Australia's new minority government must balance the economic benefits of a booming coal industry with an electorate calling for climate action
West of Australia's Great Dividing Range, a cluster of giant black gashes marks one of the country's biggest coal mines. Latrobe valley's pits and power plants provide 85% of the electricity used by the 5 million residents of the state of Victoria.
They are a source of pride at the local exhibition centre, where guides claim their seam is the basis for the long-term prosperity of the region. "We've got enough coal in this valley for 500 years and there's more elsewhere. Australia is one giant pit," says Ian Southall, manager of the centre.
But Latrobe will also soon be the focus of a protest by environmentalists, who want Australia to end its dependency on mining, commodity exports and coal power by moving more emphatically towards renewable energy.
The sharply different perspectives at Latrobe are also evident at a national level, where the mining industry and the environmental movement have emerged as unusually prominent and divisive political forces.
In last month's general election, Queensland and New South Wales – two giant rural states that are increasingly wealthy thanks to mining – swung sharply to the right, while the inner city of Melbourne shifted emphatically in the opposite direction towards the Greens.
The lobbying might of the mining industry has always been great, but its influence – and confidence – appear to have swollen with its growing economic clout. But there are doubts among analysts and political opponents that the miners' short-term benefits are in line with the country's long term interests.
Currently, the industry is in the midst of a boom. Thanks to commodity demand from China and other developing nations, Kieran Davies, the chief economist at RBS Australia, says Australia's two key exports – coal and iron ore – now account for 7.5% of gross domestic product. This has almost cleared the country's trade deficit and enabled Australia to sprint out of the global downturn with an economy that could soon grow at the astonishing annual rate of about 10%.
"This highlights how closely our fortunes have become aligned with China's," Davies recently wrote in the Australian Financial Review. "Commodity demand from Asia has held up even as the US has faded, which suggests that the big challenge for Australian policy makers is how best to manage the huge surge in income that has started to course through the economy."
That task has proved politically toxic. This summer, Labor prime minister Kevin Rudd was driven from power when he tried to impose a 40% tax on super-profits made by the mining industry to fund long-term infrastructure investment. Commodity conglomerates tilted him out of office with a lavishly funded publicity campaign that claimed he was threatening Australia's prosperity.
It was not entirely a coup by the mining lobby. Rudd was already unpopular among colleagues and had lost credibility with the electorate for buckling on carbon trading legislation despite earlier claiming that climate change was "the great moral issue of our time."
But the spectacularly sudden unseating of a prime minister underscored the influence of the minerals industry. Rudd's replacement, Julia Gillard, has softened the super-tax plan.
The question of how to balance the here-now, gone-tomorrow gains from mining with the long-term goals of a sustainable economy and climate stability refuses to go away. Nationalists are concerned that Chinese firms are increasingly buying not just coal, but collieries as well. Environmentalists are ashamed that Australia has one of the world's highest per capita emissions of greenhouse gases.
The success of the Greens, which affirmed its position as the undisputed third party in last month's election, is likely to push the transition issue further to the fore.
"We must make a discussion as a nation. Do we want to be just a quarry for China?" asked Richard Di Natale, a newly elected Greens senator. "That would be risky and unbalanced. Renewables can provide jobs and help us manage the transition to a low-carbon economy." At Latrobe valley, perceptions are different. A promotional video at the centre shows the plant's plans to reduce emissions through carbon capture and storage and by drying the brown coal and compressing it into coal pellets for export.
Centre manager Southall sees this technology as the future. "We recognise that wind and solar are playing a growing role, but brown coal remains the basis of prosperity. The green movement don't buy that. It's very divisive. I wish they would get on board."
Others are quietly trying to pioneer a transition at grassroots level. Not far from the mining machines and smoke stacks, a co-operative of union activists is working with local government, farmers and workers to establish a factory that makes solar water heaters, which would be funded with pension funds and state incentives for renewable power. Their aim is to provide jobs for former mine workers, reduce energy costs and cut emissions.
The founder of the co-operative venture, Dave Kerin, said it was necessary to find an alternative way to address the climate crisis because political methods weren't working. "This election led to a really creative confusion," said Kerin. "Our nation is based on consumption. But that is based on an illusion. Everything's been thrown into the air."
Even so, there was predictably little support for the Greens in Latrobe valley. "The so-called Greens are all from the city. They don't know anything about living in a real green environment. They just talk and then go home and switch on their air conditioners," said Trevor Wallace, manager of a chainsaw and tractor shop.
But he acknowledged that other parts of Australia also changed as they became more dependent on mining. "Whoever leads the next government, it is going to be hard to ensure stability. Some rifts take time to heal."
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