Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers CFMEU and the BFFSSA May 2013

Transcription

1 Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers CFMEU and the BFFSSA May Social and Economic Impact of Singleton FIFO Camp

2 This report has been prepared for Error! No text of specified style in document.. SGS Economics and Planning has taken all due care in the preparation of this report. However, SGS and its associated consultants are not liable to any person or entity for any damage or loss that has occurred, or may occur, in relation to that person or entity taking or not taking action in respect of any representation, statement, opinion or advice referred to herein. SGS Economics and Planning Pty Ltd ACN Offices in Brisbane, Canberra, Hobart, Melbourne, Sydney Social and Economic Impact of Singleton FIFO Camp

3 TABLE OF CONTENTS EXECUTIVE SUMMARY 1 Purpose of this Report 1 The Proposal 1 Singleton and the Region 1 Social Costs and Benefits 3 Economic costs and benefits 4 Conclusion 5 1 OVERVIEW Purpose of Report Method Outline of Report 6 2 THE PROPOSAL Facilities and services 3 3 CONTEXT OF SINGLETON AND REGION Demographic profile 4 Growth projections Housing demand 5 Future growth areas 5 Housing Prices Regional settlement patterns Economy and employment 11 Regional overview Regional infrastructure investment in the Hunter Region 15 Existing infrastructure 15 Key investment strategies 15 4 SOCIAL COSTS AND BENEFITS OF THE PROPOSAL Why are social and community issues important? Social costs and benefits to Singleton community 17 Impacts on community integration 17 Impacts on existing infrastructure 18 Impacts on Housing Social costs and benefits to FIFO workers 21 5 ECONOMIC COSTS AND BENEFITS OF THIS PROPOSAL Introduction Overview of scenarios Overview of assumptions for estimating economic impacts Costs and benefits of the proposal 25 Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers

4 5.4 Other potential economic benefits of using resident workers over FIFO workers 27 6 REFERENCES 29 LIST OF FIGURES FIGURE 1. REGIONAL CONTEXT FOR SINGLETO N 1 FIGURE 2. DEVE LOPMENT SITE IN RELATION TO SINGLETO N, NSW. 2 FIGURE 3. SITE DEVE LOPME NT PLA N 3 FIGURE 4 LONG TE RM GROWTH AREAS IDENTIFIED FOR SI NGLETON (SINGLETON COUNCIL) 7 FIGURE 5 MEDIAN HOUSE PRICES FOR SINGLETON, UPPER AND LOWER HUNTE R 8 FIGURE 6 MEDIAN UNIT PRICES FOR SINGLETON, UPPER AND LOWER HUNTE R 9 FIGURE 7 MEDIAN RENTS IN SING LETON FIGURE 8 SINGLE TON IN THE REG IONAL SETTLEMENT CON TEXT 11 FIGURE 9 ACCESSIBILITY OF LAB OUR FORCE TO SINGLETON BY CAR 13 FIGURE 10 PEOPLE BUYING AND SE LLING HOUSING (ABS 2011) 20 FIGURE 11 TRANSITIONING TEMPOR ARY HOUSING TO PERMANENT HOUSING 21 LIST OF TABLES TABLE 1. DE VELOPMENT SEQUENCE OF THE PROPOSAL 2 TABLE 2. SINGLE TON LGA DE MOGR APHIC COMPARISON, TABLE 3 DWELLINGS PER ANNUM ( ) 5 TABLE 4. HOUSING PROFILE REGIONAL COMPARISON 10 TABLE 5. EMPLOYMENT PROFILE OCCUPATION (REGIONAL COMPARISON) 12 TABLE 6. TOP INDUSTRIES OF EMPLOYMENT (REGIONAL COMPARISON) 12 TABLE 7 SELECTE D POPULATION AND EMPLOYMENT INDIC ATORS 14 TABLE 8 EMPLOYED RESIDENTS A ND EMPLOYMENT OPPORT UNITIES, SINGLETON REGIONAL LABOUR MARKET CATCHMENT (2011) 14 TABLE 9. ESTIMATED CONSTRUCTIO N AND SPENDING PHASE IMPACTS BY SCENARIO 26 TABLE 10. OVE RALL TOTAL IMPACTS AFTER AC COUNTING FOR CONSTRU CTION AND WORKE R SPENDING 27 Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers

5 EXECUTIVE SUMMARY Purpose of this Report SGS has undertaken a social and economic assessment of a proposed temporary accommodation village to house up to 3000 FIFO workers (in up to 1500 accommodation units) around 2.5 kilometres outside of Singleton. It is being proposed by the MAC Services Group and is currently being assessed by the Singleton Council. This report forms part of the CFMEU response to the proposal during the public consultation period. SGS has undertaken this assessment analysing the existing local and regional context and undertaking quantitative and qualitative analysis of the costs and benefits of the proposal by MAC. The Proposal The proposal is located 2.5 kilometres out of Singleton at Putty Road Glenridding and a map showing the location of the proposal is below. The 43 hectare site could accommodate rooms initially and staged to accommodate up to 1500 rooms. Source: Google Maps, Singleton and the Region SGS has analysed a range of local and regional demographic, housing, land supply and infrastructure issues relevant to the assessment of this proposal. The key points are: Land is available for residential development in Singelton (zoning for 2000 lots) and additional land is available in nearby towns, highlighting a lack of need for the proposal from a settlement perspective; House prices and rents are generally affordable and have recently declined indicating capacity in existing housing markets to progressively absorb resident workers; and The NSW Government has invested in infrastructure and programs to support local economies including a skilled labour force indicating that a proposal to house FIFO workers is contrary to current state policy commitments. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 1

6 The map below shows the accessibility to Singleton by car (within 60 minutes drive time), and the resident labour force catchment within these accessibility contours. In total, nearly 170,000 employed residents live within an hour s drive from Singleton, with nearly 9,000 of these employed in the mining industry in this region. Source: SGS Economics and Planning Based on small area data accessed from the Department of Education, Employment and Workplace Relations, the unemployment rate in Singleton has risen since August 2011 since the last census data was collected. This indicates some current slack in the labour market. There is excess capacity presently in the regional labour market to service any demand for additional workers. The wider regional economy (comprised of eight local government areas) hosts nearly 19,700 mining jobs whilst nearly 22,000 employed residents of the area report they are employed in the sector. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 2

7 Social Costs and Benefits SGS has found that the MAC proposal will have social impacts on the existing community and also on the FIFO workforce. Impact on community integration Temporary workers are unlikely to invest in the social capital of the community in comparison with workers who reside in the town (or the region). For example local or regional workers would: Use local services such as businesses, schools and health services; Invest in housing and spend their money locally; Develop local social networks and friendships; Have the potential to have family members employed in local businesses and services; and Be involved in local sport and community organisations. The MAC proposal acknowledges that the temporary camp could create a them and us divide in the town and suggests that further ways to integrate the two communities should be explored. However there are no options or ideas presented for better integration into the community. There is also a suggestion by MAC that isolating the workers away from the town will minimise disturbance to the community. Again under the approach by MAC, opportunities are lost for community building and integration by firstly not using local workers and secondly having FIFO workers separated from the community. Impact on existing infrastructure The proposed development will not contribute to supporting the existing infrastructure in the town. The Singleton Council has identified the need for sustainable infrastructure as a priority in the next three years, as well as a revitalised town centre, more retail options, a café and eatery precinct, more cycle ways and other community spaces that bring people together. The proposal also does not support investment by the NSW Government which is targetted at the development of strong local and regional economies including a local and regional skilled labour force. The MAC proposal addresses the impact on local roads with increased traffic and has said it would provide Council with additional information on the impacts on health and policing services. It does not address how the town will benefit from this proposal but rather how it will address mitigating effects of the proposal on the town s infrastructure. The Council has clear policies around revitalising and supporting community and business opportunities in the town. Use of local workers however, unambiguously supports the aims of these policies. Impact on Housing Singleton has sufficient land zoned in the Singleton Heights area for approximately 2,000 new dwellings, while in Muswellbrook there is potential for a further 1,300 new dwellings in the zoned residential land at South Muswellbrook. The Huntley proposal near Branxton, is for a new town of homes, a town centre and employment lands. The Huntley site is about kilometres from Singelton. Other townships in this region will be further accessible by the F3 Freeway once completed. The NSW Government has recognised that temporary worker villages can have significant impacts on an established town, such as changes to the social structure, changes to the character of the town or placing pressure on existing services, and may not be appropriate or desirable for all communities. For these reasons the NSW Government is intending to prepare a guideline for the temporary accommodation of mining employees. The MAC proposal states that there is not enough temporary accommodation in the town to house these workers. It also states that this new development will allow housing to be freed up for other uses to increase affordability and for potential tourist uses. However, SGS s research has shown that Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 3

