Reviewed by Matt Canavan

 

The Second Rush: Mining and the Transformation of Australia By David Lee, 

  • Publisher: Connor Court 2017
  • ISBN: 9781925501148
  • RRP  $49.95 (hb)

David Lee’s The Second Rush is a nutrient packed contribution to the veritable Mother Hubbard’s cupboard that is the historiography of the Australian mining industry.

Perhaps with the exception of agriculture, mining has had the greatest impact on Australia’s psyche, personality and prosperity. Yet, Lee’s book is just the third dedicated history of Australian mining, after Geoffrey Blainey’s The Rush That Never Ended and Malcolm Knox’s Boom.

David Lee does not just refresh or update on these works. His book fills important gaps. For example Geoffrey Blainey did not cover the coal sector,\ and Malcolm Knox’s book focused heavily on how mining has shaped Australia’s national identity, whereas Lee provides a more clinical, blow-by-blow account of the development of Australian mining.

As the first Nationals Party Resources Minister since Doug Anthony, I found it fascinating to hear of Doug Anthony’s bruising approach. During a disagreement with Japanese steel mills over iron ore contracts in the late 1970s, Anthony simply imposed tougher federal controls on mineral exports without Cabinet approval. (Don’t worry Malcolm, I have not read the book as a how-to guide!)

Yet the book is not just useful for Ministers but for all interested in resources policy, especially as that policy undergoes fundamental shifts. As David Lee highlights, the last 50 years has been marked by Australia becoming the biggest exporter of iron ore, coal and (soon to be) gas.

This is where The Second Rush provides its most instructive lessons. Just a couple of generations ago, in the early 1960s, mining accounted for just two per cent of Australia’s GDP, down from a peak of 10 per cent at the turn of the twentieth century. Australia’s mining sector had become insular and union dominated.

Few then predicted the transformation to come. The Vernon Report of 1965, a major inquiry into the Australian economy, commented that mining “was not a major sector of the economy”. The report’s authors predicted that mining exports would likely only reach $300 million by 1975 – mining exports would reach four times that amount.

David Lee provides important insights into why the unexpected happened. This analysis is where the book is at its strongest and a reader learns the most.

You learn that the CSIRO recommended that Australia should not expand its black coal resources to Japan as we risked running out of coal ourselves! You learn that the ultimate rejection of that advice was led by visionary individuals such as the then Minister for National Development, William Spooner.

You learn that the dramatic removal of Federal export controls on iron ore in the 1960s was opposed vociferously by BHP to protect its steelmaking interests – ironically BHP would end up benefiting greatly from the changed policy.

But most revealingly, you learn that these changes were made less because of their potential long term benefits to the nation, and more in response to the prosaic pressures of the 1960s. Back then, Australia’s fixed currency contributed to a balance of payments crisis – as a growing middle class demanded more consumer goods.

The Menzies Government was determined to find ways to boost exports and earn vital foreign currency. It was in that environment that Japanese businesses partnered with some groundbreaking Australian investment houses – including Sir James Vernon’s CSR (yes the same Vernon!) to develop Australia’s natural resources.

The result was that Australia, almost by accident, learnt the benefits of an open economy and developed strong economic links for the first time with our Asian neighbours.

David Lee makes a strong case that this was, in fact, the opening up of the Australian economy. Some chroniclers of Australian political history tend to date the opening up of Australia’s economy to the Hawke-Keating era of reforms of the 1980s. The success of mining exports helped Australia learn that high tariffs, industrial regulation and migration controls were not necessary for prosperity, and in fact may generate the opposite result.

However, The Second Rush does not convince me that the political decision makers at the time made these moves with those consequences in mind. Louis XVI called the Estates General, not to embark on democratic reform, but as a desperate attempt to prolong the ancien regime. Likewise, in my view, the Menzies-McEwen Government did not boost Australia’s resource exports with the goal of the now familiar modern, open and cosmopolitan Australia in mind, but in an attempt to earn sufficient foreign exchange so that they could maintain a fixed currency and a regulated economy. A by-product of the door slightly opening, however, was that the mining industry got Australians to appreciate the benefits of trade, investment and fewer controls.

This is most directly demonstrated by David Lee reminding us that Paul Keating was shadow resources minister before becoming Treasurer, and he learnt to respect a sector that did not rely on government protection to thrive.

David Lee covers these political developments in such detail that you experience these developments as a natural evolution. One downside, however, is that the history does not cover the innovation that mining entrepreneurs demonstrated to overcome the economic and technical barriers to development, not just the political ones. So we don’t learn about the innovative copper refining techniques, such as the Isa Process, a breakthrough in copper refining now used around the world and that helped make Mount Isa Mines the biggest company in Australia. Another more recent example would be the increasing use of autonomous and remotely controlled vehicles in the mining sector.

These are gaps perhaps for the fourth history of Australian mining to fill.

The Second Rush details the government investments that were made in ports, rail lines and other infrastructure to support the development of often then frontier areas of our country. For instance, every coal basin was opened up through direct investment in rail and ports and although the Pilbara is the obvious exception in the minerals industry, its famous duplication is not an obvious candidate to replicate in all areas.

Such a lesson has critical real-world implications as governments consider opening up the first coal basin in Australia for more than 40 years, in the Galilee Basin. The development of that basin could establish a growing trade with India, the fastest growing major economy in the world.

Lee’s main thesis is that Australia has experienced a “second rush” since the 1960s that at least equals in importance our first rush in gold. Towards the end of the book, David Lee suggests that this second rush may now be over with China moving towards a more consumption led growth path.

I think he may have called it too early. There are still more than a billion people without access to electricity who will demand the resources of Australia if they can just stabilise their economic performance. But this is history not prophecy, and at that Lee does a fine job at telling the remarkable story of 50 years of mining policy success.

George Santayana said, “Those who cannot remember the past are condemned to repeat it.” David Lee’s book is the exception to the rule because the history of Australian mining is one we do want to repeat. So for those wanting to extend the second rush a little longer, this is a history worth reading.

Matt Caravan is the former Minister for Resources and Northern Australia