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The mining boom’s frontline:

That’s where the high wages are

May 20, 2011 – 10:53AM

There’s a backlash brewing on multiple levels against aspects of Australia’s resources boom, from complaints about “rich bogans” on disruptive big wages to ivory tower economists who’d like higher taxation to curtail the boom, with much of Australian business in the middle cursing the strength of the Australian dollar that flows from it.

There might have been a tinge of jealousy in the reading of yesterday’s labor costs statistics, showing the average wage in the mining industry is now six figures and therefore drawing away or starting to make more expensive skills in the cities.

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And Treasury Secretary Martin Parkinson this week warned that our dollar, stronger for longer, might be the biggest external shock to our economy yet. Parkinson was not being judgmental in that observation, merely stating the fact, but there has been a suspicion (denied) that some in Treasury would have been happy to see policy that limited the boom.

Having spent the week on the boom’s frontline in the north-west, flying into Broome and driving down to Port Hedland and Karratha, there’s a simple message: get over it. Rediscover Australia’s ability to rejoice in momentous achievements, in the capacity of Australians to work hard and change our world.

It’s a regular whinge that Australia hasn’t done anything big since the Snowy Mountains Scheme and it’s all the guvment’s fault. That’s a complaint made in ignorance. What’s happening in the Pilbara dwarfs the mighty Snowy vision and is having a bigger impact on the nation.

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You can read about it all you like and watch the pictures on TV, but the scale of projects present, promised and possible are only fully appreciated when they’re in front of you. I was hired to chair the inaugural Pilbara Pulse economic conference for the Karratha and Districts Chamber of Commerce and Industry – business people at the nation’s frontier facing enormous challenges and problems.

The biggest problems are those of too much success: a shortage of housing and commercial real estate that has pushed prices through the roof and, mainly because of that, a scarcity of labor, any labor, but especially skilled labor.

Just for starters, an average house in Karratha costs a million dollars to buy – or $2,000 a week to rent. And even at those prices, rentals right now simply aren’t available.

Providing housing therefore is part of the deal in hiring labor – but that doesn’t work if you are a small business person who has to do the providing for yourself and any employee.
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Commercial real estate is equally scarce, with the shire and state government running hard to try to catch up with demand that is running faster. That’s why Karratha has no independent butcher, no dry cleaner, no bootmaker and probably no candle maker either.

So yesterday’s average mining industry wage has to be put in some perspective. The wages are high, but so are the costs on the frontier.

And for those doing the fly-in-fly-out routine, well, the money would have to be good. Karratha has supermarkets, pubs, restaurants, the beautiful Dampier archipelago. (The town claims the nation’s highest level of boat ownership per head of population.) On isolated mine and construction sites throughout the region, conditions are as comfortable.
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Perhaps at the extreme end of FIFO contracts, there presently is a workforce of 3000 people on Barrow Island building the Chevron-operated Gorgon LNG plant. They work 26 days on, then have 9 days off. And they’re not eight hour days. Normally you’d have to commit some sort of crime to cop a sentence like that.

The Gorgon construction force will peak at 5000, and then only a couple of hundred will be required to run the thing when completed. Those 5000 will move on to the next mega project – and there are many more – or return to their cities and towns having saved a stake, if they’re smart, to buy a home or start a business.

In the process, those people are building amazing wealth for the nation. Don’t begrudge them big incomes, they are earning it. Don’t just curse the source of our strong currency, realise we are collectively wealthier because of it, that our nation as a whole faces the problems of success. The challenge for the rest of us softies is to adjust and adapt our economy to handle it, to become smarter, more productive, more innovative as we are forced up the value chain by our currency.

And if you’re jealous of the big money earned by people on the frontline – and if you’re mentally strong enough to handle it – you can always join them. The people building the Pilbara, building the nation’s wealth, have much to be proud of. And we should be proud of them.

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Sourced & published by Henry Sapiecha

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