Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

Hurtling through the rough terrain of the Gobi Desert as a back seat passenger in a mining company's four-wheel drive vehicle, you do not get much opportunity to snap National Geographic style photographs. Such was the case early last month whilst in Mongolia as part of a five-person delegation from the House of Representatives Standing Committee on Regional Australia visiting that fascinating country.

That followed a trip to Canada, as part of the same inquiry process. I accompanied the member for New England, who headed the delegation, as well as the members for Capricornia and Durack and inquiry secretary Siobhan Leyne.

This trip was part of the committee's inquiry into the fly in, fly out, drive in, drive out work practices in regional Australia. Both countries visited are experiencing mining booms and facing the challenges of resourcing massive and sudden upswings in activity with infrastructure and labour while trying to maintain the cultural integrity of their regions. What they told us of their experience has the potential to provide some of the answers to many of the questions raised during our site visits and public hearings in northern New South Wales, Queensland, the Northern Territory, South Australia, Victoria, outback Western Australia and here in Canberra.

While in Mongolia we visited Oyu Tolgoi, also known as Turquoise Hill, just prior to it going fully operational. While we were down south in the Gobi we also drove for many hours through fascinating terrain inhabited only by traditional herdsmen with wild horses, camels and goats—about the only living creatures, from what the eye could tell. It is a remarkable place—though I am sure there are many more animals in that terrain; they were the ones we could see and they were very sparse. The landscape is the same, kilometre after kilometre. It is one of the remotest parts of the world yet, amazingly, full mobile telephone service is available—far better than what we have in many areas close to major regional cities in Australia and perhaps even in your electorate of Maranoa, Mr Deputy Speaker.

The copper deposits at OT, as it is called, were first explored in 1996, and the place really started to be developed in 2001. The mine, which is 600 kilometres south of the Mongolian capital Ulaanbaatar, will have an estimated life of 100 years. It is the world's largest underdeveloped copper and gold deposit, anticipated to produce 450,000 tonnes of copper and 330,000 ounces of gold per annum. That is what we were told—and they are amazing deposits. Rio Tinto will have spent more than US$5.2 million in the OT project by the end of the second quarter of 2012. Obviously there is a large international FIFO workforce required at OT. We were with the executives of Rio Tinto for lunch but I decided I would go and talk to the workers—I thought it would be good to hear things from people on the ground. Everyone knows what is going on, but these people were hopefully going to tell it to me straight. I found a spare spot at a table and there were two Americans there, and another fellow. I introduced myself and he said, 'I know who you are; I am Kirby Chaney'. He had not long before been working at Tumut, in my electorate of Riverina. You go thousands of kilometres away from your home base and you find somebody you are familiar to and even someone from your own electorate—in one of the remotest corners of the globe. It truly is a small world.

OT will be the engine of the Mongolian economy. With a population of 2.6 million and a commitment to a 90 per cent Mongolian work force and FIFO turnover rates in other places approaching 40 per cent, a mining town will likely be an important feature in attracting employees. There are challenges for mining developments in Mongolia, as we heard—it will take some years to get a mining think instead of a herding think; to get people away from the sums, away from the traditional herding lifestyle, and get them thinking that this is the way of the future, that this is the way they can help their families to prosperity.

Dr Kern Von Hagen, who we spoke to, said the development of Mongolia would come as a result of leadership; good companies have the long-term view. It is what he called the managed approach, taking a long-term view. Mongolia's Minister of Education, Culture and Science, Luvsannyam Gantumur said:

As far as the mining sector is concerned, education is one of the most important issues.

The minister supports the building of the capacity of teachers and teacher training. This is one of the key areas where Australia is helping with many Mongolians who have gained tertiary education in Australia and are proud to call themselves 'Mozzies.' Importantly, English has just been adopted as the official second language of the country.

Mongolia will be a real competitor of Australia for resources in the years to come. Our delegation saw a number of coalmining operations, including one which had a remarkable 25-metre seam of coal—the blackest coal you could ever hope to see—just metres below the surface. It is said that, in some places, a metre seam of coal is paydirt. The deposits in Mongolia are quite extraordinary. Once the country gets its infrastructure right, it will be a serious player on the world stage.

Surprisingly, the road network in and around these mining sites is far better than that in Ulaanbaatar where they have just developed a numberplate system of odds and evens to avoid gridlock. Let me tell you that the traffic in the Mongolian capital is absolutely horrendous. Drivers seem to go the quickest way to a particular destination. Whether that requires driving on the wrong side of the road, it does not matter. The new government are doing their best to avoid the gridlock. They have a purpose and a vision. I wish them well in their endeavours to get a better transport system in Ulaanbaatar. They are certainly looking to the future with the mining developments. They have some good plans in place, which is encouraging for their country. Much of Mongolia's mineral wealth is being exported to China. However, that country, as we know, is going through a slowdown at the moment caused by global economic uncertainty and the fact that it has stockpiled resources such that it does not need to continue to build regional centres for the sake of building them.

