Monday, February 22, 2010

The market, corporations and environmental damage

image courtesy the Guardian and from the Report prepared by Trucost

A recent unpublished study for the United Nations shows the cost of large corporations desire to' internalize profits' and 'externalize costs'.

The United Nations study estimates the world’s 3,000 largest corporations are responsible for over $2.2 trillion in environmental damage.The study found that the cost of and other damage to the natural environment caused by the world's biggest companies would wipe out more than one-third of their profits if they were held financially accountable.

The report comes amid growing concern that no one is made to pay for most of the use, loss and damage of the environment, which is reaching crisis proportions in the form of pollution and the rapid loss of freshwater, fisheries and fertile soils.

The report in the Guardian argues that:

"The true figure is likely to be even higher because the $2.2tn does not include damage caused by household and government consumption of goods and services, such as energy used to power appliances or waste; the "social impacts" such as the migration of people driven out of affected areas, or the long-term effects of any damage other than that from climate change. The final report will also include a higher total estimate which includes those long-term effects of problems such as toxic waste"

The unpublished report was conducted by the Principles for Responsible Investment Initiative and the United Nations Environment Programme.

Sunday, February 7, 2010

Just who benefits from mining booms?

(image courtesy of the ABC)

In Western Australian the mining and resources industry is all powerful. But there are voices questioning the triumphalist narrative that the industry supposedly delivers benefits for all Western Australians equally.

Sarah Burnside* is one such voice and has published a challenging and important piece on Online Opinion. Sarah's other writings can be found at New Matilda,
University of WA Institute of Advanced Studies and the Australian Institute of Aboriginal and Torres Strait Islander Studies

The benefits of mining or not, in Boomtown, WA (published in Online Opinion, Thursday January 21 2010)

In their excellent work It’s Still in My Heart, This is My Country: The Single Noongar Claim History, the historians John Host and Chris Owen noted that the colony of Western Australia was initially:

... a capitalist venture that sent the weakest to the wall and allowed the strongest - those with stamina and adaptability but more importantly, assets, connections and a certain ruthlessness - to flourish.

Western Australia remains a state firmly wedded to market principles and in thrall to the romance of a certain rugged individualism; the mining industry occupies particular pride of place. To say that WA is pro-mining is to comprehensively understate the situation. In recent years, the mining boom - fuelled by Chinese demand for iron ore - has made the state an economic success story, if not a full-fledged capitalist fairytale.

The overriding narrative is triumphal: “WA has the best performing State economy in the nation as it shrugs off the global financial slump and enters the new year ready to reassert itself as Australia's economic powerhouse”. Late last year, a conference entitled In the Zone was held in Perth. The name referred to the time zone shared “by Perth, 60 per cent of the world’s population, and the nations that promise the greatest economic growth of the twenty-first century”. Having long been so far from the action, the isolated capital city is now asserting itself: rest of the world, meet Boomtown.

Perth has eclipsed Melbourne as the second-most affluent city in Australia, retail outlets from the likes of Gucci, Tiffany & Co and Louis Vuitton have popped up in the CBD, and the local media spent much of the last fortnight preoccupied with the fate of a yellow Lamborghini under the State’s “hoon laws”.

So far, so banal: money is being made, people are spending it and the cogs and wheels in the economic system are turning. Although there are legitimate concerns (expressed most prominently by public intellectual Clive Hamilton) about the conceptual confusion of consumerism with citizenship, economic growth is regarded as a boon for obvious reasons.

There have been several reports in recent years, however, of the uneven spread of benefits arising out of the mining boom, in Western Australia and elsewhere. Peter Kenyon, a Professor of Economic Policy at Curtin University, has cast doubt on the assumption that what is good for the mining industry is good for everyone, saying: “What tends to happen in these circumstances is those that are directly benefited through the mining industry and indirectly benefited through the mining industry tend to do very well but the significant proportion of the population do not do well.”

Professor Kenyon’s argument is supported by research (PDF 258KB) conducted by the Australia Institute in 2009 which concluded that overall, “the mining boom seems to have had very little positive impact on the wellbeing of the majority of Australians other than those directly affected by the expansion in the mining industry”.

Similarly, Committee for Perth spokeswoman Marion Fulker noted in late 2009 that “there are some disparities between those earning very good incomes and those not … I would say the divide between the have and the have nots is increasing”.

