The Utah Development Company first came into this region in 1972 and built most of the Central Queensland towns—Murrumba, Dysart, Glenden … What changed was a focus on the bottom line—a focus via mining companies, as they became more internationalised, less and less on regional communities and more and more on their bottom line.
Mining impacts on the environment and land, as well as on communities. The resources are removed from the environment by private companies for the purposes of sale, making profits for the companies who mine them. As such, mining companies secure and maintain permissions to extract resources, as well as to access the land, sea or waterways involved in the extraction.
As well as needing a license to explore and extract the resources, mining companies must secure a ‘social license to operate’. Social license to operate has been defined as an ongoing acceptance of a project by the community and other important stakeholders.
This chapter explores mining’s social licence to operate in regional areas. It considers the impacts of the use of fly-in/fly-out (FIFO) and drive-in/drive-out (DIDO) workforces on companies’ social licence to operate and looks at the trend away from direct employment towards the use of contracted casual labour employed through labour hire companies.
The chapter looks at the interactions between mining and agriculture and landholders, and considers the types of social licence agreements that exist in various parts of Australia and the roles of local, state and federal governments in making agreements.
Finally the chapter addresses the question of whether current agreements are sufficient to ensure mining is beneficial for regional communities, and looks at the Canadian ‘Towards Sustainable Mining’ framework as a possible model.
FIFO/DIDO and local workforces
The issue of FIFO work practices was discussed at length in the report of the 2013 House Standing Committee for Regional Australia inquiry into the use of fly-in, fly-out workforce practices in regional Australia.
The ‘Cancer of the bush’ report made 21 recommendations, including:
increasing funding for FIFO towns;
conducting research into FIFO practices and populations;
addressing the need for supply for affordable housing in resource communities;
reviewing various taxes; and
funding health initiatives.
The federal government response was provided in June 2015 and of the 21 recommendations, 12 were noted, five were not agreed and only four were agreed to. The response stated that FIFO work practices are ‘a legitimate way for employers to meet their skills needs, particularly in remote locations’ and, ‘that FIFO work is preferable for some employees in a range of industries’.
The intention of the current report is not to repeat information presented in the 2013 report. However, the Committee heard evidence from many individuals and organisations about the impacts of FIFO, and presents some of the most relevant evidence here.
FIFO is particularly prominent in Western Australia, where there are 96,200 people working in the mining industry with an estimated 63 per cent of that workforce being FIFO.
Queensland witnesses also felt FIFO was an issue. Isaac Regional Council stated that FIFO practices reduce the local consumer base which would support local businesses.
A number of witnesses told the Committee that FIFO practices often require people to live in major cities in order to be employed in the mining industry.
Mr Ryan Hough from Lakes Electrical Distributors Kalgoorlie said his brother, who currently lives in Perth, had expressed the wish to move back to Kalgoorlie, but could not because his mining work requires he fly in and out of Perth.
Mr Owen Pike from the Northern Territory Chamber of Commerce pointed out that FIFO workers for mines in that territory were not sourced from urban areas from Darwin, but were being sourced from capital cities in other states where managers live and have relationships with employment contracting companies. He said the loss to the Northern Territory of payroll taxes from this practice was significant.
Mayor Greg Williamson from the Mackay Regional Council pointed out that the use of FIFO incentivises living in capital cities which means lost revenue for regional communities in the form of rates and spending at local businesses.
The Greater Whitsunday Alliance also stated that FIFO practices have a flow on negative effect on regional economies, preventing local business from developing capacity to service the mining sector and wider economy. These businesses then cannot provide support and training to local residents which lead to stagnation of regional communities.
Mr Paul Flynn from Whitehaven Coal said that FIFO workforces have less commitment to the communities they work in. He said:
The very things that go into making up a community and society—families, sports and services—wouldn’t be as incentivised to move into the region as when you have a residential workforce.
Dr Kim Houghton from the Regional Australia Institute stated he understood the economic reasons behind mining companies moving to a FIFO model from the older ‘company town’ model but that this model was detrimental to regional communities from a social and economic point of view. He added that the social benefits of mining have shifted to urban centres since the FIFO model began.