Like Mongolia, Canada has a strict policy of employing its own people first and foremost. As well, Canadian mining companies are required to do secondary processing in that particular country. To start the trip we visited St John's, Newfoundland and Labrador. At a roundtable with the Department of Natural Resources at St John's we met the deputy minister, Diana Dalton, who described their local mining operations as 'world-class quality.' 'It is our Western Australia,' she said. The assistant deputy minister, Paul Carter, said that there was $50 billion worth of development planned, up to 2020, at Western Labrador. That of course is all underpinned by commodity pricing, as well as obviously having the necessary labour force but, as I said before, a necessary labour force that is essentially Canadian. Employees have to be Newfoundlanders. The mining companies have strict monitoring and reporting processes and their right to mine can be jeopardised by noncompliance. We were told that the rapid growth and outsiders coming in, even though from the same province, had resulted in long-term residents seeing their communities changing drastically. Homeowners are stacking up rents. Rental accommodation in a bungalow, which was $600 to $700 per month a few years ago, now brings $6,000 a month. We were told, 'It's crazy.' This is mirroring what is happening in areas of Australia, particularly in places our committee visited, Moranbah in Queensland, and Karratha and Kambalda in the west. Day Care Labrador West hashad to close because they could not get sufficient staff. We were told that families are being evicted, as a by-product of high rental costs. And haven't we heard that, Member for Capricornia, in our travels throughout Australia? Mechanics are being flown in to work there. Managing growth is quite challenging. In Fermont, the population doubled to 5,600 in virtually no time at all. Fermont means 'iron mountain'. As Mr Carter said, this has concerns for the future if the iron ore industry goes soft.

The Mayor of Labrador City, Karen Oldford, who is a nurse practitioner, told a similar story about the challenges of FIFO and low-paid workers battling to stay in long-term towns. She said, 'We are lobbying very hard not to have a FIFO workforce and want provincial governments to take a stance on that. It decimates existing communities.' Those were her words. A bungalow worth $80,000 five years ago is now worth $400,000. A person on the sidewalk carried a prophetic message: 'I have a job; I have no place to live.'

In this part of Canada they have similar problems to Australia inasmuch as the population statistical data is not accurate. I implore our committee, when finalising its recommendations for this inquiry—it will be early next year, perhaps in February—to ensure that something other than census data better reflects the situation in developing mining communities in remote parts of Australia.

One of the most enlightening places we visited was Bay Bulls, where the mayor, Harold Mullowney, told us of the enormous strides his community had made since having to diversify after cod fishing was banned. A total of 19,000 people lost their jobs on 2 July 1992, when the codfish moratorium was enacted. The local wharf has been diversified to begin operations in crab licences and is even producing gunboats to combat the drug trade in South America. Harold is a retired science teacher and he is proud of the fact that his community is pushing hard for local school leavers to go into trades which will be of benefit to this mightily resourceful place—with a mightily resourceful people, might I add. They are also a service wharf for Greenland.

One thing the committee picked up on which is different from Australia is the power of local councils in Canada. Local government plays a far greater role in decision making about mining operations than is possible in Australia. There is a view that mining companies should do more for social housing for lower income rentals and there is a fear that the mining companies are only looking after FIFO workers. Local councils are objecting very strongly to that, from what were told.

We saw oil sands mining at Fort McMurray in Alberta. Fort McMurray has a population of 100,000 and about 55,000 camp beds, and that is projected to increase soon to 70,000 beds. The policy for work camps will be a maximum of 30 minutes' drive from work sites. The established community has done some work to deal with the issues of growth, crime, social needs, roads, infrastructure et cetera. There is a saying that if you want to see someone from Newfoundland or Nova Scotia you have only to go to Fort McMurray, because they are from all over Canada. The company Suncor flies so many people into its oil sands operations at Fort McMurray that, if it were operating as an airline, it would be the fourth largest in Canada, which is truly remarkable.

It was a tremendous trip. There was good camaraderie between the members, and I think we learnt a lot from our travels. We learnt a lot from the people we met. Particular reference should be made to the wonderful people at the Department of Foreign Affairs and Trade. We had Tom Fuller in Canada. Nothing was too much trouble for them. They set up the appointments with key players in government and in business and certainly with the mining companies. It was a real insight for our inquiry to help us get some good outcomes for FIFO and DIDO operations in Australia.

