Fly-in-fly-out workers preventing overbuilding of houses and infrastructure in mining towns: RBA research paper

The decision by mining companies to use a fly-in-fly-out (FIFO) workforce rather than base them in mining towns will prevent an oversupply of houses and infrastructure when the boom ends, according to new research presented by the RBA.

The report notes 2011 census data, which suggests that mining-focused areas such as the Pilbara in Western Australia and the Bowen Basin in Queensland have a much higher proportion of FIFO workers, and a much smaller share of permanent residents, than other  townships (and capital cities) in Australia.

“The data suggest a little more than 30% of all people in these ‘mining areas’ on census night were FIFO workers, compared with about 15% in 2006, and 4% to 5% in other towns,” notes the report Implications for the Australian Economy of Strong Growth in Asia co-written by RBA assistant governor Christopher Kent,  Michael Plumb deputy head of economic research at the RBA,  and James Bishop, an RBA economist.

“Once the mining investment phase comes to an end, the utilisation of FIFO labour is likely to fall as labour demand in these areas declines.

“To the extent that much of the extra demand for labour in remote locations is temporary, an advantage of FIFO arrangements is that they can help limit the extent of housing and infrastructure required to service the workforce, and therefore reduce the extent of unused capacity when the boom ultimately passes," says the report.

However, the use of FIFO workers has angered many in mining towns, who claim they receive little financial benefit from the nearby mining projects as a result and are demanding mining companies base more of their workforces in their towns.

The issue is currently being examined in a parliamentary inquiry, which has to date received 226 submissions. The inquiry was launched in August last year and is chaired by independent MP Tony Windsor.

Among the submissions, the Mount Isa City Council in north-west Queensland presented a list of ways to limit fly-in, fly-out (FIFO) mining work.

It recommends the government appoint an officer to determine what proportion of workers should live locally when granting mining approvals.

"An officer should be empowered to make recommendations when they are considering issuing a mining lease," Mount Isa mayor Tony McGrady told the ABC.

“The job of this officer would be to recommend as one of the conditions of the mining lease whether or not fly-in, fly-out operations should be allowed."

McGrady says regional towns across Queensland are emptying out because of the growing trend for miners to travel to work while their families live on the coast.

McGrady also wants the government to implement tax breaks to encourage workers to live in mining towns.

The findings of the research paper Implications for the Australian Economy of Strong Growth in Asia was presented by the RBA assistant governor Christopher Kent at conference in Canberra yesterday.

The conference was jointly hosted by the International Monetary Fund (IMF), Treasury and the RBA.