Paul Cleary is a senior writer with The Australian — one of their better ones. He is also a researcher with the Australian National University, and has written a very readable book called Too Much Luck, which is about the mining boom and its possible adverse impact on Australia’s future. He has set-out a very bleak forecast of the legacy of the boom.
Expressed as concisely and simply as I can, he believes that we are living in the dreamtime on the unsustainable financial benefits of mining royalties and taxes.
By the end of this century, he forecasts that we will have mined-out most of our major resources and will fall on hard times, while lamenting the vista of an array of large empty holes in the ground.
He declares that mining is the prime cause of our highly valued dollar and, in turn, this over-valued currency can be blamed for the demise of our manufacturing and tourist industries, as well as making our rural industries marginal.
He asserts that miners have been able to get away with murder in cutting corners with the environment —especially coal seam gas — and he believes that the ‘fly in fly out’ strategy for mine workers is disastrous for declining rural communities.
The crux of the book’s message is that miners are making profits way beyond that which is reasonable, and they must become major contributors to a sovereign wealth fund that will sustain our way of life when the mines run out of resources — something similar to the one that Norway has successfully established.
The statistics that he outlines in Too Much Luck are devastating and, if taken on its face value, we should all become very alarmed. Indeed, if Cleary is correct, our governments can be charged with having been very negligent, living for the moment like drunken sailors —especially State Governments — who are totally addicted to mining royalties and sell themselves like prostitutes to anyone willing to take on a mining investment.
Another valid reason for getting rid of them!
However, there are always two sides to every story, and I am surprised that the mining industry has not yet made an aggressive response, particularly as Cleary’s book is selling well and is written in a style that the average voter can easily understand.
I know, from my dealings with miners over 15 years of serving as a director of railway companies, that the risks taken by investors in opening and operating mines are enormous. For example, millions are spent on exploration for minerals, only to find that a mine will be unviable and more must be spent on an alternative site.
Then, hundreds of millions are spent on opening the mine, while taking the risk that commodity prices will be adequate to cover those costs when the mine is open for business many years later.
Government red tape and bureaucratic inefficiency consume more millions. They can argue logically that the high risks that they take entitle them to an abnormal return.
So, can I ask my mining friends to get a book published in a hurry that tells their version of the benefits that mining brings to Australia. Then, you and I can make a decision on what is right for our country.
My view is that both sides will score telling points and that the final solution will be somewhere between the poles.
I strongly recommend that you buy Paul Cleary’s book right away and get yourself ready for the great debate. Can I warn you that in reading it, you will be profoundly disturbed?
If you want to become even more disturbed, read Geoffrey Blainey’s book, The Rush That Never Ended. Among other things, it tells the story of the Mount Lyell silver and copper mine at Queenstown in Tasmania, which financed the Tasmanian Government for almost a century from 1890. It is now a vast, open, barren crater in what was once a lush rain forest, and its days are over, along with the wealth that it provided for Tasmanians.
The basic matter to be resolved is whether or not Australia will be covered by many holes similar to Mount Lyell, and what we should do to prevent this from happening without wrecking the economy or making Australia uncompetitive in the international marketplace.