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Edition 47

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Essay

Possessed by mining

‘I AM SO sick,’ my friend remarked, ‘of hearing about the fucking mining boom.’ It was 2009, and for the past few years mining had seemed omnipresent in the texture of both our everyday lives and the wider world. I was working as a native title lawyer representing claim groups in the Pilbara, which included negotiations with mining companies, and everyone else I knew seemed connected with the industry in some way. Friends, relatives and people I met at parties provided legal services to the resources sector, worked within it as engineers, or drove trucks on the mines. Newspapers breathlessly reported announcements of some new project or other and the latest disputes between companies; fluctuations in iron ore prices occupied our conversations.

A few years on, with the initial exploration and investment boom well and truly over, it remains almost impossible to write about Western Australia without discussing mining, yet anyone seeking to do so faces a number of treacherous clichés: that the state is both ruggedly individualist and rusted-on conservative; that mining occurs ‘on the frontier’; that there is something innate that sets the state and its inhabitants fundamentally apart from the rest of the country. It’s worth, instead, taking a second glance at notions of possession and legitimacy that lurk in the background when we talk about mining. Arguments about property rights are, at base, about the kind of society we want and the kind of people we think we are – questions that burn away quietly in our largest state, and merit exploration.

Our system of mineral ownership has deep roots: under English common law the precious minerals – gold and silver – belonged to the Crown. This principle was extended on the Australian continent, where self-governing colonies legislated to reserve rights to all minerals (with some minor exceptions), retaining these rights when they became states on federation in 1901. The principle of sovereign ownership of precious metals (the ‘Mines Royal’) was set out in a 1568 case, R v Earl of Northumberland, in which the Court of Exchequer Chamber ruled, somewhat obsequiously, that ‘because gold and silver are the most excellent things which the soil contains, the law has appointed them…to the person who is most excellent’. This decision benefited the then-monarch, Queen Elizabeth I, and the phrase ‘owned by the Crown’ retains a vaguely ominous sound to some ears.

The United States is an exception to the general rule of community ownership of minerals, and in an excellent study, Mineral Resources and Australian Federalism (Australian National University, 1977), Canadian academic Garth Stevenson observed that some American businessmen tended to regard the system in places like Australia as ‘a relic of monarchical tyranny’. Others view our approach more positively: in a 2011 article in Society and Natural Resources, on the impacts of private mineral ownership on the profoundly disadvantaged region of Appalachia in the US, legal historian Jill Fraley favourably contrasted the Australian system, writing:

Natural resources…are, in effect, common property of the whole people of Australia, who as a group are entitled to their bounty and burdened with the role of protection and allocations to future generations. There is no sense of an individual entitlement to natural resources because they happen to exist beneath a particular piece of land. There is no sense of a ‘lottery’ or risk-heavy system in which persons purchase property with the hope of exploration to discover vast mineral wealth beneath the surface – allowing some to become suddenly rich, while a nearby neighbour runs his fingers through the sand.

It is rare to hear so glowing a description of the regime of Australian mineral ownership at home, particularly because, as with all areas in our public life, mining entails a constant struggle between different levels of government. As a practical matter, the states control mineral resources: they set conditions for the grant of exploration and production rights and also derive royalties from mining activity. The Commonwealth, however, can legislate in a manner which affects resource development. A 2009 review of approval processes in WA observed that over the past twenty-five years, ‘the Commonwealth Government has become more intrusive… This intrusion is mainly evident through the Environmental Protection and Biodiversity Conservation Act 1999, native title legislation and Aboriginal heritage issues.’

IT IS NOT only legislation from the Commonwealth that is resented, but also its absorption of mining profits through taxes, as distinct from state royalties. There is a perception that there is something illegitimate in moneys ultimately deriving from ‘our’ mines going to other states, and nowhere is this more complained of than in respect to the redistribution of GST revenue. WA Treasurer Mike Nahan characterised the Commonwealth Grants Commission’s distribution as a message to Tasmania that ‘if you lock up all your forests…and destroy growth, you will get compensated for it from the proceeds of WA’. Similarly, WA Senator David Johnston declared the ‘outrage of the numbers and the destination of our hard-earned revenue to other states and territories is a scandal’. The argument that profits from mining belong to those who happen to have been born on the right side of the border is driven by economic self-interest and buttressed by cognitive dissonance. The stories WA tells itself, full of grit and endeavour, tend to overlook that the presence of minerals within state boundaries is determined by history, geography and sheer dumb luck. In 2010, economist Matt Cowgill wrote on his blog We are all dead:

I don’t understand what makes West Australians, particularly anyone other than the 79,600 people who work in mining, feel some sort of proprietorial pride at the mineral wealth under the ground in the state’s far north. I speak as someone born in Perth who lived there for twenty-seven of my nearly twenty-eight years. I never felt as if I had done something special to deserve any greater share of revenue from iron ore than, say, Tasmanians or Northern Territorians… Some states receive less than other states, per head of population, because of the principle of ‘horizontal fiscal equity’. It sounds horribly wonkish, but really it just means that all citizens should have a reasonable expectation of receiving the same quality of services, no matter the state they happen to live in… Is that really a controversial suggestion?

The issue might be one of pain rather than pride. Perth is an increasingly expensive place, and for several years its inhabitants have experienced ‘resource curse’ aspects of a mining boom – rising costs of living and impact on other industries – with more intensity than residents elsewhere in Australia. Viewed through this lens, complaints about the distribution of GST revenue represent a desire for compensation for the inconvenience of living in boomtown rather than a sense of entitlement.

Nevertheless, I share Matt Cowgill’s puzzlement and feel no particular claim to moneys generated by the state’s minerals. Given the arbitrariness of state boundaries, my standard response to pub conversations about the merits of secession is to suggest that the Pilbara might as well break away from southerners who are riding on its coat-tails (and if you think living in Perth is expensive, try Karratha or Newman). Obviously, the states are constitutional entities and regions like the Pilbara are not: legally, I’ve no leg to stand on. But if there is some sort of sacred connection between iron ore taken from the red dirt above the twenty-sixth parallel and those of us living in Perth, I can’t see it.

Subterranean arguments about moral rights in the context of minerals came to a head following the announcement of Prime Minister Kevin Rudd’s ill-fated proposal for a resources super-profits tax. Its successor, the Gillard government’s minerals rent resource tax, was repealed by the Abbott government with some fanfare and the assistance of the Palmer United Party in late 2014. Before this, the tax was subject to an unsuccessful constitutional challenge initiated by Fortescue Metals Group and supported by the Western Australian and Queensland governments. The case of Fortescue Metals Group v The Commonwealth (2013) can be read for continuities in our political history. In their joint judgment, Justices Hayne, Bell and Keane suggested that the submissions put forward by WA ‘bore a striking resemblance’ to arguments the state had made twenty years earlier when it unsuccessfully contested the validity of the Native Title Act. Much has changed since the early 1990s, but the struggle between centre and periphery continues. In any event, the judges rejected the submissions: there are limits to the Commonwealth’s legislative power but the tax, like this earlier and much-resented Act, did not exceed them. As though setting out to reinforce perceptions of his industry’s self-importance, Fortescue’s CEO Andrew Forrest responded to the decision by stating benevolently, the ‘High Court didn’t agree with us and that’s their perfect, perfect right’.

ALTHOUGH THE INTERESTS of conservative governments and mining companies will often coincide, they are not identical. This distinction has been obscured in recent years by the existence of a common foe in the form of federal Labor administrations, but it becomes periodically visible. In 2014, WA’s Liberal Premier, Colin Barnett, appealed to BHP Billiton and Rio Tinto to ‘remember who your landlord is’, referring to what he termed the ‘seeming strategy of the two major producers to flood the market’ with iron ore, thus lowering the price. Barnett’s government also faced criticism from gold mining companies in 2014, on the basis that its budget papers projected a future increase in mineral royalties at a time when a royalties review had yet to be concluded. In early August, Barry Fitzgerald reported in the Australian that this had ‘raised suspicions that the government has the gold industry in its sights’. Fitzgerald foreshadowed that ‘struggling gold producers are to adopt the advertising campaign tactics used in the attack on the mining tax in their battle to stop the state government increasing royalties in its review of mineral royalty rates’. That’s politics for you: the weapon that slays your enemy one day may be used against you the next.

