Flying into a mining flashpoint

The bumper stickers on utes in the country towns read: "FIFO: Fit in or F..k off”. But a lot of the utes are brand new.

In the departure lounge upstairs at Perth airport, families from Melbourne and a few leather-clad European tourists are far outnumbered by workers forming snaking lines for propeller-plane flights to Kununurra or Karratha.

They are everywhere you look in the boom states – 'Fly in, fly out' workers who are shuttled thousands of kilometres each week by mining companies for typical rotations of eight days on, six days off.

Often housed in workers' camps or shared accommodation, they are the human side of the mines turning rural backwaters into cashed-up, but divided, hubs of the Australian economy.

These hubs are hotspots for property development and investment, creating one of the most volatile flashpoints between business, government and community interests.

So why are mining companies doing it? And why are the workers so vilified? In the FIFO debate, it's much more complex than just winners and losers.

What and why

While Australia has a long history of mining, FIFO is a relatively recent phenomenon here. Until the 1990s, mine workers typically lived near the actual site, in company-supplied housing. However, several developments have all but ended this practice.

BHP Billiton's giant Cannington mine in northwest Queensland employs 600 full-time BHP staff and 300 contractors, but is simply not a realistic location for a permanent settlement. Many interior mines face similar demands for staff against a lack of infrastructure and a volatile industry, making FIFO the only realistic option.

At the same time as companies move away from housing ownership, property developers and realtors are moving in.

In South Hedland, 3-by-2 bungalows are selling for three quarters of a million dollars, with a 10.7 per cent yield. Property values in the past decade are averaging 20 per cent growth per annum in some towns. These returns and growth rates far outstrip what is available in capital cities and are magnets of activity in the property industry.

"It is always our preference to source our workforce locally where we can,” a spokeswoman for BHP says. "However, the resource sector is experiencing major recruitment difficulties so we need to widen our options … we offer a blend of residential and FIFO positions at our iron ore operations to a mix of contractors and direct employees.”

Construction workforces for resource projects also typically much larger – and more temporary – than those required for standard operations.

Nonetheless, a Western Australian Chamber of Minerals and Energy report found that 47 per cent of WA mining personnel were FIFO, but the rate is much higher in the roughly 20 per cent subset who are contractors. With massive projected demand for approved resource projects, there will be, based on those percentages, tens of thousands of new FIFO workers in the next decade.

The issues

This expansion of FIFO entails a number of conflicts.

The majority of opposition comes from regional hubs – councils and local businesses may not have a readily available labour force, but often do have a ready supply of housing stock and a desire to reap rewards from the boom.

Where housing isn't readily available, workers can find rent and property value out of proportion (such as in Karratha, where median rent hit $1600 per week earlier this year), further encouraging FIFO while disadvantaging the non-mining local community.

According to ACIL Tasman economist Peter Johnson, while FIFOs can inject money into the local economy, the majority of wages drawn from these sites leaves the local area. "FIFO redirects income to the dormitory suburbs of major metropolitan centres,” he says. But there are beneficiaries.

"State Treasuries like it [FIFO],” Johnson says. "It means they can contain the capital costs associated with building or expanding infrastructure, such as schools, in these remote areas, which can be extremely expensive.”

But Curtin Graduate School of Business professorial fellow Fiona McKenzie notes that FIFO employees do not contribute directly to local government rates, and thus don't contribute to local infrastructure and services that they are using. There is also an impression that the workers don't contribute to the community's sporting or volunteer groups.

"As a rule, local councils don't want FIFO operations,” McKenzie says.

FIFO workers often earn upwards of $150,000 to $200,000 per year, with the drawcard of regular week-long breaks.

However, unions also have a number of concerns about FIFO. That the move away from the traditional platform of the eight-hour day has become commonplace is a concern to unions, believing it could be a 'thin end of the wedge' argument for changing workplace laws.

Andrew Dettmer, Queensland state secretary of the Australian Manufacturing Workers Union, represents many FIFO workers in Queensland and argues the high wages come at a price.

"We understand that many of these projects have to be built by FIFO, but let's not kid ourselves that this is a perfect scenario,” Dettmer says. "The wages are high; the cost is the disruption to family life.”

He also points to health and safety concerns, including the fatigue of working long shifts in a demanding environment, and 'drive in, drive out' where workers sometimes drive eight or more hours to get home after a long shift.

But the disruptions go further than simply time apart from family. Talk to longer-term residents of Mackay, Tom Price, Port Hedland, or any northern mining town, and they are sure to mention the social costs that come with an influx of wealthy, often bored, men. Increases in relationship breakdowns, prostitution, drug use and alcohol-related violence are all commonly linked with FIFO communities.

"One hundred years ago Australia was an experiment in social democracy, today it is an experiment in social dislocation,” Dettmer says.

Digging up a compromise

What is clear, looking at the pipeline of mining projects, particularly in Queensland and WA, is that many of these operations or projects simply have to be completed using a FIFO workforce. There will certainly be more FIFO workers, likely in greater proportions, which will only exacerbate existing flashpoints.

It is also clear that the concerns of local communities and the workers involved are valid.

These flashpoints will be increasingly located where the business interests of property developers and investors, and the big mining companies, clash with those in regional centres.

Regional cities such as Mackay or Geraldton are presenting themselves as partial solutions – basing FIFO workers closer to the mines and taking population pressures off the capital cities. They are also eager for a slice of the property boom and the increased council revenues a population boost would bring.

It's there, in our regional centres, that one of the greatest economic and social clashes of modern Australia is playing out. The issue of how to balance the FIFO workforce is just taking off.