Barriers to local employment
The Committee received evidence that one of the major barriers to reducing FIFO work practices was the lack of ‘liveability’ of regional areas.
Dr Houghton said that the difficulty in attracting workers to live in remote areas was why wages for these jobs are so high. Regional councils in places like Port Hedland and Karratha have been trying to improve on their ‘liveability’ to attract workers to live there.
Dr Houghton defined ‘liveability’ as a combination of cultural vibrancy and economic diversity. Health and education services are also major factors in why people choose to live in certain places.
Ms Jeanette Hasleby from Roy Hill said the reason for the use of FIFO at its mine site was due to the remoteness of its operations as well as the lack of available land and high cost of building within Port Hedland at the time of Roy Hill’s construction.
Ms Linda Dawson from Rio Tinto said a significant reason why Rio Tinto uses a FIFO employment model is to support where its workers choose to live.
A number of people and organisations gave evidence to the Committee about ways they had reduced FIFO in regional areas. This included:
negotiations between local councils and mining companies;
incentives from mining companies for their workforce to live close to their workplace; and
mining companies allowing more flexibility for their employees to move between different work models.
Councillor Gae Swain from the Gunnedah Shire Council said the Council had taken a firm anti-FIFO stance in their region, saying that this improved the social aspects of the community.
Mr Stephen Galilee from the NSW Minerals Council reinforced that there is very little FIFO in New South Wales, with 80 per cent of the workforce living close to mining operations. There is some FIFO workforce in more remote areas like Broken Hill and Cobar but predominantly mining workers live close to their work places.
Mr Galilee said this lack of FIFO workforce was largely due to New South Wales mining companies being ‘established members of the community’. As a result, the wealth generated by mining tends to stay more local than in other Australian states.
Mr Paul Flynn from Whitehaven Coal echoed this, saying the company does not support FIFO employment models and 75 per cent of its workforce resides locally. This figure is something Whitehaven is looking to improve further.
Mr Flynn said there was little need for FIFO due to the viable towns in the area. For instance, when the Maules Creek mine was established, workers were given support to transition into the community and encouraged to ‘put roots down’.
Mr Flynn was asked if this had made it difficult for Whitehaven to source labour. He conceded that it had initially been difficult, but training and upskilling the local workforce had improved these shortages.
Also in New South Wales, Glencore encourages its employees to live locally to their operations. Approximately 40 per cent of Glencore’s employees in New South Wales live in the township closest to their workplace, the remaining 60 per cent live further away but are able to commute daily to their workplaces.
Mr David Patterson from Glencore Coal stated that in Queensland, the townships of Tieri and Glenden were created for its Oakey and Newlands mines. Glencore has had a strong role in encouraging their workers to live in these communities by subsidising rent. In Clermont, Newlands and Collinsville rent is $30 per week for a Glencore employee.
Origin Energy Limited also has strong policies about the use of FIFO workforces. It submitted that having its workforce living and residing in areas close to its operations supports regional communities and their economies.
Origin uses the following to encourage employees to live closer to their workplaces:
employees living within 150km of their worksite receive an allowance worth 10 per cent of their employment package;
workers in regional Qld who live within a 45 minute drive of their workplace receive $15,000 per annum;
FIFO and DIDO staff are encouraged to reside locally (as opposed to in workers camps or temporary accommodation) with a one off payment of $5000 as well as the above allowances.
Origin stated it has also changed its recruitment practices to include local advertising of regional roles, prioritising the employment of locals and the development of local talent pools for needed skills.
In November 2017, Origin closed down its temporary workers accommodation facilities at Talinga and Condabri in response to feedback from local councils. Those workers were resettled in Chinchilla and Miles with the assistance of the allowances outlined above. Approximately half of those employees now reside permanently in the area. This had initially been a challenge for their employees due to the change in lifestyle but over time the feedback became positive.
Mr Mark Schubert from Origin Energy stated that Origin’s decision to relocate workers to Miles had made a large difference to the community and he had anecdotally received a lot of positive feedback.
Origin works with local councils to improve the amenity of the towns its employees work in. This had been a need particularly in Miles but less so in Roma which was a more established community.