8 Singleton already has affordable housing, considering household income levels. SGS supports the statement that there is unlikely to be sufficient temporary accommodation but makes the point that if local or regional workers were used (with families), temporary housing would not be needed. Furthermore investment in housing and land development would be increased if local workers were employed. There has been no demonstrated need identified by the proponent for locating a significant housing development outside the town area. In addition, the temporary housing proposal could potentially undermine confidence in land development, housing construction and demand for rental properties for the community. Alternatively the use of local workers could provide a stimulus to the housing sector. Impact on FIFO workers An inquiry into FIFO workforce practices by the House of Representatives Standing Committee on Regional Australia (2013) highlights the health impacts of FIFO work, some of which are directly related to the social isolation of the FIFO experience. Some of the impacts cited include: The use of alcohol and other drugs; Poor diet and physical inactivity; Increased sexually transmitted and blood borne infections; Mental health issues; Fatigue related injury; and An increase in injury related to high-risk behaviour. The MAC proposal has included on site services for the FIFO workers and suggests dialogue and links with the Singleton community to increase interaction and reduce social isolation. Again the use of local and regional workers with established links to the community will not generate the anticipated health and well being impacts expected with the use of FIFO workers. Economic costs and benefits The MAC proposal has measured the impacts of the construction and operational phase of the development on Singleton and assumes all workers will be FIFO workers. It has not compared the impacts of using FIFO workers to the costs and benefits gained in using a local or regional workforce. SGS s modelling shows the use of FIFO workers can lead to significant losses to the local and regional economy compared to the use of local and regional workers. SGS has modelled and compared the estimated impacts of contracting work to FIFO workers and using resident and a new workforce. The following observations can be drawn from these results: Using FIFO workers results in a net direct loss to the regional economy of (initial impacts only): o between $20 and $57 million in gross regional product during the construction phase (depending on the proportion of new permanent workers in the region), and of $48 million annually due to reduced worker spending; o up to 519 employment positions during the construction phase, and 723 employment positions annually due to reduced worker spending. Using FIFO workers results in a net total loss (i.e. direct + flow-on impacts) to the regional economy of: o between $75 and $211 million in gross regional product during the construction phase (depending on the proportion of new permanent workers in the region), and of $99 million annually due to reduced worker spending; o up to 1,961 employment positions during the construction phase, and 1,177 employment positions annually due to reduced worker spending. In aggregate, i.e. accounting for the differences in stimuli due to construction and worker spending activity, and looking at the total effects (i.e. both direct and flow-on effects), the regional economy stands to lose up to $311 million in gross regional product and 3,138 full-time employment positions annually by contracting FIFO workers instead of using a permanent resident workforce. These losses will continue annually. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 4

9 Other potential economic benefits from using resident workers Compared to FIFO workers, contracting permanent residents also has the potential to yield other benefits to the regional economy. These include: A more productive resident workforce; More increased regional spending due to new construction activity and spending by additional workers; Higher utilisation of existing businesses and capacity of services in town; and Higher property values in the vicinity of settlements. Conclusion Overall SGS finds that the social and economic benefits and costs of this proposal to house up to 3000 FIFO workers in a location 2.5 kilometres outside the town area are far outweighed by the alternative option to employ resident workers. Regional and local labour sources are available which would provide far greater returns to the economy and the community. Nearly employed residents live within a one hour drive of Singleton with of these employed in mining industry. There is excess capacity presently in the regional labour market to service any demand for additional workers. Use of local and regional labour would boost spending on construction and investment in housing. The regional economy stands to lose up to $311 million in gross regional product and 3,138 full-time employment positions annually by contracting FIFO workers instead of using a permanent resident workforce. Opportunities are lost for community integration with the use of FIFO workers over resident workers and in a location of 2.5 kilometres from Singleton. Land for housing is available for housing in Singleton and the surrounding region. Justification for locating temporary accommodation outside of the town boundaries has not been supported in the MAC proposal. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 5

10 1 OVERVIEW 1.1 Purpose of Report SGS has undertaken a social and economic assessment of a proposed temporary accommodation village to house up to 3000 FIFO workers (in up to 1500 accommodation units) around 2.5 kilometres outside of Singleton. It is being proposed by the MAC Services Group and is currently being assessed by the Singleton Council. This report forms part of the CFMEU response to the proposal during the public consultation period. SGS has undertaken this assessment analysing the existing local and regional context and undertaking quantitative and qualitative analysis of the costs and benefits of the proposal by MAC. In assessing the costs and benefits SGS has compared the use of FIFO workers in this proposal, to a proposal that uses local or regional workers and quantifies and qualifies the differences between these two approaches. 1.2 Method SGS has undertaken this assessment using the following method: Review of background documents for the MAC proposal; Review of Singleton Council and NSW Government policy documents relevant to this proposal; Research on demographic, housing and labor market trends in Singleton and the Region; Consultation with a sample of local business operators and community organizations; Participation in a round table of Community Leaders in Singleton on 8 May 2013; Assessment of the social and economic costs and benefits through quantitative and qualitative methods; and Discussion of alternative options to this proposal 1.3 Outline of Report The assessment is set out as follows: Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Provides details on the development proposal Outlines the context of Singleton and the surrounding region Identifies the social costs and benefits of the proposal Provides the outcomes of economic modelling and identifies impacts Documents references used in this report The summary and key findings can be found in the Executive Summary at the front of this report. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 6

11 2 THE PROPOSAL On 28 February 2013, The MAC Services Group 1 put forward an application to develop a Temporary Accommodation Village at Lot 60, 319 Putty Road Glenridding. The development site is 2.5 kilometres from Singleton, a major regional centre in the Hunter Region, and covers 43 hectares (see context maps at Figure 1 and Figure 2). It is approximately 8 kilometres from the nearest mine site (Warkworth Mine), and is bounded to the west by Putty Road, to the east by Army Camp Road and to the north by Heuston Lane. The Hunter River is 500 metres to the west of the site. The MAC Group has entered into a 20 year lease with the current owner of the site, who will continue to farm the remaining 7 hectares of the property. The development is currently in the master planning stage, and is expected to cost $101 million. FIGURE 1. REGIONAL CONTEXT FOR SINGLETON Source: SGS, Established in 1998, the MAC Services Group Pty Ltd (The MAC) specialises in the provision and management of accommodation facilities for the resources industry. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 1

12 FIGURE 2. DEVE LOPMENT SITE IN RELATION TO SINGLETON, NSW. Source: Google Maps, The proposed residential village would provide temporary accommodation of up to 1500 rooms for workers in the mining industry, as well as workers in related sectors of engineering, construction and infrastructure. It is proposed that the development take place in five stages (see Table 1), initially to provide 300 to 400 mostly single rooms in a resort-style village, with the potential for development of up to 1500 rooms, subject to demand. While there will be car parking facilities (1151 bay), a bus service is proposed to run between the township of Singleton and key work sites. TABLE 1. DE VELOPMENT SEQUENCE OF THE PROPOSAL Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Rooms CBF Cumulative Rooms Source: KEEPLAN, 2012 Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 2

13 A site plan showing the layout of the accommodation is shown on Figure 3. FIGURE 3. SITE DEVE LOPME NT PLA N Source: Scott Carver, Facilities and services The MAC accommodation model is proposed to be similar to a resort, where the developer designs, builds, owns and operates largely self-contained accommodation facilities. Typically, the MAC accommodation facilities are developed in areas where housing demand is generated through rapid and/or temporary expansion works related to mining. Similar facilities have been developed by the MAC in Narrabri and Boggabri in NSW. The development plan includes the following facilities for the village residents (WRI 2013): Gym and fitness facilities Lap pool Tennis court Outdoor recreational areas and a central park/lawn Communal dining facilities Convenience shop. Other proposed features of the development are: A community meeting hall or community centre Potential to expand to provide accommodation for defence and infrastructure workers Potential for a small portion of rooms to be available to the general public Bus transport to and from the mine. According to the Environmental Effects Statement prepared for the Development Application, the MAC s model is to decommission their villages at the end of their lifespan. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 3

