Elsevier

Energy Policy

Volume 99, December 2016, Pages 194-202
Energy Policy

The nexus of the coal industry and the state in Australia: Historical dimensions and contemporary challenges

https://doi.org/10.1016/j.enpol.2016.05.033Get rights and content

Highlights

  • A close nexus exists between the coal industry and the state in Australia.

  • An anti-coal movement has developed in recent years in Australia.

  • Breaking the coal industry/state nexus requires socialization of energy production.

  • This would enable a shift from reliance on coal to renewable energy sources.

Abstract

This article presents a historical account of the close relationship between the coal mining industry and the federal and various state governments, thus over time building a state/coal industry nexus in Australia. It examines (1) an early colonial stage extending from the late 18th century to around the time of Federation in 1902 when the nexus emerged; (2) an intermediate stage from the early 20th century to the late 1970s when the nexus became solidified; and (3) a late stage from the early 1980s to the present day when the corporate sector came to dominate the nexus. Both Coalition and Australian Labor Party governments have consistently supported the exploitation of Australia's coal and natural gas, including recently coal seam gas, and supported the expansion of coal ports. An opposition movement has called for leaving coal and coal seam gas in the ground and shifting Australia’s energy production to renewable sources, particularly solar and wind energy. The article highlights how the nexus between coal mining and the state inhibits action on climate change. It argues this can be transcended by energy policy directed at socializing coal mining, wedded to a program of transitioning it to renewable energy production.

Introduction

Leslie C. White, 2008 referred to coal as the “king, or the father, of the Fuel Revolution” which helped produce “modern capitalist culture.” Eventually, both capitalist and post-revolutionary societies came to rely on coal for many purposes, ranging from powering railways, heating buildings, manufacturing steel, to generating electricity. As in Britain, the birthplace of the Fuel or Industrial Revolution, in places as diverse as the United States, India, and South Africa, a tight nexus developed between the coal industry and the state. This paper examines the historical development of the coal-industry/state nexus in Australia and explores how it has facilitated production of coal for both domestic consumption and export. Kenworthy and Gordon (2011) assert that the expansion of coal exports, which is a derivative of this nexus, undermines efforts to reduce greenhouse gases. I shall also argue that this history shows that there is a need to transcend this nexus to create a safe climate in Australia and globally and detail the historical dynamics of this nexus and the difficulties it presents for dealing with greenhouse gas reduction.

In Australia mineral resources below the ground constitute Crown Land and must be leased by mining companies in order to extract mineral resources, including coal. State governments exert jurisdiction over regional and local matters issues such as minerals and energy, biophysical resources, agriculture, and infrastructure, including roads, transport, and urban planning. They have control over mining leases and exploration permits. State and Territory governments levy royalties on mineral commodities, including coal, although royalty rates vary (MinterEllison, 2010). Although the Australian Constitution does not grant the federal-government jurisdiction per se over mining operations, the federal government can override state and territorial policies on mining operations if it deems them to be inconsistent with federal legislation. The coal mining industry generates royalties for various state and territorial governments. For example, in 2010, in the two largest coal mining states, the royalty rate for Queensland was seven percent for coal priced at less than $100/ton and ten percent for coal priced at more than $100/ton and in New South Wales 8.2% for coal derived from open cut mining, 7.2% for coal derived from underground mining, and 6.2% for coal derived from deep underground mining (MinterEllison, 2010).

Crough et al., 1983 delineate four features of the Australian “mineral industry,” including the coal mining industry, that have been present at least since the late 1960s: (1) “a very high level of foreign ownership and control,” (2) “large inflows and outflows of capital from the industry,” (3) “the export-orientation of the industry,” and (4) “heavy reliance on imported equipment.” They assert that under this scenario, Australia has become a client state “whose main function is to shape the future development of the economy in such a way that profits of foreign corporations have first priority, and the needs of the Australian people the last priority” (Crough et al., 1983: 35). While corporations invariably resist governmental intervention if it entails regulation of their labor and environmental practices or profit, they welcome state involvement in situations where it benefits them. As Corrighan observes:

Capital, and particularly multinational capital, demands that the state provide sufficient inducements before investment and expansion will be undertaken. This applies especially to mining capital, which is certainly not opposed to the state having a major role in development, as long as this role is confined to such areas such as massive capital outlays for the provision of infrastructure, which capital itself will not provide (Corrighan, 1980: 30).

Prior to the 1970s or thereabouts, resource-based development tended to be viewed in a positive manner and given generous subsides by the Australian states, particularly in Queensland and Western Australia, not only because it created profits for mining companies, including coal mining ones, but also because it created royalties, tax revenue, and employment. Conversely, as Brueckner et al., 2014 observe, mining “harbours risks and poses challenges to environmental, social, and economic sustainability,” meaning that the apparent benefits have led to the risks being downplayed.

Section snippets

Methodology

This paper presents a social-historical chronology of connections between the coal industry and the state in Australia at various stages: (1) an early colonial stage extending from the late 18th century to around the time of Federation in 1902; (2) an intermediate stage from the early 20th century to the late 1970s; and (3) a late stage from the early 1980s to the present day. This account shows how the interactions between various groups influenced policy and built a coal-industry/state nexus,

The early stage in the nexus between the coal industry and the state

Coal has been a central resource in the development of the Australian political economy since the colonial era. According to Dryster and Meredith, 2012, “Before mines opened in Asia and along the west coast of the Americas, sailing ships from New South Wales carried coal to power factories, steamships, railways, domestic stove, and fireplaces around the Pacific rim.” This nexus between coal mining and the Australian state began very early as convicts were used as coal miners in both colonial

Analysis and discussion

The historical trajectory of the relationship between coal and the state in Australia, and the outcomes in terms of energy policy, demonstrate the powerful appeal of cheap fossil fuels for policy-makers. That logic has changed over time, passing through several phases that reflect the context of social development and international linkages. The persistence of coal, as a form of primary commodity production, in an industrial and now ostensibly post-industrial society, is telling. The changing

Conclusion and policy implications

The article has taken an historical perspective on the production of energy policy. It has periodised the phases of Australia’s coal policy in order to understand the dynamics of dependence, and how they may be broken. This historical research an important task for observers of energy policy, as it is in the dynamics of past change that we can find the potential for change into the future. Energy policy is at the centre of the national development trajectory, and being able to place it in that

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