When asked if regional communities are better off with FIFO or locally sourced workforces, Mr Schubert said that the needs of each individual community need to be taken into account. Origin had considered building accommodation in Wallumbilla and Yuleba but had found, after consulting with the local councils, that it would be a detriment to those communities. Any attempts to move to a local workforce need to be done in a planned and staged manner in order to avoid too much stress on local resources and infrastructure.
Ms Dawson gave evidence that Rio Tinto had built and maintained several towns in the Pilbara to support its workforce living the in the region. Roughly one third of Rio Tinto’s workforce lives in the Pilbara, with another 2,300 employees flying in and out from other regional Western Australian areas.
Rio Tinto has used a regional FIFO program since 2006, allowing employees to commute from various regional towns, rather than just from Perth. Rio Tinto’s Indigenous employment capacity has also improved through similar programs flying out from Broome and Derby.
Rio Tinto also has a program called ‘site switch’ which allows its workers to move between FIFO and residential work models. Ms Dawson said the program was about giving employees the ability to make the right choices for them and their families.
Mayor Grant Henley of the City of Busselton (a major source of Rio Tinto’s FIFO workforce) echoed the success of Rio Tinto’s program, saying that it had been a great benefit for their community and allowed them to expand to one of the largest regional local governments in Western Australia.
Mayor Baker from the Isaac Regional Council said there needs to be a commitment from both government and the mining sector to make regional centres more attractive to live in with a view to moving away from FIFO and DIDO work practices.
Dr Houghton said tax concessions for living in regional areas might help to decrease FIFO work practices and incentivise people to live in regional areas.
Fringe Benefits Tax
In Western Australia, Mayor Peter Long from the City of Karratha gave evidence that the Fringe Benefits Tax incentivises companies to use a FIFO workforce. He explained that a company can fly people into the Pilbara and accommodate them, getting a tax deduction for those costs. A local business, on the other hand, may try to subsidise their employee’s accommodation and will have to pay fringe benefits tax on that accommodation. Mayor Long viewed this as unfair and stated the federal government needs to makes changes to the law in order to ‘level the playing field’.
This view was echoed in Kalgoorlie by Mr Nicholas Fardell and Mayor John Bowler. Mayor Bowler said one of the unintended consequences of the Fringe Benefits Tax was the reduction in residential development in regional areas. He reiterated that the effect of current taxation was to incentivise companies to use FIFO and that this issue needed federal government intervention.
The Australian Tax Office website states that the Fringe Benefit Tax may apply when a business provides accommodation to their employees rent-free or at a reduced rent where that accommodation is their usual place of residence.
This issue was also raised in the 2013 ‘Cancer of the bush’ report, which recommending changes to the Fringe Benefits Tax Assessment Act 1986 (Cth):
removal of impediments to the provision of residential housing in regional communities;
removal of the exempt status of fly-in, fly-out/drive-in, drive-out work camps that are co-located with regional towns; and
removal of the exempt status of travel to and from the workplace for operational phases of regional mining projects.
The federal government agreed with the recommendation and said that these tax arrangements would be considered in the White Paper on the Reform of Australia’s Tax System.
As at November 2018, the recommended changes have not been made to the Fringe Benefits Assessment Act 1986 (Cth).
Casualised labour and labour hire companies
The Committee received submissions from workers unions detailing a trend towards workforce casualisation by large mining companies, through the use of labour hire companies.
Mayor Anne Baker said casualisation of the workforce has impacted the job market in the Mackay region, with permanent jobs being replaced with casual or contract positions flown in from Brisbane or Townsville to workers camps. She said the region missed out on benefits from local employment through taxes and purchases at local businesses.
The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and the Electrical Trades Union (ETU) noted that mining companies started moving from permanent employees to a casual labour hire workforce in 2012 at the time of the mining downturn.
The CFMMEU submitted that:
research indicates 33 per cent of underground mine workers and 44.5 per cent of open cut mine contractors are now casualised labour hire workers;
labour hire workers are paid on average 30 percent less than permanent workers (even taking into account casual loading, and considering unpaid leave arrangements);
82 per cent of mining industry job advertisements on Seek.com were placed by labour hire contracting companies; and
72 per cent of workers on labour hire contracts reported they are worse off than their previous employment in regards to pay and conditions.