Individual business triumphs have collective underpinnings, a fact (in)famously alluded to by US President Barack Obama in a speech during the 2012 presidential campaign, when he said ‘if you’ve been successful, you didn’t get there on your own… If you’ve got a business – you didn’t build that.’ Similarly, companies didn’t put the minerals in the ground, but some argue that deposits should belong to those who discover and mine them. Libertarianism lacks a broad support base in Australia. In a 2014 interview with the US publication Reason, NSW Liberal Democrat Senator David Leyonhjelm explained that his homeland ‘doesn’t have a history of revolt against its government… We have a long way to go in terms of educating Australians that the government is a nasty, big, grasping beast.’ From across an ideological divide, Crikey’s commentator Guy Rundle agrees with Leyonhjelm’s first premise, arguing that Australia is collectivist, conformist and communitarian, having ‘grown through state-based arbitration, socialised agricultural monopsonies, protectionist industries, massive public works, state land distribution and highly patterned suburban existence’. Nevertheless, libertarian ideals are particularly amenable to extractive industries, which thrive on narratives of individual discovery and initiative – in WA, priority for grants of mining tenements goes to the applicant who is first in time (visiting the site of someone else’s just-expired tenement in the dead of night, marking it out and rushing your application in might, just maybe, make you rich). In a 2010 Senate Select Committee submission, Alan Moran, then the Institute of Public Affairs’ director of deregulation, wrote of what he termed the ‘fallacy about rental income being a legitimate reward from the exploitation of mineral resources that are owned by the people’. He continued:

Rents do not exist unless someone has discovered a deposit, just as high profits in IT industries do not exist without an innovation having been made. Governments have imposed royalties on the fallacious basis that the deposit is owned by the people. This is only true of deposits that are already known.

This perspective emphasises individual ingenuity and effort, making a point that Gina Rinehart, Chairman and Director of Hancock Prospecting, articulated more bluntly in 2013 when she complained that ‘few seem to properly understand…that miners and other resources industries aren’t just ATMs for everyone else to draw from without that money first having to be earned and, before that, giant investments are made’. There is some truth to these arguments, and certainly minerals weren’t placed in the ground by wise, far-seeing governments either. However, such statements tend to overlook the assistance provided by governments over many decades, both in maintaining the framework in which mining operates, including a legal system to enforce property rights and, more specifically, in mapping, collecting geological and mineral resources data and providing tax concessions. A 2014 report by the Australia Institute, Mining the Age of Entitlement, considered the support state governments provides to the resources sector, including the construction of port, road and rail infrastructure, industry assistance funds, rehabilitation of mine sites, industry promotion and research. It concluded that, in WA, assistance to the minerals and fossil fuels sector totalled $1.391 billion in the 2013–2014 financial year, a period during which the industry paid $5.8 billion in royalties.

DEBATES ABOUT WHERE the wealth comes from go deeper than tussles between government and industry. The WA Mining Act (1978) provides that almost all land in the state is open for mining; you can even dig up a national park, provided particular conditions are met.

All of this land, of course, was taken from its original owners with varying degrees of force. This is our foundational inconvenient truth, which when raised among non-Aboriginal Australians often elicits sighs and variants of do we really have to talk about this and haven’t we dealt with this already. We haven’t – we’ve barely scratched the surface – and in this context it’s worth noting that the Native Title Act (1993), now more than twenty years old, is still often woefully misunderstood. In a 2013 article in the Age, Germaine Greer wrote:

Traditional owners have rights and privileges that non-traditional owners cannot claim. Under British common law ‘native’ or ‘aboriginal’ title is not extinguished by a subsequent claim, and therefore minerals occurring in land covered by native title do not belong to the Crown. Traditional owners have a right to negotiate with mining companies; whitefella landholders have a duty to negotiate. Holders of native title can drive a hard bargain; the rest of us cannot.

This assessment is comprehensively, almost impressively wrong. Native title as interpreted by the courts is a fragile title both easily extinguished and incapable of being revived: government ownership of minerals prevails regardless of whether native title exists (the courts have ruled that there can be no native title right to minerals, with the exception of ochre); owners of private land can also do deals with miners; and native title claimants’ ability to ‘drive a hard bargain’ is limited by the deeply flawed Native Title Act.

Let’s consider what this bargaining process looks like. The Act accords registered claim groups and determined native title-holders’ procedural rights in respect of activities that affect native title, such as the grant of a mining lease. None of these rights approaches anything like the ability to veto a development. Instead, they range from the very limited, such as the right to be notified, and culminate in the right to negotiate. If the right to negotiate applies, before the activity can be done the claim group, the relevant government and the entity which has applied for the lease must negotiate in good faith within a period of six months with a view to reaching an agreement. If the parties fail to come to an agreement in this time, any of them can seek a determination from the National Native Title Tribunal, which can rule on whether the activity can proceed, but cannot make a decision entitling native title claimants to payments calculated by reference to the amount of profits made, any income derived or anything produced as a result of the activity. If the tribunal determines that the activity cannot proceed – which it has done only three times over the past two decades – the relevant government minister can override this determination. Professor Ciaran O’Faircheallaigh from Griffith University argues that the system places heavy burdens on native title claimants’ ability to negotiate, producing ‘profoundly inequitable’ outcomes ‘in a society where markets play an increasingly dominant role in allocating resources’. It is true that some good, sustainable agreements are being made and some mining companies go above and beyond their strict legal obligations, but the overall playing field is decidedly uneven.

