Most of us will be familiar with the tell-tale signs of a stagnant economy: jobs being shed across industries, people starting to reduce debt, vacancies dotting shopping strips. Frugality holds few charms. At the time of writing, my home state of Victoria—along with New South Wales, South Australia and Tasmania—is said to be on the brink of recession.
It was the start of summer when I decided to fly to Karratha, Western Australia, armed with the proceeds of my tax return—a licence for fiscal imprudence—and a notional interest in what commentators alternately call the ‘patchwork’ or ‘two-speed economy’. My real interest, however, lay beyond the figures and in the mining towns themselves: what would life be like, I wondered, in towns cushioned by the mineral rush?
Tony1 has come to pick me up from the airport and take me on the 16-kilometre trip to Dampier. His psychedelic Kombi van is cheerfully emblazoned with a bumper sticker that says ‘Fly in, fly out of the Pilbara / Fit in or fuck off’. He has been working on a fly-in, fly-out basis for more than seven years, spending four months in Dampier followed by three weeks in Bangkok. A long-time resident of Dampier, he hopes to expand his hospitality operations to Thailand, where people ‘like to do the same things we do, kick back and enjoy what life has to offer, that sort of thing’. He has the sort of laconic Australian sensibility that is foreign to large metropolises but is enshrined in our national folklore and especially in our tourism brochures.
‘I [have] lived everywhere in Australia and I honestly have no problems with the east,’ Tony begins, once I tell him I’m from Melbourne, ‘but there’s no pretentiousness up here, there’s no bravado. We have millionaires, we have yachts, but everyone wants to help each other out, we all want to help each other get ahead.’ He explains that his business makes a point of hiring backpackers (mostly Dutch, French and German girls) as front-of-house or bar staff because he likes the ‘international feel’ it lends to the town. And it’s not just Tony who is hiring foreign labour; retailers, mining and construction companies, local government and restaurants throughout the Pilbara seem to have made the most of the bounty of exoticism, where twenty-somethings, particularly from continental Europe, are drawn to high wages and the romanticism of living in the harsh, unrelenting outback. ‘There’s no place quite like it,’ Tony says, ‘where you can live the high life in one of the most beautiful areas of the world with mates you’ll have for life. The politically correct can go fuck themselves.’
Fringed by pretty palm trees, Dampier seems a curiously misplaced idyll amid endless reams of red dust and salt pans that make up the landscape of the drive west of Karratha. The town entrance is marked by a giant blackboard for community announcements—when I drive through, someone has written in block letters ‘Happy 52nd Birthday Deb!!’—as well as the statue of Red Dog, the famed kelpie–cattle dog cross whose travels throughout the Pilbara were immortalised in the book by British author Louis de Bernières and the recent movie of the same name, which was financed jointly by Woodside Petroleum and Rio Tinto. Like all company mining towns, Dampier has an unflinching regularity in its civic planning, made possible by the fact that Hamersley Iron—now a wholly owned subsidiary of the Rio Tinto Group—constructed it as a single-purpose iron ore processing centre and port in 1965. It comprises a ‘core’ with a supermarket, a police station, a church, a Thai restaurant and the salubrious Dampier Mermaid Hotel (which promises patrons a new ‘skimpy mermaid’ each week), while industrial parks are located on its outskirts.
This rigid layout lends the town the specificity and charm of a Lego model village. In gently undulating cul-de-sacs there are rows of modest, visually unremarkable two- and three-bedroom homes that collect rents, on average, of $1650 to $1900 a week. (In comparison, the average rental price of a three-bedroom home in Perth is $460 per week.) There’s no public transport, except for a community bus powered by Rio Tinto that runs a forty-kilometre journey three times a week from Dampier to Point Sampson, a seaside resort on the Pilbara coast, taking in the towns of Karratha, Roebourne and Wickham. A preponderance of European accents thrive in spite of the town’s relative isolation and 4000-strong population, as backpackers comprise the help at the supermarket, the bottle shop and the hotel. A glinting turquoise bay holds the promise of coastal charm, marred by the slightly quirky rendering of two distant silhouettes of offshore liquefied natural gas (LNG) plants.
