Background briefing - Hunter Coal

My Wednesday post, The importance of regional environmental impact statements, reported on moves to try to gain regional environmental impact statements as a way of assessing the combined effects of various mining developments underway in the Hunter Valley and beyond.

An interesting article by Di Sneddon in the Singleton Argus (Thursday 9 April) provides a perspective on the scale of development. I will just provide a brief summary here; the article is worth reading in full.

In 2,000, Hunter Valley coal production was 67 million tonnes, rising to 112 million tonnes in 2007/2008. This increase is reflected in a rise in coal royalties paid the NSW Government from $197.03 million ten years ago to $1.227 billion in 2008/2009.

With seven new mines under construction, five proposed expansions of existing mines plus two new proposed mines, you get a feel for the way the industry is exploding. You can also see why mining royalties are so important to Sydney, for this is the Government's main growth revenue. Without this growth, the recent drop in State revenues from other sources would have had even more calamitous effects.

The improvement in the Australian economy is now benefiting Sydney. Even so, mining royalties remains a major growth area. Watch the fall-out here from the likely recommendations of the Henry Tax review that royalties be replaced by some form of national resource rent tax.

The growth in mining flows over into local employment. Back in 1990 coal mining in the Hunter Valley provided 4,400 direct jobs. That figure almost doubled for 2007/08 to 8,384.        

Back in 1990 coal mining in the Hunter Valley provided 4,400 direct jobs. That figure almost doubled for 2007/08 to 8,384. Then there are the flow-on effects to other areas of the local economy, as well as investments in new rail and coal loading facilities. This helps explain why the Hunter economy as a whole held up so much better than than that of metro Sydney. 

However, there have also been costs, costs that have led to increasing concerns.

At one end of the spectrum, we have environmentalists who just want to stop coal and who consequently try to blockade coal exports from Newcastle. At the other end, is the coal industry who want expansion now regardless. In the middle are a whole range of concerns that try to temper growth with costs.

Di's article provides a historical summary of recent environmental concerns. I think that we can summarise the overall pattern this way.

The Hunter has always been a premier agricultural area and was Australia's first prestige wine area. In recent years, it has become a major tourist centre as well as a sea/tree change destination. Mining threatens this.

   While Sydney reaps benefits from taxes, the direct economic costs at local level associated with expansion (road congestion, need for new schools etc) have not been adequately catered for. The mining royalties go into the general tax pool and are then allocated across the state as a component of total state wide spend based on perceived state wide priorities.

I have written quite a bit on this one. The practical effect is that the Hunter does not get the resources required to meet direct economic costs. Indeed, my impression is that these costs are not even calculated.

Mining creates a series of local affects. Some of these are health linked (dust problems in Singleton is an example), others relate to visual appearance, history and life style. These effects can be quite dramatic and drastic at local level.

The sudden loss of the 120 year old Camberwell village common is an example. Sydney says that the locals did not want to negotiate. Their position was clear-cut. They just wanted to preserve a community asset already under threat.

One can argue rights or wrongs here. However, what I would argue quite strongly is that when your head is in the trough, you do become very insensitive to anything that might interfere with your feed. And that's what's happening.

What might be done?

Well, I don't think that the environmental purists blockading ships have much to offer from a purely local viewpoint. Their agendas are far broader.

What needs to be done is the creation of a broader Hunter coalition that recognises the economic benefits of mining, that aims to subject the claims put forward to detailed analysis and has the influence to force payment of compensation and of the funds required for local investment.

Of course, this may exist. While I know the Hunter pretty well, my current knowledge is drawn from newspaper and blog reports. However, I don't get the impression of coordinated action.

Perhaps the Hunter Valley Research Foundation could be commissioned to undertake a purely factual study? Political action with facts is generally more effective.