Energy Minister Michael O’Brien has stated on ABC radio that “one of the compelling reasons for withdrawing the Remote Areas Electricity Subsidy from 13 remote communities was due to the increased mining activity near Coober Pedy and elsewhere in the state”.
Communities in the Far North of South Australia are now fearing that the expanding mining sector will give rise to blanket taxes on all SA communities.
On ‘Late Afternoons with Annette Marner’ on ABC radio Friday 18 March, Ms Marner reported “that businesses in outback towns such as Coober Pedy have been saying that their electricity prices are going up by as much as 130 percent with claims that this will “cripple the outback”.
“The government has reduced funding to what’s known as the Remote Areas Energy Supply Scheme to 5.5 million [cut by $1.3 million dollars] “This affects the communities of Marree, Parachilna, Blinman, Manna Hilla, Yunta, Coburn, Marla, Oodnadatta, Coober Pedy, Kingoonya, Andamooka, Glendambo and Nundroo,” said Ms Marner.
According to Robert Coro, Managing Director of the Opal Inn Group [in Coober Pedy], water prices will also rise by as much as 20 – 30 percent, because the town relies on reverse osmosis to produce it’s water and that’s all powered by electricity. The cost will obviously be passed on through the cost of water,” he said.
In a radio interview that took place on the 10th of March – “Energy Minister Michael O’Brien pointed to the expansion in mining as one of the reasons for cutting the electricity subsidy”, said ABC’s Annette Marner who replayed parts of an interview with the Energy Minister.
MINISTER MICHAEL O’BRIEN [replay from Thursday 10 March]: “I think the reality is that in business you’ve got to realise that the tax payers basically don’t underwrite the total cost of running your business. South Australian tax payers are subsidising Rob’s business and other businesses and domestic consumers in remote areas to the tune of 5.5 million a year. It’s a reduction on projection of about $1.3 million.
We’re taking into account rising fuel prices and the like and saying “no, we’ve got to get a hold on this”.
One of the compelling reasons [for electricity tariff] is we are beginning to see a significant amount of activity in the mining sector. What our concern is, that there’s a proposition that I think has been approved in Coober Pedy for single persons quarters -130 beds. We have a range of those occurring around the state. The level of tax payer subsidy to mining companies would go through the roof.
So we’ve got escalating oil prices, we’ve got increasing mining activity, we’ve got to do something about the level of tax payer subsidy that is going into remote regions for electricity.
What we’ve done is we’ve put a cap on the larger companies. Over 160 megawatts [160,000 kilowatts] you’ll get no subsidy. And that really is to deal with the larger operators who have currently received a subsidy. Below the 160 megawatt [160,000 kilowatts]- we’re talking about the small pubs and small supermarkets, so it really is an attempt to deal with what is going to be rapid expansion of the mining sector in Coober Pedy. We’ve got, as I said we’ve got a 130 bed single persons quarters. Now we’ve got to make sure this doesn’t run rampant. Fair is fair and this is the measure that we’ve decided upon.
There is an element of personal choice in all this and people have decided they’re going to set up businesses in Coober Pedy or they’re going to live in Coober Pedy and there are costs associated and they’re not on the grid. All the power is generated by diesel. The state government is subsidising their decision to operate businesses in places like Coober Pedy or Andamooka to the tune of $5.5 million a year.
Duncan McBain, Managing Director, IMX Resources in the north of South Australia operates the Cairn Hill Mine not far from Coober Pedy. Mr. Duncan McBain of IMX Resources heard the interview that took place on 10th March and soon thereafter contacted ABC radio with a request for a right-of-reply. ABC granted the request and on 18th March the interview took place.
Annette Marner’s asked Mr. McBain if the Energy Minister was referring to his company IMX Resources.
DUNCAN MCBAIN: “I assume it’s us [IMX Resources] being referred to although the minister got his facts wrong. We are only looking at a 66 room camp in town.
We made a conscious decision to put the camp in town because we basically felt it benefitted the community of Coober Pedy. The options for us, and it would have been just as cheap, would be to put the camp out on the site.
The other thing is when they talk about power; the operator of the camp is going to put an island power station in to supplement the power because there isn’t enough power available in Coober Pedy for us.
ANNETTE MARNER: Re subsidies to mining companies going through the roof in terms of electricity use?
DUNCAN MCBAIN: “We’ve never had a subsidy at all from the South Australian government for anything, so I don’t know how they can go through the roof. Apart from a few dugouts we have in Coober Pedy for some of our staff, we basically have no subsidy at all. We operate our mining activities completely separately….so from my point of view I don’t think there is a subsidy and we’ve never discussed with the Minister wanting a subsidy for our camp operation in town.
I’m very, very surprised – we’ve never had a subsidy from the government for anything. Everything we have and everything we do we pay full tote odds for. On top of paying things like royalties and payroll tax and all the other things, I think the government can very clearly see we make a positive contribution to the economy
More fundamentally than that though, places like Coober Pedy do cost a lot of extra money to live there. Forget the electricity, you have the groceries, and all these things cost a lot more money to live in Coober Pedy. I think South Australia would be a lot poorer for it if Coober Pedy were to collapse due to neglect. We made a very conscious decision to get as many people as we possibly can to live in Coober Pedy. Our target over the next year or two is around 40 to 50 percent of our work force living in Coober Pedy.
We’ve bought extra families into the town which helps keep the school and those things open and adds to the community. We feel very much part of the community. The community benefits are equally as important to us as the economics of the project.
Coober Pedy has been through some fairly hard times in terms of the opal industry, and tourism can be a very fickle industry.
People I speak to in Coober Pedy are fairly welcoming about the opportunity to create the mining services centre in town and obviously the more impost you put on setting up a business in Coober Pedy the harder it is to attract new jobs into the town, new employment opportunities in what’s a very disadvantaged community by Australian statistical standards. Aboriginal opportunities for employment and all these sorts of things. It’s always somewhat of a challenge to get people to go to remote communities because they see increased costs of living and they haven’t got the same services you would have in Adelaide in terms of hospitals.
I listened to a program the other day with the Mayor [of Coober Pedy] talking about the facilities available in Adelaide compared to any bush community, so it does take quite a lot to attract people to Coober Pedy and the more impost you put on them, the harder it is to get people there.
In the mining industry they do not have to work in South Australia, they do not have to work in Coober Pedy. They can work in Western Australia or Queensland as fly-in fly-outs!” said Mr McBain.
A recent comment from Coober Pedy Councillor and IMX Resources employee Steve Staines:
“For the State Government to use the increased activity in the mining industry as a reason to slash the RAES subsidy is absurd.
We want to continue to work with the three tiers of government to ensure maximum benefits, both social and economic, for the town and the region. We hope the government shares this vision with us,” said Mr Staines.
Is the reduction in the RAES subsidy more about the $2.5 billion in budget cuts that the State Government announced in September last year?
Former State Treasurer Kevin Foley said on 17thSeptember last year, “What we’ve tried to do with this Budget, as best as possible, is to take the pain internally and not to lump it on to families.”
Obviously families in the remote areas of South Australia were not the families Mr Foley was referring to!