14 3 CONTEXT OF SINGLETON AND REGION 3.1 Demographic profile The Singleton Local Government Area has a population of 22,695, with a slightly higher percentage of males than females. The largest town in the area, Singleton, has a population of 13,961 (ABS, 2011). 22 per cent of the LGA population are under the age of 15, with 10 per cent over 65. Singleton LGA has a younger profile when compared to Hunter Statistical Area Level 4 and Regional NSW, with a median age of 35 years. TABLE 2. SINGLE TON LGA DE MOGR APHIC COMPARISON, Singleton Township (UCL) Singleton LGA Hunter Valley (excl. Newcastle) Population (resident) 13,961 22, ,246 7,211,468 Male 50.3% 51% 49.7% 50.4% Female 49.7% 49% 50.3% 49.6% Under % 22% 21.1% 18.8% Over % 10% 14.7% 14.9% Median age Median household income $1,638 $1,692 $1,158 $1,237 Source: ABS Community Profiles (Singleton UCL; Singleton LGA; Hunter Valley, 2012; RDA 2012). NSW Growth projections The LGA has experienced modest growth over the past decade, with an average population increase of 1 per cent per annum since Mining is the key driver of growth in the region, by way of comparison, in Dungog Shire where there is no coal mining presence growth has been 0.7% per annum 2. The overall population growth rate (10 per cent from ) is slightly higher than the Hunter Valley Statistical Division (9 per cent), and regional NSW (6.48 per cent). As reported in the Social and Economic Impact Assessment for the development application (WRI 2013), the NSW Government expected the population of Singleton LGA to increase above the average rate out to 2036, from 22,900 in 2006 to 31,800 in 2036 (just over 9000 persons) 3. However, this growth has not been as fast as expected, with population at the 2011 census sitting at 22,695 (1,500 less than projected). The population of Singleton LGA is projected to steadily increase at a rate of 1.1 per cent, slightly higher than the average for the Hunter Valley Statistical Division. 2 Department of Planning and Infrastructure (2012). Upper Hunter Strategic Regional Land Use Plan. Sydney: Department of Planning and Infrastructure. 3 Department of Planning (2009) NSW Statistical Local Area Population Projections, Sydney: Department of Planning. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 4

15 3.2 Housing demand According to the Singleton Land Use Strategy (PWA 2008) by 2021 the Singleton township is expected to have a population of 17,750 with 9,750 in rural areas. This represents an increase of almost 4000 people in the township and 1000 people in rural areas. Table 3 shows that the growth in new dwellings in Singleton has been modest, with around 138 new dwellings built per year. The Singleton Land Use Strategy envisages a growth rate of 1.5 per cent per annum out to 2032, with new dwelling demand averaging 200 dwellings per year. However Singleton is located in the Upper and Lower Hunter Region with over people residing in this region. This is the largest region in Australia outside the capital cities and new growth has been averaging around 2850 dwellings per year across the wider region. TABLE 3 DWELLINGS PER ANNUM ( ) Popn Popn Popn Popn pa Dwgs Dwgs Dwgs Dwgs pa Singleton LGA 20,290 21,937 22, ,764 8,374 9, Upper Hunter Region 59,394 63,013 65, ,746 26,756 28, Lower Hunter Region 468, , ,666 5, , , ,330 2,469 Hunter Region (total) 528, , ,100 5, , , ,888 2,850 Source: SGS Economics and Planning and ABS 2011 Source: Singleton Council, Future growth areas There are various issues facing the supply of housing in the Singleton township. These include flood liable land, heritage issues, servicing and infrastructure issues. The town is constrained by its physical setting, and surrounding land uses (i.e. coal mining and army camp). Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 5

16 However, according to the Singleton Land Use Strategy, there is adequate existing provision for residential land within the time period of the Strategy, and no immediate need for further residential land releases in the Strategy time frame, above and beyond what is already available. A local environmental plan amendment was finalised in 2008 zoning additional land for residential purposes in North Singleton. This is expected to ensure an adequate supply of zoned residential land for the next 15 years. Figure 4 shows the conceptual location of the long term urban expansion options for Singleton. According to the Land Use Strategy, future urban growth is to be concentrated in the Singleton Heights (North Singleton) area, providing 60% of all additional dwellings out to Long term residential land opportunities need to be provided for and sites need to be identified for urban support uses (e.g. schools, health and social facilities). The Lower Hunter Regional Strategy also identified the nearby area of Branxton as a site for future intensive development, including up to around 2000 lots within the Singleton Local Government Area as part of a new urban area having around 7000 lots, and a new overall potential population of 15-20,000 people. Source: Singleton Council, Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 6

17 FIGURE 4 LONG TE RM GROWTH AREAS IDENTIFIED FOR SI NGLETON (SINGLETON COUNCIL) Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 7

18 Housing Prices The Singleton township area (Urban Centres and Localities) has a significantly lower rental vacancy rate (7.8 per cent) than the surrounding LGA (10 per cent) and the Hunter Valley region (13 per cent). However, discussions with a local real estate agent have indicated that the vacancy rate has been increasing recently 4. Shortages of rental accommodation have periodically occurred in Singleton, and there are potential issues associated with provision of affordable housing, and changes in housing requirements associated with the overall ageing of the population. Housing affordability for the vulnerable and providing adequate suitable aged persons accommodation are expected to continue to be significant issues. Figure 5 shows the median house prices in Singleton have increased by 24% over the five yeas up to 2012 with some strong signs of a slow down so far in house prices in In 2011 and 2012 the median house price in Singleton was above the Upper and Lower Hunter median prices reflecting demand for housing was strong in Singleton in these years. FIGURE 5 MEDIAN HOUSE PRICES FOR SINGLETON, UP PER AND LOWE R HUNTE R $450,000 $400,000 $350,000 $300,000 $250,000 Source: RP Data 2013 $200, (part) Upper Hunter $275,000 $279,750 $306,000 $316,500 $340,000 $272,500 Lower Hunter $315,000 $327,000 $360,000 $357,500 $371,000 $360,000 Singleton $312,000 $320,000 $360,000 $372,000 $410,000 $354,000 Median unit prices in Singleton have shown increases over the last five years of around 26% and again show a spike in 2012 with some signs of weakening across all the areas in In recent years prices for units in Singleton have been comparable to prices in the Upper and Lower Hunter (Figure 6). 4 Telephone cconversation with Christine Leighton, Real Estate Property Manager from David Williams Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 8

19 FIGURE 6 MEDIAN UNIT PRICES FOR SINGLETON, UP PER AND LOWER HUNTE R Source: RP Data 2013 $340,000 $320,000 $300,000 $280,000 $260,000 $240,000 $220,000 $200, (part) Upper Hunter $218,655 $284,000 $285,000 $275,000 $300,000 $228,500 Lower Hunter $300,000 $299,950 $319,000 $316,000 $330,000 $290,000 Singleton $263,000 $285,000 $290,295 $264,000 $332,500 $235,250 In the last five years, rental prices have increased by around 25% for houses with signs of stabilising in 2013 (Figure 7). In 2013 the median rental price for a house was $390 and units $330/week. FIGURE 7 MEDIAN RENTS IN SING LETON House Unit Source: RP Data 2013 House prices and rents in Singleton are relatively affordable when compared to average household incomes. Singleton has a relatively low level of mortgage stress (typically defined as households where mortgage payments are 30 per cent, or greater, of household income), with only 6. 5 per cent of households in this category, compared to the Hunter Valley region rate of 8.8 per cent and New South Wales proportion of 10.5 per cent (Table 4). This is due to the high median wage of the area: at $1,638, and the median household income is significantly higher than both the Hunter Valley region ($1,158) and the Newcastle LGA ($1,150). There are still relatively affordable house prices and rents. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 9

