17/12/2009 - 00:00

Questions over indigenous commitment

17/12/2009 - 00:00

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Interpretation is all in the eye of the beholder, as the big resource companies have discovered

THERE are times as a journalist you blunder into something that has a little more to it than you realised at first glance.

Take, for example, a story I wrote a couple of weeks ago about the Pilbara Aboriginal Contractors Association, whose new chairman Barry Taylor was complaining that resource companies were not doing enough to support the members of his association.

Mr Taylor reckoned that BHP Billiton, the association’s major sponsor, was the only resources company pulling its weight in the region when it comes to contracting with businesses that are owned by indigenous people from the region.

Most of the $80 million Mr Taylor estimates is contracted each year is represented by one contract with Ngarda Civil and Mining to manage the Yarrie iron ore mine. Mr Taylor used to run Ngarda, which is a 50-50 joint venture between engineering and construction giant Leighton and an entity associated with Ngarda Ngarli Yarndu Foundation.

Mr Taylor claimed that it was important that contracting businesses had Aboriginal ownership, not just employment.

PACA defines indigenous ownership as anything above 25 per cent.

So it was with some interest that I heard Rio Tinto’s Australian chief, Sam Walsh, address a business crowd at Dampier recently and state that his company spends in the order of $110 million a year with Aboriginal contractors.

After the formalities I managed to quiz Mr Walsh further and he confirmed this was the case.

I extracted further detail from the company, which claims it had spent $102.3 million the year to date ending in November. Like PACA, it defines Aboriginal ownership as 25 per cent or more, though it is thought to be considering increasing that deemed level substantially, possibly as high as 50 per cent.

One of the contractors is Ngarda, which confirmed to me that it earns about $25 million to $30 million from managing truck fleets for Rio Tinto, and has done for the past few years.

As an aside, Rio has also spent more than $10 million on programs to get Aboriginal kids to school – via programs created by charities such as the Polly Farmer Foundation. It is also aiming to be a significant direct employer of indigenous people.

Ngarda has also recently finished work on the $170 million Gap Ridge village for Woodside Petroleum, a project that had about 30 per cent Aboriginal employment.

Ngarda general manager Brian Huey said all of the big three resources companies were important to it, and while BHP was its biggest customer, Rio had been the company’s first.

Mr Huey added that Woodside had been more responsive since Don Voelte had taken charge of the business.

He also added that Mr Taylor had been among the visionaries decades ago who realised that Aboriginal people had to get into business for themselves and had established the structures that created the possibility for Ngarda’s existence.

For the record, Woodside states it has 32 direct indigenous employees, a further 35 in training, and 247 indigenous people currently employed through contractors.

For his part, Mr Taylor is adamant that, apart from BHP, the contribution of the other giants is insignificant, especially in relation to the amount they are spending on their expansions.

Yet the companies like Rio and Woodside are perplexed that their efforts, either current and past, are not acknowledged by someone as respected as Mr Taylor.

It’s a conundrum as to how these views can contrast so strongly. It just shows that even something that deals with facts can end up being a difference of opinion.

The year behind us

AS a parting gesture for 2009 I thought I’d best sign off my column with a quick review of the year that was.

I was considering a set of my own awards but that would be a little unoriginal, and has been pretty much covered off by my colleague, John Phaceas, in this week’s cover feature reviewing the big news of the past 12 months.

So I thought I’d be reflective about the lessons from history that 2009 has reminded us about.

The global financial crisis may have struck late last year, but the real cost emerged in 2009 as those who had put too much of their portfolio into certain parts of the market suffered badly.

Many of those also broke another golden rule of investing – that if it sounds too good to be true, it probably is.

There is a view that, at least for the foreseeable future, people will be more realistic about their investment prospects and the growth they can expect.

In fact, there is a belief that a new investment paradigm has emerged where people have truly lowered their sights. This would be against human nature, so I don’t expect things to go long without hype and hubris returning.

Another thing to note about 2009 was the return of xenophobia. I am the first to be suspicious about state-owned enterprises taking strategic assets but we ought to be careful about the way we debate this. The government has both the rules and the resources to manage foreign ownership and it ought to have been very clear about this. Instead, it allowed politics and fear mongering to hijack the debate.

However, the return of boat people to our shores has proved that Labor in government has no silver bullet on a truly humane way of handling this issue, despite making a massive issue of it when John Howard was prime minister.

The news that Australia’s population growth was faster than expected (and we could have 35 million people within a few decades) has also fuelled anti-immigration sentiment. I am wary of these populist views. Australia needs more people from a broad range of cultures; we just have to manage the process well.

Climate change has also been one of the big subjects of the year because our reaction to it has gone from a wishy-washy theory to nearly being enshrined in legislation.

Throughout the year I have been increasingly cynical about this subject and I am yet to be convinced that alarmism is anything more than that. Nevertheless, it is a fascinating debate and, due to the stakes involved, I believe the argument ought to continue until we have more certainty around the risks and the costs.

That timeline has little to do with Kevin Rudd needing a prize to show off in Copenhagen.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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