The Minerals Council of Australia (MCA) was questioned about the use of casual labour hire and stated that 14 per cent of labour hire workers are considered to be casual workers. Mrs Tania Constable said that this is an issue being considered by the MCA and its members.
The CFMMEU believes the reason for increasing labour hire employment to allow mining companies to cut the wages and conditions of their permanent employees.
The ETU noted the following impacts on its members in Queensland from the move to labour hire employment:
the hourly rate for Electricians special class fell from $42 per hour to $25 per hour, being a 40 per cent reduction;
all employment was moved to casual employment despite no change in hours worked and conversion from casual to full time work was stopped;
local workers were actively blocked from jobs;
apprentices and trainees were no longer engaged and there was no access to training or skill development for ongoing employees;
there were difficulties getting appropriate safety equipment;
the preferred location of employees was typically Brisbane or Sydney and drive-in, drive-out work arrangements were introduced on mass; and
employee rosters were extended ‘beyond the 21/7 model’.
The effect of these changes on ETU members was:
employees moving their families to major cities in order to maintain their employment;
employees were required to purchase their own flights and travel during days off;
workers were required to drive for 12 hours at the start and end of their shifts; and
employees were afraid to speak to their union representatives, raise safety concerns or ask for safety equipment due to the ‘insecure nature of their employment’.
The Australian Workers Union provided a case study of the effects of workforce casualisation on the town of Cobar. Cobar has a population of 4,647 with five operational mines in the area, mining gold, copper, lead, zinc and silver. The only residential mine in the region is the Aurelia Metals owned Peak Gold Mine, which has a workforce of 130 people.
Aurelia Metals engaged Pybar Mining Services, a large mining contractor, to move their workforce from Aurelia’s employment to Pybar’s. The AWU believes this is an attempt to reduce worker’s salaries and remove conditions such as redundancy and leave entitlements.
Pybar Mining intends to add 60 employees to the mine with no guarantee it will hire from the local population.
The AWU submitted that:
… the replacement of the workforce by an external workforce would almost certainly see the town of Cobar into recession, and an unemployment rate in excess of 12% (more than double the national average).
Both the CFMMEU and the ETU recommend changes to the Fair Work Act 2009 (Cth) that would redefine casual employment to be consistent with the common law definition and the Federal Court decision of WorkPac Pty Ltd v Skene (this should include provisions to specifically preclude ‘permanent casual’ work) as well as including provisions for casual conversion (allowing casuals to convert to full time work after six months).
The CFFMEU also recommends state governments consider attaching specific social criteria to the approvals of mine leases.
Mining and agriculture
Part of mining companies’ social license is to ensure it has proper approvals and community support to access agricultural land. This can be impacted by environmental concerns, competition for water, and ineffective consultation processes with land owners.
The NSW Minerals council provided the following examples of successful interactions between mining and agriculture:
Edderton is a property owned by BHP Mt Arthur Coal which is leased and is currently used for producing Wagyu and Angus beef.
In Central West NSW, the copper and gold mine Northparkes owns and operates a series of farms around their mine site. These farms produce canola, barley, wheat and field peas.
The NSW Minerals Council believes that the presence of successful farming operations so close to a mine site shows the minimal impact that mining can have on agriculture.
Mr Greg Owens from the Northern Territory Farmers Association was concerned about that contamination and biosecurity risks posed by the increased people and vehicle movement caused by mining activities. He argued there is a need for the Australian agriculture sector to keep its ‘clean-and-green’ image for their Australian and overseas markets and it can be difficult for famers to address contamination issues.
Mr Owens noted that the heavy rain which falls in the Northern Territory can lead to contaminated water from mining sites running into the agricultural and horticultural water supply.
Mr Owens also wanted mining companies to engage more with land managing stakeholders during the planning stage of a new mine so that stakeholders can maximise any benefits from the project.