20 TABLE 4. HOUSING PROFILE REGIONAL COMPARISON Singleton Township (ULA) Singleton LGA Hunter Region (excl. Newcastle) Newcastle LGA New South Wales Median rent $270 $260 $240 $270 $300 Median mortgage repayments $1,950 $2,000 $1,733 $1,780 $1,993 Vacancy rate (unoccupied private dwellings) Median household income Households experiencing mortgage stress * 7.8% (423) 10% (879) 13% (13,266) 7.7% (9,825) 9.7% (265,338) $1,638 $1,692 $1,158 $1,150 $1, % 7.5% 8.8% 10.1% 10.5% *where mortgage payments are 30%, or greater, of household income. Source: ABS, Regional settlement patterns The Hunter Region is home to over 9 per cent of the NSW population and is the largest growth centre in NSW outside the Sydney basin. The Singleton LGA falls within the Upper Hunter Region, which also includes the LGAs of Muswellbrook, Dungog, Upper Hunter and Gloucester. The broader region is shown on Figure 8. The region has an estimated population of 67,500 and has experienced steady population growth since 2006 (DoPI 2012). Projections estimate that the population will be between 82,000 and 83,500 by 2036, with the majority of the growth concentrated in settlements close to mining areas. Most of the settlements are located along the New England Highway, which is the region s main transport corridor. The predominant housing type is large detached houses with three or more bedrooms (91 per cent of the housing stock is detached houses). There has been a decline in average household size across the region, from 2.8 in 1991 to 2.6 in There is a limited supply of (and increasing demand for) smaller dwellings including detached houses, townhouses and apartments with one or two bedrooms. The 2012 Upper Hunter Regional Land Use Plan (DoPI 2012) identified a number of headline issues associated with the growth of the mining industry in the area. These include the need for new and more varied housing to cater for the expected population growth, and the likely ongoing need for short-term accommodation and temporary housing (DoPI 2012). The greatest demand for new housing is in the Singleton, Muswellbrook and Upper Hunter LGAs driven by the continued expansion of mining activities. Affordable housing is particularly an issue for the workers who provide essential support services, including construction workers and other local service providers, who do not have access to high incomes that are common in the mining industry and therefore might be priced out of a highly competitive private rental market. Local councils have identified a steady supply of land zoned for housing across the region. All councils have identified housing growth opportunities to meet housing demand until at least 2026 (DoPI 2012). According to the regional land use and local strategies, Singleton has sufficient land zoned in the Singleton Heights area for approximately 2,000 new dwellings, while in Muswellbrook there is potential for a further 1,300 new dwellings in the zoned residential land at South Muswellbrook. Maitland also has an effective planning regime for land release. The Huntley proposal near Branxton, is for a new town of homes, a town centre and employment lands. The Huntley site is about kilometres from Singelton. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 10

21 Temporary accommodation villages were discussed in the Land Use Strategy, noting that they can have significant impacts on an established town, such as changes to the social structure, changes to the character of the town or placing pressure on existing services, and may not be appropriate or desirable for all communities. However, temporary housing was cited as potentially helping difficulties in expanding permanent housing stock quickly and to avoid a potential oversupply of permanent housing in the longer term. It was noted that it will be important to ensure that temporary housing solutions do not undermine the potential for more sustainable, longer term growth. The development of a policy for the development of temporary accommodation was recommended to be developed by the NSW Government (DoPI 2012) though it is understood that this has not commenced. FIGURE 8 SINGLE TON IN THE REG IONAL SETTLEMENT CON TEXT Source: Regional Action Plan NSW Government - Hunter 3.4 Economy and employment Singleton s economy and that of the Hunter more broadly - is heavily skewed toward to the mining and resources sector. The largest occupation by employment for Singleton LGA is Machinery Operators and Drivers representing 19 per cent of the workforce, closely followed by Technicians and Trades Workers (18.8 per cent). This is a significantly higher rate than found in Hunter Valley Statistical Division (12.2 per cent) and NSW more broadly (6.4 per cent). Coal mining is the dominant industry. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 11

22 The strong job market in the area is reflected in its median household income: the Singleton LGA has the highest in the region at $1,692, compared to an average median income across the Hunter Valley Region of $1158 (ABS 2011). In the Gross Regional Product (GRP) of Singleton LGA was $1,706 million, representing approximately $132,000 per full time equivalent (FTE) job in the region. Mining is the dominant sector (ABS and SGS). The most common occupations in Singleton (A) (Local Government Areas) included Machinery Operators and Drivers 19.0 per cent, Technicians and Trades Workers 18.8 per cent, Professionals 12.4 per cent, Clerical and Administrative Workers 11.9 per cent, and Managers 11.0 per cent. Eighteen coal mines operate in the Singleton LGA, directly employing 3800 workers, of which approximately 2100 reside in Singleton, demonstrating the importance of this industry to the local economy (Singleton Council 2012). The Australian Army School of Infantry is located on the outskirts of the Singleton CBD, and has approximately 1000 personnel. A majority of the military staff (60 per cent) live locally with their families and 6 per cent own a local home. The urban centres in the region still provide a rural and agricultural servicing role. TABLE 5. EMPLOYMENT PROFILE OCCUPATION (REGIONAL COMPARISON) Occupation Singleton ULA % Singleton LGA % Hunter Region % New South Wales Machinery Operators And Drivers 1, , , , Technicians and Trades Workers 1, , , , Professionals , , , Clerical and Administrative Workers , , , Labourers , , , Managers , , , Community and Personal Service Workers , , Sales Workers , , Source: ABS, 2012 (Employed people aged 15 years and over) % TABLE 6. TOP INDUSTRIES OF EMPLOYMENT (REGIONAL COMPARISON) Occupation Singleton ULA % Singleton LGA % Hunter Region % New South Wales Coal Mining 1, , , , Cafes, Restaurants and Takeaway Food Services , , School Education , , Supermarket and Grocery Stores , , Machinery and Equipment Repair and Maintenance , Defence , Hospitals , , Source: ABS, % Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 12

23 The regional labour market catchment for Singleton extends beyond council boundaries, and includes local government areas both in the upper and lower hunter regions, including Cessnock, Dungog, Maitland, Muswellbrook, Newcastle, Port Stephens and the Upper Hunter Shire. The map below shows the accessibility to Singleton by car (within 60 minutes drive time), and the resident labour force catchment within these accessibility contours. In total, nearly 170,000 employed residents live within an hour s drive from Singleton, with nearly 9,000 of these employed in the mining industry in this region (Figure 9). This indicates that the labour market issue is not a Singleton LGA one alone. There is a regional labour force which is able to fill jobs within Singleton and which can be accessed by the F3 Freeway. FIGURE 9 ACCESSIBILITY OF LAB OUR FORCE TO SINGLETON BY CAR Source: SGS Economics and Planning Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 13