In the late 1960s a wealth of new mineral deposits in the region had placed considerable pressure on Dampier. In the 1980s the $25 billion LNG development, the Lower North West Shelf Gas project on East Intercourse Island, brought with it an immense influx of labour, which caused a severe accommodation shortage. The town’s underdeveloped infrastructure was also buckling under the strain. In response to these logistical issues, the town of Karratha was established. It absorbs the majority of people who work for the Dampier Salt Mines, Rio Tinto, the Lower North West Shelf Gas project and Pluto LNG. There are nine suburbs and one industrial estate that make up Karratha. It is home to the Pilbara’s only shopping complex, Centro Karratha. Accounting for fly-in, fly-out workers, the population fluctuates between 11,000 and 20,000 people, with a gender imbalance that skews wildly towards men, with 130 males to 100 females2—the highestmale-to-female sex ratio in Australia.
It’s in one of Karratha’s few bars—the Evolution Lounge—that I meet two twenty-somethings from Canada, Andy and Nathalie. Straining to hear ourselves over the blaring of a Pitbull–Jennifer Lopez duet, I’m told that up until recently, Andy had been working as a bar attendant at Karratha Airport but found his casual wages could hardly cover rent and skyrocketing utility costs. Nathalie, however, continues to work as a sales assistant in a camera shop at the Centro. Andy has pinned his hopes on snaring a job as a street sweeper with the local council, which has a listed salary of $91,000 plus. ‘Locals say to me you have to be earning $150,000 just to get by here comfortably, so it’s a little worrying,’ he says. The plan is to stay here for a year so they can save some money and go back to Ottawa with solid finances. I ask them why they made the trek all the way out to Australia when they could have just as easily picked a similarly plum position in Canada, which is also extracting maximum benefits from its resources boom. ‘I guess we thought it would be a cool thing to do, going to a part of the world that’s so different,’ Andy begins, before Nathalie interjects:
We’d heard about the money, which, honestly, we couldn’t get back home. Not the same amount of money—not by a long shot. Alberta is even worse [than Karratha], with entire families renting out the basements of other people’s homes. It’s starting to happen a bit in Karratha, but no-one seems to be too worried about it yet. And a lot of the backpackers either squeeze into places or max out their stay at Karratha Backpackers [Karratha Backpackers, the sole budget-accommodation choice in the region, has a twelve-month waiting list]. You’d think people would be more stressed out about the financial situation, but people seem chilled.
Andy grins at me, before adding: ‘It’s the default reaction among younger locals to laugh it off. It must be that laidback Aussie thing that everyone keeps talking about.’
This attitude seems common when people describe the allure of working and living in the Pilbara, a vast, dusty expanse so remote that it is hermetically sealed from the experiences one takes for granted in urbanised Australia: cultural diversity, public gardens, traffic jams. Outside Centro Karratha, the streets are dead quiet. It is harder to maintain a sense of community when the majority of workers are in town two weeks of every month. Daniel, an electrical technician I spoke to who worked at electronics retailer Harvey Norman, said the best thing about living in Karratha was the ability to wear ‘shorts, singlets and thongs for every day of the year’. Workers in the Pilbara seem content with their rising fortunes, but economists argue that the mining boom presents several causes for concern. Being overly reliant on our natural resources means that when it comes to economic policy, governments of either political persuasion are afforded an unusual laxity. With overall low employment, a strong currency and low inflation, they don’t have to do much to ensure prosperity. We’re very relaxed and comfortable, as the indicators say, but it’s significantly affecting one important factor: productivity. That indicator has been stagnant for decades. Increasingly, Australia’s wealth is being derived not from innovation or productivity or entrepreneurship, but pure luck. Journalist Siobhain Ryan writes that the mining industry is one of the biggest culprits in terms of productivity, with the sector lagging at the bottom of the table with a 4.9 per cent decrease in productivity levels.3
By contrast, the media and telecommunications sector has increased productivity by 6.9 per cent. Saul Eslake, former productivity growth director at the Grattan Institute, has reasoned that this is due to ‘very substantial lags between the ramping up of labour and capital and the subsequent increase in production’. Perhaps when you are making super profits, the scrutiny on productivity is less important. It’s a worrying trend, as Tyler Cowen, economist and author of The Great Stagnation, points out. On his blog, Marginal Revolution, he notes with some foreboding: ‘You will see plenty of talk about the problem cases in the world economy, for instance Greece or Portugal. But arguably it is the success stories—Canada and Australia—which are scarier and more indicative of the true long-run problem.’