Mayor Andrew Hope from the Liverpool Plains Shire Council stated that competition for water resources between agriculture and the mining sector, as well as fears of water contamination, were major issues. This was often exacerbated by long wait times for decisions about development approvals which Mayor Hope felt were detrimental to regional communities.
Mrs Patricia Duddy, a farmer from the Liverpool Plains, echoed this view, saying that agriculture’s need for water and fears about water contamination from mining activities were a great concern for the community.
Mr Mitchum Neave, Chair of the Red Chief Local Aboriginal Land Council, said that mining companies did not allow enough time for traditional owners to perform surveys and inspect land for significant Indigenous sites. He also felt that government should be doing more to ensure that environmental law and practices were upheld.
CE Smith & Co Chartered Accountants stated they have clients who have farms near mines that have found the dust and noise from mining operations has a large impact on their farming operations as well as their daily lives.
CE Smith & Co’s clients would like to see more engagement from mining companies with their neighbouring farmers as well as compensation payments for properties impacted by their close proximity to mining operations.
Compensation for gas extraction
The issue of mining’s interactions with agriculture is particularly prominent in the area of the natural gas and petroleum extraction industries.
The Australian Petroleum Production and Exploration Association Ltd (APPEA) conceded that there had been significant tension between the industry and the agriculture sector in the past:
There were complaints of a lack of mutual understanding and respect, a short-term focus on development rather than first building long-term relationships, and breaches by the industry of the standards of behaviour expected by landholders.
APPEA stated that there had been changes within its industry and a determined effort to learn from previous mistakes. In Queensland, there is now a much more constructive approach to relationships between the natural gas industry and different stakeholder groups.
APPEA detailed how landholder payments are calculated in Queensland. Payments are based on the level of disturbance to the land, as well as the value of the affected land. This model provides consistent annual payments to landholders, and also allows landholders to be paid during the exploration phase, rather than waiting for extraction to commence, possibly years later.
APPEA provided the following information about the payment of compensation to land holders by its members:
in Queensland, $387 million in compensation was paid to landholders in the years 2011-17;
Santos has paid $11.1 million in compensation to landowners;
Origin has negotiated 167 conduct and compensation agreements in Queensland since 2012;
Australia Pacific Liquid Natural Gas (APLNG) has paid $50 million to landholders for compensation in the 2017-18 financial year;
APLNG’s total compensation to be paid over the 30-year terms of the 167 agreements will be $627 million; and
average compensation over the life of each well is $265,000.
Dr Malcolm Roberts from APPEA stated that APPEA’s member companies have almost 6,000 conduct and compensation agreements with 2,100 landowners in Queensland and attitudes towards coal seam gas exploration in the agricultural sector should not be ‘generalised’. Dr Roberts reported on the differences of opinion among farmers in relation to coal seam gas, and said compensation to landowners can be a steady income during times of drought.
Dr Roberts also said that gas exploration companies in Queensland do not ‘aggressively assert their rights’ to explore agricultural land because mining companies want to operate in a community on a long term basis, and it is not in their interests to work against landowner sentiment.
Mr Schubert echoed this view, saying agreements with landowners are more than a financial transaction but are about finding ‘mutual agreement’, adding that Origin does not have a ‘one size fits all’ model for these agreements.
Origin and APPEA were questioned about whether landowners should be paid using a model based on how much the well produces. Mr Schubert did not support this approach, saying such a scheme would have drawbacks:
any return would be related to the commodity price, leading to increased risk to the landowner;
the certainty of the current payment scheme allows landowners to plan their investments; and
returns are not currently dependant on the amount of product flowing from the well and are also protected if wells stop producing.
Social licence agreements
The Committee received evidence from many organisations and individuals about the importance of mining companies’ social licence to operate, what can cause this relationship to break down, and how it can be improved to the benefit of both mining companies and regional communities.
Mr Brian O’Gallagher of the Northern Territory Chamber of Commerce stated it was imperative that mining companies have a social licence to operate. He defined this concept as ‘giving value back to the regional and local communities you’re actually operating in’.