24 Labour market conditions in this regional labour market catchment - comprising the Upper and Lower Hunter regions are relatively strong compared to the regional economy. These regions have a relatively high labour force participation rate and a lower unemployment rate compared to Regional NSW. Importantly growth in the labour force in the region, and indeed the Singleton local government area, has far exceeded that of Regional NSW (refer Table 7 below). TABLE 7 SELECTE D POPULATION AND EMPLOYMENT INDIC ATORS Singleton LGA Upper Hunter Lower Hunter Regional NSW Growth in labour force ( ): 2.1% 1.4% 2.0% 1.1% Labour force participation rate (2011) 67.3% 63.3% 59.2% 56.2% Unemployment rate (2011) 3.3% 4.2% 5.3% 6.1% Source: SGS Economics and Planning based on ABS Census Data. There has been a recent softening in labour market conditions in the Singleton area. Based on small area data accessed from the Department of Education, Employment and Workplace Relations, the unemployment rate in Singleton has risen since August 2011 since the last census data was collected. This indicates some current slack in the labour market. Nonetheless, it is interesting to note that there is excess capacity presently in the regional labour market to service any demand for additional workers. The regional economy (comprised of the eight local government areas listed above) hosts nearly 19,700 mining jobs whilst nearly 22,000 employed residents of the area report they are employed in the sector. Consequently, there is scope to redirect nearly 2,100 mining workforce who are presently residing in the region but working outside of this region, gradually into this workforce over time (Table 8). TABLE 8 EMPLOYED RESIDENTS A ND EMPLOYMENT OPPORT UNITIES, SINGLETON REGIONAL LABOUR MARKET CATCHMENT (2011) Selective industry sectors Employed residents of Employment positions regional labour market (i.e. within regional labour Gap potential supply) market (i.e. demand) A B A-B Mining 21,916 19,760 2,156 Manufacturing 34,908 37,172-2,264 Construction 26,098 21,928 4,170 Source: SGS Economics and Planning based on ABS Census Data. Notes: regional labour market defined to include the LGAs of Cessrock, Dungog, Maitland, Muswellbrook, Newcastle, Port Stephens and the Upper Hunter Shire. It is encouraging to note that in the five years to 2011, nearly 5,000 people moved into Singleton from elsewhere in Australia and overseas (this does not account for people leaving the town and churn in the regional labour force); a majority of these were from other parts of NSW (3,000), followed by nearly 1,150 from Queensland and Western Australia collectively. Regional overview Over the last decade job growth has outstripped population growth in the Hunter, lowering the unemployment rate across the region to 4.5 per cent. In the coal mining areas of Singleton and Muswellbrook this rate is even lower between 1.1 and 2.1 per cent (DoPI 2012). In June 2011, Singleton recorded the lowest unemployment rate in NSW (Singleton Council 2012). While the success of the region is largely due to the success of the black coal industry this concentration does not necessarily fully benefit the local communities: a majority of the income generated by black coal and electricity generation accrue to the owners of the capital, meaning that a significant proportion of it flows out of the Hunter (RDA 2010). Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 14

25 The coal industry in the Hunter Region generates around $10B a year and around 90% of the state s production in coal (RDA 2012). With over 60 per cent of NSW s coal mined in the Upper Hunter Region, the Singleton area is well position to capture a significant portion of this wealth. Greater diversity in the economic base is sought through the regional strategy, including more employment in higher added value industries and more future facing sectors, including renewable energy (RDA 2010, 11). 3.5 Regional infrastructure investment in the Hunter Region Existing infrastructure The Hunter Region is well serviced by transport access including road, rail and port, making it attractive for investment. There are a number of intersecting transport nodes across the Hunter, connecting it to the surrounding region, as well as to national and international markets. An electrified rail system links the Hunter to Sydney, with a non-electrified system running between the North Coast and North West of NSW (RDA 2012).The city of Newcastle links the Hunter Valley rail corridor and ARTC s North-South rail network for services to and from Sydney. Accelerating journey times and more frequent services to the Hunter is a longer term objective of the NSW Government (Infrastructure NSW 2012). Three major highways run through the region (F3, Pacific and New England), with the Pacific seeing up to 3,000 freight vehicles per day. The Newcastle Airport links to the major capital city airports around Australia, as well as to selected regional centres. Finally, the Port of Newcastle is one of the most significant port areas in Australia, exporting coal to international markets. It is one of the largest coal export ports in the world (RDA 2013). Singleton lies in the centre of the Hunter Valley region, at the junction of the New England and Golden Highways, and is serviced by the Singleton railway station, on the Hunter Line. Construction of the Hunter Expressway between the F3 and Branxton will reduce existing commuting times to and from Singleton by around minutes. Key investment strategies There are a number of investment strategies and government commitments aimed at supporting regional growth in NSW. The NSW Government s decentralisation strategy outlined in NSW 2021 also aims to strengthen local and regional economies. Goal three of this strategy is to drive economic growth in regional NSW including a target to increase the population of regional NSW by by The Hunter Infrastructure and Investment Fund (HIIF) is a $350 million program to improve the Hunter region s infrastructure to support growth and maintain and enhance liveability. Key priorities relevant to the Singleton area include: Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 15

26 $43.5 million on the upgrade of the New England Highway through Maitland; $62.5 million in grants to local Councils for regional development projects. Resources for Regions are a $160 million program aimed at assisting communities to address local infrastructure issues and the local impact on mining affected communities. In the Budget the NSW Government allocated an initial $9.9 million from the Resources for Regions program under Restart NSW to help meet the local infrastructure needs of Singleton and Muswellbrook. Throughout the Upper Hunter, new development opportunities need to enhance, rather than detract from the distinct local character. Developments that satisfy a short term need but create long term problems by degrading the quality of the environment and overall liveability of a settlement should not be supported. Upper Hunter Strategic Land Use Plan 2012 Local Infrastructure Renewal Scheme: $70 million funding program to assist council to pay for large local infrastructure projects by providing interest subsidies to help cover borrowing costs. Connecting the Hunter Infrastructure Report highlighted regionally significant projects needed in the context of planning for a population of one million for the Hunter. Key recommendations included integrating skilled migration, a regional governance approach to local government infrastructure, and establishing a regional transport authority to identify, assess and advocated long-term public transport related projects. Based on small area data accessed from the Department of Education, Employment and Workplace Relations, the unemployment rate in Singleton has risen since August 2011 since the last census data was last collected. This indicates some current slack in the labour market. Nonetheless, it is interesting to note that there is excess capacity presently in the regional labour market to service the demand for additional workers. The wider regional economy (comprised of eight local government areas) hosts nearly 19,700 mining jobs whilst nearly 22,000 employed residents of the area are employed in the sector. Consequently, there is scope to redirect nearly 2,100 mining workforce who are presently residing in the region but working outside of this region, gradually into this project over time. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 16

27 4 SOCIAL COSTS AND BENEFITS OF THE PROPOSAL 4.1 Why are social and community issues important? A community s health and well being is enhanced by connections to place, a sense of belonging and relationships established within the community. Social infrastructure provides an important role in providing places for people to meet and interact provides essential services such as health and education and with housing provides permanency. A cohesive community is also the key to a strong economy, investment and participation in local business and community groups. 4.2 Social costs and benefits to Singleton community Temporary mining camps can have wide ranging impacts on both the host communities and the workers themselves. Most research indicates FIFO arrangements have adverse rather than beneficial implications at a community and individual level. Impacts on community integration Little social investment in the community will be derived from using temporary workers as opposed to using workers who reside in the town (or the region) and this has been documented in the recent House of Representative Inquiry (2012). Local workers who reside in the town would: Use local services such as businesses, schools and health services; Invest in housing and spend their money locally; Develop local social networks and friendships; Have the potential to have additional family members employed in local businesses; and Be involved in local sport and community organisations. Tensions between a local community and a temporary workforce in resource communities are not uncommon. This tension can be derived from a lack of social integration between the two groups, as well as by a lack of cohesion in urban form between temporary and permanent dwellings. The location of this camp 2.5 kilometres outside the town area further exacerbates this concern with a complete segregation of workers from an existing community. Communities that are liveable and cohesive are more likely to be attractive as places to live and, therefore, building community cohesion must be seen as a key element of building a resilient and diverse economy. Upper Hunter Strategic Land Use Plan 2012 As stated earlier the Upper Hunter Strategic Land Use Plan also identifies a need to integrate any temporary accommodation into the town so as to maximise social integration and economic benefits for the town. It requires that temporary housing solutions do not undermine the potential for more sustainable long term growth in Singleton. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 17