Debates about native title often seem to presuppose that all land subject to claims is rich in minerals, but it isn’t, not even ‘up north’. Such discussions also frequently overlook the ‘settled south’, which was the first to be colonised. The Native Title Act requires claimants to prove, among other things, that they have a connection to the claimed land and waters that has continued substantially uninterrupted since the assertion of British sovereignty. At the risk of being glib, this task is made considerably more difficult when someone saw fit more than a century ago to plonk a city in the middle of your traditional country. In WA the ‘settled south’ is Noongar land, and in 2006 the Noongar people had a stunning yet short-lived win in the Federal Court. Justice Wilcox found, as a threshold issue, that native title existed in the area we now call Perth. He was not required to consider issues of extinguishment, but simply to examine whether there was a single Noongar ‘community’ for native title purposes and whether that community had continued to acknowledge its traditional laws and customs between 1829 and the present.

Native title is inevitably a reminder of the other side of the story – a not-so-distant past that white people often find it awkward to talk about. In opposing the ‘Single Noongar Claim’, the state of Western Australia relied on its predecessors’ misdeeds, arguing that ‘[t]hroughout the nineteenth century, European settlement of the Perth Metropolitan Area caused Aboriginal people to cease to acknowledge and observe traditional law and custom and to lose connection with their traditional estate’, including by ‘depopulation through disease and the killing of Aboriginal people by early settlers’; ‘dispossession and exclusion from the land’, and ‘removal to institutions and restrictions imposed on the movement and activities of Aboriginal people under legislation and government policy’. The rejection of these arguments was seen by some as more than merely a judicial decision, but as a formal acknowledgment that the Noongar people had survived all that the colonists had thrown at them. Glen Kelly, the CEO of the claimants’ legal representative the South West Aboriginal Land and Sea Council (SWALSC) and a Noongar man himself, wrote: ‘There was one group of people that weren’t surprised by this finding. This group was Noongars themselves, who have striven to maintain…law and custom in the face of wave after wave of dispossession policy pushed by the state.’ Jubilation was short-lived, however. The state government appealed Justice Wilcox’s decision, and in 2008 the Full Federal Court overturned it, ruling that he had incorrectly applied the Native Title Act. The decision prompted widespread criticism of the Act. SWALSC has since focused its efforts on negotiating with the state government on a settlement that would incorporate payments to a trust and the transfer of Crown Land – an alternative to doing battle in the courts.

The themes of history and postcolonial justice with which native title is entangled take us to broader questions. I’ve referred above to the arbitrariness of mineral distribution between states and territories, but this argument also applies to the nation itself and complicates the resource nationalism often invoked by supporters of the minerals rent resource tax. It would surely be theoretically possible to build a social democrat’s paradise in Australia using our mineral wealth, but what of the wider world?

WE RARELY ASK what a wealthy nation like Australia might owe to those less favoured by the random presence of iron ore, coal, nickel, uranium and gold. Recent cuts to the overseas aid budget, and our increasingly punitive asylum-seeker policies, suggest the answer is ‘not much’. The question of international obligations goes further. In 2013, Bill McKibben warned: ‘Australia’s massive deposits of hydrocarbons [are] a menace to the planet, and…have to be left in the ground if the world [has] any hope of avoiding catastrophic global warming.’ Like agriculture and manufacturing, mining is a polluting industry and our impact on the environment does not conveniently end at state or commonwealth borders. WA might be at the bottom of the world and, as the old joke goes, several hours and a few decades behind the eastern states, but we can’t ignore these questions.

Public conversations about fairness, in the context of mineral resources, are only a beginning. The theatre of mining – big personalities, huge deals, litigation, bravado – plays out under bright lights in Western Australia, yet while we quibble about tax revenue and joke about colourful billionaires, larger questions relating to issues of ownership, rights and responsibilities go unanswered. How long can we drown them out?


From Griffith Review Edition 47: Looking West © Copyright Griffith University & the author.

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