Capricorn Enterprise submitted that regional communities are less accepting of mining company activities in their areas due to the weakening of social license to operate. The factors affecting this perception include:
an increase in FIFO workforces;
increased traffic congestion and infrastructure degradation on roads and bridges due to increased mining activities;
upward pressure on wages as well as housing affordability and rentals; and
gouging of skilled workers.
Capricorn Enterprise also said that regional communities are now seeking greater investment from mining companies, having gone through the mining boom of 2013-10 and subsequent bust period.
Mr Pike said that mining companies currently advertise and promote their efforts to gain social license but communities have no way of policing whether they are actually following through on their promises. He said governments should ensure mining companies are accountable for what they have committed to.
Ms Stacey Cooke of the Gunnedah and District Chamber of Commerce and Industry said communities appreciate the contributions of mining companies, like sponsoring sporting teams, but the industry needs to provide more for the future of the region as well.
Mr Neil Lethlean from Capricorn Enterprise said mining companies could contribute a lot more to improve their social license to operate and listed: supporting training; apprenticeships and Indigenous employment; decentralisation of their offices to regional centres; implementing local procurement programs and improving their regional supply chains; as well contributing to local business growth and social infrastructure.
Mr Ric Gros from METS Ignited said a code of conduct for social license to operate should be strongly encouraged but hoped it would not need to be legislated.
From an industry perspective, Ms Tania Constable of the Minerals Council of Australia said the industry ‘takes their social license to operate very seriously’ while also needing to remain competitive at a global level.
The Minerals Council of Australia stated that social investment by its member companies had expanded over time, from sponsorships and donations to include long term investments and partnerships in regional communities.
State government requirements
A number of people and organisations gave evidence to the Committee about various state government frameworks to encourage mining companies to expand their social license to operate.
The Regional Australian Institute stated that social impact assessments are required as a part of state governments’ environmental impact assessments process. However, it submitted that the disappointing outcomes for local communities from many mining projects approved under these arrangements suggest this approach is insufficient.
The Cessnock City Council submitted that state governments had previously issued mining leases with conditions that companies support community infrastructure. However, there was little support for the future economic and social resilience of regional communities after mining activities ceased.
In most states, the state government makes decisions about whether private or public projects require government management, and assesses various factors to determine if the project may proceed, including the cumulative impacts. Cessnock City Council stated that cumulative impacts are a major concern but are not taken seriously by mining companies. It submitted that cumulative impacts should be one of the major assessment criteria for project approval.
In New South Wales part of the approvals process for major mining projects is that a mining company ‘may’ form a Community Consultative Committee, but this not a requirement.
Mayor Andrew Hope of the Liverpool Plains Shire Council said he was a member of the Shenhua and BHP Community Consultative Committees and had found the process ‘slow and bureaucratic’ with little information going back to the community through that model. He said the approvals process for mines needs to be more transparent.
The Strong and Sustainable Resource Communities Act 2017 (QLD)
The Queensland government has a number of initiatives in place to increase mining companies’ social license to operate.
In 2013, the Queensland government started requiring companies to adhere to the Queensland Resources Council Code of Practice for Local Content as a part of their Environmental Impact Statement. However, the broad definition of ‘local’ used in this document means that any Australian or New Zealand business can be counted as local.
More recently, the Queensland government has introduced the Strong and Sustainable Resource Communities Act 2017 (Qld) (the Act) which is designed to ensure residents of communities near large resource projects benefit from these projects. A ‘large resource project’ is defined as:
a project where an environmental impact statement (EIS) is required or holds a site specific environmental authority under the Environmental Protection Act 1994 (Qld); and
a project with 100 or more workers (or a smaller workforce if be decided by the Coordinator General).
A ‘nearby regional community’ is defined as a town within 125km radius of the main access to the project and has a population of more than 200 people. The Coordinator-General may decide on a greater or lesser radius or a smaller population.
The Act requires large resource projects to prepare a social impact assessment which is to be done in consultation with stakeholders. The social impact assessment requires the project to develop management plans for worker management, housing plans, local procurement, community wellbeing and stakeholder engagement.
The Act also prohibits a 100 per cent FIFO workforce.
The Local Government Association of Queensland strongly supported the introduction of the Act.