28 The creation of community cohesion has also been recognised as an important value by the local community. The Singleton Council s Charter highlights its commitment to providing quality community infrastructure and services, essential for overall community wellbeing and cohesion. The Strategic Plan sets out the community s vision and aspirations for Singleton over the next ten years up to 2023 and identifies strategies to be pursued in order to achieve the desired outcomes. The Strategic Plan is focussed around four pillars, these being: 1) Our Community; 2) Our Places; 3) Our Environment; and 4) Our Community Leadership. Response to MAC proposal The MAC proposal acknowledges that the temporary camp could create a them and us divide in the town and suggests that further ways to integrate the two communities better should be explored. However there are no options or ideas presented for better integration into the community. There is also a suggestion by MAC that isolating the workers away from the town will minimise disturbance to the community. Again under the approach by MAC, opportunities are lost for community building and integration by firstly not using local workers and secondly having FIFO workers separated from the community. Impacts on existing infrastructure The Singleton Council identified the need for sustainable infrastructure as a priority in the next three years, as well as a revitalised town centre, more retail options, a café and eatery precinct, more cycle ways and other community spaces that bring people together. The MAC proposal will not contribute to funding upgrades or new infrastructure in the town such as those identified by the Council and State Government infrastructure such as schools and health services. It also does not support investment by the NSW Government discussed in Section 3.5 which seeks to support strong local and regional economies including a local and regional skilled labour force. Response to MAC proposal The MAC proposal addresses the impact on roads with increased traffic and has said it would provide Council with additional information on the impacts on health and policing services. It does not address how the town will benefit from this proposal but rather how it will address mitigating effects of the proposal on the town s infrastructure. SGS s research has shown that the Council has clear policies around revitalising and supporting community and business opportunities in the town. The use of local workers would however support increased economic and community activity in the town. Impacts on Housing The House of Representatives Standing Committee on Regional Australia (2013) states that the primary cause of the current accommodation crisis in resource communities is a lack of adequate planning and appropriate land release. However, as discussed in Section 3.3 Singleton has sufficient land zoned in the Singleton Heights area for approximately 2,000 new dwellings, while in Muswellbrook there is potential for a further 1,300 new dwellings in the zoned residential land at South Muswellbrook. Other townships in this region will be further accessible by the F3 Freeway once completed. The Huntley proposal near Branxton, is for a new town of homes, a town centre and employment lands. The Huntley site is about kilometres from Singelton. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 18

29 The provision of adequate housing supply, the type of housing and its affordability are major issues for Singleton and other communities in the Upper Hunter Region. New housing will be needed to cater for the expected population growth as well as growing demand for a wider variety of housing, largely driven by continued expansion of mining activities. The Land Use Plan acknowledges that ensuring an adequate supply of housing is a challenge for the region, and planning for development in new and existing areas is required. The Land Use Plan notes that temporary housing for mining workers might help to address some housing difficulties, for example, by expanding permanent housing stock quickly and to avoiding a potential oversupply of permanent housing in the longer term. However it also acknowledges that temporary worker villages can have significant impacts on an established town, such as changes to the social structure, changes to the character of the town or placing pressure on existing services, and may not be appropriate or desirable for all communities. For these reasons the NSW Government is preparing a guideline for the temporary accommodation of mining employees. The proposal will crush the local rental market which is already seeing a downturn in prices (193 properties currently for rent) and will also put downward pressure on housing prices. Singleton will be very accessible by road to nearby townships (F3 Hunter Link) so some housing could potentially be located in these towns if the demand can t be met solely in Singleton. There is a concern that some people who have relocated from interstate for work to Singleton will now relocate back to their home states and take up FIFO. The people in the town have to live with the impacts of mining activity such as increased traffic and dust but will see little benefits from FIFO. FIFO workers are unlikely to spend on discretionary items in the town. Christine Leighton, Real Estate Property Manager from David Williams In communities with high levels of temporary (FIFO) workers, levels of home ownership are reduced. These findings are supported by the 2011 ABS Census (Figure 10) which shows under 10% of people living in high growth mining towns own their dwellings compared to 28% nationally and around 19% have mortgages compared to 40% nationally. Local workers are more likely to invest in housing in their community and therefore promote local land development and more sustainable development patterns. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 19

30 FIGURE 10 PEOPLE BUYING AND SE LLING HOUSING (ABS 2011) Source: Australian Social Trends, April 2013 Legend - (a) Comprises people staying in the listed location on Census Night in a private dwelling owned with a mortgage or a private dwelling being purchased under a rent/buy scheme. (b) Comprises people staying in the listed location on Census Night in a private dwelling being rented or a private dwelling being occupied rent-free. (c) A real estate agent, an unrelated person outside the household, or a related person outside the household. (d) A government employer (including the Defence Housing Authority), or a non-government employer. (e) A state or territory housing authority, a housing co-operative, a community group, a church group, a residential park, a caravan park or a marina. Response to MAC Proposal The MAC proposal states that there is not enough temporary accommodation in the town to house these workers. It also states that this new development will allow housing to be freed up for other uses to increase affordability and for potential tourist uses. However, SGS s research has shown that Singleton already has affordable housing given the household income levels. SGS supports the statement that there is unlikely to be sufficient temporary accommodation but makes the point that if local or regional workers were used (with families), temporary housing would not be needed. Furthermore investment in housing and land development would be increased if local workers were employed. There is sufficient land identified for around 2000 housing lots in Singelton and more in the surrounding region. There has been no demonstrated need identified by the proponent for locating a significant housing development outside the town area. The proponent has asserted that there is not enough suitable temporary accommodation in the town available to accommodate this proposal. Options for subdivision layouts that could house temporary accommodation that could then transition to future permanent housing is shown on Figure 11. In this case the layout can accommodate temporary dwellings (shown in red) that can later be replaced with permanent dwellings (shown in yellow) using the same road and servicing layout. This option could also be adapted to Singleton to ensure that development is within the urban footprint of the town and there is an opportunity for a temporary development to transition into a longer term sustainable development for the town. What is shown here is a grid pattern of development but it could be adapted for other road layouts as currently developed in Singleton. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 20

31 FIGURE 11 TRANSITIONING TEMPOR ARY HOUSING TO PERMANENT HOUSING Source: s+w and SGS Economics and Planning In addition, the temporary housing proposal could potentially undermine confidence in land development, housing construction and demand for rental properties for the community. Alternatively the use of local workers could provide a stimulus to the housing sector. 4.3 Social costs and benefits to FIFO workers Social isolation and regular separation from family support and informal social interactions, along with the lack of the sense of belonging to a community can have negative impacts on the wellbeing of FIFO workers (House of Representatives Standing Committee on Regional Australia, 2013). This exacerbated by the fatigue that mine workers experience when working long shifts and and/or spending large amounts of time commuting (Brannock & Associates, 2012). A 2004 FIFO Research Project commissioned by the Pilbara Regional Council acknowledges that incidences of relationship and family breakdown are higher among families in which at least one member is employed in the mining industry, this includes both FIFO and permanent resident employees. The report identifies the following key causal factors: Inadequate communication and access to communications technology; Changes to working and living arrangements such as longer working hours, reduced time spent with family members and changing responsibilities; and Changing emotions and behaviours associated with social isolation, loneliness, depression, lack of social support and risk taking behaviours. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 21

32 Along with the direct impacts on relationships and the families involved, the problem is often compounded by a lack of social infrastructure for crisis support, for example: The lack of short term housing and emergency accommodation means one spouse (and often children) are forced to relocate, leaving little opportunity for resolutions / reconciliation; and Ongoing mental health issues, which is particularly challenging where limited services are available (SoEP, 2012). An inquiry into FIFO workforce practices by the House of Representatives Standing Committee on Regional Australia (2013) highlights the health impacts of FIFO work, some of which are directly related to the social isolation of the FIFO experience. Some of the impacts cited include: The use of alcohol and other drugs; Poor diet and physical inactivity; Increased sexually transmitted and blood borne infections; Mental health issues; Fatigue related injury; and An increase in injury related to high-risk behaviour. The Retired Mineworkers Association has moved a motion to condemn this proposal. The proposal is bad for the town; it will put a strain on services and has no monetary benefit for the town. It doesn t help address existing unemployment in Singleton. Alice Muller, Secretary of the Singleton Retired Mineworkers Association The Shire of East Pilbara Community Wellbeing Strategy (SoEP, 2012) notes similar factors that are commonly reported among FIFO workers such as social dislocation and loneliness, high stress work related pressures, relationship strain, substance abuse and other risk taking behaviours and mental health problems. Not only does this exert significant pressure on medical service providers, it also restricts access to these services for local residents due to longer waiting times and the additional workload placed on doctors. Response to MAC Proposal The MAC proposal has included on site services for the FIFO workers and suggests dialogue and links with the Singleton community to increase interaction and reduce social isolation. Again the use of local and regional workers with established links to the community will not generate the anticipated health and well being impacts expected with the use of FIFO workers. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 22

