Getting a better deal for regions involved with mining

The issue of how mining companies can support business in regional economies is under the microscope – and late last month our General Manager of Policy and Research, Dr Kim Houghton presented the RAI’s view on this issue to the House of Representatives Parliamentary Standing Committee into Industry, Innovation, Science and Resources.

This committee has been tasked by the Minister for Resources and Northern Australia, Senator the Hon. Matthew Canavan, to conduct an inquiry into this issue, calling forward many experts from across the country.

At the Regional Australia Institute (RAI), we meet with many regional leaders around Australia, and this topic remains one of keen interest – not just in big mining regions.

State governments have also looked into this issue during the last mining construction boom and are still investigating ways in which they can secure the biggest local long-term benefits for mining projects.

In presenting his evidence to the Parliamentary Standing Committee, Dr Houghton drew on previous research conducted by the RAI through its Benefits of the Boom Policy Paper. This identified the main success factors to help businesses in regional communities. The five factors include:

• The establishment of local development strategies to maximize the benefits of projects as well as helping in managing any risks or uncertainties;
• Platforms for ongoing communication between all parties to ensure outcomes are beneficial for all involved – and where government can play a brokering or facilitating role to address market failure;
• A precise rundown of all roles and responsibilities for stakeholders involved including local and state government, local community and resource companies;
• The establishment of funding arrangements (such as Royalties for Regions or similar programs) that will provide local communities with funds to understand and respond to issues as they emerge; and
• A support system that is separate to EIA frameworks that ensures certainty for community, companies and governments.

While the capital investment and capacity building boom has passed, in the current climate, most jurisdictions across Australia are now looking more closely at mechanisms to get more local benefit from the mining sector.

In Queensland and Western Australia, new legislation has been written to increase local impact by requiring that investors demonstrate local supplier relationships. While this primarily applies to public spending on capital works, the RAI knows that the means and intention is there to push for similar requirements in approving private capital works.

During the hearing, Dr. Houghton provided an insight into the role that procurement plays in mining activities supporting regional economies. He noted that there are many barriers preventing small local businesses from capturing mining industry contracts.  The Committee is concerned that one barrier is slow payment by the large companies to the small ones, and Dr Houghton recommended that complaints along these lines be put before the Australian Competition and Consumer Commission (ACCC) for it to examine under the Trade Practices Act.

Public sector procurement is currently being reviewed by the RAI as we look into how it is being used both in Australia and overseas as a tool to promote regional economic development. This work will be finalised later this year and is likely to have some relevance for private sector procurement practices as well.

Furthermore, as part of the RAI’s 2018 Intergovernmental Shared Research Inquiry program, a significant body of work relating to regions in transition is also underway.  This work analyses how place-based assistance packages can be better designed and delivered in order to help regional communities through times of change.

Dr Houghton encouraged the committee to engage with RAI’s research findings as they come to hand, in order to assist those regions experiencing changes in the mining sector. Please Click here for more information regarding the RAI’s Regions in Transition work.

The inquiry will continue with the next stage taking place in Port Hedland on 9 October, 2018.

To access submissions to this inquiry, please click here.

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