Many economists have asked whether Australia has caught ‘Dutch disease’, meaning the hollowing out of an economy as it overwhelmingly focuses on one industry. It was coined in the Netherlands in 1959, where that economy focused—to its detriment—on natural gas at the expense of the manufacturing industry. The premise of Dutch disease is that the concentration on resources for export drives up the currency and punishes industries affected by high exchange rates. In a recently released paper entitled Does Australia Have a Resource Curse?, HSBC chief economist Paul Bloxham identifies these sectors as manufacturing, tourism, education, retail and housing. It is the medium-sized manufacturers in Melbourne’s southern suburbs and Sydney’s western suburbs that feel this most acutely, as they struggle to compete against cheap imports from China and India.
In terms of extractable resources, Western Australia, like the oil-rich states of the Middle East, is blessed with a significant endowment and is content to exploit it. According to Geoscience Australia, in 2008 Australia had about 15 per cent of the world’s economically extractable iron ore, ranking third after Ukraine with 19 per cent and Russia with 16 per cent. Western Australia accounts for 97 per cent of our iron ore production, 92 per cent of which is derived from the Pilbara region. In Western Australia, as well as elsewhere in the world, iron is found in sedimentary rocks known as ‘banded iron formations’, which consist of combinations of thin layers of iron oxide with bands of iron-poor rock. But what is especially unique and valuable about the Pilbara is that these formations have benefited from water washing away waste minerals such as quartz and carbon, leaving behind concentrated segments of iron oxide.
The region has an abundance of banded iron formations that have secondary enrichments of iron, says Jonathan Law, the director of CSIRO’s Minerals Down Under Flagship. ‘All the major resources that have been mined in WA fall into this category.’ But with the speed of production (we are currently exporting 324 million tonnes of iron ore per year), Law predicts the Pilbara’s iron ore reserves will be exhausted within fifty-six years. Dr Gavin Mudd, a senior lecturer in civil engineering at Monash University, believes the time frame is even shorter, between thirty and fifty years. If the boom is to outlast these predictions, the industry is faced with a few options: it could extend the life of its reserves by decreasing the production rate or by mining lower quality iron ore deposits but, given the immense financial and environmental costs involved in extraction, this last hardly seems a feasible option.
Yet there appears to be very little anxiety about a possible bust in the Pilbara, even though many residents and workers would be among the first to acknowledge that prices are approaching the untenable. Naturally, when you walk into Karratha McDonald’s and discover the cost of a single Big Mac is $9.65, you are forced to recalibrate your understanding of economic bubbles. The Big Mac index, invented by the Economist in 1986, is a light-hearted attempt to compare purchasing-power parity (what you can buy for your dollar) in different economies. My Victorian dollars did not take me very far out west. When I return to my hotel’s bar and recount my sob story to Tony, he laughs and says: ‘We’re living like kings here, even as the rest of the world goes down the gurgler. It’s taken us ten years to achieve what it would take thirty years to do in the east.’
I find myself overwhelmed trying to contemplate the effects of a boom of such magnitude. But John, an engineer at RiverWijs (a marine towage company headquartered in Dampier) and in the middle of downing his fourth pint of XXXX, is able to condense it for me. He has been living in a company-subsidised donga, a shipping container that has been fashioned into a one-bedroom apartment. His company foots the bill, which has risen to $250 per night due to the accommodation shortage. ‘The government is trying to fix the housing shortage, which is getting out of control,’ he says. ‘It’s the sort of thing that should have been done much earlier. There’s all this money in the town, but basic infrastructure is lagging. For people who aren’t miners, the costs of living have spiralled out of control.’ It’s probably why it is so hard to retain workers from other crucial industries—including the health, law enforcement, hospitality and childcare sectors—in towns such as Karratha and Dampier.
