The investment phase of one of the biggest mining booms in world history continues to wind down. Tens of thousands of jobs were shed from the industry in the two years after the boom’s peak in 2013. Earlier this year, National Australia Bank predicted 50,000 more would be lost as investment continues to decline over the coming two or three years.

The centre of the boom, Western Australia, is now reeling. The state has lost 64,000 jobs, and unemployment is 6.5 percent – a steep rise from a 4.5 percent average over the past decade and now the highest in the country. A walk through Perth past high rise apartments and imposing city office blocks gives a stark reminder of the many opportunities lost: high rates of homelessness, mental illness and growing listlessness among unemployed youth are immediately apparent. The end of the boom portends a bleak future for workers here.

Regional towns are decaying. Unused railway tracks criss-cross the wheat belt while roads have been left to deteriorate. Increasing rates of suicide, substance abuse and road accidents scar the lives of teenagers in rural areas. With the exception of some select areas frequented by tourists, rural towns increasingly look like places from the rust belt of the US. The Pilbara has been especially hard hit. One shire president told the ABC in March: “We’re pretty much devastated … families are just packed up and gone within a month. Empty houses everywhere”.

Boom times

The boom was largely driven by Chinese demand for iron ore and coal. The scale of the mining expansion was unprecedented. Australia racked up an extra US$1 trillion in exports over a 10-year period; $300 billion was added to government revenues. The price of iron ore reached an astounding $180 per tonne. The dividends to the mining companies were so large that the ALP Rudd-Gillard government called them “super-profits”.

In 2000, the total value of bulk commodity exports (hydrocarbons, minerals and metals) was just under $45 billion, according to BIS Shrapnel figures. By 2012, the figure had more than quadrupled to $188 billion. Huge engineering works dramatically increased the capacity of the mines as companies invested in infrastructure that hadn’t been substantially improved in decades. The Australian Bureau of Agricultural and Resource Economics estimates that nearly $360 billion was spent on expansion projects.

This boom fuelled a massive expansion of new housing stock as people migrated to WA in search of work. Perth housing was growing at 70,000 a year by 2012. Median house prices in the hot, dusty and remote town of Port Hedland peaked in 2013 at $925,000. Wages grew at the peak of the boom at almost 5 percent per year.

Grand theft

The development of WA has long been shaped by its vastness, its isolation, its mineral wealth and its integration into the global economy through exports of primary commodities. Larger than Western Europe, it lacks the same integration with the national economy as other states. It is the most parochial state, with sentiments of secession rising during the mining boom. State premiers forever play to feelings of Western Australian exceptionalism.

A handful of plutocratic tycoons such as Andrew “Twiggy” Forrest and Gina Reinhart exert considerable influence over state political affairs. Along with Sam Walsh, CEO of Rio Tinto, and Marius Kloppers of BHP, they were instrumental in getting rid of the federal Labor government’s proposed Resource Super-Profit Tax, spending $22 million in six weeks on a PR campaign that toppled the leadership of Kevin Rudd.

With the federal ALP government caving to mining magnates, the rich did very well. According to the Australian Bureau of Statistics, the total pre-tax profits earned by mining firms operating in Australia were more than $51 billion in 2009-10. So how much tax did they pay? The Australian Institute estimated that the effective corporate tax rate of mining companies was only 13.9 percent, well below the average of 21 percent.

It’s estimated that total government subsidies to mining corporations reached $10 billion a year – including such things as discounted or free water and electricity and rebates on diesel fuel, all of which they use in colossal quantities. There are lax environmental regulations and very little scrutiny of the impact of mining. The construction of airports, roads and other infrastructure associated with housing the mining workforce is often done at state expense.

The companies also receive direct government investment in research and development and geological mapping. On top of that they claim accelerated depreciation on all their assets and receive tax write-offs for capital works. To say mining companies enjoy generous tax deductions would be a great understatement.