A number of Australian companies are operating in these places. Leighton Holdings, Rio Tinto and BHP Billiton are making significant investments in regional areas in Mongolia. Leighton has investments in coal in Tavan Tolgoi and Rio Tinto has investments in copper and gold in OT which, as I say, is in the remote Gobi Desert. It is a long way from anywhere but they are certainly making great strides to ensure that the things they put in place are good not just for the mining companies. I have to say that you get the impression that they are also doing it for the benefit of the communities. Their mining operations will be around for decades and decades and they do not want to put things in place which will not be beneficial in the long term to the people or to their companies, because they are making big investments.

Australia and Mongolia are facing a similar challenge with the social impact of FIFO work practices—the impact on infrastructure, water, housing costs, food supply, school needs and the social fabric of regional areas. This has been a fascinating inquiry. Certainly it is a big issue in regional areas in Australia. I would like to think that we will get the census data right. I would like to think that from our recommendations, which will come early next year, we will put in place some things which will benefit the regional areas that rely on mining but also do not want their communities and their social fabric destroyed by big mining companies and FIFO workers coming in and not contributing to the towns in those regional centres.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

I am really pleased to join with my colleagues who travelled with me on this delegation to Canada and Mongolia in the last couple of months. I think you can get a sense from the contribution by the member for Riverina that this trip made a very big impression on members of the committee. I am sure that you, Mr Deputy Speaker, as a representative for a region that is experiencing some of these issues, will be listening with great interest to us talk about what we saw overseas and how we hope that will inform the deliberations the committee will be undertaking very shortly for our report for the parliament and our recommendations to government.

The committee received this opportunity as a result of the parliament's annual program of choosing a committee to undertake a trip to two Asia-Pacific countries. In choosing Canada and Mongolia to be the subject of our application to the parliament, we were hoping and expecting that there would be lessons to be learned from the shared experience in those countries of dealing with very fast growth in mining activity and the interactions that were happening between local communities, local populations, and those mining developments. I think we were all hopeful that this would be a very valuable delegation, but we were probably all surprised at just how much we felt we learned. You are never quite sure when you go to another country how much relevance there will be. You will see interesting things, but whether they will actually be relevant and contribute to solutions here in Australia is another question. I think we have come back with a strong sense that there are things that we will take from what we saw on our trip that we will bring into our committee report.

Before I forget—I do not want to leave it till the end because I would hate to overlook anyone—I say a big thank you particularly to Siobhan Leyne, who is the committee secretary, who did a terrific job in distilling our thoughts and our arguments for why our committee should be chosen to undertake this trip. Siobhan did a great job on that submission, putting that case forward, and also, of course, a great job in organising the program and liaising with the DFAT officials and others overseas. Of course, the International and Community Relations Office were a part of that as well. I also want to say thank you to the DFAT staff in overseas posts who were such a big help to us. The member for Riverina referred to Tom Fuller, who looked after us in Canada. Tom and his wife are expecting their first child any day now, on 3 November as I recall, so we certainly send our best wishes to Tom and his wife and await the joyful news that their child has been born safely. Very importantly, I say thank you to Tom for his great work in looking after us in Canada. A similar role was carried out in Mongolia by Natalie Barnes from the embassy in Seoul, and Dean Woodgate was there also. Dean has a role in promoting Australian Education International at the embassy in Seoul.

As the member for Riverina has described, we started our trip in Canada. We flew all the way to St John's, Newfoundland, in one hit, which was quite an experience. That is where we really started. The delegation got off to such a great start, because our very first meeting—the member for Riverina will correct me if I am wrong—was with representatives from the provincial government in Newfoundland and Labrador and also representatives from the local government in Labrador City in the western part of the province, where very big iron ore operations have been operating for quite some time.

We got a really strong sense from that meeting of some of the similarities in what the community is experiencing with expansions going on in the iron ore industry, but also there was quite a different attitude—or at least more power available to the local government to take charge of and drive some of the decision making around their local community.

So I got the sense that local government there were possibly more empowered than our equivalent local governments in Australia and certainly were not afraid to use the powers that they did have. I am talking about things like planning and licensing powers, both for the mines and very particularly as to the question of temporary accommodation to facilitate mining development at the construction phase. So they really did use whatever powers they had to feel like they were in the driver's seat for their community.

I got the very strong sense that the provincial and local governments were very much on the same page and working together in strong partnership towards similar goals of community empowerment and engagement with the development that was going on around them. They talked about the benefit agreement that effectively companies have to sign up to and about the terms and conditions, which companies agree to, that make sure that benefits like local jobs and local content and royalties come back to the province. They had a very strong view of what they wanted to get out of the development, so it was not just a one-way thing where it was what the company could get out of the resource activity. So there was a very strong view about what the province and local community expected to get out of it as well.