John’s concerns echo those highlighted in a paper written by Centrelink workers Melinda Scheltens and Yolande Morris.4 Speculation has an acute effect on mining towns, which are riding high on an inflated economy. The authors note that there are wide disparities in income in boom towns, with miners earning up to $130,000 while others—such as the largely casualised workforce at Mermaid Marine, a marine logistics provider operated by Chevron—languish on $58,000. It becomes obvious, as the authors note, that the ability for residents to ‘compete for a resource such as housing in open mining towns becomes particularly challenging when there is insufficient supply, particularly high housing costs, and exorbitant differences in incomes.’5 A glance at the streets in Karratha and Dampier reveals a striking feature: rows of houses with yachts in the front yard and caravans in the driveway, which is where workers who can’t afford to rent their own place set up camp, often paying the house-owner a small rental fee of about $300. Some stretches of highway are dotted with tents, as some workers, desperate to stay in the town, have taken to camping in the open.
It is clear that not everyone is benefiting from the boom, and that public policy has been beleaguered by complacency. Groups that have missed out include the region’s significant Indigenous population, ‘women separating from their partners [and] those employed in other non-mining businesses’. This carries a cost, as the majority of workers in sectors such as health care, childcare and education are women, who often find they cannot afford to continue living in mining towns on non-mining wages. There is inadequate provision of infrastructure, such as housing, in the Pilbara region.6 But the state government, it seems, is in for the long haul. It recently announced that construction firm Mirvac would build 600 to 800 dwellings per year until 2014 as part of a $1.5 billion public–private partnership to transform the town into the ‘Cottlesloe of the North’, reducing the number of fly-in, fly-out workers and accommodating up to 50,000 people.
All mines have a shelf-life determined by the expected production and extraction of mineral resources. But there is a significant information asymmetry between mining companies and residents in this regard; it is not in companies’ corporate interests to disclose full information about a mine’s life expectancy, or the risks—inflation, housing market bubbles, strain on existing infrastructure—that come with the rewards of an economic boom. Mine closures can wreak havoc on towns that have been dependent on big corporations to drive infrastructure, employment and capital works. In many remote areas, mining operations are the only significant mainstream activity that drives regional economic development. In Dampier, for instance, many council services such as recycling and the Dampier–Port Sampson shuttle bus have been provided in tandem with mining companies, such as Woodside or Rio Tinto. This reliance on mining companies to provide basic infrastructure was highlighted in a series of highly sentimental advertising campaigns from Australian Mining (which counts fifty mining companies among its members) that blanketed the Australian media during the debate over the Resources Super Profit Tax, highlighting the stories of everyday Australians who have been touched by the industry. There’s Len Thong, the orphan and refugee from Cambodia who now works at Rio Tinto, and Dr Paul Craven, whose neonatal intensive care unit at the John Hunter Children’s Hospital in Newcastle could not have survived without the largesse of Xstrata Coal. And so on. Among outsiders the ads arouse cynicism, but for many in the region, those narratives are very real.
Here is another real narrative. In January 2009, low nickel prices forced BHP Billiton to abandon its $3 billion investment in its Hopetoun nickel mine a mere eighteen months after its start-up, which cost 1800 workers their jobs. During the town’s mini-boom, property prices in the area had trebled, rents were high and there was considerable investment in small businesses. After the announcement of the closure, however, it was predicted that the population would fall by half. Fortunately for that community, there was a slight reprieve: a company called First Quantum Minerals bought the mine for $300 million, which extended the town’s lifespan.
It could easily have gone the other way. Ghost towns, such as Kanowna, Gwalia, Leonora and Big Bell, dot Western Australia’s rugged landscape, a reminder that mining booms can wipe towns off the map as quickly as they put them on it. Dilapidated lots and dead ends sandwich towns currently in the throes of unparalleled economic success. Cossack, a former gold-rush town, centre for pearl divers and port for the pastoral industry in the 1880s, lies twelve kilometres from Roebourne. It attracted boats from Japan, China, the Philippines and Malaysia, but by 1910 its resources had been exhausted. The gold rush had dwindled and the pearlers had moved on to Broome. By the 1950s the town was abandoned by residents and dissolved by the government. In more recent times, the Shire of Roebourne has made a concerted effort to revitalise the town as a quaint, olde-worlde artefact for inquisitive tourists, but surely its real potency lies in its ability to reiterate the finite capacity of commodities.