The divide to which Ms Fulkner refers is becoming increasingly apparent: the 2009 Counting the Homeless Report found that the rate of homelessness in WA increased by 14 per cent between 2001 and 2006. The division between Perth and the regions was starkly illustrated by the spike in homelessness rates in the Pilbara and Kimberley regions, which increased by 58 per cent during this period. The report’s author, Dr Chris Chamberlain, attributed these rates in part to the mining boom, which saw many workers moving to the northwest and finding a lack of accommodation that led to them “sleeping in their cars … sleeping in shipping containers”. Homelessness is also particularly prevalent among Aboriginal people in WA - in 2008, a survey of Broome residents undertaken by the local council revealed that 27 per cent of the Aboriginal people surveyed were homeless.

It is also commonly noted that Aboriginal people in remote and regional areas have not substantively benefited from successive mining booms within their traditional country, a fact often erroneously invoked to criticise the Native Title Act, which was predicated not on social justice grounds but on the recognition of rights held under traditional systems of law and custom.

The poverty in the midst of plenty (PDF 3.93MB) shocks us out of the complacency engendered by the comfortable Australian rhetoric of the “fair go”. Responses, from indigenous and non-indigenous Australians alike, include sincere hopes that Aboriginal people will “share in the mining spoils”, “get out of poverty, get off welfare … have a better life”.

Mining, then, rather problematically assumes the status of Great New Hope for Aboriginal People. Such a mantle ignores the diversity of indigenous groups, assumes a monolithic “solution” will fix a loosely defined problem, and rather conveniently lets State, Federal and Territory governments off the hook.

It must be acknowledged that the resources industry is an easy target for glib critique. Issues are rarely as simple as environment v mining or traditional owners v mining: progressives and conservatives alike paint skewed pictures of complicated disputes. Some devotees of “the free flow of capital” have accused commentators on the “mining boom” of expressing an “elitist snobbery towards miners”.

The problem is not the industry itself, so much as our inflated expectations of what it can achieve. Reports about the “downside of the boom” are newsworthy because they are deemed counterintuitive - man bites dog; resources boom fails to deliver equitable levels of wealth. The question is: how surprising is it that the “trickle-down” theory fails to fulfil its promise? Do we really expect mining companies - whose primary purpose is the generation of wealth for their shareholders - to further an egalitarian state or “solve” ongoing post-colonial problems, without some kind of regulatory nudge in the right direction? Whether with respect to mining or any other area of wealth creation, the news that market capitalism does not automatically lead to equality of outcomes is hardly earth-shattering.

The past few decades have seen a gradual blurring of the roles of government and private industry in Australia; under neoliberal thought, the former ought to contract to allow the latter to flourish. It is worth restating that it is the role of government, rather than of industry, to safeguard citizens’ rights and their ability to enjoy those rights on an equal basis. This is not to say that private industry is a pernicious force; merely to acknowledge, as did humanities academic David McKnight in his 2005 book Beyond Right and Left, that markets “require a strong framework of law and civil society to restrain their dynamic but destructive tendencies”.

The reports quoted above indicate that what is good for mining companies isn’t necessarily good for all of us. What is often skirted around, however, is the fact that a buoyant economy will not, absent government intervention, reward all Australians equally either. The boom raises questions about what kind of society we want, about the concept of equality and the role of government in achieving it. In WA as elsewhere, our egalitarian self-image needs more than a bright new coat of paint in time for Australia Day: it requires some serious examination.

*Sarah Burnside is a West Australian solicitor with an interest in history, native title, nationalism and politics. She works at the Yamatji Marlpa Aboriginal Corporation (YMAC), which represents native title claim groups in the Yamatji and Pilbara regions of Western Australia. The views expressed in her articles do not necessarily reflect those of YMAC.

Western Australian perspectives that challenge the market

This blog is for people concerned about the extension of the market into every sphere of life. It has a particular focus on Western Australian issues and perspectives and the majority of contributors will be West Australians.

While the prime focus of our concerns is WA, the state cannot be seen in isolation from the rest of Australia, or indeed the rest of the world. The extension of the market to more and more aspects of society is a global phenomenon of the last two to three decades and thinking and action on this matter knows no state or national boundaries. In addition to writing about Western Australia, we we will have an eye of what is happening elsewhere.

Regular contributors are welcome.