33 5 ECONOMIC COSTS AND BENEFITS OF THIS PROPOSAL 5.1 Introduction Two commonly used economic evaluation methods in public policy are used in this report to substantiate and quantify the magnitude of regional impacts and the net community costs and benefit of using local and regional resident workers, as opposed to using FIFO workers proposed under the MAC proposal. The first method is the estimation of direct and indirect employment and income effects of the stimulatory initiative to construct the temporary accommodation, as well as the spending that results from hiring workers under different contracting arrangements (i.e. regional resident workers versus FIFO workers). This has involved the development of a customised input output model. SGS has developed its own in-house econometric modelling techniques to simulate the inter-linkages evident in the regional catchment economy. This is referred to as an economic impact assessment (EIA). The second type of evaluation presented in this report is a preliminary cost benefit perspective (CBA). While an EIA traces the economic impacts of project implementation, it does not truly assess the merit of a project from a public investment perspective. Instead the CBA seeks to measure the net loss or gain in community welfare from the proposed initiatives. 5.1 Overview of scenarios This report tests the impact of three different scenarios on construction activity and worker spending. These are as follows: Scenario 1: only regional resident workers are employed, i.e. no FIFO workers, with 25% of the total workforce assumed to be net new workers in the region (i.e. 750 workers) for whom new residential housing needs to be constructed, and the remainder (i.e. 75%) being existing workers already resident in the region. Scenario 2: only regional resident workers employed, i.e. no FIFO workers, but with 50% of the total workforce assumed to be net new workers in the region (i.e. 1,500 workers) for whom new residential housing needs to be constructed, and the remainder (i.e. 50%) being existing workers already resident in the region. Scenario 3: only FIFO workers employed, all of whom are new workers in the region, and require a 1,500 bed facility for accommodation. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 23

34 5.2 Overview of assumptions for estimating economic impacts When measuring the economic impacts, SGS has assumed that the mining activity is unlikely to be any different under different worker contracting arrangements. Therefore the impacts of the mining activity itself have not been analysed. Instead, the impacts on the local economy have been analysed, assuming that the spending profile of FIFO workers is likely to be different compared to those of resident workers (regardless of whether they are existing residents or new residents in the region). Consequently, the flow on impacts of having temporary residents versus permanent residents is the subject of analysis of these impacts. The House of Representatives of the Standing Committee on Regional Australia cited a report commissioned by the Pilbara Regional Council which estimated that each resident worker contributes more than six times in regional income compared to a FIFO worker in the region ($64,000 by a resident worker versus $10,000 by a FIFO worker). Spending patterns of FIFO workers are not easily available. Consequently, this analysis has imputed spending profile of FIFO FIFO workers don t get time to spend money in the community. They do their shift, clean up, eat and go to bed. At the end of their roster they go straight to the airport. The vast majority of workers do not spend money in Moranbah. The only places they spend their money are at the doctors, and there s a couple of jewellery shops in town that do OK because they buy their gifts to take home. Generally they don t spend money here. Peter Finlay, President of Moranbah (Qld) Traders Association workers using housing expenditure survey data compiled by the ABS. After profiling spending patterns of households in NSW based on this data, it is estimated that usual resident households in a typical NSW local government area spend nearly $75,000 over one year on items including housing costs, recreation, food and alcohol, clothing & footwear, personal care, medical costs and other miscellaneous expenses. A typical FIFO worker (assumed to be employed for 40 weeks in a year, unaccompanied by family and emulating the spending profile of a non-owner, non-renter dwelling occupant), could spend around $41,000 annually, with the rest being spent in the original place of residence. Consequently, a FIFO worker is estimated to spend nearly $34,000 less compared to a regional resident worker of this regional area. SGS recognises that this is likely to be an upper figure and the range could be between $ (from Pilbara figures) and $ depending on the housing and shift arrangements of the workers. New construction in the region (either of dwellings to house new permanent workers or temporary township to accommodate FIFO workers) is expected to generate new construction stimuli in the region. For the purposes of this report, SGS has assumed the following construction estimates and likely spending in the regional catchment under the assumed scenarios 5 : Scenario 1: 750 new dwellings (@$300,000 each) with a total construction cost of $225 million, and nearly 75% of construction contracts awarded to regional contractors, i.e. initial construction stimuli of $169 million in the regional economy. Scenario 2: 1,500 new dwellings (@$300,000 each) with a total construction cost of $450 million, and nearly 75% of construction contracts awarded to regional contractors, i.e. initial construction stimuli of $338 million in the regional economy. Scenario 3: $101 million total construction costs (1,500 bed facility) with nearly 75% of contracts awarded to regional contractors, i.e. initial construction stimuli of $75 million in the regional economy. 5 Note that some construction contracts will likely be serviced by contractors from outside the regional catchment. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 24

35 5.3 Costs and benefits of the proposal Based on the above assumptions, the estimated impacts of contracting work to FIFO workers versus using a resident workforce are reported in Table 9 below. The following observations can be drawn from these results: The stimulatory effects of construction in the regional economy are highest when a higher proportion of new workers are employed, who move into the region as permanent residents, rather than as FIFO workers. Using all FIFO workers results not only in lower construction stimuli, but also lower worker spending in the region. Using FIFO workers results in a net direct loss to the regional economy of (initial impacts only): o between $20 and $57 million in gross regional product during the construction phase (depending on the proportion of new permanent workers in the region), and of $48 million annually due to reduced worker spending; o up to 519 employment positions during the construction phase, and 723 employment positions annually due to reduced worker spending. Using FIFO workers results in a net total loss (i.e. direct + flow-on impacts) to the regional economy of: o between $75 and $211 million in gross regional product during the construction phase (depending on the proportion of new permanent workers in the region), and of $99 million annually due to reduced worker spending; o up to 1,961 employment positions during the construction phase, and 1,177 employment positions annually due to reduced worker spending. In aggregate, i.e. accounting for the differences in stimuli due to construction and worker spending activity, and looking at the total effects (i.e. both direct and flow-on effects), the regional economy stands to lose up to $311 million in gross regional product and 3,138 full-time employment positions annually by contracting FIFO workers instead of using a permanent resident workforce (refer Table 10). These losses will continue annually. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 25

36 TABLE 9. ESTIMATED CO NSTRUCTION AND SPENDING PHASE IMPACTS BY SCENARIO Scenario 1 (only resident workers with 25% of these being net new workers in the region) Scenario 2 (only resident workers with 50% of these being net new workers in the region) Scenario 3 (only FIFO workers, all of whom are net new workers in the region) Net impact of Scenario 3 versus Scenario 1 Net impact of Scenario 3 versus scenario 2 A B C C-A C-B Initial impacts of construction phase and worker spending during the operation phase, i.e. initial stimulatory expenditures. Construction phase stimuli on: Annual impacts due to worker spending on: Construction phase stimuli on: Annual impacts due to worker spending on: Turnover/ revenue $169 million $338 million $75 million -$94 million -$263 million Gross Regional Product $37 million $73 million $16 million -$20 million -$57 million Employment (EFT) Turnover/ revenue $227 million $227 million $125 million -$102 million -$102 million Gross Regional Product $107 million $107 million $59 million -$48 million -$48 million Employment (EFT) 1,614 1, Total impacts (i.e. initial + flow-on impacts) of construction phase and worker spending during the operations phase. Turnover/ revenue $398 million $797 million $177 million -$221 million -$620 million Gross Regional Product $136 million $272 million $60 million -$75 million -$211 million Employment (EFT) 1,261 2, ,961 Turnover/ revenue $450 million $450 million $249 million -$202 million -$202 million Gross Regional Product $222 million $222 million $122 million -$99 million -$99 million Employment (EFT) 2,627 2,627 1,450-1,177-1,177 Source: SGS Economics & Planning calculations Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 26