We went from there to speak to one of the companies involved, Iron Ore Canada, which is a Rio Tinto subsidiary. We were very impressed by their attitude and they really described to us their taking the initiative. They are not the only company operating in that region, so they talked to us about how they as a company felt an obligation and took the initiative to bring the other companies operating in that region to the table, together with provincial officials and local government, to talk about what was going to be happening and how some of these things could be managed while building that shared picture of what the community could expect and aspire to and how they could partner with the community to get the benefits and ameliorate some of the problems that might arise. So there seemed to be a real environment that fostered those expectations of companies and the companies seemed to show a willingness to meet those obligations and be genuine partners in the region.

We went from there to Alberta and saw Fort McMurray, which to me, as the member who represents Moranbah in my electorate, felt like Moranbah on steroids. As the member for Riverina mentioned, it has something like a population of 100,000 but at least half of those are fly in, fly out workers living in camps around the place. The population has doubled in the last 10 years. So Fort McMurray gave us a real snapshot of some of the opportunities but also some of the problems that local communities over there are trying to deal with. I was very impressed in Alberta by the initiative, one that was described to us at a meeting in Edmonton of provincial government officials, of the Alberta Oil Sands Secretariat. That has a coordinating role within the government so that the government can take a whole of government look at development that is happening in the oil sands region and communities. That was sitting within Treasury and the idea was that it be rather than the very piecemeal approach that we have particularly in Queensland.

The Queensland experience is that everything is quite reactive and you have got one government department just dealing with applications for mining licences and mining activities in a fairly piecemeal approach. The Alberta Oil Sands Secretariat is about this: when an application comes in the provincial government develops a mechanism by which you can then, across the government, look at all the implications of that so you are dealing not just with the application but with what arises out of that application and how the provincial government, with local government involvement, can respond to some of the issues. It is similar to a recommendation that the committee has heard from Mount Isa council. It was put to us by the Mayor of Mount Isa, who is a former state minister for resources in Queensland and so knows a bit about some of these structural matters. So that is something for the committee to think about.

We then went through to a very different country—but one that gave us just as much to think about and had just as much to teach us. Part of the trip in Mongolia had a different, more official, focus. As representatives of our parliament, the committee sought to reaffirm Australia's friendship with Mongolia, particularly given that this year is the 40th anniversary of the establishment of diplomatic relations between our two countries. We wanted to reaffirm that friendship and to look for ways that our country can continue to support Mongolia on its journey of development and in making the most of its resources.

We learned that we share a lot—environmentally and in the area of resource opportunities. These are obvious areas where we can assist their development and their aspirations to become a strong resource exporting country. A very important part of that, as the member for Riverina mentioned, is the role of AusAID in providing scholarships. These have increased in the last year from 28 per year to 38. The scholarships provide opportunities for Mongolians to come to Australia and study at our leading universities in the areas of law and governance. I think the program has been expanded so there can be more of an emphasis on, say, engineering, environmental management and things like that. The scholarships are about trying to build capacity—helping Mongolia to make the most of its resources and take control of its future.

We were really impressed with what we saw at Rio Tinto's operation at Oyuu Tolgoi. We came away with a very strong sense, as the member for Riverina said, that these guys are fair dinkum. They really want this to work. Sure, they want to mine copper and they want to make a profit, but they also believe very strongly—and you can see the evidence with your own eyes—in creating something which belongs to Mongolia and which Mongolians will benefit from. Those benefits will come not only through the royalties and taxes the company will pay but also through the very significant investments in training, education and community building.

Here in Australia, the committee has been getting the message that you have to have FIFO for mining to be viable. But then we saw what Rio Tinto is doing over in Mongolia. About 90 per cent of the workforce at this copper mine, the world's biggest copper mine, is already Mongolian. Rio Tinto surveyed their workforce. Their workforce said, 'We really want to live here with our families.' So Rio is looking very seriously at how to establish a long-term sustainable functioning community alongside that mine—a demonstration, as I said, of how these guys are not in there just to make a quick buck. They really are genuinely committed to the country and are working with the Mongolian government, the Mongolian people and, importantly, their workforce to make sure those benefits are spread far and wide throughout the country.

In closing, it was, as always, great to catch up with the Mozzies. The Mozzies are an alumni group—people who have studied in Australia. They are very passionate supporters of Australia and great friends to all Australian visitors to Mongolia. I thank them again for their hospitality. I am really looking forward to getting our teeth into this report, which I think will benefit greatly from our travels as a committee, not just in Australia—obviously we have travelled extensively throughout Australia—but also internationally. It has been very helpful to get this international perspective and some of the solutions and ideas it provides.

Debate adjourned.

Federation Chamber adjourned at 21:34