BHP took avoidance to extremes. During a Senate inquiry into corporate tax avoidance, the company revealed that between 2006 and 2014, it paid a tiny US$121,000 on profits of $5.7 billion. It channelled its sales of bulk commodities through a special “marketing hub” established in Singapore. Through the scheme, BHP buys resources from its Australian operations and resells them at a higher price internationally. The profits declared in Singapore are virtually tax free. BHP admitted in the Senate inquiry that more than 40 percent of its on-sale commodities were not subject to tax in Australia.

Bust

Politicians acted as though the boom would forever deliver mountains of wealth to state and federal treasuries. But from late 2011, the price of commodities began to fall; a huge collapse ensued, the commodities price index more than halving by the end of 2015, with only a slight recovery throughout 2016. Writing at the Conversation, University of Western Australia professor Richard Heaney noted in late November:

“The Western Australian economy posted a dismal 0.7 percent growth in Gross State Product per capita in the year 2015-16, a number shared only with Queensland. Further, WA’s Real Gross State Income – a measure that also includes adjustment for purchasing power, was actually negative in the year 2015-16, at -6.4 percent. The next worst performing state was again Queensland, although it at least achieved a 1.1 percent growth rate.

“The impact of decreasing capital expenditure is particularly evident in the State Final Demand figures – a measure of domestic demand. Demand in Western Australia actually shrunk, declining 4 percent.”

The chance to reap significant social rewards from the boom has been squandered. The WA government is now in debt and is selling assets to try to balance the books. Not only have people stopped migrating here, but there’s now an exodus. Interstate migration numbers dipped from a net inflow of 8,898 in 2012 to a net outflow of 3,005 in 2015. International migration is following a similar trend.

During the boom, Perth experienced the highest population growth of any city in Australia, with a record number of houses being built in sprawling suburbs based on large estates that have no trees, green spaces, amenities or access to public transport. These are the future ghettos, with high levels of mortgage stress, housing that is bland, featureless, inefficient, poorly designed and dislocated from the centre of the city.

Home lending has dropped by 8.6 percent, and the rate of mortgages that are more than 90 days in arrears has doubled in one year. Mining town property values have dropped by as much as 78 percent, and building approvals have dropped by almost 25 percent, according to the ABS. The “mining state”, as it’s commonly called, recorded the largest increase of insolvencies in all Australia in June. The number of debtors in Perth rose 22 percent in the June quarter. Rockingham has been dubbed “the most bankrupt region in Australia”.

No other advanced capitalist country in the world squandered its resource boom quite like this. The end of the price and investment boom was always going to happen, but there was nothing inevitable or natural about the consequences of its collapse.

The period ahead will be marked by greater precariousness for workers. We have already seen evidence of this in an industrial dispute at Griffin Coal in Collie. The agreement covering maintenance workers was scrapped by the Fair Work Commission “in the public interest”. This sent workers back to the Black Coal Award, slashing redundancy and super entitlements, cutting wages by 43 percent and removing their even-time roster.

The union representing the maintenance workers, the AMWU, stayed strictly within the confines of the law and observed all the dictates of the commission, muting any sort of resistance, refusing to picket the entrance of the mine. What could have been the start of a fightback against anti-union laws and austerity turned into a miserable defeat.

Admittedly, the union had not faced such savage attacks in decades and has not been able to keep up with the rapid shifts in the industrial landscape. At a delegates’ conference in Fremantle, AMWU state secretary Steve McCartney described the unravelling of the boom and attacks on workers as the “new normal”, and indeed that is how industry heads describe it.

We should resist this sort of language. “New normal” reinforces the idea that workers have to put up with austerity and job cuts without fighting back. The big mining companies will look at the Collie defeat with glee and without fear of a unified explosion of working class resistance to its restructuring drive.

While the investment phase of the boom is over, the production phase is still on – export volumes remain at record highs even with price declines. Productivity levels have risen sharply as new operations finally come on line after years of the construction phase. So the mining companies are still raking in billions – looting the future of Western Australians.

It’s important to reflect on the missed opportunities of the boom and the defeats of mining workers so that we recognise that each fight against job cuts and austerity is significant and is the staging ground for a more united resistance that can win back the ground that has been lost.