37 TABLE 10. OVE RALL TOTAL I MPACTS AFTER ACCOUNTING FOR CONSTRUCTION AND WORKE R SPENDING Column heading Scenario 3 versus Scenario 1 Scenario 3 versus Scenario 2 Turnover/ revenue -$423 million -$821 million Gross Regional Product -$175 million -$311 million Employment (EFT) -1,877-3,138 Source: SGS Economics & Planning calculations Response to MAC Proposal The MAC proposal has measured the impacts of the construction and operational phase of the development on Singleton. It has not compared the impacts of using FIFO workers to using a local or regional workforce. SGS s modelling shows the use of FIFO can have significant losses to the economy over the use of local and regional workers. 5.4 Other potential economic benefits of using resident workers over FIFO workers Growth in the mining industry is creating increased pressures and the supply of labour is emerging as one of the most critical issues for all industries in the region, with many industries directly competing for access to a workforce. The Land Use Plan states that the relatively short supply of workers has already begun to have an impact in Singleton, with many businesses struggling to compete with the mining industry to attract or keep workers. While mining is a well established industry in Singleton and the wider Upper Hunter Region, and will continue to be a major industry for several decades, economic diversification is critical make it more resilient to change in the longer term. The rosters in the FIFO camp mean that workers will leave the town on their days off and therefore won t use the town s services such as my video hire shop. It is a self contained camp. This is different to other temporary accommodation such as the Army Camp where local services were being used on rostered days off. There is no economic benefit to Singleton from this proposal. The Land Use Plan identifies the following overarching objectives for economic Graeme Daniel, Owner Civic Video development and employment in the Upper Hunter Region: Ensure an adequate supply of land for the needs of Upper Hunter industries; Ensure an adequate supply of labour for the needs of Upper Hunter industries; Diversify the region s economy and build economic resilience; and Build cohesive and liveable communities by addressing conflicts in demand for resources and improving access to employment and training. Compared to FIFO workers, contracting permanent residents also has the potential to yield other benefits to the regional economy. These include: A more productive resident workforce; More increased regional spending due to new construction activity and spending by additional workers; Higher utilisation of existing businesses and capacity of service in town; and Higher property values in the vicinity of settlements. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 27

38 On the other hand, using permanent resident workers to work in the resource sector draws labour away from potential competing uses in other sectors, and has the potential to stymie investment in these other sectors. These are explored in greater detail below; however, they are not quantified at this stage. This is because the proponent can take some steps to influence each of these headline benefits in some way, when using FIFO contracting arrangements. Without fully appreciating the steps that the proponent might take, it would be remiss to put a value on these benefits. FIFO workers who spend most of their time working long shifts (12 hour shifts) and thereafter at temporary accommodation camps, are time deficient to engage productively with the general community. Whilst this has social implications, it also has economic implication inasmuch as it blocks the scope for knowledge transfer that usually occurs with worker interaction. This is particularly pronounced if resident workers are not employed at mine operations using contracted FIFO workers. Consequently productivity benefits to permanent resident workers are undermined by hiring contracted FIFO workers on local mining operations. On the other hand, one of the primary costs of hiring permanent resident workers to work in the resources sector is the resulting general escalation in wages and shortage of labour to work in other industry sectors. Indeed, the Standing Committee on Regional Australia report noted that some industries (especially tourism) are directly competing with the resources sector for labour in some predominant mining regions. This could lead to potential investment shortfalls in other industries at the expense of other industries which have the potential to grow. Secondly, hiring permanent residents, some of whom will be drawn from outside of the region, will require new dwellings which will result in new construction activity in the region, as well as new worker spending stimuli, which would otherwise not have become manifest in the region. Thirdly, in some cases, it is shown that mining companies which run temporary settlements to house FIFO workers tend to contract servicing arrangements for the temporary settlements to providers from outside the local region. Unless community benefits plan are in place and enforced, the potential of local businesses in town to service mine operations as well as the temporary settlements are undermined leading to a reduced flow of benefits to the town, than otherwise would be the case if permanent resident workers were contracted. Finally, land values in the vicinity of temporary settlements housing FIFO residents are likely to remain subdued. Firstly there have been safety concerns highlighted by existing residents of towns with similar settlements which lead to a dampening effect on land values in close proximity to these locations. Secondly, given that these settlements tend to be disengaged from the larger local community, the potential for social cohesion for other residents living in close proximity of these settlements is also undermined, and consequently, the demand for land in close proximity of these locations diminishes. Response to MAC Proposal There is little discussion in the MAC report of the implications of using FIFO workers over local and regional workers. SGS contends that more analysis of this scenario should have been undertaken as part of the justification for supporting temporary accommodation. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 28

39 6 REFERENCES Australian Bureau of Statistics (ABS). (2006). Census Basic Community Profile: Singleton LGA Australian Bureau of Statistics (ABS). (2011). Census Basic Community Profile: Singleton LGA Australian Bureau of Statistics (ABS). (2011). Census Basic Community Profile: Singleton UCL Australian Bureau of Statistics (ABS). (2011). Census Basic Community Profile: Hunter Valley Brannock & Associates (2012), Planning for Mining Towns Their Impacts and the Need for Interventions, prepared for the Planning Institute of Australia. Casey, S (2005), Establishing Standards for Social Infrastructure, commissioned by the University of Queensland Boilerhouse Community Services and Research Centre. Department of Planning (DoP) (2009) NSW Statistical Local Area Population Projections, Sydney: Department of Planning. Department of Planning and Infrastructure (DoPI) (2012). Upper Hunter Strategic Regional Land Use Plan. Sydney: Department of Planning and Infrastructure. Egginton, A (2009), Bowen Abbot Point Accommodation and Community Infrastructure Study: Community Infrastructure Assessment Report, prepared for Whitsunday Regional Council. Elton Consulting (2012), Tomorrow s healthy and productive communities: The case for community infrastructure in outer metropolitan growth areas, prepared for the National Growth Areas Alliance. House of Representatives Standing Committee on Regional Australia (2013), Cancer of the bush or salvation for our cities? Fly-in, fly-out and drive-in, drive-out workforce practices in Regional Australia, Australian Government, Canberra. Hunter Valley Research Foundation, Newcastle and the Hunter Region, Infrastructure NSW. (2012). First Things First: The State Infrastructure Strategy Marmot, M & Wilkinson, R.G (2001), Psychosocial and material pathways in the relation between income and health: a response to Lynch et al, British Medical Journal 322, NSW Department of Planning, Lower Hunter Regional Strategy. Available at Office of Urban Management (OUM) (2007), South East Queensland Regional Plan Implementation Guideline No. 5 Social Infrastructure Planning, Queensland Government. Planning Workshop Australia. (2008). Singleton Land Use Strategy (April 2008), Prepared for Singleton Council, in association with Land and Environment Planning. Price Waterhouse Coopers (PWC). (2010). Economic Profile of the Hunter Region Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 29

40 Regional Development Australia (RDA). (2010). Hunter Regional Plan Available at Regional Development Australia (RDA). (2012). Hunter Regional Plan Available at SGS Economics and Planning & HM Leisure Planning (2009), Investing in sport and recreation facilities: Does it pay off?, prepared for Sport and Recreation Victoria, Melbourne. Shire of East Pilbara (SoEP) (2012), Shire of East Pilbara Community Wellbeing Strategy Singleton Council (2009), Council Charter, available online at: accessed: 06/05/2013. Singleton Council (2009), Welcome to Singleton, available online at: accessed: 06/05/2013. Singleton Council (2012), Singleton Council Annual Report 2011/2012, Local Government of New South Wales. Singleton Council. (2012). Singleton Community Strategic Plan: Our Place: A Blueprint March Storey, K (2001), Fly-in/Fly-out and Fly-over: mining and regional development in Western Australia, Australian Geographer, Vol. 32, No. 2, p The Mac Services Group (2012) Development Application Plans and Elevations for The MAC Village Singleton. Prepared for by Scott Carver Pty Ltd on behalf of The MAC Services Group. Available at pdf. The World Bank (1998), What is Social Capital. Western Australian Planning Commission (WAPC) (2012), State Planning Strategy, Western Australian Government. Western Research Institute (WRI) (2013). Socio-Economic Impact Report for Temporary Accommodation Village in Singleton. Bathurst, NSW. Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 30

41 Contact us BRISBANE PO Box 1177 Level 1, 76 McLachlan Street Fortitude Valley QLD sgsqld@sgsep.com.au CANBERRA Level 1, 55 Woolley Street Dickson ACT sgsact@sgsep.com.au HOBART Unit 2, 5 King Street Bellerive TAS (0) sgstas@sgsep.com.au MELBOURNE Level 5, 171 La Trobe Street Melbourne VIC sgsvic@sgsep.com.au SYDNEY Suite 12, 50 Reservoir Street Surry Hills NSW sgsnsw@sgsep.com.au Social and Economic Impacts of Proposed Temporary Accommodation in Singleton for FIFO workers 31