But everyone, it seems, is content to forget the most famous ghost town of them all. Wittenoom, 227 kilometres from Karratha, has not been a recipient of restoration works from local government and historical societies. At its peak, the town was home to some 20,000 residents and newly arrived migrants who worked in blue asbestos mines for CSR. As Australia’s sole source of asbestos, it thrived in the 1950s and 1960s, attracting thousands of mine workers with high-paying jobs. Adjoining the Karijini National Park, amid spectacular natural beauty, it was the site of Australia’s worst industrial disaster when hundreds of residents and workers contracted asbestos-related diseases. Since the 1970s the Western Australian Government has worked assiduously to erase it from civic memory. All references to the town on highway signs have been taped over, and visitors are discouraged from exploring the area because of the ‘high risk of exposure to airborne asbestos fibres’. Wittenoom was taken off the power grid in 2006 and degazetted in 2007, although some eight people live there as of the most recent Census count.
Wittenoom is an extreme example of the ghost town phenomenon, but it is reasonable to assume there will be more failed communities at the end of the boom. In August 2011 the Western Australian Government released a set of mine closure guidelines to ‘minimise adverse long-term environmental, physical, social and economic impacts, and to create a stable landform suitable for some agreed subsequent land use’, referred to in the rest of the document as ‘mine completion’. The document also encourages mining companies to ‘target training and employment opportunities to the local community, and [to] give preference to a local supply chain’. However, the government has this year introduced enterprise-wide migration agreements that would allow mining companies to bring in foreign workers on Category 457 skilled visas to deal with a predicted labour shortage. BHP has predicted the industry will need an extra 170,000 workers in the next five years as project investments continue to pile up.
Attracting and retaining local workers, even with wages for low-skilled jobs driven up to $200,000 by inflation and manpower shortages, is proving difficult. It seems the mining-town lifestyle is an acquired taste. ‘Not everyone can hack it,’ one miner in his mid-thirties, who prefers not to be named, tells me at the Burrup Peninsula, the site of Karratha’s onshore gas plant. ‘The isolation, it’s not for everyone. A lot of guys play up, get drunk every night. It can be lonely for single men.’ And for the women? ‘Well, I wouldn’t like to be a single woman over here,’ he says. He’s been working in the Pilbara for just over a year, and his exasperation is already getting the better of him. ‘You come here for the experience and for the money, but there’s nowhere to spend it, except at the pub or the pokies.’ That is where I spend my last night in Dampier and meet John again, this time with four of his friends. Tonight the pub has ‘skimpy mermaid’ night. ‘Fresh from Perth, I reckon,’ one of his friends says, in reference to an ochre-coloured brunette in a denim G-string and two pieces of studded Lycra skimming her breasts, adding, ‘God, I love those shorts.’
This display—which to an outsider seems almost obscene in its decadence—could simply be the choice to exercise what is often considered, in our political narrative, an inviolable right: to reap the rewards of economic success. This stands in stark contrast to the livelihood of industries such as manufacturing and tourism, which have been directly affected by the commodities boom and the appreciation of our currency. But even in mining towns one wonders who, aside from the mining companies, really benefits from the boom. It is hardly a revelation that economic growth comes at a price, but the costs are often mitigated by policy intervention, ensuring that a greater share of the sector’s benefits flow into the community. Yet as the disparity between these mining communities and the rest of Australia continues to widen, one can’t help but see references to the two-speed economy as a synonym for political complacency.
© Gillian Terzis
- Some interviewees in this essay were reluctant to give their full names. In the interests of consistency and in accordance with their wishes, I have used first names only.
- Australian Bureau of Statistics, 3235.0: Population by Age and Sex, Regions of Australia, http://www.abs.gov.au/ausstats/abs@.nsf/Products/3235.0~2010~Main+Features~Main+Features?OpenDocument#PARALINK8.
- Siobhain Ryan, ‘Mining drags down economy’, Australian, 4 August 2011.
- Melinda Scheltens and Yolande Morris, ‘Homelessness in High Income Mining Towns and the Opportunity for Big Business to play a part’, <http://rimmrights.org/Documents/Australia- homelessness and mining.pdf>.
- Scheltens and Morris.
- http://udiawa.com.au/Uploads/File/Press_Releases/Pilbara_population_surge_puts_housing_availability _and_infrastructure_under_strain_220312.pdf.