Mayor Greg Williamson from the Mackay Regional Council said the Act has acknowledged that the FIFO work model is harmful to regional communities and made the mining industry recognise this too.
Mayor Anne Backer from, the Isaac Regional Council said that the Act was too new to know if it is positively affecting regional communities, though she has received anecdotal evidence that living arrangements are changing, but this may be due to the mining upswing rather than the Act.
The Mayor suggested the Queensland Act could be a model employed by the federal government and represents an improvement over previous models and voluntary codes.
Ms Millicent Bradley-Woods, also from the Isaac Regional Council pointed out that one limitation of the Act is that it only prohibits 100 per cent FIFO workforces. Mining companies can comply with the Act by hiring only one local employee.
The Isaac Regional Council stated that regulation such as this Act is a positive step to reducing FIFO workforces but the federal government should also support regional liveability though:
ensuring accessible housing, including rental accommodation;
introducing industrial laws which prevent 100 per cent FIFO work forces and amending existing laws to foster rostering which is more family friendly;
updating taxation zone allowances for residents living in regional areas; and
reducing air travel costs to and from regional communities.
The Canadian model
The Committee heard evidence about the Canadian ‘Towards Sustainable Mining’ program. This model does not incorporate Canadian government legislation, but is a framework developed and administered by industry.
Towards Sustainable Mining was established by the Mining Association of Canada in 2004 and participation in this program is compulsory for all members of the Association. It has both internal and external reporting requirements for member companies.
Towards Sustainable Mining’s main objective is to allow ‘mining companies to meet society’s needs for minerals, metals and energy products in the most socially, economically and environmentally responsible way’.
The Towards Sustainable Mining model requires member companies to have a ‘Community of Interest Advisory Panel’, which is a group comprising mining company members, Indigenous and community groups, labour and financial organisations, and environmental and social non-government organisations, in order to discuss ‘issues of mutual concern’.
The Towards Sustainable Mining model does not have a focus on regional businesses or economies.
Mr Lethlean drew the Committee’s attention to this model, proposing it as a successful corporate social responsibility model. He felt that most mining companies in Australia do not prioritise social license to operate, and that this framework might provide a model for Australia.
FIFO/DIDO work practices
The negative impacts of FIFO and DIDO work practices on mental and physical health, community cohesion and community safety have been well-documented. But FIFO and DIDO also represent opportunities to the economies of many mining region towns.
The Committee noted the importance of not having a ‘one size fits all’ approach to FIFO. In some cases, mining companies rely on FIFO workers due to the extreme distance of their mining operations from any sizable working population.
The Committee also noted FIFO practices that were helping to build regional areas, such as the relationship between the town of Busselton in Western Australia and Rio Tinto, which flies workers from the town to its mines.
The Committee noted however the damaging effect of FIFO and DIDO work practices on other communities, their economies, and how these practices affect the social license of mining companies to operate. Also concerning were the reports from a number of witnesses that in order to work for the mines, people were being forced to move from regional towns to major cities from which the FIFO workforce flies out.
The Committee encourages mining companies to look at improving the flexibility of work practices in regards to FIFO. Being able to fly in and out from different and more regional locations would allow their employees to live closer to their families and contribute more to regional economies.
The Committee commends the work of Origin Energy and other companies providing financial incentives for employees to live permanently in areas close to their workplace. Origin’s consultation with the communities of Miles and Chinchilla is a model that could be emulated by other companies.
The Committee was concerned to hear that Australia’s Fringe Benefit Tax system may be acting to incentivise companies to use FIFO work practices instead of locating workers in communities near their mines.
The Committee notes that this issue was explored in the 2013 ‘Cancer of the bush’ report. That report recommended changes to the Fringe Benefits Tax, however no changes have been made. The Committee believes the federal government should revisit this issue.
Casual labour hire
The Committee was concerned by the increased use of casual labour hire by mining companies and the associated increases in FIFO and DIDO workforces associated with this practice. Workers who are employed under this model face financial difficulty and are often forced to move to capital cities for work, creating a ‘second class’ of mining employee.
