currency would fall, allowing manufacturers and the tourism industry to thrive.
Instead of a two-speed economy we would have two economies each with its own speed.
Of course, Western Australia would have to take its off-shore islands, notably Ashmore Reef and Christmas Island and all the refugees than come with them.
Moreover, Western Australians investing into Australia – especially its media — would have to get approval of the Foreign Investment Review Board.
Western Australia would have to provide its own defence force.
And both countries would have to establish border controls on those two bitumen highways.
CRISPIN HULL
This article was first published in The Canberra Times on 2 June 2012.
Great article.
For the great mass of ordinary Australians, the mining boom has been all pain and little gain. It has led to an inflation boom across the country, resulting in a huge rise in the cost of living. The Federal Government has only made matters worse by upping the immigration intake in an effort to stem wage growth. So, not only have living costs outstripped wage growth, our cities and major towns are now buckling under the pressure of all these extra imported people. Every day ordinary Australians feel the affects of this in the form of worsening urban congestion, housing shortages, overburdened infrastructure, social dislocation, etc. etc.
As Monash demographer Bob Birrell has found, all this immigration is poorly targeted. The vast majority of new immigrants head directly to our already-overcrowded, immigrant-soaked capital cities, bypassing those mining regions that are supposedly facing labour shortages. Birrell has noted that Australia could cut its immigration intake in half and still provide plenty of workers to service the mining boom. Source
Paul Cleary clearly enunciated how we have had Too much luck in the book by that name.
The end of growth is here, everything is finite and collectively we are being fooled into a position of rule by an ugly and grossly wealthy manipulative few who are the voice of visionless politicians. That the lives of 9 out of 10 people are doomed to death this century as a result of pollution of the planet matters not to these greedy miners.