DELEGATION REPORTS: Regional Australia Committee Delegation to Canada and Mongolia

Mr McCORMACK (Riverina) (21:04): 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 Oyuu 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 Ulan Bator, 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 soums, 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, Yo.Otgonbayar 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 Ulan Bator 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 Ulan Bator. 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 Canadians 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 has had 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 work site 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.