The Committee understands that during the downturn the mining industry was looking for ways to economise, but these kinds of work practices can be damaging to communities, impacting on companies’ social licence to operate, and should be reviewed.
The Committee is watching this issue closely and supports moves to legislate to prevent further casualization and outsourcing of mining workforces.
Mining and agriculture
The interaction between mining and agriculture attracts a great deal of commentary and opinions. However, the Committee did not receive a lot of evidence from the agricultural sector during this inquiry.
The Committee notes positive examples of cooperation and co-existence of mining and agriculture, as well as recognising negative impacts of mining, such as competition for water resources, dust and noise pollution.
The Committee notes the gas industry’s evidence about its work to improve relationships between the industry and landholders. However, the Committee also notes that the coal seam gas industry has failed to engage successfully in New South Wales, and that coal seam gas still has a very poor public image in that state.
The Committee explored the possibility of land owners being compensated based on the production levels of wells on their land, rather than receiving a set annual amount.
Some members of the Committee believe that such an approach would make landholders and agricultural communities more amenable to the idea of coal seam gas extraction in their regions. The Committee strongly suggests the industry consider this approach for future agreements.
Social license models
The Strong and Sustainable Resource Communities Act 2017 (Qld) represents a step in the right direction for enforcing corporate social responsibility in Australia but the Committee suggests the Act could be strengthened. For instance, a mining company should not be able to satisfy the requirements of the Act by hiring a single local worker.
The Act should include provisions to address community concerns about levels of local procurement and barriers to entering the mining services sector for local businesses.
The Committee also notes the relative newness of the Queensland Act and encourages the Queensland government to conduct a thorough evaluation of its impacts on regional communities. Provisions to strengthen the Act should be considered by the Queensland government, informed by the evaluation.
Other states and territories, especially New South Wales, should explore if a similar Act would be appropriate in their jurisdiction.
The Committee notes the Canadian resource sector’s ‘Towards Sustainable Mining’ framework. The Minerals Council of Australia should consider developing a similar social license framework for the mining sector in Australia.
Any Australian framework must include provisions for local procurement, fair payment terms and ethical contracting practices, best practice in employment and training, and mining companies’ responsibilities in terms of planning for the long-term sustainability and viability of mining towns and regions.
In addition, the federal government should advocate though the Council of Australian Governments that the state and territory governments develop a consistent framework for negotiating mining agreements which would include minimum standards for resource companies in relation to securing and maintaining a social license to operate, and include the development of social impact assessments as part of granting a mining license.
The Committee recommends the Federal Government review the provisions of the Fringe Benefits Tax that relate to businesses providing housing for their workers. The aim of the review should be to remove the existing incentives for companies to use fly-in/fly-out workforces as opposed to providing housing for their workers to live in regional communities close to mines.
The Committee recommends the Federal Government conduct a review into the use of casualised workforces and labour hire companies in the mining and other sectors with a view to amending the Fair Work Act 2009 (Cth) in order to prohibit the move towards replacing directly-employed, full time workers with ‘permanent casual’ employees, and other similar casualised employee types.
Changes to the Act should also include provisions that guarantee that employees have a legal right to convert from casual to permanent employment after a set period of time.
The Committee recommends the Federal Government consult with state and territory governments on existing legislation and frameworks that govern the issuing of licences for gas extraction. Frameworks should be amended to ensure:
Transparency: affected landholders should be informed of the gross production of wells on their land;
A fair return: affected landholders should be entitled to a share of the revenue produced by the well/s, of no less than 2 per cent; and
Dispute resolution: affected landholders should have access to an accessible arbitration process to settle disputes with companies.
Similar measures should be considered for landholders whose land is affected by other extractive industries.
The Committee recommends the Federal Government consult with state and territory governments on existing legislation and frameworks that govern the issuing of licences for resource extraction, with a view to developing a national framework to take to the Council of Australian Governments (COAG) for endorsement.
The framework should set minimum standards for mining and resources companies in relation to securing and maintaining a social licence to operate in regional areas, including the requirement to develop social impact assessments for their projects.
Hon Barnaby Joyce MP, Chair
28 November 2018